PRESENTATION ON INVESTOR AWARENESS. INVESTMENT OPTIONS AVAILABLE IN THE MARKET SHARE MARKET MUTUAL FUNDS BONDS BANKS OTHERS Compiled by - CA Vivek Sharma.

PRESENTATION ON INVESTOR AWARENESS

INVESTMENT OPTIONS AVAILABLE IN THE MARKET

• SHARE MARKET• MUTUAL FUNDS• BONDS• BANKS• OTHERS

Compiled by - CA Vivek Sharma

WAYS TO INVEST INTO SHARE MARKET / MUTUAL FUNDS

• PRIMARY MARKET – IPO/NFO• SECONDARY MARKET – STOCK EXCHANGES


LAWS AND RULES TO BE FOLLOWED BY THE COMPANIES/STOCK EXCHANGES

• SEBI GUIDELINES• SCRA• CDSL/NSDL NORMS• STOCK EXCANGE RULES AND REGULATIONS• COMPANIES ACT/ROC, Etc.


ALL THESE FACTORS NEED TO CREATE AN INFORMED AND ENLIGHTENED INVESTOR, WHO KNOWS WHAT PRECAUTIONS TO TAKE WHILE DEALING IN THE MARKET AND WHERE TO GO IN IN CASE OF ANY TROUBLE.


INITIAL PUBLIC OFFERING - IPOIPO means when the company issues the shares in the market for the first time. This means that in the case of IPO the investor is dealing directly with the company, which is issuing its shares.In such case document available for inspection is the Prospectus of the issue, which lays down the details about the issue.


Do’s in case of IPOCheck the pricing of the issue. Is it aggressive or conservative?

Check out the promoter’s track record, performance of other group companies and Promoter’s interest in the company.

Understand Issuer Company’s Balance Sheet and Profit & Loss Account by paying attention to the total turnover and Profit After Tax (PAT) figures, the reasons for variances. Carefully examine the reasons for sudden increase in the top line or sudden increase in the profits.

Read ‘Risk factors’ carefully and try to do an impact analysis of the critical risk factors.


Know about the major shareholders of the company. Whether the Institutional Investors have already invested in the company or not? Analyse carefully.

Carefully examine the reasons for which the IPO is coming. Is the issue for general corporate purpose, or to finance a new project or for an expansion/diversification project? Or is it for retiring a debt? Look carefully.

Find out whether the listed group of companies have been diligent in filing their returns with various Regulatory Bodies. The prospectus discloses all major litigation cases filed against the Company’s Directors and Promoters, as well as against group companies. Avoid companies that are deeply mired in litigations. Check out outstanding dues and defaults to lenders and depositors.

Check IPO Grading assigned by the Credit Rating Agency, if any.


Don’ts in case of IPODo not allow others to take decisions on your behalf. Do not invest on the basis of market tips.

Don’t underestimate risk or overestimate gains in IPO’s

Don’t invest because of ‘Brand’ or corporate image but always remember that you are investing in a company. A company may have a hugely popular brand, but may be bleeding financially. Moreover, a high-flying company may still be a risky losing proposition if its issue has been aggressively priced.


Do not invest based on bull run of the market index / scrips of other companies in the same industry.

Do not invest all your money in one company. Keep your portfolio diversified.


Dealing in the Secondary MarketSecondary Market means the dealing of shares through Stock Exchanges or between shareholders amongst themselves.

While dealing through the Stock Exchanges there are brokers and DP’s acting as mediators, there is no such body when shares are transferred off-market.

As in such a case the company is not involved in between there is a need to take extra care, while making such transactions.


Essentials to Deal in Securities MarketTo Deal it the securities market it is essential for an investor to open two types of accounts –

1) A Demat account with any Depository Participant, for holding shares in electronic form on behalf of the shareholder. It works in the similar manner as our saving bank account is maintained to hold our money.

2) A trading Account with any Broker registered with any Stock Exchange to buy and sell shares on your behalf.


These days most DP’s are also registered with Stock Exchanges as brokers as well. This provides us with the option to open a Trading as well a Demat account with the same entity.

This provides ease of transfer of shares in case of sale and purchase; although it is not by any means necessary to do so. One can maintain a Demat account with a different entity and a Trading Account with a different entity.


Completely filled FormOne coloured PhotographProof of IdentityProof of AddressCopy of PAN cardDuly executed agreement on a Stamp Paper between the Client & Depository Participant/BrokerBanker verification

Essentials for opening a Demat/Trading A/c


Do’s and Don’ts while dealing in securities market

DO’s : PRE-ACCOUNT OPENING• Always deal with market intermediaries registered with

SEBI/Exchanges.• Its is very important that one should make himself/herself familiar

with the rules, regulations, byelaws and circulars issued by Stock Exchanges/SEBI before entering into and/or carrying any transaction.

• Transact only through Stock Exchanges.

• Please carry out due-diligence before registering as client with any intermediary. Clients should carefully read and understand the contents stated in the Risk disclosure document, which forms part of investor registration requirement for dealing through brokers in stock market.


Clear all your doubts by raising your queries with the Relationship Manager prior to opening an account.

DON’Ts PRE-ACCOUNT OPENING• Do not start trading until you have read and understood the Risk

Disclosure Document and Member-Client Agreement.


DO’s ACCOUNT OPENING• Please read and understand and thereafter execute the

Member-Client Agreement with the DP, setting out the terms and conditions clearly.

• Enter accurate and complete details in the form, fill up all fields. Do not leave any spaces blank.

• All information provided should be factually correct and accurate since this will form the basis of your relationship with your DP

• Read and understand every document in the Registration kit carefully before signing.

• Please provide accurate Email ID, Client ID, DP ID, Mobile Number, Contact Details and Bank account number.


• The correspond address should always be updated.• Submit your Permanent Account Number (PAN)• Understand the utility of maintaining a running account before

signing the authorization for the same. Maintaining a Running Account with the same DP is not compulsory.

• Ensure that all details are correctly mentioned in the welcome letter sent by your DP after account opening.

DON’Ts : ACCOUNT OPENING• Do not sign the Member- Client Agreement without clearing

your doubts in respect thereof.• Do not fill in wrong or incomplete details. Do not overwrite,

cancel, misspell the details.


DO’s PRE-TRADING• Adopt trading / investment strategies commensurate with you

risk bearing capacity, as all investments carry risk, the degree of which varies according to the investment strategy adopted.

• Assess the risk-return profile of the investment as well as the liquidity and safety aspects before making and/or acting upon your investment decision.

• Make investments based on your sound reasoning, after taking into account all publicly available information, fundamentals and information made available.

• Check the veracity of the information available.• Access the website of Companies and Regulators for

information.


• Keep copies of the Member Client Agreement and your trading account related documents.

• Familiarise yourself with the rules, regulation and circulars issued by stock exchanges/SEBI before carrying out any transaction.

• Ask all relevant question and clear your doubts with your broker before transacting

• Please be informed that there are no guaranteed returns on investment in stock markets. Investment in Capital Market are subject to market risk.

• Ensure that you have adequate balance before you buy.• Ensure that you are holding securities before you sell.• Exercise due caution while trading in illiquid shares or penny

stocks or Z, T2T category stock.


DON’Ts PRE-TRADING• Do not trade in any product without knowing and/or

understanding the associated risks and rewards.• Do not be influenced by information which is not originating

from an appropriates source.• Do not believe any promises made about Assured Returns by

DP’s employees or Sub-Brokers or Authorized Persons or Marketing Associated.

• Do not rely on any implicit/explicit promise made by the issuer or any third party on returns.

• Do not be influenced into buying fundamentally unsound companies (penny stocks) based on sudden spurts in trading volumes or prices or non-authentic favorable looking articles/stories.


• Do not match/ synchronize trades with any other person for any thinly traded shares.

• Do not be misled by rumors circulating in the market.• Do not indulge in any manner including manipulation of price of

any scrips.• Do not follow the herd or play on momentum it could turn

against you.• Do not be misled by so called hot tips.• Do not undertake deals for others or trade on your own name

and then issue cheques from family members/friend accounts.• Do not pay in cash or do not issue a cheque in the name of any

employee of the Broker or any other person in respect of the transactions.


• Do not get carried away by luring advertisements, if any.• Do not try to time the market.• Do not leave signed blank delivery instruction slips (DIS) of your

depository account lying around carelessly or with anyone.• Do not sign blank DIS and keep them with Depository Participant or

broker to save time. Remember your carelessness can be your peril.• Do not invest based on bull run of the market index/ scrips of other

companies in same industry/ issuer company.• Do not start trading before reading and understanding the Risk

Disclosure documents.• Don’t get misled by guarantees of repayment of your investments

through postdated cheques.


DO’s TRADING• Call on the landline numbers of your broker and give clear and

unambiguous instructions while placing orders over the phone. In case you visit the broker, kindly give your orders in writing.

• Be vigilant in your transactions• Be aware of the risk associated with your Cash Market and Futures &

Options positions in the market and margin calls on them. In case of inadequate margin or nonpayment of margin in your account, your positions will be squared off by the Risk Management Team.

• Please bear in mind that while the usually the broker informs you in case of a margin call, it is your responsibility to maintain margins. Broker will square up outstanding position in case of shortfall in margin and delay in payments.


• Maintain secrecy of your password in case of Internet trading, since you will be solely responsible for all transactions effected from its usage.

• The password should be distinct & periodically changed to ensure security.

• If at any point of time you receive response for resetting password against request which has not been made by you, you may contact DP immediately.


DON’Ts TRADING• Do not give instructions which are not clear. They should be

given verbally over recorded phone lines or in writing.• Do not forget to take note of risks involved in the investment.• Do not reveal your password to any other person.• Do not engage your self in any activity which is in the nature of

intermediary such as sub-broker without proper registration with SEBI/Exchanges.


DO’s DEPOSITORES• Handle Delivery Instruction Slips (DIS) Book issued to you carefully.• Insist that the DIS numbers are pre-printed and you account number

(client id) be pre-stamped.• While sending securities for demat, record the distinctive numbers of

the securities sent.• Check the demat performance of the issuer company with your DP

before deciding to send certificates for demat.• Scrutinize minutely both the transaction and the holding statements

that you receive from your depository participant.• Always mention the details like ISIN, number of securities accurately. If

in doubt, contact Depository Participant or your broker.


• Authorise any corrections, over-writing or cancellations on the instruction slips by signing against the same.

• Ensure that all joint holders of the demat account sign the slip.• If there is space for multiple instructions and it is not used fully,

please strike out the blank space for furnishing securities details.• Avoid over-writing cancellations, misspellings, changing of the

name and quantity of securities.• In case you are not transacting frequently make use of the

freezing facilities provided for your depository account.


DON’Ts DEPOSITORIES• Do not issue depository delivery instruction slip from any other

family members/friends accounts. Issue the DIS only from your own depository account.

• Do not sign blank Delivery instruction slip(s) while meeting security pay in obligation.


MUTUAL FUNDSWHAT IS A MUTUAL FUND?

A Mutual Fund is a Trust that pools the savings of a number of investors who share a comman financial goal. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Fund. These investors buy units of a particular Mutual Fund Scheme that has a defined investment objective strategy.

InvestsThe Fund Manager in different types of securities

Income Earned is distributed to the unitholders

Dividend + NAV Appreciation


TYPES OF MUTUAL FUND SCHEMESMutual Funds can be divided two basis

By Structure By Investment objectivei) Open ended schemes i) Growth Schemesii) Closed ended schemes ii) Income Schemes

iii) Balanced Schemes iv) Money Market/Liquid Schemes

Other Schemes – Tax Saving Schemes Special Schemes


REASONS TO INVEST IN MUTUAL FUNDSFollowing are the advantages of investing in Mutual Funds:1) Professional Management2) Diversification3) Convenient Administration4) Return potential5) Low Costs6) Liquidity7) Transparency8) Flexibility9) Multiple options10)Well Regulated


STEPS TO INVEST IN MUTUAL FUNDS

1) Identify your investment needs2) Choose the Right Mutual Fund3) Select the ideal mix of Schemes4) Invest Regularly5) Keep your Taxes in mind6) Start Early7) Buy a Mutual Fund


YOUR RIGHTS AS A MUTUAL FUND UNIT HOLDER

As a unit holder in a Mutual Fund scheme coming under the SEBI (Mutual Funds) Regulations, you are entitled to:

• Receive unit certificates or statements of accounts confirming your title within 30 days from the date of closure of the subscription under open-ended schemes or within 6 weeks from the date your request for a unit certificate is received by the Mutual Fund;

• Receive information about the investment policies, investment objectives, financial position and general affairs of the scheme;

• Receive dividend within 30 days of their declaration and receive the redemption or repurchase proceeds within 10 days from the date of redemption or repurchase;


• Voting in accordance with the Regulations to:– Change the Asset Management Company.– Wind up the schemes.

• To receive communication from the Trustee about change in the fundamental attributes of any scheme or any other changes which would modify the scheme and effect the interest of the unitholders and to have option to exit at prevailing Net Asset Value without any exit load in such cases.

• Inspect the documents of the Mutual Funds specified in the scheme’s offer document.


THANK YOU


PRESENTATION ON INVESTOR AWARENESS. INVESTMENT OPTIONS AVAILABLE IN THE MARKET SHARE MARKET MUTUAL FUNDS BONDS BANKS OTHERS Compiled by - CA Vivek Sharma.

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