Satish Kumar Project

Chapter 1:-



Introduction of Topic

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INTRODUCTION OF TOPIC

The Investment Market is one of the fastest growing market in India today. The upcoming sector which the graph towards upwards are- Telecom, Banking, and Insurance.These sectors really have a lot of responsibility towards the economy.Amongst the above- mentioned areas Capital Market is one sector, Which took a lot of time in positioning itself. The scope for private companies have great opportunities to cover the market and can insure the customer.The initiation of the deregulation in the Indian Share market , the monopoly of

big public sector companies in share market has been

broken.

New private players have entered the market and with their innovative approaches and better use of distribution channels and technology, they are eating in to the shares of established public sector companies in Indian Share Market .

This report includes the key private players in the market such as Big Companies. It also includes the leading competitors in the life insurance and general insurance segments along with their market shares.

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I want to take full information about their various products and how they are beneficial to an individual person . After the information about the products to know how they talk and convey the information about products and how they convince their customers to invest in that products all these show their financial and market condition. This project will beneficial for me in future while investing the money in the particular area . It will solve my problem where money invest in the future?

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Chapter 2:-

 Objective of Study

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OBJECTIVES OF TOPIC

The main Objectives of the present study are accomplishing the following objective:-



To understanding and analysis of Investment Avenues, sources of savings,

Investors approach towards Securities Market.



To Study the difference between various products available in

Securities Market & in Banking Sector.



And based on analysis of the available Data & Information

Presentation of Fact & Findings.



To know Various Financial Products, Investors approach towards

Share Market. This will give me more confidence in marketing the products given to me. 

As the Stock Holding Corporation of India is well reputed

company in India its great chance for me to observed different products launch by other competitor companies like Kotak securities, ICICI Direct, ShareKhan, etc. In all, it is to understand the overall working of the Investment market & Savings.

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Chapter 3:-

 Company Profile

6

Company Profile

MISSION STATEMENT “To be a world class technology driven

an client focused to market leader in

financial and technical services"

SHCIL of the Government of India as a Public Limited Company in 1986. It has

been

jointly promoted

and owned

by the

All

India Banks

and

Financial Institutions, viz., LIC, GIC and its subsidiaries, ICICI Bank, UTI, IDBI, IFCI and IIBI, all leaders in their fields of business.

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SHCIL began by offering custodial and post trading services, adding depository services and other services to its portfolio over a period Stock Holding Corporation of India Ltd. (SHCIL) was incorporated at the special initiative of time.

SHCIL has established itself in India as a one-stop solution provider in the Financial Services domain. SHCIL, apart from being the country’s premier Custodian and Depository Participant, SHCIL is also the largest Professional Clearing Member; backed by an immense capacity to process volumes with precision. To give an idea of our capability, every year we process around…. SHCIL also provides Derivatives clearing, PF fund accounting, SGL constituent account services, distribution of mutual funds and other capital market instruments, besides distribution of life and non-life insurance policies. Other offerings added to the bouquet are online net trading, loan against shares, Western Union Money Transfer & E-stamping. In the pipeline are a host of services that will complement the range of services offered by SHCIL.

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 Our Values • Safety and Efficiency of operations is a hallmark of SHCIL • Professionalism and Integrity • Customer First • Relationship Building • Commitment to Quality irrespective of asset size

 Our Financials

•

We are a Zero-debt financially sound company with healthy

reserves. •

We have a consistent Dividend paying track record.

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Accolades and Certifications



•

Citation and Medal from Smithsonian Institute, Washington D.C. U.S.A. for “Visionary and Innovative use of Technology in Finance, Banking and Insurance industry”

•

First South Asian Corporate to receive this.

•

Computer Society of India Award for best IT usage in the country.

•

Our software processes have been assessed at SEI CMM.

•

Accepted industry leader and pioneer in Custodial system.

 Our Technology •

Comprehensive business solutions adept in

handling high volume time critical transactions within a secured environment. •

Zero error approach towards delivery of

products and services.

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•

Single window view of business and up-to-

date information. •

Oracle database currently at 1.6 Terabytes

size (and growing) managed by competent IT personnel with domain experts. •

Data mirroring using cluster technology and

fiber optic connection as a part of Disaster Management Plan. •

Network Security using Firewall, Proxy, and

Intrusion Detection System (IDS) and Intrusion Prevention System (IPS). •

Internet products with built-in PKI features.

•

Dedicated

communication

channels

with

built-in redundancies in connectivity to client Institutions, Stock Exchanges, Clearing houses and Depositaries.

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Chapter 4:-

 Investment and Bonds

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Bonds

“Minimal risks and wise investments - this is what bonds are all about. They deliver steady growth like the imminent crescendo building up towards the end of a symphony”

The first thing that comes to most people's minds when they think of investing is the stock market. After all, stocks are exciting. The swings in the market are scrutinized in the newspapers and even covered by local evening newscasts. Stories of investors gaining great wealth in the stock market are common.

Bonds, on the other hand, don't have the same sex appeal. The lingo seems arcane and confusing to the average person. Plus, bonds are much more boring - especially during raging bull markets, when they seem to offer an insignificant return compared to stocks.

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However, all it takes is a bear market to remind investors of the virtues of a bond's safety and stability. In fact, for many investors it makes sense to have at least part of their portfolio invested in bonds.

This tutorial will hopefully help you determine whether or not bonds are right for you. We'll introduce you to the fundamentals of what bonds are, the different types of bonds and their important characteristics, how they behave, how to purchase them, and more.

Just as people need money, so do companies and governments. A company needs funds to expand into new markets, while governments need money for everything from infrastructure to social programs. The problem large organizations run into is that they typically need far more money than the average bank can provide. The solution is to raise money by issuing bonds (or other debt instruments) to a public market. Thousands of investors then each lend a portion of the capital needed. Really, a bond is nothing more than a loan for which you are the lender. The organization that sells a bond is known as the issuer. You can think of a bond as an IOU given by a borrower (the issuer) to a lender (the investor).

Of course, nobody would loan his or her hard-earned money for nothing. The issuer of a bond must pay the investor something extra for the privilege of using his or her money.

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This "extra" comes in the form of interest payments, which are made at a predetermined rate and schedule. The interest rate is often referred to as the coupon. The date on which the issuer has to repay the amount borrowed (known as face value) is called the maturity date. Bonds are known as fixed-income securities because you know the exact amount of cash you'll get back if you hold the security until maturity.

Types of bond markets

The Securities Industry and Financial Markets Association classifies the broader bond market into five specific bond markets. •

Corporate

•

Government & Agency

•

Municipal

•

Mortgage Backed, Asset Backed, and Collateralized debt obligation

•

Funding

Bond indices

A number of bond indices exist for the purposes of managing portfolios and measuring performance, similar to the S&P 500 or Russell Indexes for stocks. The most common American benchmarks are the Lehman Aggregate, Citigroup BIG and 15

Merrill Lynch Domestic Master. Most indices are parts of families of broader indices that can be used to measure global bond portfolios, or may be further subdivided by maturity and/or sector for managing specialized portfolios.

Bond market participants

Bond market participants are similar to participants in most financial markets and are essentially either buyers (debt issuer) of funds or sellers (institution) of funds and often both.

Participants include:-

•

Institutional investors;

•

Governments;

•

Traders; and

•

Individuals

Because of the specificity of individual bond issues, and the lack of liquidity in many smaller issues, the majority of outstanding bonds are held by institutions like

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pension funds, banks and mutual funds. In the United States, approximately 10% of the market is currently held by private individuals.

 Characteristics of Bonds:-

When you purchase a bond, you lend money to the "issuer" (e.g. a large corporation or the government). In return for the loan, the issuer promises to pay you a specified rate of interest during the life of the bond (the coupon rate) and to repay the face value of the bond (the principal) when it matures. Capital values fixed interest securities of can fluctuate. This is because fixed interest securities have a fixed coupon (interest) rate whereas market interest rates fluctuate. If a coupon rate of 9% is higher than the current market yield to maturity of 7%, (based on the markets assessment of the security of the bond relative to other fixed interest security offerings) you would therefore be prepared to pay a premium for the bond (i.e. you would pay more than the face value). If market interest rates then increased to 10% and you were only receiving the 9% coupon rate on your bond, and you then wished to sell it, you would have to sell the bond at a loss (i.e. less than the amount paid for it originally). If you held the bond to maturity you would be repaid the full face value of the bond irrespective of the price you paid, market interest rates or yields to maturity for the same fixed interest security.

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 Types of Bonds

There are many types of bonds from many different issuers.

Bonds have many characteristics such as the way they pay their interest, the market they are issued in, the currency they are payable in, protective features and their legal status. Bond issuers may be governments, corporations, special purpose trusts or even non-profit organizations. Usually it is the type of issuer or the particular nature of a bond that sets it apart in its own category. We briefly discuss some of the main types of bonds below:

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Asset-Backed Securities

Convertible Bonds

Corporate Bonds

Eurobonds

Extendible/Retractable Bonds

Foreign Currency Bonds

Government Bonds

High Yield or "Junk" Bonds

Inflation-Linked Bonds Mortgage-Backed Securities

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 MARKET STRUCTURE The bond market (also known as the debt, credit, or fixed income market) is a financial market where participants buy and sell debt securities, usually in the form of bonds. As of 2006, the size of the international bond market is an estimated $45 trillion, of which the size of the outstanding U.S. bond market debt was $25.2 trillion. Nearly all of the $923 billion average daily trading volume (as of early 2007) in the U.S. bond market takes place between broker-dealers and large institutions in a decentralized, over-the-counter (OTC) market. However, a small number of bonds, primarily corporate, are listed on exchanges. References to the "bond market" usually referto the government bond market, because of its size, liquidity, lack of credit risk and, therefore, sensitivity to interest rates. Because of the inverse relationship between bond valuation and interest rates, the bond market is often used to indicate changes in interest rates or the shape of the yield curve. Bond markets in most countries remain decentralized and lack common exchanges like stock, future and commodity markets. This has occurred, in part, because no two bond issues are exactly alike, and the number of different securities outstanding is far larger. However, the New York Stock Exchange (NYSE) is the largest centralized bond market, representing mostly corporate bonds. The NYSE migrated from the Automated Bond System (ABS) to the NYSE Bonds trading system in April 2007 and expects the number of traded issues to increase from 1000 to 6000.

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Fixed Deposits (FD's)

FD’s are one of the oldest and most common methods of investing. Incase you do not know how it works, you have to give the financial institution a certain sum of money for a certain fixed period of time. After that time period is over you will get the original amount with some interest that you have earned for the time period you invested your money.

Just to give you an idea about the time periods and the interest rates you can earn, you can check this out. It is a link to the ICICI Bank FD interest rate chart. All the major banks and other financial institutions also have different FD offers.

FD’s are not very “liquid” investments. If you invest your money in FD’s, you will not be able to withdraw it until the FD matures. Generally, if you need to remove your money before the maturity of the investment, you will be able to do so but you will loose the interest that you were supposed to earn. There are some FD’s that allow you to claim your interest every month or every 6 months etc. There are many different schemes with many different offers! Besides this, if a particular interest rate is decided at the time of investing and the interest rate goes up while your money is invested; you will not be able to enjoy the higher interest rate.

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However, now-a-days the banks and the financial market are becoming very competitive. You need to check up on the different types of FD schemes available before making any FD investments. There are FD’s offered by non-financial institutions like companies etc. also. These are generally FD’s that will give good rate of returns. They are called Company FD’s.However, the risk involved is also moderately high. However, the companies try to get themselves an AAA rating according to the specifications of the RBI. If a company has an AAA rating, then it can be considered to be a safe investment. (HDFC PREMIUM DEPOSITS).

WHY SHCIL???

Why you would choose SHCIL as a preferred service provider…

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Well integrated front and back office, paper and electronic system. A focused client Relation Team to manage your needs and queries. A single point contact for your comfort. In-House capacity to address all IT needs in terms of software development, maintenance,

back

office

processing,

database

administration,

network

maintenance, backups and disaster recovery. Multilevel security is maintained in software application and guard to access to various data, clients and integrated reports.

Expertise in running processes utilizing digital signature.

Regular Audits internal and external by SEBI, Depositories, Clients and Compliance to rules and regulations.

Constant review and benchmarking of processes to ensure adherences to global best practices. Insurance cover with International re- insurance. Full Confidentiality of business operations.

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How do I buy fixed a company deposit? Company Fixed Deposits forms are available through various broking agencies or directly with the companies.

What is the minimum investment for a company fixed deposit? Minimum investment in a Company Fixed deposit varies from company to company. Normally, the minimum investment is Rs.5,000. For individual investors, there is no upper limit. In case of recurring deposits, the minimum amount is normally Rs.100 per month.

What is the duration of the Company FD scheme? Company Fixed Deposits have varying duration; they may vary from a minimum of 6 months to 5 years or even more.

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All Banks offer fixed deposits schemes with a wide range of tenures for periods from 7 days to 10 years. The term "fixed" in Fixed Deposits (FD) denotes the period of maturity or tenor. Therefore, the depositors are supposed to continue such Fixed Deposits for the length of time for which the depositor decides to keep the money with the bank. However, in case of need, the depositor can ask for closing (or breaking) the fixed deposit prematurely by paying a penalty (usually of 1%, but some banks even do not charge any penalty).

(Soon some banks have

even introduced variable interest fixed deposits. The rate of interest in such deposits will keep on varying with the prevalent market rates i.e. it will go up if market interest rate goes and it will come down if the market rates fall). The rate of interest for Fixed Deposits differs from bank to bank unlike previously when the same were regulated by RBI and all banks used to have the same interest rate structure. The present trends indicate that private sector and foreign banks offer higher rate of interest.

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Risk – Asset Allocation

Traditional Way of Investment 26

Plantation Schemes

IPOs

Bank Deposits Co. FDs

PPF Post office NSS

Bonds/Deben tures Assured High Risk - High Return or Low Risk - Schemes Low Return

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Different Types of investments (Asset Classes)

Structure and size of the markets:-

Today India has two national exchanges, the Bombay Stock Exchange (BSE) and the 28

National Stock Exchange (NSE). Each has fully electronic trading platforms with around 9400 participating broking outfits. Foreign brokers account for 29 of these. There are some 9600 companies listed on the respective exchangeswith a combined market capitalisation near $125.5bn. Any market that has experienced this sort of growth has an equally substantial demand for highly efficient settlement procedures. In India 99.9% of the trades, according to the National Securities Depository, are settled in dematerialized form in a T+2 rolling settlement environments. In addition, trades are guaranteed by the National Clearing Corporation of India Ltd (NSCCL) and Bank of India Shareholding Ltd (BOISL), Clearing Corporation houses of NSE and BSE respectively.

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Chapter 5 :-

 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

Research always starts with a question or a problem. Its purpose is to question through the application of the scientific method. It is a systematic and intensive

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study directed towards a more complete knowledge of the subject studied. Research Methology is the function which links the consumer, customer and public to the marketer through information- information used to identify and define marketing opportunities and problems generate, refine, and evaluate marketing actions, monitor marketing actions, monitor marketing performance and improve understanding of market as a process. Research Methology specifies the information required to address these issues, designs, and the method for collecting information, manage and implemented the data collection process, analysis the results and communicate the findings and their implication. I have prepared our project as descriptive type, as the objective of the study the application of Fixed Deposits and Bonds available in market for investment through selling.

The Marketing Research Process As Research Methology is a systemic and formalized process, it follows a certain sequence of research action. The marketing process has the following steps: 31

 Formulating the problems  Developing objectives of the research  Designing an effective research plan  Data collection techniques  Evaluating the data and preparing  We have collected data by:-



Secondary data.

For my project, I decided on secondary data collection method To know the interest in business with company in my project and creating database of business class people is Nagpur city for company. I decided on Secondary data collection method was used by referring to various websites, books, magazines, journals and daily newspapers for collecting information regarding project under study.

Chapter 6 :-

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 DATA COLLECTION

 DATA COLLECTION After the research methodology, research problem in marketing has been identified and selected; the next step is together the requisite data.

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I have collected all this data as secondary data. To get the knowledge about the Fixed Deposit and Bonds and its applications, I decided to go to the Brochures ,Offer Documents, Information from Internet, Information from books ,Data from News Paper

Sources of Information about Products:-

 Brochures  Offer Documents  Information from Internet  Information from books  Data from News Paper  Data from Magazines

Chapter 7 :-

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 DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS:The research give the information about the Fixed Deposits and Capital Gain Bonds about their Savings and Investment avenues. Which I have showed various Savings Options and the percentage of Households.

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1. DISTRIBUTION OF HOUSEHOLD SAVINGS

Insurance Providend Fund & Pension Fund Currency Bank Deposits Shares & Bonds Govt. Securities Govt. Small Sevings

Figure No.1

Area of Investment Insurance Provident Fund & Pension Fund

% of Household 13.1 13.1

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Currency Bank Deposits Shares & Bonds Govt. Securities Govt. Small Savings

9.1 39.1 1.8 5 18.8

Table No. 1 Explanation: We are saving amount in our income for future expenses but data say that near about 13.1% people and 13.1% people save in Provident Fund & Pension Fund for future security and 9.1% people save in the area of currency and most people are interested to save their income in the Bank Deposits and very least person are interested to save their income in the share market only 1.8% and 5% people are save in Government Security and 18.8% people save in the small saving which is control by government.

2. SALES FIGURE:-

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Achieved Not Achieved

Figure No.2

Target Rs.100000 Achieved Rs.70000 Explanation: SHCIL has made the target 1,00,000 customer in the year 2008-09 but they have achieve only 70,000 customer.

3.

Graph shows % of Interested & not interested

people in the share market. Table No.3

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60%

not Interested

40%

Interested

0%

10%

20%

30%

40%

50%

60%

70%

Series1

Figure No.3

Interested Not Interested

40% 60%

Explanation: Due to financial cerise came that’s way only 40% people are interested and in this trading business risk is more so, 60% people are not interested.

4. Graph shows % of Conversion from FD to Shares.

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90%

not converted

10%

Converte d

0%

20%

40%

60%

80%

100%

Series1

Figure No.4

Converted Not Converted

10% 90%

Explanation: This graph show that 10% people are prefer converted and 90% people are not interested for converting their share.

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INTERPRETATION & ANALYSIS

1. For investment, people prefer instruments backed by low–risk and high security. 2. Bank Deposits is the most preferable way for investment nowadays. 3. People fear to invest in Share market. 4. Banking products are more preferable than Securities. 5. People fear to invest in Private Banks.

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Chapter 8 :-

 FINDINGS AND CONCLUSION

FINDINGS AND CONCLUSION

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Financial markets will sometimes reward you for taking risk and sometimes punish you. The key is to know when it's worth taking the risks, and when it's not.

Bonds are not risk-free, but when stock markets are volatile and dividend warnings abound, they can be a good place to weather the storm. They give you a stable and predictable income.

Your capital is as safe in gilts as it is possible to be.

In corporate bonds, you have the option of higher yields at higher

If you predict the movement of interest rates correctly,

risk.

you can make tax-

free capital gains.

Liquidity is good.

If you don't want to pick bonds yourself, you have the option of investing in bond funds.

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Younger investors might be able to ride out the troughs and peaks of the stock market over decades, and may not find bonds a compelling case. Older investors, however, may need to concentrate on income and on capital preservation over the short term, and for them “the case for bonds may be a powerful one”. In current scenario Investment is one of the most essential need for today, to secure our future in terms of finance. Nowadays Share market is become more risky and no one is predict its moments perfectly and in this situation people start moving toward traditional source of investment i.e. Fixed Deposits for investment. Because:• High Security • Reasonable Return • Low Risk • Variety of products

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Chapter 9 :-

 RECOMMENDATIONS & SUGGESTIONS

RECOMMENDATIONS & SUGGESTIONS

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1. In current situation where Inflation rate is become big problem for normal citizens, in this situation saving money is become tough task. 2. To fight with Inflationary situation investor should invest in Fixed Deposits and in Gold bonds. 3. Fixed Deposits is one of the trusted and secure ways of investment. 4. Company should create awareness in investor about Fixed Deposits. 5. Company’s should come up with more flexible Schemes. 6. Investor should use Fixed Deposits for long term. 7. Companies should focus more on lower class people who have Rs.1000 savings per month. 8. Companies should target the aged people above 50-60.b’coz 9. Women should also be given some additional interest rate.

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Chapter 10 :-

 Limitation of the study

LIMITATION OF THE STUDY Some of the difficulties and limitations faced by me while preparing project are follows: 47



Lack of awareness among the people – This is the biggest limitation

found in this sector. Most of the people are not aware about the importance of the Fixed Deposits & Bonds in their life.

 Perception of the people towards Fixed Deposits – People still consider Share just as Fixed Deposits is an old age scheme.

 Lack of awareness about the earning opportunity in the Banking Sector – People still today are not aware about the earning opportunity that the Banking sector gives.

 Increased competition – Today the competition in banking market has became very stiff. Currently the Large Number of companies working in India including the HDFC, ICICI, AXIS, are the main players in the market. Today each and every company is trying to increase their

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Chapter 11:-

 Appendices

 Bibliography

Websites that I have refer to collect information for this project. 49

•

www.shcil.com

• Bonds101.bonds.yahoo.com •

www.businessweek.com

•

www.hdfcbank.com

 Books that I referred during this project to get the information about various elements … •

Basics of Investment

• Brealey Myers – Tata Mc-Graw – Hill • Financial Management – Knan N Jain • Financial Management- I M. Pandey

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