A PROJECT ON CAPITAL MARKET

Submitted To:
Punjab Technical University, Jalandhar.
In partial fullfilment of the degree in Master of Business Administration

(MBA).
Project submitted to:

Submitted By:

Pooja M. Kohli

Shelly jumba

Executive director

MBA 3rd semester

Ludhiana stock exchange Roll no-94372236511

Lse code no: A-92
(Session 2009-2010)
CT institute of management and technology, Jalandhar

GUIDE CERTIFICATE

It is hereby certified that the project report on CAPITAL MARKET, being submitted
by Shelly jumba student of the degree of Master of Business Administration (3 rd Sem)
of CT Institute of Management and Information Technology, Jalandhar which affiliated
to Punjab Technical University, Jalandhar is an original work carried out successfully
under my guidance and supervision and that no part of this project has been
submitted for any other degree/ diploma. The sincerely efforts put in during the course
of investigation is hereby acknowledged.

Project guide
Miss Shivani jagneja
Lect. CTIM& IT

DECLARATION
This project entitled Empirical Study on CAPITAL MARKET is submitted in partial
fulfilment of the requirement for the award of degree of master of business
administration of Punjab technical university, Jalandhar.
This research work is done by SHELLY JUMBA, .This research work has been done only for
MBA only and none of this research work has been submitted for any other degree.
The assistance and help during the execution of the project has been fully acknowledged.

SHELLY JUMBA
MBA 3rd SEM
ROLL NO-94372236511

ACKNOWLEDGEMENT

We take this opportunity to express my deep sense of gratitude to all our friends and seniors who
helped and guide me to complete this project successfully. I am highly grateful and indebted to our
project guide Lect. Miss Shivani jagneja, Mr. Kuber kansal (guide & co-ordinator) and

Mr Atul chikersal (guide & co-ordinator) for their excellent and expert guidance in
helping us in completion of project report.

Shelly jumba

PREFACE
The successful completion of this project was a unique experience for us
because by visiting many place and interacting various person, I achieved a
better knowledge about this project. The experience which I gained by doing this
project was essential at this turning point of my carrier this project is being
submitted which content detailed analysis of the research under taken by me.
The research provides an opportunity to the student to devote her skills
knowledge and competencies required during the technical session.
The research is on the topic Capital market.

Index
SerialParticulars

Page

No.

No.

11

Capital market

12

Role of capital market in India

13

Factors affecting capital market in India

14

India stock exchange overview

15

Capital market efficiency

16

Mutual funds as a part of capital market

17

Concepts of mutual funds

18

Categories of mutual funds

19

Investment strategies for mutual funds

10

Research methodology

11

Data analysis and interpretation

CAPITAL MARKET

The capital market is the market

for securities, where

Companies and governments can raise long-term funds. It is a market in which money
is lent for periods longer than a year. A nation's capital market includes such financial
institutions as banks, insurance companies, and stock exchanges that channel longterm investment funds to commercial and industrial borrowers. Unlike the money
market, on which lending is ordinarily short term, the capital market typically finances
fixed investments like those in buildings and machinery.
Nature and Constituents:
The capital market consists of number of individuals and institutions (including the
government) that canalize the supply and demand for long-term capital and claims on
capital. The stock exchange, commercial banks, co-operative banks, saving banks,
development banks, insurance companies, investment trust or companies, etc., are
important constituents of the capital markets.

The capital market, like the money market, has three important
Components, namely the suppliers of loanable funds, the borrowers and the
Intermediaries who deal with the leaders on the one hand and the Borrowers on the
other.
The demand for capital comes mostly from agriculture, industry, trade The
government. The predominant form of industrial organization developed Capital Market
becomes a necessary infrastructure for fast industrialization. Capital market not
concerned solely with the issue of new claims on capital, But also with dealing in
existing claims.

Debt or Bond market

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 2009, the size of the worldwide bond market (total debt outstanding) is an
estimated $82.2 trillion

[1]

, of which the size of the outstanding U.S. bond market debt

was $31.2 trillion according to BIS (or alternatively $34.3 trillion according to SIFMA).
Nearly all of the $822 billion average daily trading volume 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 refer to 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.

Contents
1

1 Market structure

2 Types of bond markets

3 Bond market participants

4 Bond market size

5 Bond market volatility

6 Bond market influence

7 Bond investments

8 Bond indices

Market structure
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 variety of bond securities outstanding greatly exceeds that of stocks.

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.
Besides other causes, the decentralized market structure of the corporate and municipal bond
markets, as distinguished from the stock market structure, results in higher transaction costs and
less liquidity. A study performed by Profs Harris and Piwowar in 2004, Secondary Trading Costs in
the Municipal Bond Market, reached the following conclusions: (1) "Municipal bond trades are also
substantially more expensive than similar sized equity trades. We attribute these results to the lack
of price transparency in the bond markets. Additional cross-sectional analyses show that bond
trading costs decrease with credit quality and increase with instrument complexity, time to maturity,
and time since issuance." (2) "Our results show that municipal bond trades are significantly more
expensive than equivalent sized equity trades. Effective spreads in municipal

bonds average about two percent of price for retail size trades of 20,000 dollars and
about one percent for institutional trade size trades of 200,000 dollars."
Types of bond markets
The Securities Industry and Financial Markets Association (SIFMA) classifies the
broader bond market into five specific bond markets.
1 Corporate
2 Government & agency
3 Municipal
4 Mortgage backed, asset backed, and collateralized debt obligation
5 Funding
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:
1 Institutional investors
2 Governments
3 Traders
4 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 pension
funds, banks and mutual funds. In the United States, approximately 10% of the market
is currently held by private individuals.

Bond market size

Amounts outstanding on the global bond market increased 10% in 2009 to a record $91 trillion.
Domestic bonds accounted for 70% of the total and international bonds for the remainder. The
US was the largest market with 39% of the total followed by Japan (18%). Mortgage-backed
bonds accounted for around a quarter of outstanding bonds in the US in 2009 or some $9.2
trillion. The sub-prime portion of this market is variously estimated at between $500bn and $1.4
trillion. Treasury bonds and corporate bonds each accounted for a fifth of US domestic bonds.
In Europe, public sector debt is substantial in Italy (93% of GDP), Belgium (63%) and France
(63%). Concerns about the ability of some countries to continue to finance their debt came to
the forefront in late 2009. This was partly a result of large debt taken on by some governments
to reverse the economic downturn and finance bank bailouts. The outstanding value of
international bonds increased by 13% in 2009 to $27 trillion. The $2.3 trillion issued during the
year was down 4% on the 2008 total, with activity declining in the second half of the year.

Bond market volatility

For market participants who own a bond, collect the coupon and hold it to maturity, market volatility
is irrelevant; principal and interest are received according to a pre-determined schedule.

But participants who buy and sell bonds before maturity are exposed to many risks, most
importantly changes in interest rates. When interest rates increase, the value of existing bonds
fall, since new issues pay a higher yield. Likewise, when interest rates decrease, the value of
existing bonds rise, since new issues pay a lower yield. This is the fundamental concept of
bond market volatility: changes in bond prices are inverse to changes in interest rates.
Fluctuating interest rates are part of a country's monetary policy and bond market volatility is a
response to expected monetary policy and economic changes.
Economists' views of economic indicators versus actual released data contribute to market
volatility. A tight consensus is generally reflected in bond prices and there is little price movement in
the market after the release of "in-line" data. If the economic release differs from the consensus
view the market usually undergoes rapid price movement as participants interpret the data.
Uncertainty (as measured by a wide consensus) generally brings more volatility before

and after an economic release. Economic releases vary in importance and impact
depending on where the economy is in the business cycle.
Bond market influence
Bond markets determine the price in terms of yield that a borrower must pay in able to
receive funding. In one notable instance, when President Clinton attempted to increase
the US budget deficit in the 1990s, it led to such a sell-off (decreasing prices; increasing
yields) that he was forced to abandon the strategy and instead balance the budget.
I used to think that if there was reincarnation, I wanted to come back as the president or
the pope or as a .400 baseball hitter. But now I would like to come back as the bond

market. You can intimidate everybody.

James Carville, political advisor to President Clinton, Bloomberg

[6]

Bond investments
Investment companies allow individual investors the ability to participate in the bond
markets through bond funds, closed-end funds and unit-investment trusts. In 2006
total bond fund net inflows increased 97% from $30.8 billion in 2005 to $60.8 billion in
[Link] -traded funds (ETFs) are another alternative to trading or investing
directly in a bond issue. These securities allow individual investors the ability to
overcome large initial and incremental trading sizes.
Bond indices
Main article: Bond market index
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 Barclays Aggregate, Citigroup BIG and 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.

STOCK OR EQUITY MARKET

A stock market or equity market is a public market (a loose network of economic
transactions, not a physical facility or discrete entity) for the trading of company stock
and derivatives at an agreed price; these are securities listed on a stock exchange as
well as those only traded privately.
The size of the world stock market was estimated at about $36.6 trillion US at the beginning of
October 2008. The total world derivatives market has been estimated at about $791 trillion face
or nominal value, 11 times the size of the entire world economy. The value of the derivatives
market, because it is stated in terms of notional values, cannot be directly compared to a stock
or a fixed income security, which traditionally refers to an actual value. Moreover, the vast
majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is
offset by a comparable derivative 'bet' on the event not occurring). Many such relatively illiquid
securities are valued as marked to model, rather than an actual market price.
The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual
organization specialized in the business of bringing buyers and sellers of the organizations to a
listing of stocks and securities together. The largest stock market in the United States, by market cap
is the New York Stock Exchange, NYSE, while in Canada, it is the Toronto Stock Exchange. Major
European examples of stock exchanges include the London Stock Exchange, Paris Bourse, and
the Deutsche Brse. Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock
Exchange, the Shanghai Stock Exchange, and the Bombay Stock Exchange. In Latin America,

there are such exchanges as the BM&F Bovespa and the BMV.

Contents
1

1 Trading

2 Market participants

3 History

4 Importance of stock market

1o 4.1 Function and purpose
2o 4.2 Relation of the stock market to the modern financial system
3o 4.3 The stock market, individual investors, and financial risk

Trading
Participants in the stock market range from small individual stock investors to large
hedge fund traders, who can be based anywhere. Their orders usually end up with a
professional at a stock exchange, who executes the order.
Some exchanges are physical locations where transactions are carried out on a trading
floor, by a method known as open outcry. This type of auction is used in stock
exchanges and commodity exchanges where traders may enter "verbal" bids and
offers simultaneously. The other type of stock exchange is a virtual kind, composed of a
network of computers where trades are made electronically via traders.
Actual trades are based on an auction market model where a potential buyer bids a specific price
for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market
means you will accept any ask price or bid price for the stock, respectively.) When the bid and

ask prices match, a sale takes place, on a first-come-first-served basis if there

are multiple bidders or askers at a given price.
The purpose of a stock exchange is to facilitate the exchange of securities between
buyers and sellers, thus providing a marketplace (virtual or real). The exchanges provide
real-time trading information on the listed securities, facilitating price discovery.
The New York Stock Exchange is a physical exchange, also referred to as a listed
exchange only stocks listed with the exchange may be traded. Orders enter by way of
exchange members and flow down to a floor broker, who goes to the floor trading post
specialist for that stock to trade the order. The specialist's job is to match buy and sell
orders using open outcry. If a spread exists, no trade immediately takes place--in this case
the specialist should use his/her own resources (money or stock) to close the difference
after his/her judged time. Once a trade has been made the details are reported on the
"tape" and sent back to the brokerage firm, which then notifies the investor who placed the
order. Although there is a significant amount of human contact in this process, computers
play an important role, especially for so-called "program trading".
The NASDAQ is a virtual listed exchange, where all of the trading is done over a computer
network. The process is similar to the New York Stock Exchange. However, buyers and
sellers are electronically matched. One or more NASDAQ market makers will always
provide a bid and ask price at which they will always purchase or sell 'their' stock.
The Paris Bourse, now part of Euronext, is an order-driven, electronic stock exchange. It was
automated in the late 1980s. Prior to the 1980s, it consisted of an open outcry exchange.
Stockbrokers met on the trading floor or the Palais Brongniart. In 1986, the CATS trading
system was introduced, and the order matching process was fully automated.

From time to time, active trading (especially in large blocks of securities) have moved away
from the 'active' exchanges. Securities firms, led by UBS AG, Goldman Sachs Group Inc. and
Credit Suisse Group, already steer 12 percent of U.S. security trades away from the exchanges
to their internal systems. That share probably will increase to 18 percent by 2010 as more
investment banks bypass the NYSE and NASDAQ and pair buyers and sellers of securities

themselves, according to data compiled by Boston-based Aite Group LLC, a

brokerage-industry consultant.
Now that computers have eliminated the need for trading floors like the Big Board's, the
balance of power in equity markets is shifting. By bringing more orders in-house, where
clients can move big blocks of stock anonymously, brokers pay the exchanges less in
fees and capture a bigger share of the $11 billion a year that institutional investors pay
in trading commissions as well as the surplus of the century had taken place.

Market participants
A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy
businessmen, with long family histories (and emotional ties) to particular corporations. Over
time, markets have become more "institutionalized"; buyers and sellers are largely institutions
(e.g., pension funds, insurance companies, mutual funds, index funds, exchange-traded
funds, hedge funds, investor groups, banks and various other financial institutions). The rise
of the institutional investor has brought with it some improvements in market operations. Thus,
the government was responsible for "fixed" (and exorbitant) fees being markedly reduced for
the 'small' investor, but only after the large institutions had managed to break the brokers' solid
front on fees. (They then went to 'negotiated' fees, but only for large institutions.

However, corporate governance (at least in the West) has been very much adversely
affected by the rise of (largely 'absentee') institutional 'owners'.

History
Established in 1875, the Bombay Stock
Exchange is Asia's first stock exchange.

In 12th century France the courratiers de change were concerned with managing and
regulating the debts of agricultural communities on behalf of the banks. Because these men
also traded with debts, they could be called the first brokers. A common misbelief is that in late
13th century Bruges commodity traders gathered inside the house of a man called Van der
Beurze, and in 1309 they became the "Brugse Beurse", institutionalizing what had been, until
then, an informal meeting, but actually, the family Van der Beurze had a building in Antwerp
where those gatherings occurred; the Van der Beurze had Antwerp, as most of the merchants
of that period, as their primary place for trading. The idea quickly spread around Flanders and
neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam.
In the middle of the 13th century, Venetian bankers began to trade in government securities.
In 1351 the Venetian government outlawed spreading rumors intended to lower the price of
government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in
government securities during the 14th century. This was only possible because these were
independent city states not ruled by a duke but a council of influential citizens. The Dutch later
started joint stock companies, which let shareholders invest in business ventures and get a
share of their profits - or losses. In 1602, the Dutch East India Company issued the first share
on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds.

The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the
first stock exchange to introduce continuous trade in the early 17th century. The Dutch
"pioneered short selling, option trading, debt-equity swaps, merchant banking, unit
trusts and other speculative instruments, much as we know them" There are now
stock markets in virtually every developed and most developing economies, with the
world's biggest markets being in the United States, United Kingdom, Japan, India,
China, Canada, Germany, France, South Korea and the Netherlands.

IMPORTANCE OF
STOCK MARKET

Function and purpose

The main trading room of the Tokyo Stock Exchange, where trading is currently
completed through computers.
The stock market is one of the most important sources for companies to raise money. This
allows businesses to be publicly traded, or raise additional capital for expansion by selling
shares of ownership of the company in a public market. The liquidity that an exchange provides
affords investors the ability to quickly and easily sell securities. This is an attractive feature of
investing in stocks, compared to other less liquid investments such as real estate.
History has shown that the price of shares and other assets is an important part of the
dynamics of economic activity, and can influence or be an indicator of social mood. An
economy where the stock market is on the rise is considered to be an up-and-coming
economy. In fact, the stock market is often considered the primary indicator of a country's
economic strength and development. Rising share prices, for instance, tend to be associated
with increased business investment and vice versa. Share prices also affect the wealth of
households and their consumption. Therefore, central banks tend to keep an eye on the
control and behavior of the stock market and, in general, on the smooth operation of financial
system functions. Financial stability is the raison d'tre of central banks.
Exchanges also act as the clearinghouse for each transaction, meaning that they collect and
deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to
an individual buyer or seller that the counterparty could default on the transaction.
The smooth functioning of all these activities facilitates economic growth in that lower costs and
enterprise risks promote the production of goods and services as well as employment. In this way
the financial system contributes to increased prosperity. An important aspect of modern financial
markets, however, including the stock markets, is absolute discretion. For example, American stock
markets see more unrestrained acceptance of any firm than in smaller markets. For example,
Chinese firms that possess little or no perceived value to American society profit American bankers
on Wall Street, as they reap large commissions from the placement, as well as the Chinese

company which yields funds to invest in China. However, these companies accrue

no intrinsic value to the long-term stability of the American economy, but rather only short-term
profits to American business men and the Chinese; although, when the foreign company has a
presence in the new market, this can benefit the market's citizens. Conversely, there are very
few large foreign corporations listed on the Toronto Stock Exchange TSX, Canada's largest
stock exchange. This discretion has insulated Canada to some degree to worldwide financial
conditions. In order for the stock markets to truly facilitate economic growth via lower costs and
better employment, great attention must be given to the foreign participants being allowed in.

Relation of the stock market to the modern financial system

The financial systems in most western countries has undergone a remarkable
transformation. One feature of this development is disintermediation. A portion of the
funds involved in saving and financing, flows directly to the financial markets instead
of being routed via the traditional bank lending and deposit operations. The general
public's heightened interest in investing in the stock market, either directly or through
mutual funds, has been an important component of this process.
Statistics show that in recent decades shares have made up an increasingly large
proportion of households' financial assets in many countries. In the 1970s, in Sweden,
deposit accounts and other very liquid assets with little risk made up almost 60 percent of
households' financial wealth, compared to less than 20 percent in the 2000s. The major part
of this adjustment in financial portfolios has gone directly to shares but a good deal now
takes the form of various kinds of institutional investment for groups of individuals, e.g.,
pension funds, mutual funds, hedge funds, insurance investment of premiums, etc.

The trend towards forms of saving with a higher risk has been accentuated by new rules for
most funds and insurance, permitting a higher proportion of shares to bonds. Similar
tendencies are to be found in other industrialized countries. In all developed economic
systems, such as the European Union, the United States, Japan and other developed
nations, the trend has been the same: saving has moved away from traditional (government
insured) bank deposits to more risky securities of one sort or another.

The stock market, individual investors, and financial risk

Riskier long-term saving requires that an individual possess the ability to manage the associated
increased risks. Stock prices fluctuate widely, in marked contrast to the stability of (government
insured) bank deposits or bonds. This is something that could affect not only the individual investor
or household, but also the economy on a large scale. The following deals with some of the risks of
the financial sector in general and the stock market in particular. This is certainly more important
now that so many newcomers have entered the stock market, or have acquired other 'risky'
investments (such as 'investment' property, i.e., real estate and collectables).

With each passing year, the noise level in the stock market rises. Television commentators,
financial writers, analysts, and market strategists are all overtaking each other to get
investors' attention. At the same time, individual investors, immersed in chat rooms and
message boards, are exchanging questionable and often misleading tips. Yet, despite all
this available information, investors find it increasingly difficult to profit. Stock prices
skyrocket with little reason, then plummet just as quickly, and people who have turned to
investing for their children's education and their own retirement become frightened.
Sometimes there appears to be no rhyme or reason to the market, only folly.
This is a quote from the preface to a published biography about the long-term value-oriented
stock investor Warren Buffett. [9] Buffett began his career with $100, and $100,000 from
seven limited partners consisting of Buffett's family and friends. Over the years he has built
himself a multi-billion-dollar fortune. The quote illustrates some of what has been happening in
the stock market during the end of the 20th century and the beginning of the 21st century.

Primary Market
, also called the new issue market, is the market for issuing new securities. Many
companies, especially small and medium scale, enter the primary market to raise
money from the public to expand their businesses. They sell their securities to the
public through an initial public offering. The securities can be directly bought from the
shareholders, which is not the case for the secondary market. The primary market is a
market for new capitals that will be traded over a longer period.
In the primary market, securities are issued on an exchange basis. The underwriters,
that is, the investment banks, play an important role in this market: they set the initial
price range for a particular share and then supervise the selling of that share.

Investors can obtain news of upcoming shares only on the primary market. The issuing firm
collects money, which is then used to finance its operations or expand business, by selling its
shares. Before selling a security on the primary market, the firm must fulfill all the requirements

regarding the exchange.

After trading in the primary market the security will then enter the secondary
market, where numerous trades happen every day. The primary market
accelerates the process of capital formation in a country's economy.
The primary market categorically excludes several other new long-term finance sources, such
as loans from financial institutions. Many companies have entered the primary market to earn
profit by converting its capital, which is basically a private capital, into a public one, releasing
securities to the public. This phenomena is known as "public issue" or "going public."

There are three methods though which securities can be issued on the primary
market: rights issue, Initial Public Offer (IPO), and preferential issue. A company's
new offering is placed on the primary market through an initial public offer.

Functioning of Primary Market

Primary Mortgage Market

Primary Target Market

Transaction Costs In Primary

Market

PL in Primary Market

Revival Of Indian Primary

Problems Of Indian Primary

Market

Investment In Primary Market

Primary Money market

International Primary Market

Association

Market

IPO Primary Market

primary Securities Market

Primary Capital Market

Secondary Market
is the market where, unlike the primary market, an investor can buy a security directly from
another investor in lieu of the issuer. It is also referred as "after market". The securities initially
are issued in the primary market, and then they enter into the secondary market.
All the securities are first created in the primary market and then, they enter into the secondary
market. In the New York Stock Exchange, all the stocks belong to the secondary market.

In other words, secondary market

is a place where any type of used goods is available. In the secondary market shares are
maneuvered from one investor to other, that is, one investor buys an asset from another
investor instead of an issuing corporation. So, the secondary market should be liquid.

Example of Secondary market:

In the New York Stock Exchange, in the United States of America, all the securities
belong to the secondary market
.

Importance of Secondary Market:

Secondary Market has an important role to play behind the developments of an efficient
capital market. Secondary market connects investors' favoritism for liquidity with the capital
users' wish of using their capital for a longer period. For example, in a traditional
partnership, a partner can not access the other partner's investment but only his or her
investment in that partnership, even on an emergency basis. Then if he or she may breaks
the ownership of equity into parts and sell his or her respective proportion to another
investor. This kind of trading is facilitated only by the secondary market

ROLE
OF
CAPITAL
MARKET

The primary role of the capital market is to raise long-term funds for governments,
banks, and corporations while providing a platform for the trading of securities.

This fundraising is regulated by the performance of the stock and bond markets
within the capital market. The member organizations of the capital market may issue
stocks and bonds in order to raise funds. Investors can then invest in the capital
market by purchasing those stocks and bonds.
The capital market, however, is not without risk. It is important for investors to understand
market trends before fully investing in the capital market. To that end, there are various
market indices available to investors that reflect the present performance of the market.

Regulation of the Capital Market

Every capital market in the world is monitored by financial regulators and their respective
governance organization. The purpose of such regulation is to protect investors from fraud
and deception. Financial regulatory bodies are also charged with minimizing financial
losses, issuing licenses to financial service providers, and enforcing applicable laws.

The Capital Markets Influence on International Trade

Capital market investment is no longer confined to the boundaries of a single nation.
Todays corporations and individuals are able, under some regulation, to invest in the
capital market of any country in the world. Investment in foreign capital markets has
caused substantial enhancement to the business of international trade.
The Primary and Secondary Markets
The capital market is also dependent on two sub-markets the primary market and the secondary
market. The primary market deals with newly issued securities and is responsible for generating new
long-term capital. The secondary market handles the trading of previously-issued securities, and
must remain highly liquid in nature because most of the securities are sold by investors. A

capital market with high liquidity and high transparency is predicated upon a
secondary market with the same qualities.

ROLE OF CAPITAL MARKET IN INDIA:

Indias growth story has important implications for the capital market, which has grown
sharply with respect to several parameters amounts raised number of stock exchanges
and other intermediaries, listed stocks, market capitalization, trading volumes and
turnover, market instruments, investor population, issuer and intermediary profiles.
The capital market consists primarily of the debt and equity markets. Historically, it contributed
significantly to mobilizing funds to meet public and private companies financing requirements.
The introduction of exchange-traded derivative instruments such as options and futures has
enabled investors to better hedge their positions and reduce risks.
Indias debt and equity markets rose from 75 per cent in 1995 to 130 per cent of GDP in 2005.
But the growth relative to the US, Malaysia and South Korea remains low and largely skewed,
indicating immense latent potential. Indias debt markets comprise government bonds and the
corporate bond market (comprising PSUs, corporates, financial institutions and banks).

India compares well with other emerging economies in terms of sophisticated market design
of equity spot and derivatives market, widespread retail participation and resilient liquidity.

SEBIs measures such as submission of quarterly compliance reports, and company

valuation on the lines of the Sarbanes-Oxley Act have enhanced corporate
governance. But enforcement continues to be a problem because of limited trained
staff and companies not being subjected to substantial fines or legal sanctions.
Given the booming economy, large skilled labour force, reliable business community, continued
reforms and greater global integration vindicated by the investment-grade ratings of Moodys

and Fitch, the net cumulative portfolio flows from 2003-06 (bonds and equities)
amounted to $35 billion.
The number of foreign institutional investors registered with SEBI rose from none in
1992-93 to 528 in 2000-01, to about 1,000 in 2006-07.
Indias stock market rose five-fold since mid-2003 and outperformed world indices with
returns far outstripping other emerging markets, such as Mexico (52 per cent), Brazil
(43 per cent) or GCC economies such as Kuwait (26 per cent) in FY-06.
In 2006, Indian companies raised more than $6 billion on the BSE, NSE and other regional
stock exchanges. Buoyed by internal economic factors and foreign capital flows, Indian
markets are globally competitive, even in terms of pricing, efficiency and liquidity.

US sub prime crisis:

The financial crisis facing the Wall Street is the worst since the Great Depression and
will have a major impact on the US and global economy. The ongoing global financial
crisis will have a domino effect and spill over all aspects of the economy. Due to the
Western worlds messianic faith in the market forces and deregulation, the market
friendly governments have no choice but to step in.
The top five investment banks in the US have ceased to exist in their previous forms. Bears
Stearns was taken over some time ago. Fannie Mae and Freddie Mac are nationalised to
prevent their collapse. Fannie and Freddie together underwrite half of the home loans in the
United States, and the sum involved is of $ 3 trillionabout double the entire annual output of
the British economy. This is the biggest rescue operation since the credit crunch began.
Lehman Brothers, an investment bank with a 158 year-old history, was declared bankrupt;
Merrill Lynch, another Wall Street icon, chose to pre-empt a similar fate by deciding to sell to
the Bank of America; and Goldman Sachs and Morgan Stanley have decided to transform
themselves into ordinary deposit banks. AIG, the worlds largest insurance company, has
survived through the injection of funds worth $ 85 billion from the US Government.

The question arises: why has this happened?

Besides the cyclical crisis of capitalism, there are some recent factors which have
contributed towards this crisis. Under the so-called innovative approach, financial
institutions systematically underestimated risks during the boom in property prices, which
makes such boom more prolonged. This relates to the shortsightedness of speculators and
their unrestrained greed, and they, during the asset price boom, believed that it would stay
forever. This resulted in keeping the risk aspects at a minimum and thus resorting to more
and more risk taking financial activities. Loans were made on the basis of collateral whose
value was inflated by a bubble. And the collateral is now worth less than the loan. Credit
was available up to full value of the property which was assessed at inflated market prices.
Credits were given in anticipation that rising property prices will continue. Under looming
recession and uncertainty, to pay back their mortgage many of those who engaged in such
an exercise are forced to sell their houses, at a time when the banks are reluctant to lend
and buyers would like to wait in the hope that property prices will further come down. All
these factors would lead to a further decline in property prices.

Effect of the subprime crisis on India:

Globalization has ensured that the Indian economy and financial markets cannot stay
insulated from the present financial crisis in the developed economies.
In the light of the fact that the Indian economy is linked to global markets through a full
float in current account ( trade and services) and partial float in capital account (debt
and equity), we need to analyze the impact based on three critical factors: Availability of
global liquidity; demand for India investment and cost thereof and decreased consumer
demand affecting Indian exports.
The concerted intervention by central banks of developed countries in injecting liquidity is
expected to reduce the unwinding of India investments held by foreign entities, but fresh

investment

flows into

India are

in

doubt.

The impact of this will be three-fold: The element of GDP growth driven by off-shore
flows (along with skills and technology) will be diluted; correction in the asset prices
which were hitherto pushed by foreign investors and demand for domestic liquidity
putting pressure on interest rates
.
While the global financial system takes time to nurse its wounds leading to low
demand for investments in emerging markets, the impact will be on the cost and
related risk premium. The impact will be felt both in the trade and capital account.
Indian companies which had access to cheap foreign currency funds for financing their
import and export will be the worst hit. Also, foreign funds (through debt and equity) will
be available at huge premium and would be limited to blue-chip companies.

The impact of which, again, will be three-fold: Reduced capacity expansion leading to
supply side pressure; increased interest expenses to affect corporate profitability and
increased demand for domestic liquidity putting pressure on the interest rates.
Consumer demand in developed economies is certain to be hurt by the present crisis,
leading to lower demand for Indian goods and services, thus affecting the Indian exports.
The impact of which, once again, will be three-fold: Export-oriented units will be the worst hit
impacting employment; reduced exports will further widen the trade gap to put pressure on rupee
exchange rate and intervention leading to sucking out liquidity and pressure on interest rates.

The impact on the financial markets will be the following: Equity market will continue to
remain in bearish mood with reduced off-shore flows, limited domestic appetite due to liquidity
pressure and pressure on corporate earnings; while the inflation would stay under control,
increased demand for domestic liquidity will push interest rates higher and we are likely to
witness gradual rupee depreciation and depleted currency reserves. Overall, while RBI would

inject liquidity through CRR/SLR cuts, maintaining growth beyond 7% will be a struggle.
The banking sector will have the least impact as high interest rates, increased demand for rupee
loans and reduced statutory reserves will lead to improved NIM while, on the other hand, other
income from cross-border business flows and distribution of investment products will take a hit.

Banks with capabilities to generate low cost CASA and zero cost float funds will gain
the most as revenues from financial intermediation will drive the banks profitability.
Given the dependence on foreign funds and off-shore consumer demand for the India
growth story, India cannot wish away from the negative impact of the present global
financial crisis but should quickly focus on alternative remedial measures to limit
damage and look in-wards to sustain growth!
Role of capital market during the present crisis:
In addition to resource allocation, capital markets also provided a medium for risk
management by allowing the diversification of risk in the economy. The wellfunctioning capital market improved information quality as it played a major role in
encouraging the adoption of stronger corporate governance principles, thus
supporting a trading environment, which is founded on integrity.
liquid markets make it possible to obtain financing for capital-intensive projects
with long gestation periods..
For a long time, the Indian market was considered too small to warrant much attention. However,
this view has changed rapidly as vast amounts of international investment have poured into our
markets over the last decade. The Indian market is no longer viewed as a static universe but as a
constantly evolving market providing attractive opportunities to the global investing community.
Now during the present financial crisis, we saw how capital market stood still as the symbol of
better risk management practices adopted by the Indians. Though we observed a huge fall in the

sensex and other stock market indicators but that was all due to low confidence
among the investors. Because balance sheet of most of the Indian companies listed
in the sensex were reflecting profit even then people kept on withdrawing money.
While there was a panic in the capital market due to withdrawal by the FIIs, we saw
Indian institutional investors like insurance and mutual funds coming for the rescue
under SEBI guidelines so that the confidence of the investors doesnt go low.
SEBI also came up with various norms including more liberal policies regarding participatory
notes, restricting the exit from close ended mutual funds etc. to boost the investment.

While talking about currency crisis, the rupee kept on depreciating against the dollar
mainly due to the withdrawals by FIIs. So , the capital market tried to attract FIIs once
again. SEBI came up with many revolutionary reforms to attract the foreign investors
so that the depreciation of rupee could be put to hault.

FACTORS
AFFECTING
CAPITAL MARKET
IN INDIA

The capital market is affected by a range of factors . Some of the factors which
influence capital market are as follows:A)Performance of domestic companies:The performance of the companies or rather corporate earnings is one of the factors
which has direct impact or effect on capital market in a country. Weak corporate earnings
indicate that the demand for goods and services in the economy is less due to slow growth
in per capita income of people . Because of slow growth in demand there is slow growth in
employment which means slow growth in demand in the near future. Thus weak corporate
earnings indicate average or not so good prospects for the economy as a whole in the near
term. In such a scenario the investors ( both domestic as well as foreign ) would be wary to
invest in the capital market and thus there is bear market like situation. The opposite case
of it would be robust corporate earnings and its positive impact on the capital market.
The corporate earnings for the April June quarter for the current fiscal has been good.
The companies like TCS, Infosys,Maruti Suzuki, Bharti Airtel, ACC, ITC, Wipro,HDFC,Binani
cement, IDEA, Marico Canara Bank, Piramal Health, India cements , Ultra Tech, L&T, CocaCola, Yes Bank, Dr. Reddys Laboratories, Oriental Bank of Commerce, Ranbaxy, Fortis, Shree
Cement ,etc have registered growth in net profit compared to the corresponding quarter a year
ago. Thus we see companies from Infrastructure sector, Financial Services, Pharmaceutical
sector, IT Sector, Automobile sector, etc. doing well . This across the sector growth indicates
that the Indian economy is on the path of recovery which has been positively reflected in the
stock market( rise in sensex & nifty) in the last two weeks. (July 13-July 24).

B) Environmental Factors :Environmental Factor in Indias context primarily means- Monsoon . In India around 60 % of
agricultural production is dependent on monsoon. Thus there is heavy dependence on monsoon.
The major chunk of agricultural production comes from the states of Punjab , Haryana & Uttar
Pradesh. Thus deficient or delayed monsoon in this part of the country would directly affect the
agricultural output in the country. Apart from monsoon other natural calamities like Floods, tsunami,
drought, earthquake, etc. also have an impact on the capital market of a country.

The Indian Met Department (IMD) on 24 th June stated that India would receive only 93
% rainfall of Long Period Average (LPA). This piece of news directly had an impact on
Indian capital market with BSE Sensex falling by 0.5 % on the 25 th June . The major
losers were automakers and consumer goods firms since the below normal monsoon
forecast triggered concerns that demand in the crucial rural heartland would take a hit.
This is because a deficient monsoon could seriously squeeze rural incomes, reduce the
demand for everything from motorbikes to soaps and worsen a slowing economy.
C) Macro Economic Numbers :The macro economic numbers also influence the capital market. It includes Index of Industrial
Production (IIP) which is released every month, annual Inflation number indicated by Wholesale
Price Index (WPI) which is released every week, Export Import numbers which are declared
every month, Core Industries growth rate ( It includes Six Core infrastructure industries Coal,
Crude oil, refining, power, cement and finished steel) which comes out every month, etc. This
macro economic indicators indicate the state of the economy and the direction in which the
economy is headed and therefore impacts the capital market in India.

A case in the point was declaration of core industries growth figure. The six Core
Infrastructure Industries Coal, Crude oil, refining, finished steel, power & cement grew
6.5% in June , the figure came on the 23 rd of July and had a positive impact on the capital
market with the Sensex and nifty rising by 388 points & 125 points respectively.

D) Global Cues :In this world of globalization various economies are interdependent and interconnected.
An event in one part of the world is bound to affect other parts of the world , however
the magnitude and intensity of impact would vary.
Thus capital market in India is also affected by developments in other parts of the world
i.e. U.S. , Europe, Japan , etc.
Global cues includes corporate earnings of MNCs, consumer confidence index in developed
countries, jobless claims in developed countries, global growth outlook given by various

agencies like IMF, economic growth of major economies, price of crude oil, credit
rating of various economies given by Moodys, S & P, etc.
An obvious example at this point in time would be that of subprime crisis & recession.
Recession started in U.S. and some parts of the Europe in early 2008 .Since then it has
impacted all the countries of the world- developed, developing, less- developed and
even emerging economies.
E) Political stability and government policies:For any economy to achieve and sustain growth it has to have political stability and progrowth government policies. This is because when there is political stability there is
stability and consistency in governments attitude which is communicated through
various government policies. The vice- versa is the case when there is no political
stability .So capital market also reacts to the nature of government, attitude of
government, and various policies of the government.
The above statement can be substantiated by the fact the when the mandate came in
UPA governments favor ( Without the baggage of left party) on May 16 2009, the stock
markets on Monday , 18th May had a bullish rally with Sensex closing 800 point higher
over the previous days close. The reason was political stability. Also without the
baggage of left party government can go ahead with reforms.
F) Growth prospectus of an economy:When the national income of the country increases and per capita income of people
increases it is said that the economy is growing. Higher income also means higher
expenditure and higher savings. This augurs well for the economy as higher
expenditure means higher demand and higher savings means higher investment. Thus
when an economy is growing at a good pace capital market of the country attracts more
money from investors, both from within and outside the country and vice -versa. So we
can say that growth prospects of an economy do have an impact on capital markets.

G) Investor Sentiment and risk appetite :Another factor which influences capital market is investor sentiment and their risk appetite

.Even if the investors have the money to invest but if they are not confident about the
returns from their investment , they may stay away from investment for some [Link] the
same time if the investors have low risk appetite , which they were having in global and
Indian capital market some four to five months back due to global financial meltdown
and recessionary situation in U.S. & some parts of Europe , they may stay away from
investment and wait for the right time to come.

INDIAN STOCK MARKET AN OVERVIEW

Evolution
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200
years ago. The earliest records of security dealings in India are meagre and obscure.
The East India Company was the dominant institution in those days and business in its
loan securities used to be transacted towards the close of the eighteenth century.
By 1830's business on corporate stocks and shares in Bank and Cotton presses
took place in Bombay. Though the trading list was broader in 1839, there were only
half a dozen brokers recognized by banks and merchants during 1840 and 1850.
The 1850's witnessed a rapid development of commercial enterprise and brokerage business
attracted many men into the field and by 1860 the number of brokers increased into 60.
In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was
stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to
250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for
example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a
place in a street (now appropriately called as Dalal Street) where they would conveniently
assemble and transact business. In 1887, they formally established in Bombay, the "Native
Share and Stock Brokers' Association" (which is alternatively known as " The Stock Exchange
"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated
in 1899. Thus, the Stock Exchange at Bombay was consolidated.

Other leading cities in stock market operations

Ahmedabad gained importance next to Bombay with respect to cotton textile industry. After
1880, many mills originated from Ahmedabad and rapidly forged ahead. As new mills were

floated, the need for a Stock Exchange at Ahmedabad was realized and in 1894
the brokers formed "The Ahmedabad Share and Stock Brokers' Association".
What the cotton textile industry was to Bombay and Ahmedabad, the jute industry was to Calcutta.
Also tea and coal industries were the other major industrial groups in Calcutta. After the Share
Mania in 1861-65, in the 1870's there was a sharp boom in jute shares, which was followed by a
boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and 1908. On June
1908, some leading brokers formed "The Calcutta Stock Exchange Association".
In the beginning of the twentieth century, the industrial revolution was on the way in India with the
Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company Limited in
1907, an important stage in industrial advancement under Indian enterprise was reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies
generally enjoyed phenomenal prosperity, due to the First World War.
In 1920, the then demure city of Madras had the maiden thrill of a stock exchange
functioning in its midst, under the name and style of "The Madras Stock Exchange" with
100 members. However, when boom faded, the number of members stood reduced
from 100 to 3, by 1923, and so it went out of existence.
In 1935, the stock market activity improved, especially in South India where there was a rapid
increase in the number of textile mills and many plantation companies were floated. In 1937, a
stock exchange was once again organized in Madras - Madras Stock Exchange Association
(Pvt) Limited. (In 1957 the name was changed to Madras Stock Exchange Limited).

Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged
with the Punjab Stock Exchange Limited, which was incorporated in 1936.
Indian Stock Exchanges - An Umbrella Growth
The Second World War broke out in 1939. It gave a sharp boom which was followed by a slump.
But, in 1943, the situation changed radically, when India was fully mobilized as a supply base.

On account of the restrictive controls on cotton, bullion, seeds and other

commodities, those dealing in them found in the stock market as the only outlet for
their activities. They were anxious to join the trade and their number was swelled by
numerous others. Many new associations were constituted for the purpose and
Stock Exchanges in all parts of the country were floated.
The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited
(1940) and Hyderabad Stock Exchange Limited (1944) were incorporated.
In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited
and the Delhi Stocks and Shares Exchange Limited - were floated and later in June
1947, amalgamated into the Delhi Stock Exchange Association Limited.
Post-independence Scenario
Most of the exchanges suffered almost a total eclipse during depression. Lahore
Exchange was closed during partition of the country and later migrated to Delhi and
merged with Delhi Stock Exchange.
Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963.
Most of the other exchanges languished till 1957 when they applied to the Central Government
for recognition under the Securities Contracts (Regulation) Act, 1956. Only Bombay, Calcutta,
Madras, Ahmedabad, Delhi, Hyderabad and Indore, the well-established exchanges, were
recognized under the Act. Some of the members of the other Associations were required to be
admitted by the recognized stock exchanges on a concessional basis, but acting on the
principle of unitary control, all these pseudo stock exchanges were refused recognition by the
Government of India and they thereupon ceased to function.
Thus, during early sixties there were eight recognized stock exchanges in India (mentioned above).
The number virtually remained unchanged, for nearly two decades. During eighties, however, many
stock exchanges were established: Cochin Stock Exchange (1980), Uttar Pradesh Stock Exchange
Association Limited (at Kanpur, 1982), and Pune Stock Exchange Limited

(1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock Exchange Limited
(1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock Exchange
Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock
Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot,
1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently established
exchanges - Coimbatore and Meerut. Thus, at present, there are totally twenty one recognized
stock exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI)
and the National Stock Exchange of India Limited (NSEIL).
The Table given below portrays the overall growth pattern of Indian stock markets since
independence. It is quite evident from the Table that Indian stock markets have not only
grown just in number of exchanges, but also in number of listed companies and in capital of
listed companies. The remarkable growth after 1985 can be clearly seen from the Table, and
this was due to the favoring government policies towards security market industry.

Growth Pattern of the Indian Stock Market

[Link]. As on 31st

1946 1961 1971 1975 1980 1985 1991

1995

December
No. of

No. of

14

20

22

1125 1203 1599 1552 2265 4344 6229

8593

Listed Cos.
No. of Stock

1506 2111 2838 3230 3697 6174 8967 11784

Issues of Listed Cos.

Capital of Listed

Capital of Listed Cos. (Cr.

Rs.)

270 7531812 2614 3973 9723 32041 59583

Cos. (Cr. Rs.)

Market value of

15

Stock Exchanges

13

971 12922675 3273 6750 25302 110279 478121

Capital per
16

24 63 113 168 175 224 514

Listed Cos. (4/2) (Lakh

Rs.)

Market Value of
7

86 107 167 211 298 582 1770 5564

Capital per Listed

Cos. (Lakh Rs.)
(5/2)
Appreciated value

18

358 170 148 126 170 260

of Capital per
Listed Cos. (Lak Rs.)

Trading Pattern of the Indian Stock Market

344

803

693

Trading in Indian stock exchanges are limited to listed securities of public limited
companies. They are broadly divided into two categories, namely, specified securities
(forward list) and non-specified securities (cash list). Equity shares of dividend paying,
growth-oriented companies with a paid-up capital of at least Rs.50 million and a market
capitalization of at least Rs.100 million and having more than 20,000 shareholders are,
normally, put in the specified group and the balance in non-specified group.
Two types of transactions can be carried out on the Indian stock exchanges: (a) spot delivery
transactions "for delivery and payment within the time or on the date stipulated when entering into
the contract which shall not be more than 14 days following the date of the contract" : and

(b) forward transactions "delivery and payment can be extended by further period of 14
days each so that the overall period does not exceed 90 days from the date of the
contract". The latter is permitted only in the case of specified shares. The brokers who
carry over the outstanding pay carry over charges (cantango or backwardation) which
are usually determined by the rates of interest prevailing.
A member broker in an Indian stock exchange can act as an agent, buy and sell securities for
his clients on a commission basis and also can act as a trader or dealer as a principal, buy and
sell securities on his own account and risk, in contrast with the practice prevailing on New York
and London Stock Exchanges, where a member can act as a jobber or a broker only.

The nature of trading on Indian Stock Exchanges are that of age old conventional style of
face-to-face trading with bids and offers being made by open outcry. However, there is a
great amount of effort to modernize the Indian stock exchanges in the very recent times.

Over The Counter Exchange of India (OTCEI)

The traditional trading mechanism prevailed in the Indian stock markets gave way to many
functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long settlement
periods and benami transactions, which affected the small investors to a great extent. To provide
improved services to investors, the country's first ringless, scripless, electronic stock exchange OTCEI - was created in 1992 by country's premier financial institutions - Unit Trust of India,
Industrial Credit and Investment Corporation of India, Industrial Development Bank of

India, SBI Capital Markets, Industrial Finance Corporation of India, General

Insurance Corporation and its subsidiaries and CanBank Financial Services.
Trading at OTCEI is done over the centers spread across the country. Securities
traded on the OTCEI are classified into:
1 Listed Securities - The shares and debentures of the companies listed on the
OTC can be bought or sold at any OTC counter all over the country and they
should not be listed anywhere else
2 Permitted Securities - Certain shares and debentures listed on other
exchanges and units of mutual funds are allowed to be traded
3 Initiated debentures - Any equity holding at least one lakh debentures of a
particular scrip can offer them for trading on the OTC.
OTC has a unique feature of trading compared to other traditional exchanges. That is,
certificates of listed securities and initiated debentures are not traded at OTC. The
original certificate will be safely with the custodian. But, a counter receipt is generated
out at the counter which substitutes the share certificate and is used for all transactions.
In the case of permitted securities, the system is similar to a traditional stock exchange. The
difference is that the delivery and payment procedure will be completed within 14 days.

Compared to the traditional Exchanges, OTC Exchange network has the following advantages:

1 OTCEI has widely dispersed trading mechanism across the country which
provides greater liquidity and lesser risk of intermediary charges.
2 Greater transparency and accuracy of prices is obtained due to the screenbased scripless trading.
3 Since the exact price of the transaction is shown on the computer screen, the
investor gets to know the exact price at which s/he is trading.

1 Faster settlement and transfer process compared to other exchanges.

2 In the case of an OTC issue (new issue), the allotment procedure is completed
in a month and trading commences after a month of the issue closure, whereas
it takes a longer period for the same with respect to other exchanges.
Thus, with the superior trading mechanism coupled with information transparency
investors are gradually becoming aware of the manifold advantages of the OTCEI.
National Stock Exchange (NSE)
With the liberalization of the Indian economy, it was found inevitable to lift the Indian
stock market trading system on par with the international standards. On the basis of
the recommendations of high powered Pherwani Committee, the National Stock
Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial
Credit and Investment Corporation of India, Industrial Finance Corporation of India, all
Insurance Corporations, selected commercial banks and others.
Trading at NSE can be classified under two broad categories:
(1) Wholesale debt market and
(2) Capital market.
Wholesale debt market operations are similar to money market operations - institutions and
corporate bodies enter into high value transactions in financial instruments such as government
securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc.

There are two kinds of players in NSE:

(a) trading members and

(b) participants.
Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients. Participants include trading members and large players
like banks who take direct settlement responsibility.
Trading at NSE takes place through a fully automated screen-based trading
mechanism which adopts the principle of an order-driven market. Trading members can
stay at their offices and execute the trading, since they are linked through a
communication network. The prices at which the buyer and seller are willing to transact
will appear on the screen. When the prices match the transaction will be completed and
a confirmation slip will be printed at the office of the trading member.
NSE has several advantages over the traditional trading exchanges. They are as follows:

1 NSE brings an integrated stock market trading network across the nation.
2 Investors can trade at the same price from anywhere in the country since inter-market
operations are streamlined coupled with the countrywide access to the securities.

3 Delays in communication, late payments and the malpractices prevailing in the

traditional trading mechanism can be done away with greater operational
efficiency and informational transparency in the stock market operations, with
the support of total computerized network.
Unless stock markets provide professionalized service, small investors and foreign investors
will not be interested in capital market operations. And capital market being one of the major
source of long-term finance for industrial projects, India cannot afford to damage the capital
market path. In this regard NSE gains vital importance in the Indian capital market system.

CAPITAL MARKET
EFFICIENCY

An efficient capital market is a market where the share prices reflect new
information accurately and in real time.

Capital market efficiency is judged by its success in incorporating and inducting

information, generally about the basic value of securities, into the price of securities.
This basic or fundamental value of securities is the present value of the cash flows
expected in the future by the person owning the securities.
The fluctuation in the value of stocks encourage traders to trade in a competitive manner with
the objective of maximum profit. This results in price movements towards the current value of
the cash flows in the future. The information is very easily available at cheap rates because of
the presence of organized markets and various technological innovations. An efficient capital
market incorporates information quickly and accurately into the prices of securities.

In the weak-form efficient capital market, information about the history of previous
returns and prices are reflected fully in the security prices; the returns from stocks in
this type of market are unpredictable.
In the semi strong-form efficient market, the public information is completely
reflected in security prices; in this market, those traders who have non-public
information access can earn excess profits.
In the strong-form efficient market, under no circumstances can investors earn
excess profits because all of the information is incorporated into the security prices.
The funds that are flowing in capital markets, from savers to the firms with the aim of
financing projects, must flow into the best and top valued projects and, therefore,
informational efficiency is of supreme importance. Stocks must be efficiently priced,
because if the securities are priced accurately, then those investors who do not have time
for market analysis would feel confident about making investments in the capital market.

Eugene Fama was one of the earliest to theorize capital market efficiency, but
empirical tests of capital market efficiency had begun even before that.

Efficient-market hypothesis
In finance, the efficient-market hypothesis (EMH) asserts that financial markets are
"informationally efficient". That is, one cannot consistently achieve returns in excess of
average market returns on a risk-adjusted basis, given the information publicly
available at the time the investment is made.
There are three major versions of the hypothesis: "weak", "semi-strong", and "strong".
Weak EMH claims that prices on traded assets (e.g., stocks, bonds, or property)
already reflect all past publicly available information. Semi-strong EMH claims both
that prices reflect all publicly available information and that prices instantly change to
reflect new public information. Strong EMH additionally claims that prices instantly
reflect even hidden or "insider" information. There is evidence for and against the weak
and semi-strong EMHs, while there is powerful evidence against strong EMH.
The validity of the hypothesis has been questioned by critics who blame the belief in
rational markets for much of the financial crisis of 20072010. Defenders of the EMH
caution that conflating market stability with the EMH is unwarranted; when publicly
available information is unstable, the market can be just as unstable .

Historical background
The efficient-market hypothesis was first expressed by Louis Bachelier, a French
mathematician, in his 1900 dissertation, "The Theory of Speculation". His work was largely
ignored until the 1950s; however beginning in the 30s scattered, independent work
corroborated his thesis. A small number of studies indicated that US stock prices and related
financial series followed a random walk model. [5] Research by Alfred Cowles in the 30s and
40s suggested that professional investors were in general unable to outperform the market.
The efficient-market hypothesis was developed by Professor Eugene Fama at the University of
Chicago Booth School of Business as an academic concept of study through his published Ph.D.
thesis in the early 1960s at the same school. It was widely accepted up until the 1990s, when
behavioral finance economists, who were a fringe element, became mainstream. Empirical

analyses have consistently found problems with the efficient-market hypothesis, the
most consistent being that stocks with low price to earnings (and similarly, low price to
cash-flow or book value) outperform other stocks. Alternative theories have proposed
that cognitive biases cause these inefficiencies, leading investors to purchase
overpriced growth stocks rather than value stocks. Although the efficient-market
hypothesis has become controversial because substantial and lasting inefficiencies are
observed, Beechey et al. (2000) consider that it remains a worthwhile starting point.
The efficient-market hypothesis emerged as a prominent theory in the mid-1960s. Paul
Samuelson had begun to circulate Bachelier's work among economists. In 1964 Bachelier's
dissertation along with the empirical studies mentioned above were published in an anthology
edited by Paul Cootner. In 1965 Eugene Fama published his dissertation arguing for the random
walk hypothesis, and Samuelson published a proof for a version of the efficient-market
hypothesis. In 1970 Fama published a review of both the theory and the evidence for the
hypothesis. The paper extended and refined the theory, included the definitions for three forms
of financial market efficiency: weak, semi-strong and strong (see below).
Further to this evidence that the UK stock market is weak-form efficient, other studies of capital
markets have pointed toward their being semi-strong-form efficient. A study by Khan of the grain
futures market indicated semi-strong form efficiency following the release of large trader position
information (Khan, 1986). Studies by Firth (1976, 1979, and 1980) in the United Kingdom have
compared the share prices existing after a takeover announcement with the bid offer. Firth found that
the share prices were fully and instantaneously adjusted to their correct levels, thus concluding that
the UK stock market was semi-strong-form efficient. However, the market's ability to efficiently
respond to a short term, widely publicized event such as a takeover announcement does not
necessarily prove market efficiency related to other more long term, amorphous factors. David
Dreman has criticized the evidence provided by this instant "efficient" response, pointing out that an
immediate response is not necessarily efficient, and that the long-term performance of the stock in
response to certain movements is better indications. A study on stocks response to dividend cuts or
increases over three years found that after an announcement of a dividend cut, stocks
underperformed the market by 15.3% for the three-year period, while stocks outperformed 24.8% for
the three years afterward after a dividend increase announcement.

Theoretical background
Beyond the normal utility maximizing agents, the efficient-market hypothesis requires that agents
have rational expectations; that on average the population is correct (even if no one person is) and
whenever new relevant information appears, the agents update their expectations appropriately.
Note that it is not required that the agents be rational. EMH allows that when faced with new
information, some investors may overreact and some may underreact. All that is required by the
EMH is that investors' reactions be random and follow a normal distribution pattern so that the net
effect on market prices cannot be reliably exploited to make an abnormal profit, especially when
considering transaction costs (including commissions and spreads). Thus, any one person can be
wrong about the marketindeed, everyone can bebut the market as a whole is always right.
There are three common forms in which the efficient-market hypothesis is commonly statedweakform efficiency, semi-strong-form efficiency and strong-form efficiency, each of which has
different implications for how markets work.

In weak-form efficiency, future prices cannot be predicted by analyzing price from the past.
Excess returns cannot be earned in the long run by using investment strategies based on
historical share prices or other historical data. Technical analysis techniques will not be able to
consistently produce excess returns, though some forms of fundamental analysis may still
provide excess returns. Share prices exhibit no serial dependencies, meaning that there are no
"patterns" to asset prices. This implies that future price movements are determined entirely by
information not contained in the price series. Hence, prices must follow a random walk. This
'soft' EMH does not require that prices remain at or near equilibrium, but only that market
participants not be able to systematically profit from market 'inefficiencies'. However, while
EMH predicts that all price movement (in the absence of change in fundamental information) is
random (i.e., non-trending), many studies have shown a marked tendency for the stock markets
to trend over time periods of weeks or longer and that, moreover, there is a positive correlation
between degree of trending and length of time period studied (but note that over long time
periods, the trending is sinusoidal in appearance). Various explanations for such large and
apparently non-random price movements have been promulgated. But the best explanation
seems to be that the distribution of stock market prices is non-Gaussian (in which case EMH, in
any of its current forms, would not be strictly applicable).

The problem of algorithmically constructing prices which reflect all available information has
been studied extensively in the field of computer science. For example, the complexity of
finding the arbitrage opportunities in pair betting markets has been shown to be NP-hard.
In semi-strong-form efficiency, it is implied that share prices adjust to publicly available
new information very rapidly and in an unbiased fashion, such that no excess returns can
be earned by trading on that information. Semi-strong-form efficiency implies that neither
fundamental analysis nor technical analysis techniques will be able to reliably produce
excess returns. To test for semi-strong-form efficiency, the adjustments to previously
unknown news must be of a reasonable size and must be instantaneous. To test for this,
consistent upward or downward adjustments after the initial change must be looked for. If
there are any such adjustments it would suggest that investors had interpreted the
information in a biased fashion and hence in an inefficient manner.
In strong-form efficiency, share prices reflect all information, public and private, and no
one can earn excess returns. If there are legal barriers to private information becoming
public, as with insider trading laws, strong-form efficiency is impossible, except in the case
where the laws are universally ignored. To test for strong-form efficiency, a market needs to
exist where investors cannot consistently earn excess returns over a long period of time.
Even if some money managers are consistently observed to beat the market, no refutation
even of strong-form efficiency follows: with hundreds of thousands of fund managers
worldwide, even a normal distribution of returns (as efficiency predicts) should be expected
to produce a few dozen "star" performers.

MUTUAL FUNDS AS

A PART OF
CAPITAL MARKET

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS

financial goal. This pool of money is invested
Mutual fund is a trust that pools the savings of a in accordance with a stated objective. The joint
number of investors who share a common

ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. 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
appreciations realized are shared by its unit holders in proportion 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. A Mutual Fund is an investment tool that allows small
investors access to a well-diversified portfolio of equities, bonds and other securities. Each
shareholder participates in the gain or loss of the fund. Units are issued and can be
redeemed as needed. The funds Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of industries and

sectors and thus the risk is reduced. Diversification reduces the risk because all stocks
may not move in the same direction in the same proportion at the same time. Mutual
fund issues units to the investors in accordance with quantum of money invested by
them. Investors of mutual funds are known as unit holders.

Age
Group

<= 30

No. of
Investors

12

31-35
18

36-40

41-45
30

46-50
24

>50
20

16

24
18

20

12

<=30

31-35 36-40 41-45 46-50

Age group of the Investors

16

>50

Educational Qualification
Graduate/ Post Graduate

Number of Investors
88

Under Graduate

25

Others

Total

120

Interpretation:Out of 120 Mutual Fund investors 71% of the investors

in Ludhiana are Graduate/Post Graduate, 23% are Under Graduate and 6%

are others (under HSC).

c). Occupation of the investors of Ludhiana.

Occupation
Govt. Service
Pvt. Service
Business
Agriculture
Others
.

No. of Investors
30
45
35
4
6

Interpretation:
In Occupation group out of 120 investors, 38% are Pvt.
Employees, 25% are Businessman, 29% are Govt. Employees,
3% are in Agriculture and 5% are in others.

(d). Monthly Family Income of the Investors of Ludhiana.

Income Group
<=10,000
10,001-15,000
15,001-20,000
20,001-30,000
>30,000

No. of Investors
5

12
28
43
32

Interpretati
on:

In the Income Group of the investors of Ludhiana, out of 120 investors,

36% investors that is the maximum investors are in the monthly income
group Rs. 20,001 to Rs. 30,000, Second one i.e. 27% investors are in
the monthly income group of more than Rs. 30,000 and the minimum
investors i.e. 4% are in the monthly income group of below Rs. 10,000

(2) Investors invested in different kind of investments.

Kind of Investments
Saving A/C

Fixed deposits
Insurance
Mutual Fund
Post office (NSC)
Shares/Debentures
Gold/Silver
Real Estate

No. of Respondents
195
148
152
120
75
50
30
65

Interpretation: From the above graph it can be inferred that out of 200
people, 97.5% people have invested in Saving A/c, 76% in Insurance,
74% in Fixed Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in
Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing

Factors

No. of
Respondents

(a) Liquidity

40

(b) Low Risk

60

(c) High Return

64

(d) Trust

36

Interpretation:

Out of 200 People, 32% People prefer to invest where there is High
Return, 30% prefer to invest where there is Low Risk, 20% prefer easy
Liquidity and 18% prefer Trust

4. Awareness about Mutual Fund and its Operations

Response
No. of Respondents

Yes
135

No
65

Interpretati
on:

From the above chart it is inferred that 67% People are aware of Mutual Fund
and its operations and 33% are not aware of Mutual Fund and its operations.

5. Source of information for customers about Mutual Fund

Source of information
Advertisement
Peer Group
Bank
Financial Advisors

No. of Respondents
18
25
30
62

Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most
important source of information about Mutual Fund. Out of 135 Respondents,
46% know about Mutual fund Through Financial Advisor, 22% through Bank,
19% through Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund

Response

No. of Respondents

YES

120

NO

80

Total

200

Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have

invested in Mutual Fund.

7. Reason for not invested in Mutual Fund

Reason
Not Aware
Higher Risk
Not any Specific Reason

No. of Respondents

65
5
10

Interpretation:
not aware of Mutual Fund, 13%
Out of 80 people, whosaid there is likely to be higher
have not invested inrisk and 6% do not have any
Mutual Fund, 81% arespecific reason.

8. Investors invested in different Assets Management Co. (AMC)

Name of AMC
SBIMF
UTI
HDFC
Reliance
ICICI Prudential
Kotak
Others

No. of Investors
55
75
30
75
56
45
70

Interpretation:
have invested in each of them, only
In Ludhiana most of the Investors46% have invested in SBIMF, 47% in
preferred UTI and Reliance MutualICICI Prudential, 37.5% in Kotak and
Fund. Out of 120 Investors 62.5%25% in HDFC.

9. Preference of Investors for future investment in Mutual Fund

Name of AMC
SBIMF
UTI
HDFC
Reliance
ICICI Prudential
Kotak
Others

No. of Investors
76
45
35
82
80
60
75
n: Out of 120 investors,
68% prefer to invest in
Reliance,

67%

in

ICICI

Prudential, 63% in SBIMF,

62.5% in Others, 50% in
Kotak, 37.5% in UTI and

Interpretatio 29% in HDFC Mutual Fund.

10. Channel Preferred by the Investors for Mutual Fund

Investment
Channel
No. of Respondents

Financial Advisor
72

Bank
18

AMC
30

Interpretation:
Out of 120 Investors 60% preferred to invest through Financial Advisors, 25%

through AMC and 15% through Bank.

11. Mode of Investment Preferred by the Investors

Mode of Investment
No. of Respondents

One time Investment Systematic Investment Plan (SIP)

78

42

Interpretation:
Out of 120 Investors 65% preferred One time Investment and 35 % Preferred
through Systematic Investment Plan.

12. Preferred Portfolios

by the Investors

Portfolio
Equity
Debt
Balanced

No. of Investors
56
20
44

Interpretation:
From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and

17% preferred Debt portfolio

13. Option for getting Return

Preferred by the Investors

Option
No. of Respondents

Dividend Payout
25

Dividend
Reinvestment
10

Growth
85

Interpretation:
From the above graph 71% preferred Growth Option, 21% preferred Dividend

Payout and 8% preferred Dividend Reinvestment Option.

14. Preference of Investors whether to invest in Sectorial Funds

Response

No. of Respondents
Yes
No

25
95

Interpretation:
Out of 120 investors, 79% investors do not prefer to invest in Sectorial
Fund because there is maximum risk and 21% prefer to invest in Sectorial
Fund.

Findings

In Ludhiana in the Age Group of 36-40 years were more in

numbers. The second most Investors were in the age group

of 41-45 years and the least were in the age group of below 30 years.

In Ludhiana most of the Investors were Graduate or Post

Graduate and below HSC there were very few in numbers.
In Occupation group most of the Investors were Govt.
employees, the second most Investors were Private employees and
the least were associated with Agriculture.
In family Income group, between Rs. 20,001- 30,000 were more
in numbers, the second most were in the Income group of more than
Rs.30,000 and the least were in the group of below Rs. 10,000.
About all the Respondents had a Saving A/c in Bank,
76% Invested in Fixed Deposits, Only 60% Respondents invested in
Mutual fund.
Mostly Respondents preferred High Return while investment, the
second most preferred Low Risk then liquidity and the least preferred
Trust.
Only 67% Respondents were aware about Mutual fund and its
operations and 33% were not.

Among 200 Respondents only 60% had invested in

Mutual Fund and 40% did not have invested in Mutual fund.
Out of 80 Respondents 81% were not aware of Mutual Fund,
13% told there is not any specific reason for not invested in Mutual
Fund and 6% told there is likely to be higher risk in Mutual Fund.
60% Investors preferred to Invest through Financial
Advisors, 25% through AMC (means Direct Investment) and 15%
through Bank.
The most preferred Portfolio was Equity, the second most was
Balance (mixture of both equity and debt), and the least preferred
Portfolio was Debt portfolio.
Most of the Investors did not want to invest in Sectoral
Fund, only 21% wanted to invest in Sectoral Fund.

Conclusion
Running a successful Mutual Fund requires complete understanding of the
peculiarities of the Indian Stock Market and also the psyche of the small investors. This
study has made an attempt to understand the financial behavior of Mutual Fund investors
in connection with the preferences of Brand (AMC), Products, Channels etc. I observed
that many of people have fear of Mutual Fund. They think their money will not be secure

in Mutual Fund. They need the knowledge of Mutual Fund and its related terms.
Many of people do not have invested in mutual fund due to lack of awareness
although they have money to invest. As the awareness and income is growing the
number of mutual fund investors are also growing.
Brand plays important role for the investment. People invest in those
Companies where they have faith or they are well known with them. There are
many AMCs in Punjab but only some are performing well due to Brand awareness.
Some AMCs are not performing well although some of the schemes of them are
giving good return because of not awareness about Brand.
Distribution channels are also important for the investment in mutual fund.
Financial Advisors are the most preferred channel for the investment in mutual
fund. They can change investors mind from one investment option to others. Many
of investors directly invest their money through AMC because they do not have to
pay entry load. Only those people invest directly who know well about mutual fund
and its operations and those have time.

Suggestions and Recommendations

The most vital problem spotted is of ignorance. Investors should be made aware of
the benefits. Nobody will invest until and unless he is fully convinced. Investors should be
made to realize that ignorance is no longer bliss and what they are losing by not investing.

Mutual funds offer a lot of benefit which no other single option could offer.
But most of the people are not even aware of what actually a mutual fund is? They
only see it as just another investment option. So the advisors should try to change
their mindsets. The advisors should target for more and more young investors.
Young investors as well as persons at the height of their career would like to go for
advisors due to lack of expertise and time.

Mutual Fund Company needs to give the training of the Individual Financial
Advisors about the Fund/Scheme and its objective, because they are the main
source to influence the investors.

Before making any investment Financial Advisors should first enquire about
the risk tolerance of the investors/customers, their need and time (how long they want to
invest). By considering these three things they can take the customers into consideration.

Younger people aged under 35 will be a key new customer group into the
future, so making greater efforts with younger customers who show some interest
in investing should pay off.
Customers with graduate level education are easier to sell to and there is a
large untapped market there. To succeed however, advisors must provide sound
advice and high quality.
Systematic Investment Plan (SIP) is one the innovative products launched
by Assets Management companies very recently in the industry. SIP is easy for
monthly salaried person as it provides the facility of do the investment in EMI.
Though most of the prospects and potential investors are not aware about the SIP.
There is a large scope for the companies to tap the salaried persons.

BIBLIOGRAPHY
1 NEWS PAPERS
2 OUTLOOK MONEY
3 TELEVISION CHANNEL (CNBC AAWAJ)
4 MUTUAL FUND HAND BOOK
5 FACT SHEET AND STATEMENT
6

[Link]

[Link]

[Link]

[Link]

4 WWW. [Link]

QUESTIONNAIRE
A study of preferences of the investors for investment in
mutual funds. 1. Personal Details:

(a). Name:(b). Add: - Phone:(c). Age:(d). Qualification:Graduation/PG

Under Graduate

Others

(e). Occupation. Pl tick ()

Govt. Ser

Pvt. Ser

Business

Agriculture

Others

(g). What is your monthly family income approximately? Pl tick ().

Up to
Rs.10,000

Rs. 10,001 to
15000

Rs. 15,001 to
20,000

Rs. 20,001 to
30,000

Rs. 30,001
and above

2. What kind of investments you have made so far? Pl tick (). All applicable.
a. Saving account

b. Fixed deposits

c. Insurance

d. Mutual Fund

e. Post Office-NSC,
etc

f.
g. Gold/ Silver
Shares/Debentures

h. Real Estate

3. While investing your money, which factor will you prefer?

(a) Liquidity

(b) Low Risk

(c) High Return (d) Trust

4. Are you aware about Mutual Funds and their operations? Pl tick (). Yes

No

5. If yes, how did you know about Mutual Fund?

a. Advertisement

b. Peer Group

c. Banks

d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick ().

Yes

No

7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason
8. If yes, in which Mutual Fund you have
invested? Pl. tick (). All applicable.

a. SBIMF

b. UTI

c.
HDFC

d. Reliance e. Kotak

f. Other. specify

9. When you plan to invest your money in asset management co. which AMC
will you prefer? Assets Management Co.
1. SBIMF
2. UTI
3. Reliance
4. HDFC
5. Kotak
6. ICICI

10. Which Channel will you prefer while investing in Mutual Fund?
(a) Financial Advisor

(b) Bank

(c) AMC

11. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick
().

a. One Time Investment

b. Systematic Investment Plan (SIP)

12. When you want to invest which type of funds would you choose?
a. Having only debt
portfolio

b. Having debt & equity

portfolio.

c. Only equity portfolio.

13. How would you like to receive the returns every year? Pl. tick ().
a. Dividend payout

b. Dividend re-

c. Growth in NAV

investment

14. Instead of general Mutual Funds, would you like to invest in sectorial funds?

Please tick (). Yes

No

Any suggestions

..