Comparitive Analysis of Mutual Funds With Equity Shares project report

CONTENTS

CHAPTER – I INTRODUCTION

1. Introduction on mutual funds2. Objectives of the study3. Scope of the study4. Application of the study5. Methodology of the study6. Tools used for analysis7. Limitations of the study

CHAPTER – II INTRADUCTION TO MUTUAL FUNDS

1. Introduction on Mutual fund

2. Introduction on Equity shares

3. Introduction on Index

4. Introduction on Derivatives

CHAPTER – III COMPANY PROFILE

1. Karvy – Overview2. Karvy – Early days3. Karvy – Alliances4. Milestone5. Achievements6. Quality policy & objectives7. Karvy – stock broking limited

CHAPTER – IV ANALYSIS & INTERPRETATION

CHAPTER – V CONCLUSIONS & SUGGESTIONS

1. Conclusions2. Suggestions

CHAPTER – VI BIBILOGRAPHY

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CHAPTER –1

INTRODUCTION

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INTRODUCTION ON MUTUAL FUNDS

Last two decades have witnessed a phenomenal growth in trade

and industry the world over. The days are passed when capital used to

remain within the boundaries of nations. In this era of globalization and

liberalization, technology, capital and other resources are not only

crossing the borders of nation but also increasing the volume of

international trade. The rapidity with which the concept of corporate

finance, bank finance and investment finance have changed in recent

years have given birth to new financial products known as Mutual

funds.

As the name suggests, this is financial instrument that pools the

savings of number of investors who share a common financial goal. The

money thus collected is invested by the funds manager in different

types of securities depending on the objective of the scheme.

Mutual funds have become increasingly importance in the world

of finance. Mutual funds legally known as “open-ended companies” are

subject to regulations set forth by the Investment Company Act 1940,

when deciding how to invest. Mutual funds are attractive because they

require less of investors, as they offer diversification, experts talk and

bond selection, low cost and preferential tax treatment. Additionally

Mutual funds do not have a predetermined number of stocks to sell;

rather stocks are added to the fund as required by the demand.

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A mutual fund is a trust that pools the savings of a number of

investors who share a common financial goal. The money thus

collected is invested by the fund manager in different types of

securities depending upon the objective of the scheme. This could

range from shares to debentures to money market instruments. The

income earned through these investments and the capital

appreciations realized by the scheme are shared by its unit holders in

proportion to the number of units owned by them.

Thus mutual fund is the most suitable investment for the

common man as it offers the opportunity to invest in a diversified

professionally managed portfolio at a relatively low cost. Any body with

an investible surplus of as little as a few thousand rupees can invest in

mutual funds.

A mutual fund is the ideal investment vehicle for today’s complex

and modern financial scenario. Markets for equity shares, bonds and

other fixed income instruments, real estate derivatives and other

assets have become mature and information driven. A typical

individual is unlikely to have the knowledge, skills, inclination and time

to keep track of events, understand their implications and act speedily.

Thus a mutual fund is the sum total of many parts, each of which is

designated to perform a specific function. SEBI, the market regulator

has outlined clearly the role and responsibilities of each entity. How

well they function determines, in part, the quality of your experience

with the mutual fund.

As investment vehicles go, mutual funds are unique being the

only ones to operate on the principle of pooling resources. The element

of novelty extends to their working also in the kind of investment

exposures they offer, the terms they use, the norms for pricing they

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follow, and lots more. These character traits will unravel through the

course of this book.

Life makes many demands of us. There’s so much to indulge in

and deal with. At work or at home. With family, friends or self. Woven

into these threats is the inescapable truth that money is a means to

many an end. A house in the sub-urbs, good education for the kids, a

set of four wheels to zip around and early retirement. The ends might

differ but the means – at least one of them – to reach them remain the

same: money. Earned wisely, saved regularly, and invested smartly.

People say that they don’t have the discipline, they don’t

understand investing, especially the stock market. They don’t have

time and don’t really care. Well they should, even if just a little. After

all it’s their money and their life and it helps to have their saving

working for you. They don’t need to get neck – deep in to their personal

finances, but the least they can do, and should do, is get a fix on the

big picture. Explore and understand what they want from their

investments, and leave the rest to the money managers: mutual funds.

These investment vehicles don’t demand them to have a deep

understanding of financial matters; they don’t even demand oodles of

your time.

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OBJECTIVES OF THE STUDY

1) The main purpose is to study whether mutual fund is investor’s best

choice or not.

2) The objective of doing this project is to make a study of various

investment schemes in the secondary market.

3) To ascertain the various fluctuation in different sectoral schemes of

mutual funds

4) To examine mutual funds investment with equity shares and also

relative to Nifty and Sensex.

5) To assist the community at large in deciding which investment

provides best return considering various points at a time.

6) To know how various schemes effect mutual fund investment and its

performance taking past records.

7) To study the performance of selected mutual fund companies and

equity companies and their performance in 1 year.

8) To reveal the current situation of mutual funds and equities as well

as index in last one year in India .

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SCOPE OF THE STUDY

1) The study covers the concept and details of mutual funds and

introduction on equity, derivatives and index.

2) The study also includes returns of equity, mutual funds and relative

index of different sectors.

3) Equities year high and low is also included in the study.

4) The project report covers the study of Net Asset Value (NAV) of

mutual funds in different sectors.

5) The analysis part includes the Net Asset Value (NAV) charts which

gives the clear picture of the present value of the mutual fund

company.

6) The study includes the information regarding the selection of

portfolio for different funds in theory part.

7) The theory part also includes following information related to

mutual fund :

History of mutual funds

Concept of mutual funds

Why mutual funds

Net Asset Value (NAV)

Types and benefits of mutual funds

Trends in mutual funds

Future scenario

Problem of mutual fund industry in India.

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APPLICATION OF THE STUDY

1) The study helps the investor to compare various investment

schemes and the returns from those investments.

2) The reader can have thorough knowledge on concepts and trends of

mutual funds.

3) The study helps to have the knowledge of various schemes and

working of mutual funds.

4) User can make proper analysis of returns in different schemes

comparing the performance of the study period.

5) The study enables the readers to assess the Net Asset Value (NAV)

by seeing the charts.

6) Researchers can think of further study by including the data of large

period.

7) The study also enables us to understand the fluctuations related to

Sensex and Nifty

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METHODOLOGY OF THE STUDY

All information related to the topic needs to be carefully

scrutinized to avoid the risk of biased analysis. Having once identified

which information is relevant and need to be collected, we will have to

define how this will be done.

The method employed in the investigation depends on the

purpose and scope of the study. Let us try to understand methodology.

1) RESEARCH DESIGN: Research design is some statement or

specification of procedures for collecting and analyzing the

information required for the solution of some specific problem.

Here the exploratory research is used as investigation is mainly

concerned with determining the trends and positive and negative

returns in different sectors of mutual funds and equities. Exploratory

research is generally carried out by three sources of information

A) Study of secondary sources

B) Discussion with individuals

C) Analyzing some specific areas

2) DATA COLLECTION METHODS : The key for creating useful system

are selectivity in collection of data and linking that selectivity to the

analysis and decision issue of the action to be taken. The accuracy of

collected data is of great significance for drawing correct and valid

conclusions from the investigation.

The following are the main steps in data collection process

a) Type of information required in the investigation

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b) Establishing the facts that are available at present and

additional facts required.

c) Identification of sources from where the information can be

available.

d) Selection of appropriate information i.e. collection method.

3) SOURCES OF INFORMATION: Data available in marketing

research are either primary or secondary.

Primary data: primary data are generated in an investigation

according to the needs of problem in head. Primary data is collected

using case study methods. There are some set of Qualitative

techniques used for collection of some socio economic information

about some phenomenon.

Secondary data: Secondary data can be defined as data collected by

some one else for purpose other than solving the problem being

investigated. Secondary data is collected from external sources which

include information from published material of SEBI and some of the

information is collected online. The data sources also include various

books, journals, magazines, news papers, etc. The organization profile

is collected from Branch Manager.

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TOOLS USED FOR ANALYSIS

TABULATION

A Table is a systematic arrangement of statistical data in rows and

columns. Rows are horizontal arrangements whereas columns are

vertical. Tabulation is a systematic presentation of data in a form

suitable for analysis and interpretation. The tables used are as follows:

1) One way table: It presents only one characteristic and hence in

answering one or more independent questions with regard to

those characteristics.

2) Two-way table: It contains sub divisions of a total and is able to

answer two mutually dependent questions.

3) Three-way table: It sub-divides the total in to three distinct

categories It is capable of answering three mutually dependent

questions

GRAPHICAL REPRESENTATION OF DATA

A picture is worth a thousand words. The impression created by a

picture has much greater impact than any amount of detailed

explanation. Statistical data can be effectively presented in the form of

diagrams and graphs. Graphs and Diagrams make complex data simple

and easily understandable. They help to compare related data and

bring out subtle data with amazing clarity. The Diagram used is as

follows:

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1) Bar diagrams: Bar diagrams are used specifically for categorical

data or series. They consist of the group of equidistant rectangles,

one for each group or category of data in which the values of

magnitudes are represented by length or height of rectangles.

2) Sample Bar diagram: It is used of comparative study of two or more

aspects of a single variable or single category of data.

3) Percentage bar diagram: If sub-divided bar diagrams are presented

on a percentage basis i.e. each component as a percentage of

whole, it is said to be a percentage bar diagram.

COMPARATIVE STUDY

Comparative study is made by comparing the different investment

schemes including mutual funds, equity and relative indexes. The

returns of mutual funds and equity are compared for different sectors.

The Net Asset Value of different mutual fund companies is also shown

in the study. Overall the study is done by comparing different

investment schemes and what returns they give in the period of 1 year.

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LIMITATIONS

1) Equity return is not taken from NSE stock exchange.

2) The data of mutual fund companies and equity companies is taken

only for 3& 6 months and 1 year due to non availability of data.

3) Due to limitation of time all sectors are not studied, only selected

sectors have been studied.

4) Data for mutual funds available on website is day to day basis data.

Data is updated daily. Hence the data is available as on 31 march

2006.

5) only growth funds are taken.

6) Due to non availability of data NSE scrip Tata consultancy information has not taken.

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CHAPTER – 2COMPARATIVE STUDY ON MUTUAL FUNDS

AND OTHER INVESTMENT SCHEMES

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INTRODUCTION ON MUTUAL FUND

The concept of “Mutual fund” is a new feature in the cap of

Indian capital market but not to international market. The concept of

mutual fund spread to USA in the beginning of 20th century and three

mutual fund companies were started in 1924. Mutual funds have been

successfully working in the USA and some western countries. These

funds have been useful in filling the gap between the demand and

supply of capital in the market. A mutual fund motivates small and big

investors to entrust their savings to it so that these are professionally

employed in sharing good return. A large number of investors have

small savings with them. They can at the most buy shares of one or

two companies. When small savings are pooled and entrusted to

mutual fund then these can be used to buy blue chips where regular

returns and capital appreciation are ensured.

Fund is an American concept. The terms like investment

company, money fund investment trust and mutual funds are used

interchangeably and used to describe the same thing in American

literature. In British literature mutual funds has not been explained but

is considered as a synonym of investment trust of USA.

DEFINITION & MEANING

A mutual fund is an investment vehicle for investors, who pool

their savings for investing in diversified portfolio of securities with the

aim of attractive yields and appreciation in their value.

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As per mutual fund book published by investment company institute of

US,“Mutual fund is a financial service organization that receives money

from shareholders, invest it, earns return on it, attempt to make it grow

and agree to pay the shareholder cash on demand for the current

value of investment”

SEBI (mutual fund) regulations, 1996 defines mutual funds as

“A fund established in the form of a trust to raise monies through

the sale of units to the public or a section of public under one or more

schemes for investing in securities including money market

instruments”

A mutual fund is a special type of institution a trust or an

investment company which acts as an investment – intermediary and

channelises the savings of large number of people to the corporate

securities in such a way that investors get a steady return, capital

appreciation and low risk

A mutual fund is a trust that pools the savings of a number of

investors who wish to start investing but do not have a large amount of

capital to work with or who want to take hands of approach and let the

professional take all decisions. Mutual funds are basically large funds

operated by investment companies and pull money from many

different people and then invest according to a certain goal for the

fund. This allows for greater diversification than would be possible for a

single person with less-than-generous assets and also removes the

burden of researching market conditions and constantly adjusting

investments accordingly from the individual.

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HISTORY OF MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the

formation of Unit Trust of India, at the initiative of the Government of

India and Reserve Bank the. The history of mutual funds in India can be

broadly divided into four distinct phases

FIRST PHASE – 1964-87 Unit Trust of India (UTI) was established

on 1963 by an Act of Parliament. It was set up by the Reserve Bank of

India and functioned under the Regulatory and administrative control

of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI

and the Industrial Development Bank of India (IDBI) took over the

regulatory and administrative control in place of RBI. The first scheme

launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had

Rs.6,700 crores of assets under management.

SECOND PHASE – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up

by public sector banks and Life Insurance Corporation of India (LIC) and

General Insurance Corporation of India (GIC). SBI Mutual Fund was the

first non- UTI Mutual Fund established in June 1987 followed by Canara

Bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug

89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of

Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June

1989 while GIC had set up its mutual fund in December 1990. At the

end of 1993, the mutual fund industry had assets under management

of Rs.47,004 crores.

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THIRD PHASE – 1993-2003 (Entry of Private Sector Funds) With

the entry of private sector funds in 1993, a new era started in the

Indian mutual fund industry, giving the Indian investors a wider choice

of fund families. Also, 1993 was the year in which the first Mutual Fund

Regulations came into being, under which all mutual funds, except UTI

were to be registered and governed. The erstwhile Kothari Pioneer

(now merged with

Franklin Templeton) was the first private sector mutual fund registered

in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted

by a more comprehensive and revised Mutual Fund Regulations in

1996. The industry now functions under the SEBI (Mutual Fund)

Regulations 1996. The number of mutual fund houses went on

increasing, with many foreign mutual funds setting up funds in India

and also the industry has witnessed several mergers and acquisitions.

As at the end of January 2003, there were 33 mutual funds with total

assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541

crores of assets under management was way ahead of other mutual

funds.

FOURTH PHASE – since February 2003 In February 2003,

following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities. One is the Specified Undertaking

of the Unit Trust of India with assets under management of Rs.29,835

crores as at the end of January 2003, representing broadly, the assets

of US 64 scheme, assured return and certain other schemes. The

Specified Undertaking of Unit Trust of India, functioning under an

administrator and under the rules framed by Government of India and

does not come under the purview of the Mutual Fund Regulations. The

second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and

LIC.

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It is registered with SEBI and functions under the Mutual Fund

Regulations. With the bifurcation of the erstwhile UTI which had in

March 2000 more than Rs.76,000 crores of assets under management

and with the setting up of a UTI Mutual Fund, conforming to the SEBI

Mutual Fund Regulations, and with recent mergers taking place among

different private sector funds, the mutual fund industry has entered its

current phase of consolidation and growth. As at the end of September,

2004, there were 29 funds, which manage assets of Rs.153108 crores

under 421 schemes. The graph indicates the growth of assets over the

years.

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GROWTH IN ASSETS UNDER MANAGEMENT

Note:

Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified

Undertaking of the Unit Trust of India effective from February 2003.

The Assets under management of the Specified Undertaking of the Unit

Trust of India has therefore been excluded from the total assets of the

industry as a whole from February 2003 onwards.

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CONCEPT OF MUTUAL FUND

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

investors who share a common financial goal. The money thus

collected is then invested in capital market instruments such as shares,

debentures and other securities. The income earned through these

investments and the capital appreciation realised are shared by its unit

holders in proportion to the number of units owned by them. Thus a

Mutual Fund is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified, professionally managed

basket of securities at a relatively low cost. The flow chart below

describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

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ORGANISATION OF A MUTUAL FUND

There  are  many  entities  involved  and  the  diagram  below 

illustrates  the  organisational set up of a mutual fund:

WHY MUTUAL FUNDS

Let's suppose you're just getting started as an investor and have

$5,000 to invest and you have three important goals you want to

achieve. First, you don't want to lose your money in a risky venture so

you want security, like that found in a certificate of deposit or other

fixed income investment. But you also want to make the most money

you can, so you want the prospect for growth potential, too. Finally,

since you don't have the time or knowledge to actively manage your

money, you want professional money management -- occasionally

diversifying your investments into promising new opportunities. That

sounds like a very good plan, but where can you invest your money

and have a chance to meet all three criteria? Certificates of deposit

and other fixed income investments offer security, but often with low

rates of interest and a fixed potential for growth.

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Individual stocks may carry greater potential for growth, but

$5,000 isn't a lot to invest and if you put it all in one stock, you risk

everything if it performs poorly. And, brokers and investment advisors

can offer you advice and money management, but at a price -- you pay

for their services, which reduces further the amount you have available

to invest.

More than 80 million people, or one out of every two households

in America, invest in mutual funds. Currently, over $6 trillion is

invested in mutual funds. While funds have been around since the

1920's, their popularity over the past 25 years has soared. The

reasons:

Mutual funds make it easy and less costly for investors to satisfy their need for capital growth, income and/or income preservation

Mutual funds bring diversification and professional money management to the individual investor

A mutual fund is a company that pools the money of many

investors -- its shareholders -- to invest in a variety of different

securities. Investments may be in stocks, bonds, money market

securities or some combination of these. Those securities are

professionally managed on behalf of the shareholders, and each

investor holds a pro rata share of the portfolio -- entitled to any profits

when the securities are sold, but subject to any losses in value as well.

For the individual investor, mutual funds provide the benefit of

having someone else manage your investments, take care of record

keeping for your account, and diversify your dollars over many

different securities that may not be available or affordable to you

otherwise. Today, minimum investment requirements on many funds

are low enough that even the smallest investor can get started in

mutual funds.

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A mutual fund, by its very nature, is diversified -- its assets are

invested in many different securities. Beyond that, there are many

different types of mutual funds with different objectives and levels of

growth potential, furthering your chances to diversify.

NET ASSET VALUE

The net asset value of the fund is the cumulative market value of

the assets fund net of its liabilities. In other words, if the fund is

dissolved or liquidated, by selling off all the assets in the fund, this is

the amount that the shareholders would collectively own. This gives

rise to the concept of net asset value per unit, which is the value,

represented by the ownership of one unit in the fund. It is calculated

simply by dividing the net asset value of the fund by the number of

units. However, most people refer loosely to the NAV per unit as NAV,

ignoring the "per unit". We also abide by the same convention.

The price measured per unit is called the Net asset value NAV of

the unit. Just as a share or a bond is brought at a price, a mutual fund

is bought and sold at its NAV. If for example u were to invest Rs.10000

in a scheme when its NAV is Rs.10 you will be

allotted 1000 units (10000/10) roughly –the fund charges a nominal

processing fee. The NAV of any scheme tells how much each unit of it

is worth at any point in time, and is therefore the simplest measure of

how it is performing. A scheme’s NAV is its Net assets (market value of

the securities is owns minus whatever it owes) divided by the number

of units it has issued.

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A scheme’s NAV is a dynamic figure. The market value of the

scheme’s portfolio changes from day to day as prices of shares and

bonds move up or down. The number of units outstanding also

changes, as new investors come into the scheme and old ones leave. If

the NAV of your schemes rises from Rs.10 to Rs.11 over a period of

time, your scheme is said to have generated a return of 10 percent.

Similarly if its Net NAV falls form Rs.10 to Rs. 9, it is said to have lost

10 percent. Fund houses have to calculate and disclose, the NAVs of

their schemes daily. Fund NAVs can be easily looked up. While the

general dailies give a random listing of schemes, the financial papers

are more exhaustive in their coverage. When invested in a scheme, its

NAV is the figure to track, as it quantifies your returns, and your

purchase price will be based on it. Random listing of schemes, the

financial papers random listing

TYPES OF MUTUAL FUNDS

This section provides descriptions of the characteristics -- such as

investment objective and potential for volatility of your investment -- of

various categories of funds. These descriptions are organized by the

type of securities purchased by each fund: equities, fixed-income,

money market instruments, or some combination of these.

This table organizes these fund types by how aggressive or

conservative they are and by investment objective. Because mutual

funds have specific investment objectives such as growth of capital,

safety of principal, current income or tax-exempt income, you can

select one fund or any number of different funds to help you meet your

specific goals.

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In general mutual funds fall into these general categories:

Equity Funds invest in shares of common stocks.

Fixed-Income Funds invest in government or corporate securities

which offer fixed rates of return.

Balanced Funds invest in a combination of both stocks and

bonds.

Money Market Funds for high stability of principal, liquidity and

income.

Bond Funds, both tax-exempt and taxable funds to generate

income.

Specialty/Sector Funds to diversify holdings within an industry.

Equity Funds

Aggressive Growth Funds What they invest in: These funds seek maximum growth of

capital with secondary emphasis on

dividend or interest income. They invest

in common stocks with a high potential

for rapid growth and capital appreciation.

Because they invest in stocks which can

experience wide swings up or down,

these funds have a relatively low stability

of principal. They often invest in the

stocks of small emerging growth

companies and generally provide low

current income because these companies

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usually reinvest their profits in their

businesses and pay small dividends, if

any. Aggressive growth funds generally

incur higher risks than growth funds in an

effort to secure more pronounced growth.

These funds may invest in a broad range

of industries or concentrate on one or

more industry sectors. Some use

borrowing, short-selling, options and

other speculative strategies to leverage

their results.

Suitable for: Investors who can assume the risk of

potential loss in value of their investment

in the hope of achieving substantial and

rapid gains. They are not suitable for

investors who must conserve their

principal or who must maximize current

income.

Growth FundsWhat they invest in:

Generally invest in stocks for growth rather than

current income.

Growth funds are more likely to invest in well-

established companies where the company itself

and the industry in which it operates are thought to

have good long-term growth potential.

Growth funds provide low current income, but the

investor's principal is more stable than it would be

in an aggressive growth fund. While the growth

potential may be less over the short term, many

growth funds have superior long-term performance

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records. They are less likely than aggressive growth

funds to invest in smaller companies which may

provide short-term substantial gains at the risk of

substantial declines.

Suitable for: Although growth funds are more conservative than

aggressive growth funds, they are still relatively

volatile. They are suitable for growth-oriented

investors but not investors who are unable to

assume risk or who are dependent on maximizing

current income from their investments.

International/Global FundsWhat they invest in:

International funds seek growth through

investments in companies outside the United

States. Global funds seek growth by investing in

securities around the world, including the United

States. Both provide investors with another

opportunity to diversify their mutual fund portfolio,

since foreign markets do not always move in the

same direction as the U.S.

The best way to invest abroad is through mutual

funds, rather than direct investment in a foreign

security. Most investors are unfamiliar with foreign

investment practices and currencies and may not

have a clear understanding of how economic or

political events can affect foreign securities. An

investor in an international mutual fund doesn't

have to worry about trading practices,

recordkeeping, time zones or other laws and

customs of a foreign country -- that is all handled by

the fund's money manager.

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International and global funds can invest in

common stocks or bonds of foreign firms and

governments. Many international funds invest in a

particular country or region of the world.

Suitable for: While international and global funds offer

opportunities for growth and diversification, these

types of funds do carry some additional risks over

domestic funds and should be carefully evaluated

and selected according to the investor's objectives,

timeframe and risk profile. Because most

international and global funds are considered to be

aggressive growth funds or growth funds, investors

must be willing to assume the risk of potential loss

in value in the hope of achieving substantial gains.

They are not suitable for investors who must

conserve their principal or maximize current

income.

Growth and Income FundsWhat they invest in: Growth and income funds seek long-term

growth of capital as well as current income.

The investment strategies used to reach

these goals vary among funds

Some invest in a dual portfolio consisting

of growth stocks and income stocks, or a

combination of growth stocks, stocks

paying high dividends, preferred stocks,

convertible securities or fixed-income

securities such as corporate bonds and

money market instruments. Others may

invest in growth stocks and earn current

income by selling covered call options on

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their portfolio stocks.

Suitable for: Growth and income funds have low to

moderate stability of principal and

moderate potential for current income and

growth. They are suitable for investors who

can assume some risk to achieve growth of

capital but who also want to maintain a

moderate level of current income.

Fixed-Income Funds What they invest in:

The goal of fixed income funds is to provide high

current income consistent with the preservation of

capital. Growth of capital is of secondary

importance

Income funds that invest primarily in common

stocks are classified as equity income funds (see

next listing). Those that invest primarily in bonds

and preferred stocks are classified as fixed-income

funds. These funds invest in corporate bonds or

government-backed mortgage securities that have

a fixed rate of return.

Since bond prices fluctuate with changing interest

rates, there is some risk involved despite the fund's

conservative nature. When interest rates rise, the

market price of fixed-income securities declines and

so will the value of the income funds' investments.

Conversely, in periods of declining interest rates,

the value of fixed-income funds will rise and

investors will enjoy capital appreciation as well as

income

Fixed-income funds offer a higher level of current

income than money market funds, but a lower

stability of principal. They are generally more stable

in price than funds that invest in stocks. Within the

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fixed-income category, funds vary greatly in their

stability of principal and in their dividend yields.

High-yield funds, which seek to maximize yield by

investing in lower-rated bonds of longer maturities,

entail less stability of principal than fixed-income

funds that invest in higher-rated but lower-yielding

securities.

Some fixed-income funds seek to minimize risk by

investing exclusively in securities whose timely

payment of interest and principal is backed by the

full faith and credit of the U.S. Government. These

include securities issued by the U.S. Treasury, the

Government National Mortgage Association ("Ginnie

Mae" securities), the Federal National Mortgage

Association ("Fannie Maes") and Federal Home Loan

Mortgage Corporation ("Freddie Macs"). All are

backed by pools of mortgages.

Suitable for: Fixed-income funds are suitable for investors who

want to maximize current income and who can

assume a degree of capital risk in order to do so.

Again, carefully read the prospectus to learn if a

fund's investment policy with respect to yield and

risk coincides with your own objectives.

Balanced/Equity Income funds What they invest in:

Equity income funds seek high current yield by

investing primarily in equity securities of companies

which pay high dividends. Unlike interest payments

on bonds, dividends on equity securities can change

as companies raise or lower their dividends. Since

yield-oriented stocks are more volatile than

31

comparably rated fixed-income securities, equity

income funds offer less stability of principal than

fixed-income funds. Balanced funds are more

evenly invested in equities and income securities.

Suitable for: Balanced and equity income funds are suitable for

conservative investors who want high current yield

with some growth.

Money Market Funds What they invest in:

For the cautious investor, these funds provide a

very high stability of principal while seeking a

moderate to high current income. They invest in

highly-liquid, virtually risk-free, short-term debt

securities of agencies of the U.S. Government,

banks and corporations and U.S. Treasury Bills.

They have no potential for capital appreciation.

Tax-exempt money market funds invest in

securities that provide safety of principal, liquidity

and income exempt from federal income taxes by

investing in short-term, high-rated municipal

obligations.

Because of their short-term investments, money

market mutual funds are able to keep a constant

share price; only the yield fluctuates. Therefore,

they are an attractive alternative to bank accounts.

With yields that are generally competitive with --

and usually somewhat higher than -- yields on bank

certificates of deposit (CDs), they offer several

advantages:

Money can be withdrawn any time without

32

penalty. Money market funds also offer check

writing privileges.

Although not insured by the FDIC or FSLIC,

money market funds invest only in highly-

liquid, short-term, top-rated money market

instruments.

Money market funds are suitable for

conservative investors who want high stability

of principal and moderate current income with

immediate liquidity.

Suitable for:Money market funds are suitable for conservative

investors who want high stability of principal and

moderate current income with immediate liquidity.

Municipal Bond Funds     

What they

invest in:

"Muni" bond funds provide higher tax-exempt

income than tax-exempt money market funds by

investing in longer-maturity (and often lower-rated)

securities, which generally offer higher yields than

the short-term, high-rated securities in which tax-

exempt money market funds invest

Municipal bond funds vary greatly in the quality and

maturity of the municipal bonds they invest in. The

longer the maturity, the higher the yield. Also, the

lower the credit rating of the issuer, the greater the

risk and the higher the yield

While municipal bond funds generally provide lower

yields than income funds with debt obligations of

33

similar maturities and ratings, for an investor in a

high marginal tax bracket the after-tax yields of

municipal bond funds will be higher. The price and

yield of municipal bond funds will fluctuate

moderately with interest rates. As interest rates

decline, the value of principal increases while yield

decreases; as rates increase, bond prices decline

but yields increase.

Suitable for: Suitable for investors in medium to higher tax

brackets who want current income free from federal

income tax.

Double & Triple Tax-Exempt Bond Funds What they

invest in:

These bond funds provide the investor with an even

greater tax advantage by investing in municipal

bonds of a single state. Triple tax-exempt funds are

exempt from income tax in a specific city. Thus they

generate income exempt from not only federal

income tax but also from state and/or city income

tax for residents of those jurisdictions. Like all bond

funds, the value of the shares will fluctuate with

interest rates, as will the current yield. Also, the

stability of principal and yield levels vary with the

quality and maturity length of the bonds in which

the funds invest. Lack of geographic diversification

increases credit risk of these funds compared with

national funds.

Suitable for: These funds are suitable for investors in medium to

high tax brackets in high tax states who want

income with maximum exemption from taxes.

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Specialty/Sector Funds What they invest in:

These funds invest in securities of a specific

industry or sector of the economy such as health

care, high technology, leisure, utilities or precious

metals

Because such funds invest primarily in one sector,

they do not offer the element of downside risk

protection found in mutual funds that invest in a

broad range of industries. However, the funds do

enable investors to diversify holdings among many

companies within an industry, a more conservative

approach than investing directly in one particular

company

Sector funds offer the opportunity for sharp capital

gains in cases where the fund's industry is "in favor"

but also entail the risk of capital losses when the

industry is out of favor

While sector funds restrict holdings to a particular

industry, other specialty funds such as index funds

give investors a broadly-diversified portfolio and

attempt to mirror the performance of various

market averages. Index funds generally buy shares

in all the companies composing the S&P 500 Stock

Index or other broad stock market indices

Asset allocation funds move funds among a variety

of markets and instruments in response to the fund

manager's view of relative market prospects. They

35

are broadly diversified and sometimes have higher

management fees since there may be a variety of

securities in the portfolio. These funds are suitable

for investors who can tolerate a moderate to high

degree of risk, are seeking capital appreciation and

to whom dividend income is secondary in

importance. And whatever the instruments, social

responsibility funds apply moral and ethical as well

as economic principles in the selection of securities.

Suitable for: Specialty funds are suitable for investors seeking to

invest in a particular industry who can monitor

industry performance regularly and alter

investment strategies accordingly. Investors must

be willing to assume the risk of potential loss in

value of their investment in the hope of achieving

substantial gains. They are not suitable for investors

who must conserve their principal or maximize

current income.

BENEFITS OF MUTUAL FUNDS

1) Professional Investment Management: By pooling the funds of

thousands of investors, mutual funds provide full-time, high-level

professional management that few individual investors can afford to

obtain independently. Such management is vital to achieving results

in today's complex markets. Your fund managers' interests are tied

to yours, because their compensation is based not on sales

commissions, but on how well the fund performs. These managers

have instantaneous access to crucial market information and are

able to execute trades on the largest and most cost-effective scale.

In short, managing investments is a full-time job for professionals.

36

2) Diversification: Mutual funds invest in a broad range of securities.

This limits investment risk by reducing the effect of a possible

decline in the value of any one security. Mutual fund shareowners

can benefit from diversification techniques usually available only to

investors wealthy enough to buy significant positions in a wide

variety of securities.

3) Low Cost: If you tried to create your own diversified portfolio of 50

stocks, you'd need at least $100,000 and you'd pay thousands of

dollars in commissions to assemble your portfolio. A mutual fund

lets you participate in a diversified portfolio for as little as $1,000,

and sometimes less. And if you buy a no-load fund, you pay or no

sale charges to own them.

4) Convenience and Flexibility: You own just one security rather

than many, yet enjoy the benefits of a diversified portfolio and a

wide range of services. Fund managers decide what securities to

trade, clip the bond coupons, collect the interest payments and see

that your dividends on portfolio securities are received and your

rights exercised. It's easy to purchase and redeem mutual fund

shares, either directly online or with a phone call.

5) Quick, Personalized Service: Most funds now offer extensive

websites with a host of shareholder services for immediate access

to information about your fund account. Or a phone call puts you in

touch with a trained investment specialist at a mutual fund

company who can provide information you can use to make your

own investment choices, assist you with buying and selling your

fund shares, and answer questions about your account status.

6) Ease of Investing: You may open or add to your account and

conduct transactions or business with the fund by mail, telephone or

bank wire. You can even arrange for automatic monthly investments

by authorizing electronic fund transfers from your checking account

37

in any amount and on a date you choose. Also, many of the

companies featured at this site allow account transactions online.

7) Total Liquidity, Easy Withdrawal: You can easily redeem your

shares anytime you need cash by letter, telephone, bank wire or

check, depending on the fund. Your proceeds are usually available

within a day or two.

8) Life Cycle Planning: With no-load mutual funds, you can link your

investment plans to future individual and family needs -- and make

changes as your life cycles change. You can invest in growth funds

for future college tuition needs, then move to income funds for

retirement, and adjust your investments as your needs change

throughout your life. With no-load funds, there are no commissions

to pay when you change your investments.

9) Market Cycle Planning: For investors who understand how to

actively manage their portfolio, mutual fund investments can be

moved as market conditions change. You can place your funds in

equities when the market is on the upswing and move into money

market funds on the downswing or take any number of steps to

ensure that your investments are meeting your needs in changing

market climates. A word of caution: since it is impossible to predict

what the market will do at any point in time, staying on course with

a long-term, diversified investment view is recommended for most

investors.

10) Investor Information: Shareholders receive regular reports from

the funds, including details of transactions on a year-to-date basis.

The current net asset value of your shares (the price at which you

may purchase or redeem them) appears in the mutual fund price

listings of daily newspapers. You can also obtain pricing and

performance results for the all mutual funds at this site, or it can be

obtained by phone from the fund.

38

11) Periodic Withdrawals: If you want steady monthly income, many

funds allow you to arrange for monthly fixed checks to be sent to

you, first by distributing some or all of the income and then, if

necessary, by dipping into your principal.

12) Dividend Options: You can receive all dividend payments in

cash. Or you can have them reinvested in the fund free of charge, in

which case the dividends are automatically compounded. This can

make a significant contribution to your long-term investment

results. With some funds you can elect to have your dividends from

income paid in cash and your capital gains distributions reinvested.

13) Automatic Direct Deposit: You can usually arrange to have

regular, third-party payments -- such as Social Security or pension

checks -- deposited directly into your fund account. This puts your

money to work immediately, without waiting to clear your checking

account, and it saves you from worrying about checks being lost in

the mail.

14) Recordkeeping Service: With your own portfolio of stocks and

bonds, you would have to do your own recordkeeping of purchases,

sales, dividends, interest, short-term and long-term gains and

losses.

15) Safekeeping: When you own shares in a mutual fund, you own

securities in many companies without having to worry about

keeping stock certificates in safe deposit boxes or sending them by

registered mail. You don't even have to worry about handling the

mutual fund stock certificates; the fund maintains your account on

its books and sends you periodic statements keeping track of all

your transactions.

16) Retirement and College Plans: Mutual funds are well suited to

Individual Retirement Accounts and most funds offer IRA-approved

prototype and master plans for individual retirement accounts (IRAs)

and Keogh, 403(b), SEP-IRA and 401(k) retirement plans. Funds also

39

make it easy to invest -- for college, children or other long-term

goals. Many offer special investment products or programs tailored

specifically for investments for children and college.

17) Online Services: The internet provides a fast, convenient way for

investors to access financial information. A host of services are

available to the online investor including direct access to no-load

companies.

18) Sweep Accounts: With many funds, if you choose not to reinvest

your stock or bond fund dividends, you can arrange to have them

swept into your money market fund automatically. You get all the

advantages of both accounts with no extra effort.

19) Asset Management Accounts: These master accounts, available

from many of the larger fund groups, enable you to manage all your

financial service needs under a single umbrella from unlimited

check writing and automatic bill paying to discount brokerage and

credit card accounts.

20) Margin: Some mutual fund shares are marginable. You may buy

them on margin or use them as collateral to borrow money from

your bank or broker. Call your fund company for details.

MARKET TRENDS

Alone UTI with just one scheme in 1964, now competes with as

many as 400 odd products and 34 players in the market. In spite of the

stiff competition and losing market share, UTI still remains a formidable

force to reckon with.

Last six years have been the most turbulent as well as exiting

ones for the industry. New players have come in, while others have

decided to close shop by either selling off or merging with others.

Product innovation is now passé with the game shifting to performance

40

delivery in fund management as well as service. Those directly

associated with the fund management industry like distributors,

registrars and transfer agents, and even the regulators have become

more mature and responsible.

The industry is also having a profound impact on financial

markets. While UTI has always been a dominant player on the bourses

as well as the debt markets, the new generation of private funds which

have gained substantial mass are now seen flexing their muscles. Fund

managers, by their selection criteria for stocks have forced corporate

governance on the industry. By rewarding honest and transparent

management with higher valuations, a system of risk-reward has been

created where the corporate sector is more transparent then before.

Funds have shifted their focus to the recession free sectors like

pharmaceuticals, FMCG and technology sector. Funds performances

are improving. Funds collection, which averaged at less than Rs100bn

per annum over five-year period spanning 1993-98 doubled to Rs210bn

in 1998-99. In the current year mobilization till now have exceeded

Rs300bn. Total collection for the current financial year ending March

2000 is expected to reach Rs450bn.

What is particularly noteworthy is that bulk of the mobilization

has been by the private sector mutual funds rather than public sector

mutual funds. Indeed private MFs saw a net inflow of Rs. 7819.34 crore

during the first nine months of the year as against a net inflow of

Rs.604.40 crore in the case of public sector funds.

Mutual funds are now also competing with commercial banks in

the race for retail investor’s savings and corporate float money. The

41

power shift towards mutual funds has become obvious. The coming few

years will show that the traditional saving avenues are losing out in the

current scenario. Many investors are realizing that investments in

savings accounts are as good as locking up their deposits in a closet.

The fund mobilization trend by mutual funds in the current

year indicates that money is going to mutual funds in a big way. The

collection in the first half of the financial year 1999-2000 matches the

whole of 1998-99.

India is at the first stage of a revolution that has already peaked

in the U.S. The U.S. boasts of an Asset base that is much higher than its

bank deposits. In India, mutual fund assets are not even 10% of the

bank deposits, but this trend is beginning to change. Recent figures

indicate that in the first quarter of the current fiscal year mutual fund

assets went up by 115% whereas bank deposits rose by only 17%.

(Source: Thinktank, The Financial Express September, 99)   This is

forcing a large number of banks to adopt the concept of narrow

banking wherein the deposits are kept in Gilts and some other assets

which improves liquidity and reduces risk. The basic fact lies that banks

cannot be ignored and they will not close down completely. Their role

as intermediaries cannot be ignored. It is just that Mutual Funds are

going to change the way banks do business in the future.

COMPARISON OF BANKS, MUTUAL FUNDS, EQUITY & DERIVATIVES

42

BANKS MUTUAL FUNDS

EQUITY DERIVATIVES

Returns Low Better Better Better

Administrative exp.

High Low Low Low

Risk Low Moderate High High

Investment options

Less More More Less

Network High penetration Low but improving

High penetration

High penetration

Liquidity At a cost Better Better Better

Quality of assets

Not transparent Transparent Transparent -

Interest calculatio

n

Minimum balance between 10th. & 30th. Of every

month

Everyday NA NA

Guarantee Maximum Rs.1 lakh on deposits

None NA NA

43

RECENT TRENDS IN MUTUAL FUND INDUSTRY

The most important trend in the mutual fund industry is the

aggressive expansion of the foreign owned mutual fund companies and

the decline of the companies floated by nationalized banks and smaller

private sector players.

Many nationalized banks got into the mutual fund business in the

early nineties and got off to a good start due to the stock market boom

prevailing then. These banks did not really understand the mutual fund

business and they just viewed it as another kind of banking activity.

Few hired specialized staff and generally chose to transfer staff from

the parent organizations. The performance of most of the schemes

floated by these funds was not good. Some schemes had offered

guaranteed returns and their parent organizations had to bail out these

AMCs by paying large amounts of money as the difference between the

guaranteed and actual returns. The service levels were also very bad.

Most of these AMCs have not been able to retain staff, float new

schemes etc. and it is doubtful whether, barring a few exceptions, they

have serious plans of continuing the activity in a major way.

The experience of some of the AMCs floated by private sector

Indian companies was also very similar. They quickly realized that the

AMC business is a business, which makes money in the long term and

requires deep-pocketed support in the intermediate years. Some have

sold out to foreign owned companies, some have merged with others

and there is general restructuring going on.

The foreign owned companies have deep pockets and have come

in here with the expectation of a long haul. They can be credited with

introducing many new practices such as new product innovation, sharp

improvement in service standards and disclosure, usage of technology,

broker education and support etc.

44

In fact, they have forced the industry to upgrade itself and

service levels of organizations like UTI have improved dramatically in

the last few years in response to the competition provided by these.

SELECTING FUNDS FOR YOUR PORTFOLIO

The chart below can be used to identify the types of funds best suited

to your particular investment objectives. Refer to it as you begin to

formulate your portfolio.

If Your Basic Objective Is

You Want The Following Fund Type

These Funds Invest Primarily In

Potential Capital Appreciation

Potential Current Income

Potential Risk

Maximum Capital Growth

Aggressive Growth

International

Common stocks with potential for very rapid growth. May employ certain aggressive strategies

Very High Very LowHigh to Very High

High Capital Growth

Growth

Specialty/ Sector

International

Common stocks with long-term growth potential

High to Very High

Very Low High

Current Income & Capital Growth

Growth & Income

Common stocks with potential for high dividends and capital appreciation

Moderate ModerateModerate to High

High Current Income

Fixed Income

Equity Income

Both high-dividend-paying stocks and bonds

Very LowHigh to Very High

Low to Moderate

Current Income & Protection of

General Money Market Funds

Money market instruments

None Moderate to High

Very Low

45

Principal

Tax-Free Income & Protection of Principal

Tax-Exempt Money Market

Short-term municipal notes and bonds

NoneModerate to High

Low

Current Income & Maximum Safety of Principal

U.S.Government Money Market

U.S.Treasury and agency issues guaranteed by the U.S. Government

NoneModerate to High

Low

FUTURE SCENARIO

The asset base will continue to grow at an annual rate of about

30 to 35 % over the next few years as investor’s shift their assets from

banks and other traditional avenues. Some of the older public and

private sector players will either close shop or be taken over.

Out of ten public sector players five will sell out, close down or

merge with stronger players in three to four years. In the private sector

this trend has already started with two mergers and one takeover.

Here too some of them will down their shutters in the near future to

come.

But this does not mean there is no room for other players. The

market will witness a flurry of new players entering the arena. There

will be a large number of offers from various asset management

companies in the time to come. Some big names like Fidelity, Principal,

and Old Mutual etc. are looking at Indian market seriously. One

important reason for it is that most major players already have

presence here and hence these big names would hardly like to get left

behind.

46

The mutual fund industry is awaiting the introduction of

derivatives in India as this would enable it to hedge its risk and this in

turn would be reflected in its Net Asset Value (NAV).

SEBI is working out the norms for enabling the existing mutual

fund schemes to trade in derivatives. Importantly, many market

players have called on the Regulator to initiate the process

immediately, so that the mutual funds can implement the changes that

are required to trade in Derivatives.

PROBLEMS & PROSPECTS OF MUTUAL FUNDS

1) Wrong positioning : The mutual funds in India have been quite

wrongly promoted as an alternative to equity industry. Thus

creating very high expectations in the minds of the investors. In a

falling market, these expectations have been belied. Only the pure

equity schemes can be compared with the stock market index.

However pure equity schemes are few in India, further, investment

is not purely linked to a particular index. Therefore returns form

mutual funds cannot really be compared with stock market index.

2) Limited product range: Indian mutual funds have remained

centered around a limited product range basically income, income-

cum-growth and tax saving schemes. Efforts to develop and expand

the market through innovative new products have been negligible.

These have happened due to the tendency to avoid risk, inability to

understand future market developments, and change in investor

preference. Therefore the extent of mutual funds market has

remained limited.

47

3) Confused market situation: probably the introduction and

implementation of new regulatory norms has contributed in some

measure to market sluggishness, as the emerging market was,

initially, not able to respond to the regulatory objectives.

4) Absence of Innovative Marketing Network: The absence of

product diversification and a confused market situation has been

made worse by the absence of an innovative marketing network for

mutual funds. The agent oriented network has largely been failure

because most of the agents have not been specifically trained to sell

mutual funds products,

5) Lack of adequate research infrastructure: the passive

approach of some mutual funds in managing investor’s funds is

compounded by the lack of adequate research infrastructure.

Consequently, returns commensurate with the market movement

could not be realized by many schemes, which has tended to show

up Indian mutual funds in a bad light.

6) Inefficient management: Management is considered to be a key

factor for the operational efficiency of any business venture. This

factor becomes even more crucial for service ventures such as

mutual funds. What mutual funds require are managers who have a

clear understanding of prevailing and emerging market potential,

investor preference and macro economic fundamentals.

7) Lack of investor’s education: The market success of any new

product particularly a financial product depends largely on its

acceptance by consumers, in this case investors. Mutual funds must

undertake a well design and comprehensive program of investor

education especially aimed at investors in rural and semi-urban

areas. However this has been mostly neglected in India.

48

8) Lack of media support: investors understanding about mutual

funds product and it feature must be increased as it was found to be

very low so far. This problem requires quick and structured

attention. This can be solved with effective use of media. A positive

media support is also required and mutual funds need to be media

friendly. A very closer coordination between AMFI, mutual funds and

the media to promote investor education in India.

9) Ignorance of liquidity management: over emphasis on asset

management has often ignored the crucial importance of liability

management in mutual funds, leading many Indian funds into a

liquidity trap at the time of redemption. A more scientific approach

needs to be adopted by the funds.

10) Risk management ignored: Derivatives have been widely used

by the mutual funds as a measure of risk management as a complex

and competitive market place. Further the practice of stock lending,

used widely in the western market has induced efficiency in funds

management a regulatory environment for mutual funds need to

encouraged this practices in India.

49

INTRODUCTION ON EQUITY SHARES

Equity is a term commonly used to describe the ordinary share

capital of the business. Ordinary share in the equity capital of the

business entitle the holders to all distributed profits after the holders of

debentures and preference shares have been paid. Ordinary shares are

issued to the owners of the company. It is important to understand the

market values of company’s shares have little relationship to their

nominal or face value. The market value of the company share is

determined by the price another investor is prepared to pay for them.

In the case of publicly quoted companied, this is reflected in the

market value of the ordinary shares traded on the stock exchange. In

case of privately owned companies, where there is unlikely to be much

trading in shares, market value is often determined when the business

is sold or when the minority share holding is valued for taxation

purpose.

Differed ordinary shares are a form of ordinary shares which are

entitled to a dividend only after a certain date or only if profits rise

above a certain amount. Voting rights might also differ from those

attach to other ordinary shares. Financing a company through the sale

of stock in accompany is known as equity financing. Alternatively debt

financing can be done to avoid giving up shares of ownership of the

company. Equity financing are usually used for longer term investment

projects such as investment in a new factory or a new foreign market.

Equity investment generally refers to the buying and holding of

shares of stock on a stock market by individuals and funds in

anticipation of income from dividends and capital gain as the value of

stock rises. It also sometimes refers to the acquisition of equity

(ownership) participation in a private (unlisted) company or a start up.

(A company being created or newly created). When the investment is

in infant companies it is refer to as venture capital investing and is

generally understood to be higher risk than investment in listing, going

concern situations.

50

ON INDEX INTRODUCTION

Stock market talk is everywhere, from T.V and radio, to the

newspapers and the web. But what does it mean? When people say

that “the market turned a great performance today”. “What is the

market anyway?”

As it turns out, when most people talk about “the market” they

are actually referring to an index. With the growing importance of the

stock market in our society the names of indexes such as S & P 500,

NIFTY, and SENSEX have become part of our every vocabulary.

Index can be defined as “a statistical measure of changes in the

portfolio of stocks representing the portion of the overall market.” It

would be difficult to track every single security trading in the country.

To get around this we take a smaller sample of the market that is

representative of the whole. Thus, just a pollster’s use a political

survey to gauge the sentiment of population, the investors use indexes

to track the performance of the stock market. Ideally change in price of

an index would represent and exactly proportionate change in the

stocks included in the index.

Indexes are great tools for telling us what direction the market is

taking, what trends are prevailing. “An index is a number use to

represent the changes in a set of values between a base time period

and another time period” A stock index is number that helps you

measure the levels of the market. Most stock indexes attempt to be

proxies for the market they exist in. returns on the index are thus

supposed to represent the returns on the market i.e the returns that u

could get if u had the entire market in your portfolio.

51

CHAPTER – 3COMPANY PROFILE

52

COMPANY PROFILE

OVERVIEW

Karvy is a premier integrated financial services provider, and

ranked among the top five in the country in all its business segments,

services over 16 million individual investors in various capacities, and

provides investor services to over 300 corporate, comprising the who is

who of Corporate India. Karvy covers the entire spectrum of financial

services such as Stock broking, Depository Participants, Distribution of

financial products - mutual funds, bonds, fixed deposit, equities,

Insurance Broking, Commodities Broking, Personal Finance Advisory

Services, Merchant Banking & Corporate Finance, placement of equity,

IPO’s, among others. Karvy has a professional management team and

ranks among the best in technology, operations and research of

various industrial segments.

KARVY -IN EARLY DAYS

The birth of Karvy was on a modest scale in 1981. It began with

the vision and enterprise of a small group of practicing Chartered

Accountants who founded the flagship company Karvy Consultants

Limited. We started with consulting and financial accounting

automation, and carved inroads into the field of registry and share

accounting by 1985. Since then, we have utilized our experience and

superlative expertise to go from strength to strength…to better our

services, to provide new ones, to innovate, diversify and in the process,

evolved Karvy as one of India’s premier integrated financial service

enterprise.

53

Thus over the last 20 years Karvy has traveled the success route,

towards building a reputation as an integrated financial services

provider, offering a wide spectrum of services. And we have made this

journey by taking the route of quality service, path Breaking

innovations in service, versatility in service and finally…totality in

service.

Our highly qualified manpower, cutting-edge technology,

comprehensive infrastructure and total customer-focus has secured for

us the position of an emerging financial services giant enjoying the

confidence and support of an enviable clientele across diverse fields in

the financial world.

Our values and vision of attaining total competence in our

servicing has served as the building block for creating a great financial

enterprise, which stands solid on our fortresses of financial strength -

our various companies. With the experience of years of holistic

financial servicing behind us and years of complete expertise in the

industry to look forward to, we have now emerged as a premier

integrated financial services provider. And today, we can look with

pride at the fruits of our mastery and experience – comprehensive

financial services that are competently segregated to service and

manage a diverse range of customer requirements

KARVY - CREDO

OUR FOCUS OUR CLIENTS

Clients are the reason for our being.

Personalized service, professional care; pro-activeness are the

values that help us nurture enduring relationships with our clients.

54

RESPECT FOR INDIVIDUAL

Each and every individual is an essential building block of our

organization.

We are the kiln that hones individuals to perfection. Be they our

employees, shareholders or investors. We do so by upholding their

dignity & pride, inculcating trust and achieving a sensitive balance

of their professional and personal lives.

TEAM WORK

None of us is more important than all of us.

Each team member is the face of Karvy. Together we offer diverse

services with speed, accuracy and quality to deliver only one

product: excellence. Transparency, co-operation, invaluable

individual contributions for a collective goal, and respecting

individual uniqueness within a corporate whole, are how we deliver

again and again.

RESPONSIBLE CITIZENSHIP

A social balance sheet is as rewarding as a business one.

As a responsible corporate citizen, our duty is to foster a better

environment in the society where we live and work. Abiding by its

norms, and behaving responsibly towards the environment, are

some of our growing initiatives towards realizing it.

55

INEGRITY

Everything else is secondary.

Professional and personal ethics are our bedrock. We take pride in

an environment that encourages honesty and the opportunity to

learn from failures than camouflage them. We insist on consistency

between works and actions.

KARVY ALLIANCES

Karvy Computer share Private Limited is a 50:50 joint venture of

Karvy Consultants Limited and Computer share Limited, Australia.

Computer share Limited is world's largest -- and only global -- share

registry, and a leading financial market services provider to the global

securities industry.

The joint venture with Computer share, reckoned as the largest

registrar in the world, servicing over 60 million shareholder accounts

for over 7,000 corporations across eleven countries spread across five

continents. Computer share manages more than 70 million shareholder

accounts for over 13,000 corporations around the world. Karvy

Computer share Private Limited, today, is India's largest Registrar and

Share Transfer Agent servicing over 300 corporate and mutual funds

and 16 million investors.

MILESTONE

56

ACHIEVEMENTS

Among the top 5 stock brokers in India (4% of NSE volumes)

India's No. 1 Registrar & Securities Transfer Agents

Among the to top 3 Depository Participants

Largest Network of Branches & Business Associates

ISO 9002 certified operations by DNV

Among top 10 Investment bankers

Largest Distributor of Financial Products

Adjudged as one of the top 50 IT uses in India by MIS Asia

57

Full Fledged IT driven operations

QUALITY POLICY

To achieve and retain leadership, Karvy shall aim for complete

customer satisfaction, by combining its human and technological

resources, to provide superior quality financial services. In the process,

Karvy will strive to exceed Customer's expectations. 

QUALITY OBJECTIVES

As per the Quality Policy, Karvy will: 

Build in-house processes that will ensure transparent and

harmonious relationships with its clients and investors to provide

high quality of services.

Establish a partner relationship with its investor service agents and

vendors that will help in keeping up its commitments to the

customers.

Provide high quality of work life for all its employees and equip them

with adequate knowledge & skills so as to respond to customer's

needs.

Continue to uphold the values of honesty & integrity and strive to

establish unparalleled standards in business ethics.

Use state-of-the art information technology in developing new and

innovative financial products and services to meet the changing

needs of investors and clients.

58

Strive to be a reliable source of value-added financial products and

services and constantly guide the individuals and institutions in

making a judicious choice of same.

Strive to keep all stake-holders (shareholders, clients, investors,

employees, suppliers and regulatory authorities) proud and

satisfied. 

KARVY STOCK BROKING LIMITED

Member - National Stock Exchange (NSE), The Bombay Stock

Exchange (BSE), and The Hyderabad Stock Exchange (HSE).

Karvy Stock Broking Limited, one of the cornerstones of the

Karvy edifice, flows freely towards attaining diverse goals of the

customer through varied services. Creating a plethora of opportunities

for the customer by opening up investment vistas backed by research-

based advisory services. Here, growth knows no limits and success

recognizes no boundaries. Helping the customer create waves in his

portfolio and empowering the investor completely is the ultimate goal.

STOCK BROKING SERVICES

It is an undisputed fact that the stock market is unpredictable

and yet enjoys a high success rate as a wealth management and

wealth accumulation option. The difference between unpredictability

and a safety anchor in the market is provided by in-depth knowledge of

market functioning and changing trends, planning with foresight and

59

choosing one option with care. This is what we provide in our Stock

Broking services.

We offer services that are beyond just a medium for buying and

selling stocks and shares. Instead we provide services which are multi

dimensional and multi-focused in their scope. There are several

advantages in utilizing our Stock Broking services, which are the

reasons why it is one of the best in the country.

We offer trading on a vast platform; National Stock Exchange,

Bombay Stock Exchange and Hyderabad Stock Exchange. More

importantly, we make trading safe to the maximum possible extent, by

accounting for several risk factors and planning accordingly. We are

assisted in this task by our in-depth research, constant feedback and

Sound advisory facilities. Our highly skilled research team, comprising

of technical analysts as well as fundamental specialists, secure result-

oriented information on market trends, market analysis and market

predictions.

This crucial information is given as a constant feedback to our

customers, through daily reports delivered thrice daily; The Pre-session

Report, where market scenario for the day is predicted, The Mid-

session Report, timed to arrive during lunch break, where the market

forecast for the rest of the day is given and The Post-session Report,

the final report for the day, where the market and the report itself is

reviewed. To add to this repository of information, we publish a

monthly magazine & ldquo; Karvy;

60

The Finapolis & rdquo;, which analyzes the latest stock market

trends and takes a close look at the various investment options, and

products available in the market, while a weekly report, called & ldquo;

Karvy Bazaar Baatein & rdquo;, keeps you more informed on the

immediate trends in the stock market. In addition, our specific industry

reports give comprehensive information on various industries. Besides

this, we also offer special portfolio analysis packages that provide daily

technical advice on scrip for successful portfolio management and

provide customized advisory services to help you make the right

financial moves that are specifically suited to your portfolio.

Our Stock Broking services are widely networked across India,

with the number of our trading terminals providing retail stock broking

facilities. Our services have increasingly offered customer oriented

convenience, which we provide to a spectrum of investors, high-net

worth or otherwise, with equal dedication and competence. But true to

our spirit, this success is not our final destination, but just a platform to

launch further enhanced quality services to provide you the latest in

convenient, customer-friendly stock management.

Over the years we have ensured that the trust of our customers

is our biggest returns. Factors such as our success in the Electronic

custody business has helped build on our tradition of trust even more.

Consequentially our retail client base expanded very fast.

To empower the investor further we have made serious efforts to

ensure that our research calls are disseminated systematically to all

our stock broking clients through various delivery channels like email,

chat, SMS, phone calls etc.

61

Our foray into commodities broking has been path breaking and

we are in the process of converting existing traders in commodities

into the more organized mainstream of trading in commodity futures,

both as a trading and risk hedging mechanism.

In the future, our focus will be on the emerging businesses and to

meet this objective, we have enhanced our manpower and revitalized

our knowledge base with enhances focus on Futures and Options as

well as the commodities business.

DEPOSITORY SERVICES

The onset of the technology revolution in financial services

Industry saw the emergence of Karvy as an electronic custodian

registered with National Securities Depository Ltd (NSDL) and Central

Securities Depository Ltd (CSDL) in 1998. Karvy set standards enabling

further comfort to the investor by promoting paperless trading across

the country and emerged as the top 3 Depository Participants in the

country in terms of customer serviced.

Offering a wide trading platform with a dual membership at both

NSDL and CDSL, we are a powerful medium for trading and settlement

of dematerialized shares. We have established live DPMs, Internet

access to accounts and an easier transaction process in order to offer

more convenience to individual and corporate investors. A team of

professional and the latest technological expertise allocated

exclusively to our demat division including technological

enhancements like SPEED-e; make our response time quick and our

delivery impeccable. A wide national network makes our efficiencies

accessible to all.

62

DISTRIBUTION OF FINANCIAL PRODUCTS

The paradigm shift from pure selling to knowledge based selling

drives the business today. With our wide portfolio offerings, we occupy

all segments in the retail financial services industry.

A 1600 team of highly qualified and dedicated professionals

drawn from the best of academic and professional backgrounds are

committed to maintaining high levels of client service delivery. This has

propelled us to a position among the top distributors for equity and

debt issues with an estimated market share of 15% in terms of

applications mobilized, besides being established as the leading

procurer in all public issues.

To further tap the immense growth potential in the capital

markets we enhanced the scope of our retail brand, Karvy – the

Finapolis, thereby providing planning and advisory services to the mass

affluent. Here we understand the customer needs and lifestyle in the

context of present earnings and provide adequate advisory services

that will necessarily help in creating wealth. Judicious planning that is

customized to meet the future needs of the customer deliver a service

that is exemplary. The market-savvy and the ignorant investors, both

find this service very satisfactory. The edge that we have over

competition is our portfolio of offerings and our professional expertise.

The investment planning for each customer is done with an unbiased

attitude so that the service is truly customized.

Our monthly magazine, Finapolis, provides up-dated market

information on market trends, investment options, opinions etc. Thus

empowering the investor to base every financial move on rational

thought and prudent analysis and embark on the path to wealth

creation.

63

ADVISORY SERVICES

Under our retail brand ‘Karvy – the Finapolis', we deliver advisory

services to a cross-section of customers. The service is backed by a

team of dedicated and expert professionals with varied experience and

background in handling investment portfolios. They are continually

engaged in designing the right investment portfolio for each customer

according to individual needs and budget considerations with a

comprehensive support system that focuses on trading customers'

portfolios and providing valuable inputs, monitoring and managing the

portfolio through varied technological initiatives.

This is made possible by the expertise we have gained in the business

over the years. Another venture towards being investor-friendly is the

circulation of a monthly magazine called ‘Karvy - the Finapolis'.

Covering the latest of market news, trends, investment schemes and

research-based opinions from experts in various financial fields.

PRIVATE CLIENT GROUP

This specialized division was set up to cater to the high net worth

individuals and institutional clients keeping in mind that they require a

different kind of financial planning and management that will augment

not just existing finances but their life-style as well. Here we follow a

hard-nosed business approach with the soft touch of dedicated

customer care and personalized attention.

For this purpose we offer a comprehensive and personalized

service that encompasses planning and protection of finances,

planning of business needs and retirement needs and a host of other

services, all provided on a one-to-one basis.

64

CHAPTER – 4ANALYSIS & INTERPRETATION

65

ANALYSIS & INTERPRETATION

PREFACE

The analysis is done to know whether, Mutual fund, is it

investor’s best choice. The information is collected of different sectors

which include FMCG Sector, , Pharma Sector and Index sector.

The returns of selected Mutual funds and selected Equities are

calculated for 3&6 months and 1year period. Equities closing price are

also given for half year and annually. The information collected is

shown in graphical form to make it more simple and easy to

understand by the Reader. The information regarding all Mutual Funds

and Equities is given in the Table.

The Analysis is done by comparing the Particular Sector Mutual

Funds with Equities and also with Relative Sensex and Nifty, index of

BSE and NSE. The average of Particular Sector Mutual Funds and

Equities is taken and returns are calculated. Let us take for example, In

FMCG Sector the Returns of ICICI Prudential FMCG Fund, Franklin FMCG

fund and Magnum FMCG Fund are added and then divided by 3 hence

the average is taken as returns of FMCG Mutual Funds in the same way

Returns of HLL Equity, Dabur Equity, Colgate Equity, Tata tea Equity

and Britannia Equity are also added and divided by 5 and the average

is taken as the returns of FMCG sector Equities. The Returns of Relative

Sensex and Nifty is Calculated and then the Analysis is done to know

the position of Mutual Funds in the market in long term and short term

period. The period of 3 months and 6 months is taken as short term

and period of 1 year is taken as long term period. The comparison of

aggregate Mutual Funds and Equities is shown in Table.

66

FMCG – SECTOR MUTUAL FUNDS & EQUITIES

(TABLE :4.1)RETURNS OF FMCG SECTOR EQUITIES & MUTUAL FUNDS

NAMEAbsolute returns %

3 MONTHS

6 MONTHS 1 YEAR

Franklin FMCG Fund 15.12 -9.9 55.20Pru ICICI FMCG Fund 0.57 0.30 0.12Magnum FMCG Fund 0.21 0.04 0.10Hind Lever ltd Equity 0.84 0.95 0.84

Dabur equity -0.82 0.38 0.01Colgate Equity 0.72 0.48 0.79

Britannia Equity 0.0019 0.08 0.0013Tata tea Equity 0.014 0.05 0.06

  RETURNS OF EQUITIES

(BAR DIAGRAM – 4.1)RETURNS OF MUTUAL FUNDS & EQUITIES

RETURNS OF FMCG SECTOR EQUITIES & MUTUAL FUNDS

-20

0

20

40

60

1 2 3

Franklin FMCGFund

Pru ICICIFMCG Fund

MagnumFMCG Fund

67

-20

-10

0

10

20

30

40

50

60

1 2 3

FranklinFMCG Fund

Pru ICICIFMCG Fund

MagnumFMCG Fund

-1-0.8

-0.6-0.4-0.2

0

0.20.40.60.8

11.2

HindLever ltd

Equity

Daburequity

ColgateEquity

BritanniaEquity

Tata teaEquity

Series1

Series2

Series3

68

-20

-10

0

10

20

30

40

50

60

Fra

nklin

FM

CG

Magnum

FM

CG

Dabur

equity

Brita

nnia

Equity

Series1

Series2

Series3

-20

-10

0

10

20

30

40

50

60

Franklin FMCGFund

Pru ICICIFMCG Fund

MagnumFMCG Fund

Hind Lever ltdEquity

Dabur equity Colgate Equity BritanniaEquity

Tata tea Equity

Series1

Series2

Series3

(TABLE :4.1A)

69

FMCG MUTUAL FUNDS VS EQUITIES & RELATIVE INDEX

NAME ABSOLUTE RETURNS IN %

3 MONTHS

6 MONTHS

1 YEAR

FMCG SECTOR MUTUAL FUNDS

0.15 0.10 0.55

FMCG SECTOR EQUITIES

0.023 0.019 0.017

RELATIVE TO SENSEX

594.13 1476.18 1725.89

RELATIVE TO NIFTY

6561.00 9965.46 9830.72

FMCG Mutual Funds includes Franklin FMCG Fund, Prudential ICICI

FMCG Fund and Magnum FMCG fund.

FMCG Equities includes Hindustan lever ltd, Dabur, Colgate, Tata

Tea and Britannia

ABSOLUTE RETURNS OF MUTUAL FUNDS AND EQUITIES

(LINE DIAGRAM 4.1)

70

ABSOLUTE RETURNS OF INDEX

0

2000

4000

6000

8000

10000

12000

1 2 3

RELATIVE TOSENSEX

RELATIVE TONIFTY

ABSOLUTE RETURNS OF INDEX

0

2000

4000

6000

8000

10000

12000

1 2 3

RELATIVE TOSENSEX

RELATIVE TONIFTY

71

(ANALYSIS)

As observed from the Table, we can say that ICICI Prudential

FMCG Fund, Franklin FMCG Fund and Magnum FMCG Fund Gives

good Return. The Bar diagram representation makes it very

clear.

In FMCG Equities from Table and Bar Diagram we can see that

Hindlever gives maximum Returns then any other Equities. The

next comes Colgate and TataTea which gives almost the same

Returns. Tata tea Equities shows good Returns only in long term

period Whereas Dabur gives Negative Returns in short term

period..

The Returns of individual Mutual Fund of FMCG Sector in

particular period is summed up and then average is taken as the

Returns of FMCG Mutual Funds. In the same manner individual

Equity is summed up and the average is taken as FMCG Equities.

These aggregated Mutual funds and Equities are now compared

in Table with the Nifty and Sensex, the Index of NSE and BSE.

FMCG Mutual funds, as observed from the Table and Line

Diagram grows rapidly. FMCG Equities show very good Returns in

long term and short term period i.e. in 3 & 6 months and 1 years

period . But Dabur shows negative returns in 3 months from the

Table .

When comparison is made between Mutual Funds and Equities,

Returns are not similar in both short term and long term period

as we can see clearly from the Line Diagram .

72

As Sensex and Nifty grows in the Market, FMCG Mutual Funds

shows upward trend where as equities shows down ward. Both

Sensex and Nifty is going at different level having different

Exchanges. We can see Mutual Funds , Equities , Nifty and

Sensex all together in the line Diagram .

Overall Performance of Equities and Mutual Funds is not

satisfactory, mutual funds shows better yieldings compare to

equities. Equities shows negative returns. If investor don’t want

to take risk then he must go for Mutual funds as we can observe

form the Table that in individual Equity sometimes returns are

negative for example in Dabur Equity, but in Mutual Funds we

can see negative Returns but compare to equities mutual funds

are risk minimising.

PHARMA-SECTOR MUTUAL FUNDS & EQUITIES

(TABLE :4.4)HIGH/LOW & RETURNS OF PHARMA SECTOR EQUITIES & MFS

NAMEABSOLUTE RETURS %

3MONTHS 6MONTHS 1 YEARFranklin Pharma Fund 0.07 0.05 0.46Magnum Pharma Fund 0.29 -0.74 -0.02UTI Pharma & health fund 0.08 0.01 0.27Dr Reddy’s Equity 0.083 0.072 0.062Ranbaxy Equity 0.027 0.027 0.042Orchid equity 0.013 -0.012 0.010Cipla equity 0.025 0.029 0.26Sun Pharma Equity 0.022 0.024 0.030

(BAR DIAGRAM)RETURNS OF MUTUAL FUNDS

73

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

1 2 3

Franklin PharmaFund

Magnum PharmaFund

UTI Pharma &health fund

(BAR DIAGRAM)RETURNS OF MUTUAL FUNDS

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

1 2 3

FranklinPharma Fund

MagnumPharma Fund

UTI Pharma &health fund

(BAR DIAGRAM 4.8)RETURNS OF EQUITIES

74

-0.05

0

0.05

0.1

0.15

0.2

0.25

0.3

Dr Reddy’s Equity Ranbaxy Equity Orchid equity Cipla equity Sun Pharma Equity

Series1

Series2

Series3

-20

-10

0

10

20

30

40

50

60

Franklin FMCGFund

Pru ICICIFMCG Fund

MagnumFMCG Fund

Hind Lever ltdEquity

Dabur equity Colgate Equity BritanniaEquity

Tata tea Equity

Series1

Series2

Series3

75

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

FranklinPharma Fund

MagnumPharma Fund

UTI Pharma &health fund

Dr Reddy’sEquity

Ranbaxy Equity Orchid equity Cipla equity Sun PharmaEquity

Series1

Series2

Series3

(TABLE :4.4A)

PHARMA – SECTOR MUTUAL FUNDS VS EQUITIES & RELATIVE INDEX

NAME ABSOLUTE RETURNS IN %3

MONTHS6

MONTHS1 YEAR

PHARMA MUTUAL FUNDS

0.44 0.80 0.75

PHARMA EQUITIES

0.17 0.16 0.40

RELATIVE TO SENSEX

594.13 1476.18 1725.89

RELATIVE TO NIFTY

6561.00 9965.46 9830.72

Pharma Sector Mutual Funds include UTI Pharma & Healthcare Fund,

Franklin Pharma Fund, Magnum Pharma Fund.

Pharma Sector Equities includes Dr Reddy Labs, Ranbaxy, orchid

and cipla Sun Pharma.

76

00.10.20.30.40.50.60.70.80.9

1 2 3

PHARMA MUTUAL FUNDS

PHARMAEQUITIES

(LINE DIAGRAM 4.4)

00.10.20.30.40.50.60.70.80.9

1 2 3

PHARMA MUTUALFUNDS

PHARMAEQUITIES

0

2000

4000

6000

8000

10000

12000

1 2 3

RELATIVE TOSENSEX

RELATIVE TONIFTY

77

0

2000

4000

6000

8000

10000

12000

1 2 3

RELATIVE TOSENSEX

RELATIVE TONIFTY

ABSOLUTE RETURNS OF MUTUAL FUNDS, EQUITIES & INDEX

0

50

100

150

200

250

300

350

3 MTHS 6 MTHS 1 YR 3 YRS

PERIOD

AB

SO

LU

TE

RE

TU

RN

S

PHARMA MF

PHARMA EQUITIES

RELATIVE SENSEX

RELATIVE NIFTY

78

(ANALYSIS)

Pharma Sector fund, as, we can see clearly that all Mutual Funds

performance in long term period and short term period is very

good.

From Table we can also see that Dr Reddy’s Equity, Sun Pharma

Equity and Ranbaxy & cipla equit also performs well. But we can

also notice that Pharma Sector Equity such as orchid gives

negative Returns in the period of 6months . In the same way

equity also gives very poor Returns during the study period.

The Returns of individual Mutual Fund of Pharma-sector in

particular period is summed up and then average is taken as the

Returns of Pharma Sector Mutual Funds. In the same way

individual Equity are summed up and average is taken as Pharma

Sector Equities. These aggregated Mutual funds and Equities are

now compared in Table with the Nifty and Sensex . Pharma

Sector Mutual Funds performs well in both short term and long

term period as noticed form the Table. But sbi pharma sector

shows negetive returns in 6months and 1 year. equities gives

good Returns in short term but in short term Orchid Equity shows

negative returns in 6 months.

When Both Pharma Sector Mutual Funds and Equities are

compared, Mutual Funds perform better than Equities in long

term period. In short term Equities gives good result but in lone

term the performance shows downward trend as we can observe

from the Line Diagram .

79

As relative Sensex and Nifty grows in the Market, Pharma Sector

Mutual Funds also shows upward trend but Equities does not

show any upward trend in long term period as we can clearly

observe in the Line Diagram showing Comparison between

Mutual Funds, Equities, Sensex and Nifty.

In long and short Pharma Sector Mutual Funds performs better

than Pharma Sector Equities. It is advisable to invest in Pharma

Sector Mutual Fund rather than Equity, because we can notice

from the Line Diagram that Equities does not show any upward

trend with the growth in Mutual Funds, Sensex, and Nifty as we

have seen from Table that Individual Pharma Equity gives

negative Returns whereas the case is never done with Mutual

Funds.

80

CHAPTER - 5CONCLUSIONS & SUGGESTIONS

CONCLUSIONS & SUGGESTIONS

The Mutual funds shows better yields compare to equities.

Even though mutual funds shows in short term negative returns

but it is better to invest in mutual funds.

in fmcg sector franklin fmcg fund shows negative returns in 6

months.

81

In pharma sector sbi mutual fund shows negative returns both in

short & long term.

In fmcg sector in short term dabur gives negative returns in 3

months.

In pharma sector orchid shows negative returns in 6 months.

82

CHAPTER - 6BIBILIOGRAPHY

I. TEXT BOOK

1. Security Analysis Portfolio Management

Donald Fisher

Ronald A Jordan

2. Mutual Fund In India

H.Sadhak

II . WEB SITES

www.mutualfundsindia.com

www.amfiindia.com

www.utimf.com

83

www.bseindia.com

III. MAGAINES

Business India

Business World

IV. NEWS PAPERS

Economic Times

Business Standard.

84