A PROJECT REPORT ON

A Comparative Study between Equity investment &

Mutual fund
SUBMITTED BY

ANAND GAVALI

(MBA-FINANCE)

UNDER THE GUIDANCE OF

SHIVSHANKAR BIRADAR

(Branch Manager)

SUBMITTED TO

KARVY STOCK BROKING LTD

IN THE PARTIAL FULFILMENT OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

THROUGH

SURYADATTA INSTITUTE OF MANAGEMENT AND MASS

COMMUNICATION, PUNE – 411021

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 ACKNOWLEDGEMENT

At the start, I would like to express my sincere gratitude to Prof.

Khushali Ozha of the internal guide, my project guide from
Suryadatta Institute of Management & Mass Communication,
(S.I.M.M.C.), Pune - 411021 for successful completion of a project
in partial fulfilment of Master of Business Administration (M.B.A.)
under his able guidance to allow me to work on such an interesting
subject. He provided me proper and correct direction for completion of
project work. His continuous guidance during the course of project
helped me in channelizing my efforts, quite appropriately.

I am also thankful to Manager Shivshankar Biradar of the external

guide, Karvy Stock Broking Ltd. for guidance given and co-operation
extended for carrying out the project.
I am also thankful to all the respondents and friends who have
helped me to conclude the contents of the project in decent and
presentable manner.

Date : Anand Gavali.(Finance)

Place : PUNE MBA, Semester III

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 Declaration

I, the undersigned Anand Gavali, declare that the Project Report

titled as, “A Comparative Study between Equity investment &

Mutual fund ", submitted by me for partial fulfillment of Master of
Business Administration (M.B.A.) is the original record of the project
work carried out by me during the period from 1 June, 2019 to 31 July,
2019 under the able guidance of prof. Dhananjay Avasarikar and the
same has not formed the basis for the award of any degree, diploma,
association, fellowship, titles - in or for any other Statutory University or
Autonomous Institutions functioning in India or abroad imparting higher
education in Management.

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 ABSTRACT

A comparative study is the process of conducting studies of two or more

subject with respect of their features. It’s a comparision of their
respective pros and cons. This way of a study help in finding out a best
thing from the compared things. Here I made a comparative study of
direct investment in equity shares and investment in mutual funds.
I have tried to put my best effort that this report can help anyone about
the Indian Capital Market, the equity shares and mutual funds.
This report has several features:

 The language and concept used to explain is very simple to

understand any reader.
 Makes enough tables and graphs for easier understanding.
 Added several websites as reference, which is helpful for a reader to
get additional information.
 Added some interesting facts about the study, which will definitely
makes the reader more enthusiastic

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 TABLE OF CONTENTS

S.NO Contents Page

No.
1 INTRODUCTION

2 RESEARCH OBJECTIVES
3 SCOPE
4 LIMITATION
5 COMPANY PROFILE
6 LITERATURE REVIEW

7 RESEARCH METHODOLOGY

8 DATA ANALYSIS AND INTERPRETATION

9 FINDINGS
10 OBSERVATION
11 RECOMMENDATIONS
12 CONCLUSION
13 BIBLIOGRAPHY

14 Annexure

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 INTRODUCTION OF FINANCIAL MARKET

A financial market is a market in which people and entities can trade

financial securities, commodities, and other fungible items of value
at low transaction costs and at prices that reflect supply and demand.
Securities include stocks and bonds, and commodities include
precious metals or agricultural goods. There are both general
markets (where many commodities are traded) and specialized
markets (where only one commodity is traded). Markets work by
placing many interested buyers and sellers, including households,
firms, and government agencies, in one "place", thus making it
easier for them to find each other. An economy which relies
primarily on interactions between buyers and sellers to allocate
resources is known as a market economy in contrast either to a
command economy or to a non-market economy such as a gift
economy.

In finance, financial markets facilitate:

 The raising of capital (in the capital markets)

 The transfer of risk (in the derivatives markets)
 Price discovery
 Global transactions with integration of financial markets

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  The transfer of liquidity (in the money markets)
 International trade (in the currency markets)

– and are used to match those who want capital to those who have
it.

Typically a borrower issues a receipt to the lender promising to pay

back the capital. These receipts are securities which may be freely bought
or sold. In return for lending money to the borrower, the lender will expect
some compensation in the form of interest or dividends. This return on
investment is a necessary part of markets to ensure that funds are supplied
to them.

Indian Financial Market

India Financial market is one of the oldest in the world and is considered
to be the fastest growing and best among all the markets of the emerging
economies. The history of Indian capital markets dates back 200 years
toward the end of the 18th century when India was under the rule of the
East India Company. The development of the capital market in India
concentrated around Mumbai where no less than 200 to 250 securities
brokers were active during the second half of the 19th century. The
financial market in India today is more developed than many other sectors

7
because it was organized long before with the securities exchanges of
Mumbai, Ahmedabad and Kolkata were established as early as the 19th
century.

By the early 1960s the total number of securities exchanges in India rose
to eight, including Mumbai, Ahmedabad and Kolkata apart from Madras,
Kanpur, Delhi, Bangalore and Pune.

Today there are 21 regional securities exchanges in India in addition to

the centralized NSE (National Stock Exchange) and OTCEI (Over the
Counter Exchange of India). However the stock markets in India remained
stagnant due to stringent controls on the market economy that allowed
only a handful of monopolies to dominate their respective sectors.

The corporate sector wasn't allowed into many industry segments, which
were dominated by the state controlled public sector resulting in
stagnation of the economy right up to the early 1990s.

Thereafter when the Indian economy began liberalizing and the controls
began to be dismantled or eased out, the securities markets witnessed a
flurry of IPOs that were launched. This resulted in many new companies
across different industry segments to come up with newer products and
services.

This was in marked contrast to the initial phase of growth in many of the
fast growing economies of East Asia that witnessed huge doses of FDI
(Foreign Direct Investment) spurring growth in their initial days of market

8
decontrol. During this phase in India much of the organized sector has
been affected by high growth as the financial markets played an all-
inclusive role in sustaining financial resourcemobilization. Many PSUs
(Public Sector Undertakings) that decided to offload part of their equity
were also helped by the well-organized securities market in India.

The launch of the NSE (National Stock Exchange) and the OTCEI (Over
the Counter Exchange of India) during the mid-1990s by the government
of India was meant to usher in an easier and more transparent form of
trading in securities. The NSE was conceived as the market for trading in
the securities of companies from the large-scale sector and the OTCEI for
those from the small-scale sector. While the NSE has not just done well
to grow and evolve into the virtual backbone of capital markets in India
the OTCEI struggled and is yet to show any sign of growth and
development. The integration of IT into the capital market infrastructure
has been particularly smooth in India due to the country’s world class IT
industry.The regulating authority for capital markets in India is the SEBI
(Securities and Exchange Board of India). SEBI came into prominence in
the 1990s after the capital markets experienced some turbulence. It had to
take drastic measures to plug many loopholes that were exploited by
certain market forces to advance their vested interests. After this initial
phase of struggle SEBI has grown in strength as the regulator of Indian
capital markets and as one of the country’s most important institutions.

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 The Equity Capital

Investors owning equity shares of a company are owners of the company.

They are issued equity shares of the company, as evidence of such
ownership.

Equity investors are not entitled to any fixed return or repayment of

capital. However, they are entitled to the benefits that arise out of the
performance of the company. If the business fails, they may lose the entire
investment. Of all the financiers, they take the most risk.

Total equity capital of a company is divided into equal units of small

denominations, each called a share. For example, in a company the total
equity capital of Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10
each. Each such unit of Rs 10 is called a Share.

Thus, the company then is 12 said to have 20, 00,000 equity shares of Rs
10 each. The holders of such shares are members of the company and have
voting rights.

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 Advantages of Equity Shares

 More Income: Equity shareholders are the residual claimant of

the profits after meeting all the fixed commitments. The
company may add to the profits by trading on equity. Thus
equity capital may get dividend at high in boom period.

 Right to participate in the Control and Management: Equity

shareholders have voting rights and elect competent persons
as directors to control and manage the affairs of the company.

 Capital profits: The market value of equity shares fluctuates

directly with the profits of the company and their real value
based on the net worth of the assets of the company. An
appreciation in the net worth of the company's assets will
increase the market value of equity shares. It brings capital
appreciation in their investments.

 An Attraction of Persons having Limited Income: Equity

shares are mostly of lower denomination and persons of
limited recourses can purchase these shares.

 Tax Advantages: Equity shares also offer tax advantages to the

investor. The larger yield on equity shares results from an
increase in principal or capital gains, which are taxed at lower
rate than other incomes in most of the countries.

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 Other Advantages: It appeals most to the speculators. Their
prices in security market are more fluctuating.

Disadvantages of Equity Shares

 Uncertain and Irregular Income: The dividend on equity shares

is subject to availability of profits and intention of the Board
of Directors and hence the income is quite irregular and
uncertain. They may get no dividend even three are sufficient
profits.

 Capital loss During Depression Period: During recession or

depression periods, the profits of the company come down and
consequently the rate of dividend also comes down. Due to
low rate of dividend and certain other factors the market value
of equity shares goes down resulting in a capital loss to the
investors. Loss on Liquidation: In case, the company goes into
liquidation, equity shareholders are the worst suffers. They are
paid in the last only if any surplus is available after every other
claim including the claim of preference shareholders is settled.
It is evident from the advantages and disadvantages of equity
share capital discussed above that the issue of equity share
capital is a must for a company, yet it should not solely depend
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 on it. In order to make its capital structure flexible, it should
raise funds from other sources also.

 Dividend at the board’s mercy: The rate of dividend is

recommended by the board. The shareholders in the AGM
cannot declare a higher rate than what is recommended by the
board.

 Illiquid: Since equity shares are not refundable they are treated
as illiquid

 Speculation: higher dividends during prosperous periods and

low dividend during depression period shall lead to ample
speculation.

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 INTRODUCTION OF PORTFOLIO MANAGEMENT

A portfolio refers to a collection of investment tools such as stocks, shares, mutual

funds, bonds, and cash and so on depending on the investor’s income, budget and
convenient time frame. The art of selecting the right investment policy for the
individuals in terms of minimum risk and maximum return is called as portfolio
management. Portfolio management refers to managing an individual’s investments
in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum
profits within the stipulated time frame. Portfolio management refers to managing
money of an individual under the expert guidance of portfolio managers. Portfolio
management refers to the management or administration of a portfolio of securities
to protect and enhance the value of the underlying investment. It is the management
of various securities (shares, bonds etc) and other assets (e.g. real estate), to meet
specified investment goals for the benefit of the investors. It helps to reduce risk
without sacrificing returns. It involves a proper investment decision with regards to
what to buy and sell. It involves proper money management. It is also known as
Investment Management

PMS SERVICES OFFERED BY FUND MANAGERS:

Personal Relationship Manager:

The portfolio manager acts as a personal relationship manager that enables the client
to interact with the fund manager at any given point of time depending on his
preference.

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Monthly Discussion:

Clients can discuss any concerns or issues related to the money or savings with their
appointed portfolio manager on monthly basis. The client can interact and discuss
regarding any major changes related to the investment strategies and asset allocation.

Asset Allocation:

Portfolio Manager assists in the allocation of assets or savings of clients by advising

regarding the investments in stocks, bonds or equity funds. The Asset allocation plan
is customized as per the risk preference and goals of the clients. This plan is designed
by doing the detailed analysis and evaluation of the client’s risk taking capacity,
savings pattern, and investment goals.

Timing:

Portfolio managers help the clients in taking timely decisions and thereby
preserving their money on time. Portfolio management service assists in the
allocating of money at precise time in suitable saving plan. Thus, portfolio managers
offer their professional and proficient advice to the clients and suggest when the
money should be invested in equities or bonds and when it should be taken out from
a particular saving plan. Portfolio managers give their recommendations after
analysing the market thoroughly. They ask the clients to withdraw their money from
market in times big risk in stock market and prevents heavy losses.

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Flexibility:

Portfolio managers have detailed knowledge of the market conditions and they are
the experts of field. They can plan the savings of the client according to his
preferences and requirements. It is possible that portfolio managers can invest the
client’s money according to his preference as they are specialists of the market. Thus,
clients can provide flexibility to the portfolio managers to manage their investment
with complete efficiency and effectiveness.

Administration handling:

Portfolio management service (PMS) involves handing and care of all type of
administrative work by the portfolio managers such as opening a new bank account
or taking financial settlement, etc.

NEED FOR PORTFOLIO MANAGEMENT

 Portfolio management presents the best investment plan to the individuals as

per their income, budget, age and ability to undertake risks.
 Portfolio management minimizes the risks involved in investing and also
increases the chance of making profits.
 Portfolio managers understand the client’s financial needs and suggest the
best and unique investment policy for them with minimum risks involved.
 Portfolio management enables the portfolio managers to provide customized
investment solutions to clients as per their needs and requirements.

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 Invest in companies
that have a strong
competitive
advantage over their
peers.

Invest when prices are

WEALTH Stress on analysis of
individual companies
and not on predicting
attractive.
movement of stock

CREATION market indices.

Buy high quality

companies at
reasonable prices
&resonably attractive
companies at below-
average prices.

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 INVESTMENT PRINCIPLES

Minimize Capital losses --------- Generate emphasis on price of purchase

Focus on indentifying strong Investment candidates Ignore short term

volatility

Invest for the long term Low level of Trading Activity

INVESTMENT PROCESS

Adding value through active management

Team approach coupled with talented individuals

INVESTMENT DISCIPLINE RISK MANAGEMENT

Long term focus ,but understand short term drivers

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SWOT ANALYSIS: PORTFOLIO MANAGEMENT SERVICES

Strength:

 Diversified Investment - PMS are having a number of investment

objectives from which an investor can choose according to his
requirements, time to get returns etc.
 Easy procedure - The procedure involved for purchasing or selling shares
is not very easy. Individual investor can also easily understand and can
himself buy or sell shares.
 Professional Management - The service provides professional
management of portfolios with the objective of delivering consistent long-
term performance while controlling risk.
 Continuous Monitoring - It is important to recognize that portfolios need
to be constantly monitored and periodic changes made to optimise the
results.
 Risk Control - A research team responsible for establishing the client’s
investment strategy and providing the PMS provider real time information
to support it backs any firm’s portfolio managers.
 Hassle Free Operation - Portfolio Management Service provider gives the
client a customized service. The company takes care of all the
administrative aspects of the client’s portfolio with a periodic reporting
(usually daily) on the overall status of the portfolio and performance.
 Flexibility - The Portfolio Manager has fair amount of flexibility in terms
of holding cash (can go up to 100% also depending on the market

19
 conditions). He can create a reasonable concentration in the investor
portfolios by investing disproportionate amounts in favour of compelling
opportunities.
 Transparency – PMS provide comprehensive communications and
performance reporting. Investors will get regular statements and updates
from the firm. Web enabled access will ensure that client is just a click
away from all information relating to his investment. Your account
statements will give you a complete picture of which individual securities
you hold, as well as the number of shares you own. It will also usually
provide:

a. the current value of the securities you own;

b. the cost basis of each security;
c. details of account activity (such as purchases, sales and dividends
paid out or reinvested);
d. your portfolio’s asset allocation;
e. your portfolio’s performance in comparison to a benchmark;
f. market commentary from your Portfolio Manager.

 Customized Advice - PMS give select clients the benefit of tailor made
investment advice designed to achieve his financial objectives. It can be
structured to automatically exclude investments you may own in another
account or investments you would prefer not to own. For example, if you
are a long-term employee in a company and you have acquired
concentrated stock positions over the years and have become over exposed
too little company’s stock, a separately managed account provides you
with the ability to exclude that stock from your portfolio.

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  Personalized Approach – Some Portfolio Managers may provide a
personal investment management service to achieve the client’s
investment objective. In PMS, you may gain direct personalized access to
the professional money managers who actively manage your portfolio.

This interaction may come in various different ways including in-person

meetings, conference calls, written commentary, etc with the fund management
team.

B) Weakness:

 Market risk - The capital market is highly volatile in nature. No matter

how much one is precautious, he will always be under threat of incurring
losses.

 No control over cost - There is not much control over the cost of operations
as the market is volatile and the cost increases quickly or dawn rapidly.

 High risk - The share market is a place where price of the shares goes up
& down rapidly so its always create a high risk.

 Ticket size – Most of the Portfolio Management Schemes have ticket size
in more than few Lakhs and Crores in compare with other Financial
Instrument like MF which is less attract small investors towards investing
PMS.

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  Profit Sharing – Most of the companies are in the term of profit sharing
with their clients and for that they do hedge in the equity market to
generate the profit which is very risky.

C) Opportunities:

 Growing PMS Market with Capital Market - PMS market in India is

growing at a very fast pace with the Indian Capital Market and if this pace
continuous then Indian PMS and capital market will be one of the
strongest economies of the world and investment in this today will then be
very fruitful.

 Branch expansion - Large no. of branches are opening day by day which
are trapping the countries having almost same type of socioeconomic
condition & even same culture etc.

 Untapped Retail Investors – Most of the companies are only doing niche
marketing for their portfolio schemes and they are targeting maximum to
the high net worth investors. So, retail investors are getting less attention
for that which can be also a part of getting huge market.

 Untapped rural market - Rural market in India is still not covered fully by
the various AMCs. Rural market in India is a very big market and if this
market is tapped then awareness about PMS can boost a lot.

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  Debt fund oriented schemes – As the day to day changing scenario of
Stock market, risk is increasing. So, for that companies should focus in
the purely Debt fund oriented schemes which is less focused by most of
the companies in the present time.

D) Threats:

 Tough competition - There is very tough competitions because of large

number of companies are providing Portfolio Services these days.

 New Entrant – As per the SEBI data of growth of PMS market year by year,
numbers of new companies which include foreign companies are entering in
this part of the Investment as there is a huge potential in India in the future
and also which create the very tough competition.

 Unawareness – Major percent of population is not aware of PMS, so it’s hard

to convince people.

 Changing scenario - Our market scenario is changing day by day i.e. our
market is fluctuating, so this makes investor hard to invest in shares though in
PMS too.

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 Mutual Fund

A mutual fund is a professionally managed type of collective

investment scheme that pools money from many investors and
invests it in stocks, bonds, short-term money market instruments and
other securities. Mutual funds have a fund manager who invests the
money on behalf of the investors by buying / selling stocks, bonds
etc. Currently, the worldwide value of all mutual funds totals more
than $US 26 trillion.

There are various investment avenues available to an investor

such as real estate, bank deposits, post office deposits, shares,
debentures, bonds etc. A mutual fund is one more type of Investment
Avenue available to investors. There are many reasons why
investors prefer mutual funds. Buying shares directly from the
market is one way of investing. But this requires spending time to
find out the performance of the company whose share is being
purchased, understanding the future business prospects of the
company, finding out the track record of the promoters and the
dividend, bonus issue history of the company etc. An informed
investor needs to do research before investing. However, many
investors find it cumbersome and time consuming to pore over so
much of information, get access to so much of details before

24
investing in the shares. Investors therefore prefer the mutual fund
route. They invest in a mutual fund scheme which in turn takes the
responsibility of investing in stocks and shares after due analysis
and research. The investor need not bother with researching
hundreds of stocks. It leaves it to the mutual fund and its
professional fund management team. Another reason why investors
prefer mutual funds is because mutual funds offer diversification.
An investor’s money is invested by the mutual fund in a variety of
shares, bonds and other securities thus diversifying the investor’s
portfolio across different companies and sectors.

This diversification helps in reducing the overall risk of the

portfolio. It is also less expensive to invest in a mutual fund since
the minimum investment amount in mutual fund units is fairly low
(Rs. 500 or so).With Rs. 500 an investor may be able to buy only a
few stocks and not get the desired diversification.

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NAV (Net Asset Value)

NAV means Net Asset Value. The investments made by a Mutual Fund
are marked to market on daily basis. In other words, we can say that
current market value of such investments is calculated on daily basis.
NAV is arrived at after deducting all liabilities (except unit capital) of the
fund from the realisable value of all assets and dividing by number of units
outstanding. Therefore, NAV on a particular day reflects the realisable
value that the investor will get for each unit if the scheme is liquidated on
that date. This NAV keeps on changing with the changes in the market
rates of equity and bond markets. Therefore, the investments in Mutual

26
Funds is not risk free, but a good managed Fund can give you regular and
higher returns than when you can get from fixed deposits of a bank etc.

Various Types of Mutual Funds A common man is so much confused

about the various kinds of Mutual Funds that he is afraid of investing in
these funds as he cannot differentiate between various types of Mutual
Funds with fancy names. Mutual Funds can be classified into various
categories under the following heads:

Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or

close-ended scheme depending on its maturity period.

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 Open-ended Fund/ Scheme:

An open-ended fund or scheme is one that is available for subscription

and repurchase on a continuous basis. These schemes do not have a fixed
maturity period. Investors can conveniently buy and sell units at Net Asset
Value (NAV) related prices which are declared on a daily basis. The key
feature of open-end schemes is liquidity.

Close-ended Fund/ Scheme:

A close-ended fund or scheme has a stipulated maturity period e.g. 3-5

years. The fund is open for subscription only during a specified period at
the time of launch of the scheme. Investors can invest in the scheme at the
time of the initial public issue and thereafter they can buy or sell the units
of the scheme on the stock exchanges where the units are listed. In order
to provide an exit route to the investors, some close-ended funds give an
option of selling back the units to the mutual fund through periodic
repurchase at NAV related prices. SEBI Regulations stipulate that at least
one of the two exit routes is provided to the investor i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds
schemes disclose NAV generally on weekly basis.

Interval Fund/ Schemes:

Interval Schemes are that scheme, which combines the features of open-
ended and close-ended schemes. The units may be traded on the stock
28
exchange or may be open for sale or redemption during pre-determined
intervals at NAV related prices.

A) Schemes according to Investment Objective:

 Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the

medium to long- term. Such schemes normally invest a major part of their
corpus in equities. Such funds have comparatively high risks. These
schemes provide different options to the investors like dividend option,
capital appreciation, etc. and the investors may choose an option
depending on their preferences. The investors must indicate the option in
the application form. The mutual funds also allow the investors to change
the options at a later date. Growth schemes are good for investors having
a long-term outlook seeking appreciation over a period of time. Equity
Schemes are also known as Stock Schemes which contains Large Cap,
Mid Cap, Small Cap and Micro Cap Stocks.

Large Cap, Mid Cap, Small Cap & Micro Cap Fund Stocks.

Market capitalization categories

Publicly traded companies are typically grouped into four different market
cap categories: Large Cap, Mid Cap, Small Cap and Micro Cap. Not
everyone agrees on the same market cap cut-offs for each category, but
the categories are often described as follows:
29
 What are large cap stocks?

Large caps are typically defined as companies with market caps that are
Rs.1000 cr. or above. Included within large caps are mega caps, which are
typically, defined as companies with markets caps of Rs.200,000 cr. or
above. These tend to be companies that are very stable and dominate their
industry. Infosys is an example of Large-cap stock. Large cap stocks tend
to hold up better in recessions, but they also tend to underperform small-
cap stocks when the economy emerges from a recession. Large-cap and
mega-cap stocks tend to be less volatile than mid-cap and small-cap stocks
and are therefore considered less risky.

(According to DSP BlackRock large cap stocks are the top 100 ranking
BSE stocks.)

Example – DSP BlackRock Top 100 Equity Fund.

What is a mid-cap stock?

Mid-caps are typically defined as companies with market caps that are
between Rs.200 cr. and Rs.1000 cr. Mid-cap stocks tend to be riskier than
large-cap stocks but less risky than small-cap stocks. Mid-cap stocks,
however, tend to offer more growth potential than large-cap stocks.
Apollo Tyres Ltd. is an example of mid-cap stock.

(According to DSP BlackRock mid cap stocks are the top 101 - 201
ranking BSE stocks.)

30
Example – DSP BlackRock Small and Mid Cap Fund.

What are small cap stocks?

Small caps are typically defined as companies with market caps that are
less than Rs.200 cr. Many small caps are young companies with
significant growth potential. However, the risk of failure is greater with
small-cap stocks than with large-cap and mid-cap stocks. As a result,
small-cap stocks tend to be the more volatile (and therefore riskier) than
large-cap and mid-cap stocks. Historically, small-cap stocks have
typically underperformed large-cap stocks during recessions but have
outperformed large-cap stocks as the economy has emerged from
recessions. 3l Infotech Ltd. is the example of small cap stock.

(According to DSP BlackRock small cap stocks are the top 201 - 301
ranking BSE stocks.)

Example – DSP BlackRock Small and Mid Cap Fund.

The smallest stocks of the small caps are called micro-cap and Nano-cap
stocks.

Micro-cap stocks (Rs.5 cr. to Rs.200 cr. in market capitalization) and

Nano-cap stocks (market caps less than Rs.5 cr.) are even riskier than
small-cap stocks. While the opportunity for these companies to
experience extreme growth is great, the risk to lose a large amount of

31
money is also possible. DCB Bank Limited is an example of micro-cap
stock.

(According to DSP BlackRock micro-cap stocks are the top 301 – 500
ranking BSE stocks.)

Example – DSP BlackRock Micro Cap Fund.

 Income / Debt Oriented Scheme:

The aim of income funds is to provide regular and steady income to

investors. Such schemes generally invest in fixed income securities such
as bonds, corporate debentures, Government securities and money market
instruments. Such funds are less risky compared to equity schemes. These
funds are not affected because of fluctuations in equity markets. However,
opportunities of capital appreciation are also limited in such funds. The
NAVs of such funds are affected because of change in interest rates in the
country. If the interest rates fall, NAVs of such funds are likely to increase
in the short run and vice versa. However, long term investors may not
bother about these fluctuations. Example – DSP BlackRock Income
Opportunities Fund.

 Balanced Fund:

The aim of balanced funds is to provide both growth and regular income
as such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. These are appropriate for
investors looking for moderate growth. They generally invest 40-60% in
32
equity and debt instruments. These funds are also affected because of
fluctuations in share prices in the stock markets. However, NAVs of such
funds are likely to be less volatile compared to pure equity funds.

Example – DSP BlackRock Balanced Fund.

 Money Market or Liquid Fund:

These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These schemes
invest exclusively in safer short-term instruments such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money,
government securities, etc. Returns on these schemes fluctuate much less
compared to other funds. These funds are appropriate for corporate and
individual investors as a means to park their surplus funds for short
periods.

Example – DSP BlackRock Liquidity Fund.

 Gilt Fund:

These funds invest exclusively in government securities. Government

securities have no default risk. NAVs of these schemes also fluctuate due
to change in interest rates and other economic factors as is the case with
income or debt oriented schemes.

33
 Index Funds:

Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in
the securities in the same weightage comprising of an index. NAVs of
such schemes would rise or fall in accordance with the rise or fall in the
index, though not exactly by the same percentage due to some factors
known as “tracking error" in technical terms. Necessary disclosures in this
regard are made in the offer document of the mutual fund scheme. There
are also exchange traded index funds launched by the mutual funds which
are traded on the stock exchanges.

 Tax-Saver Funds:

Also known as equity-linked saving schemes (ELSS), these are the

favourites of most retail investors. The reason is that the
investment is eligible for tax deduction under Section 80C of the
Income Tax Act.
These are diversified equity funds with a three-year lock-in and are
the first choice of many first-time mutual fund investors.

Example – DSP BlackRock Tax Saver Fund.

34
  Sector Specific Funds:

Mutual funds which invest in a particular sector or industry are said to be

sector-specific funds. Since the portfolio of such mutual funds consists
mainly of investment in one particular type of sector, they offer less
amount of diversification and are considered to be risky.

Example – DSP BlackRock Technology.com Fund.

 Thematic Funds:
Thematic Funds are more to do with a particular theme and not a
specific sector. For instance, an infrastructure thematic fund
invests in companies doing business with infrastructure
construction projects, steel, cement, and the like. Here the
companies may be from different sectors but are centred on a
common theme. So, in a way, as compared to sectorial funds,
thematic funds’ investments are broader, and thus offer more
diversification than sectorial funds.

35
 Advantages of Mutual Fund:

1) Beat Inflation:

Mutual Funds help investors generate better inflation-adjusted

returns, without spending a lot of time and energy on it. While most
people consider letting their savings 'grow' in a bank, they don't
consider that inflation may be nibbling away its value.
Suppose you have Rs.100 as savings in your bank today. These can
buy about 10 bottles of water. Your bank offers 5% interest per
annum, so by next year you will have Rs.105 in your bank.
However, inflation that year rose by 10%. Therefore, one bottle of

36
 water costs Rs.11. By the end of the year, with Rs.105, you will not
be able to afford 10 bottles of water anymore.
Mutual Funds provide an ideal investment option to place your
savings for a long-term inflation adjusted growth, so that the
purchasing power of your hard earned money does not plummet
over the years.

2) Expert Managers:

Backed by a dedicated research team, investors are provided

with the services of an experienced fund manager who handles the
financial decisions based on the performance and prospects available
in the market to achieve the objective of the mutual fund scheme.

3) Convenience:

Mutual funds are an ideal investment option when you are looking
at convenience and timesaving opportunity. With low investment
amount alternatives, the ability to buy or sell them on any business
day and a multitude of choices based on an individual's goal and
investment need, investors are free to pursue their course of life
while their investments earn for them.

37
 4) Low Cost:

Probably the biggest advantage for any investor is the low cost of
investment that mutual funds offer, as compared to investing
directly in capital markets. Most stock options require significant
capital, which may not be possible for young investors who are just
starting out.
Mutual funds, on the other hand, are relatively less expensive. The
benefit of scale in brokerage and fees translates to lower costs for
investors. One can start with as low as Rs.500 and get the advantage
of long term equity investment.

5) Diversification:

Going by the adage, 'Do not put all your eggs in one basket', mutual
funds help mitigate risks to a large extent by distributing your investment
across a diverse range of assets. Mutual funds offer a great investment
opportunity to investors who have a limited investment capital.

6) Liquidity:

Investors have the advantage of getting their money back promptly, in

case of open-ended schemes based on the Net Asset Value (NAV) at that
time. In case your investment is close-ended, it can be traded in the stock
exchange, as offered by some schemes.

38
 7) Higher Return Potential:

Based on medium or long-term investment, mutual funds have the

potential to generate a higher return, as you can invest on a diverse range
of sectors and industries.

8) Safety & Transparency:

Fund managers provide regular information about the current value of

the investment, along with their strategy and outlook, to give a clear
picture of how your investments are doing.
Moreover, since every mutual fund is regulated by SEBI, you can be
assured that your investments are managed in a disciplined and regulated
manner and are in safe hands.
Every form of investment involves risk. However, skilful management,
selection of fundamentally sound securities and diversification can help
reduce the risk, while increasing the chances of higher returns over
timely.

39
 Disadvantages of Mutual Fund

1) No Insurance:

Mutual funds, although regulated by the government, are not insured against losses.
The Federal Deposit Insurance Corporation (FDIC) only insures against certain
losses at banks, credit unions, and savings and loans, not mutual funds. That means
that despite the risk-reducing diversification benefits provided by mutual funds,
losses can occur, and it is possible (although extremely unlikely) that you could even
lose your entire investment.

2) Dilution:

Although diversification reduces the amount of risk involved in investing in mutual

funds, it can also be a disadvantage due to dilution. For example, if a single security
held by a mutual fund doubles in value, the mutual fund itself would not double in
value because that security is only one small part of the fund's holdings. By holding
a large number of different investments, mutual funds tend to do neither
exceptionally well nor exceptionally poorly.

3) Fees and Expenses:

Most mutual funds charge management and operating fees that pay for the fund's
management expenses (usually around 1.0% to 1.5% per year for actively managed
funds). In addition, some mutual funds charge high sales commissions, 12b-1 fees,
and redemption fees. And some funds buy and trade shares so often that the
transaction costs add up significantly. Some of these expenses are charged on an on-

40
going basis, unlike stock investments, for which a commission is paid only when
you buy and sell.

4) Poor Performance:

Returns on a mutual fund are by no means guaranteed. In fact, on average, around

75% of all mutual funds fail to beat the major market indexes, like the S&P 500,
and a growing number of critics now question whether or not professional money
managers have better stock-picking capabilities than the average investor.

5) Loss of Control:

The managers of mutual funds make all of the decisions about which securities to
buy and sell and when to do so. This can make it difficult for you when trying to
manage your portfolio. For example, the tax consequences of a decision by the
manager to buy or sell an asset at a certain time might not be optimal for you. You
also should remember that you are trusting someone else with your money when you
invest in a mutual fund.

6) Trading Limitations:

Although mutual funds are highly liquid in general, most mutual funds (called open-
ended funds) cannot be bought or sold in the middle of the trading day. You can only
buy and sell them at the end of the day, after they've calculated the current value of
their holdings.

7) Size:

Some mutual funds are too big to find enough good investments. This is especially
true of funds that focus on small companies, given that there are strict rules about
how much of a single company a fund may own. If a mutual fund has Rs.500 cr. to
invest and is only able to invest an average of Rs.5 cr. in each, then it needs to find

41
at least 100 such companies to invest in; as a result, the fund might be forced to
lower its standards when selecting companies to invest in.

8) Inefficiency of Cash Reserves:

Mutual funds usually maintain large cash reserves as protection against a large
number of simultaneous withdrawals. Although this provides investors with
liquidity, it means that some of the fund's money is invested in cash instead of assets,
which tends to lower the investor's potential return.

9) Too Many Choices:

The advantages and disadvantages listed above apply to mutual funds in general.
However, there are over 10,000 mutual funds in operation, and these funds vary
greatly according to investment objective, size, strategy, and style. Mutual funds are
available for virtually every investment strategy (e.g. value, growth), every sector
(e.g. biotech, internet), and every country or region of the world. So, even the process
of selecting a fund can be tedious.

42
 Market Capitalisation and valuation

Market capitalization is the aggregate valuation of the company based

on its current share price and the total number of outstanding stocks. It is
calculated by multiplying the current market price of the company's
share with the total outstanding shares of the company.
Market capitalization is one of the most important characteristics that
help the investor determine the returns and the risk in the share. It also
helps the investors choose the stock that can meet their risk and
diversification criterion.
The simplest definition for market capitalization is best explained by
some simple formulae. Only a public company can have market cap.
Take a company which has issued 100 shares each worth 300 bucks in
the market. This 300 is called the Market price, Example the price which
an investor will need to spend to buy 1 share.
Total market capitalization of this company= 100*300= 30,000

Market cap is a good indicator of what the "perceived" worth of the

company is in public. The fluctuation in its share price has a direct
impact on it. Market cap has a definite value at any instance in the
market.
Calculation methods for valuation are different for different companies.
It also does not have a definite value at an instance always.
An important indicator is P/E ratio. This ratio is generally hovering
around a certain value for shares in a market. This value is calculated by
help of the following statement:
Market Price of share= Earnings per share (EPS) * P/E ratio.

43
 What is EPS?

EPS = (Profit as per P&L statement)/ Total number of shares

EPS again changes from time to time. Profits are usually expected to rise
for public companies after they have raised money. Hence EPS is
expected to rise over a period of time, because till no new equity is
diluted, higher profit will be distributed among same number of shares.
Now when EPS increases, Market price is bound to rise. This is how
shareholders make money. And thus, good financial health means higher
P/E ratio in a healthy market.

To put it simply, the "valuation" will depend on how many times the
EPS you pay to buy a share.This is a very basic statement for public
companies. These values will be looked at when someone thinks of
buying your company. Will they pay just the market price for each share
that is, look at the market cap and just transfer it in their name? No. The
valuation differs, and P/E is just a way to help among many others.
Private company evaluations are more generic, though they largely
depend on "Share capital", i.e. the amount the promoters have invested
in them, purpose of valuation, and the quality of the company and yes-
industry perception.

44
Deciding on whether to invest in stocks or mutual funds is based on
how much of a risk tradeoff you are willing to put your investment
through. For higher returns, you will have to be willing to take greater
risk.

Understanding Stocks and Mutual Funds

When compared on a risk factor, stocks happen to be far riskier than
mutual funds. The risk in mutual funds is spread across and hence
reduced with the pooling in of diverse stocks. With stock, one has to
extensive research before investing, especially if you are a novice
investor. Visit Clear Tax for more details on the various areas of
investments

. In the case of mutual funds, the research is done, and the fund is
managed by a mutual fund manager. This service though is not free and
comes with an annual management fee that is charged by the fund
house.

When investing as a novice

If you are a new investor with little or no experience in the financial
markets, it is advisable to start with mutual funds as not only the risk is
comparatively lesser but also because the decisions are made by an

45
expert. These professionals have the insight to analyze and interpret
financial data to gauge the outlook of a prospective investment.

Tracking your investment

With an investment in mutual funds, you have the benefit of a fund
manager who has extensive expertise and experience in the field.
Whether it is picking the stocks or monitoring them and making
allocations, you do not have to worry about any of it. This service is not
available in the case of stock investments. You are responsible for
picking and tracking your investment.

Risk and Return

It is already established that mutual funds have the advantage of
reducing the risk by diversifying a portfolio. Stocks on the other hand
are vulnerable to the market conditions and the performance of one
stock can’t compensate for the other.

Tax Gains
Remember when investing in stocks, you will be liable to pay 15
percent tax on your short-0term capital gains if you sell your stocks
within a span of one year. On the other hand, there is no tax on capital
gains on the stocks that are sold by the fund. This can mean substantial
benefits for you. The tax saved is also available for you to invest it
further thus making way for further income generation through

46
investment. But you will have to hold on to your equity for more than a
year in order to avoid paying that short-term capital gains tax.

The cost of Investing

Though you have to pay a fee to mutual fund managers unlike in the
case of stocks that you buy individually, the economies of scale also
come into play. It is true that active management of funds is an affair
that does not come free of cost. But the truth is that due to their large
size, mutual funds pay only a small fraction of the brokerage charges
that an individual shareholder pays for brokerage. Individual investors
also have to pay the charges for DEMAT which is not needed in the case of mutual
funds.

Diversification
A well-diversified portfolio should include at least 25 to 30 stocks but
that would be a huge ask for a small investor. With mutual funds,
investors with small funds can also get a diversified portfolio. Buying
units of a fund allows you to invest in multiple stocks without having to
invest a huge corpus.

Control on your investment

In the case of mutual funds, the decision pertaining to the choice of
stocks and their trading is solely in the hands of the funds manager. You
do not have control over which stock is to be picked and for what
duration. As an investor, if you invest in mutual funds you do not have
the option to exit from some stocks that are in your portfolio. The
decisions pertaining to the fate of the stocks rest in the hands of the

47
fund manager. This way, an individual investing in stocks has more
control over their investment than an investor who invests in mutual
funds.

Time
When you invest directly, you will need to invest a lot more time and
research into your stock while in the case of mutual funds you can be
passive. The fund manager is the one who invests his time to manage
your portfolio.

Investment Horizon

When investing in mutual funds, remember that you will have to give
the funds at least 5-7 years to generate good returns as these have a
longer-term growth trajectory. In the case of stocks, you can get quick
and good returns if you choose the right stocks and sell them at the
right time.

48
 Objectives:
 To compare Equity and Mutual Fund Schemes in respect of their
risk & return.
 Analysing the performance of equity shares and mutual fund
schemes with their benchmark NSE CNX Nifty.
 Provide information about pros and cons of investing in Equity
and Mutual Funds .

Scope of the study:

The study is primarily deals with equity and mutual fund
investments .A boom has been witnessed in mutual fund industry in
recent times. A large no. of investors have entered the market and trying
to gain market share in the rapidly moving market. The present study is
an attempt to know the investors perception regarding equities (stock)
and mutual fund with the available avenues to investor. Research has
been carried with the help of primary and secondary data .The study is
restricted to karvy Stock Broking Ltd.Pune city and analysis was done
based on the responses given by respondents/ investors.
Research limitation

 There was time constraint due to which the only 38 responses were
received.
 The research was done at a very early stage as this kind of practical
exposure was new for me.
 Most of the respondents are not responding due to their busy
schedule.

49
 Company profile

The KARVY group was formed in 1983 at Hyderabad, India. Karvy

ranks among the top player in almost all the field it operates. Karvy
Computers shares Ltd is India’s largest Register and Transfer Agent
with a client base of nearly 500 blue chips corporate managing over 2
core accounts. Karvy stock brokers Ltd, member of National stock
Exchange of India. With over 6,00,000 active accounts, it ranks among
the top 5 Depository Participated in India, registered with NSDL and
CDSL karvy COM trade, Member of NCDEX and MCX ranks among
the top0 3 commodity brokers in the country. Karvy Insurance Brokers
is registered as a Broker with IRDA and ranks among the top 5
insurance agent in the country. Registered with AMFI as a corporate
Agent Karvy is also among the top Mutual fund mobilize with over Rs.
5,000 cores under management. Karvy Realty Services, which started in
2006, has quick established itself as broker who adds value, in the realty
sector. Karvy global offers niche off shoring services to client in the US.
Karvy has 575 offices over 375 locations across India overseas at Dubai
and New York. Over 9,000 high qualified people staff Karvy. Karvy –
Early Days: Karvy the name comes from the names of the directors: K –
Mr. Krishna Prasad A- Mr.Arun R- Mr. Radha Krishna V- Mr. Venkat
Krishna Y- Mr. Yogendar.

50
 VISION OF KARVY

“To achieve and sustain market leadership, Karvy shall aim for
complete customer satisfaction, by combining its human and
technological resources to provide world class quality services. In the
process Karvy shall strive to meet and exceed customer’s satisfaction
and set industry standards. Their values and vision of attaining total
competence in their servicing has served as the building block for
creating a great financial enterprise, which stands solid on their
fortresses of financial strength – their various companies. “

MISSION OF KARVY

“Our mission is to be a leading and preferred services provider to our

customers, and we aim to achieve this leadership by building an
innovative, enterprising, and technology driven organization which will
highest standards of services and business ethics.”

51
 Services Offered by KARVY

1. KARVY EQUITY BROKING:

Karvy Stock Broking Ltd offer online trading on key exchanges —NSE
(National Stock Exchange) and BSE (Bombay Stock Exchange). Key
important points trading with Karvy are they make trading safe to the
maximum possible extent by accounting for several risk factors and
planning accordingly. They have created a very robust trading platform
that facilitates customers to trade online not only in equities, but also
buy fixed deposits, mutual funds, commodities, currencies and also
participate in a public issue. Karvy's online platform enables customers
to view their portfolio online and also access various research reports
and views on stocks. It also provides them with a facility to
communicate with Karvy’s research/advisory teams online. So in
summary strong trading platform and strong research reports are key
benefit of Karvy's Stock Broking Ltd.

2. KARVY DEPOSITORY PARTICIPANT

Karvy is providing Demat facility, KSBL [Karvy Stocking Broking Ltd]
is member of NSDL and CSDL for Demat service. Karvy started
membership with NSDL and CSDL in 1998 and emerged as one of the
top-3 depository participants in India, in terms of customers serviced.

52
 3. KARVY WEALTH MANAGEMENT:
Karvy is offering comprehensive wealth management solutions for its
customers through Karvy Private Wealth (KPW) or karvywealth.com.
Karvy wealth managers provide direction to a client’s financial
decisions, enabling him achieve his financial and life goals. As a wealth
manager, we collate the relevant financial information and life goals of
the client, assess his risk tolerance level, examine his current financial
status, and identify a strategy to fulfill his goals.

4. KARVY COMMODITIES BROKING:

Karvy Comtrade Limited (KCTL) or karvycommodities.com is India’s
leading commodities trading house. Karvy started providing commodity
trading in the early phase when Indian market was adopting
commodities trading, so strong business presence as well as award
winning research service. KCTL have presence in wholesale markets
where the commodities are auctioned purely to get a complete sense on
the demand supply for most of the agricultural products. Karvy
Comtrade Limited is having membership with below given commodity
exchanges:

 Multi Commodity Exchange of India (MCX)

 National Commodity and Derivatives Exchange (NCDEX)

 National Multi-Commodity Exchange of India (NMCE)

 National Spot Exchange (NSEL)

 NCDEX Spot Exchange (NSPOT)

53
 Ace Commodity Exchange (ACE)

 Indian Commodity Exchange (ICEX)

5. KARVY CURRENCY DERIVATIVES TRADING:

Currency derivative are part of Karvy Stock Broking Limited, where
Karvy specialized research team provide customized hedging strategies
for importers, exporters and companies with foreign exchange exposure.
Karvy Currency Derivatives Segment is active member of:

 National Stock Exchange (NSE)

 Metropolitan Stock Exchange of India (MSEI)

 Bombay Stock Exchange (BSE)

Karvy Non-banking Financial Services:
Karvy Finance is incorporated in 2009, Karvy Finance is part of Karvy
groups, providing Non-banking Financial Services (NBFC) like personal
loans, business loans, loans against security and so on. Primary focus of
Karvy Finance is on micro & small enterprise secured business loans
with loan against property, loan against gold and loan for small
commercial vehicles.
6. Karvy Insurance Broking Private Limited:
At Karvy Insurance Broking Pvt. Ltd., they provide both life and non-
life insurance products to retail individuals, high net –worth clients and
corporate. With the opening up of the insurance sector and with a large
number of private players in the business, they are in a position to
provide tailor made policies for different segments of customers. Their
journey to emerge as a personal finance advisor, they will be better

54
positioned to leverage their relationships with the product providers and
place the requirements of their customers appropriately with the product
providers. With Indian markets seeing a sea change, bout in terms of
investment pattern and attitude of investors, insurance is no more seen as
only a tax saving product but also as an investment product By setting
up a separate entity, they would be positioned to provide the best of the
products available in this business to their customers.
7. Karvy Distribution of Financial Products:- Mutual Funds
Investment:
Karvy Stock Broking Ltd, provide investment options in Mutual Funds,
National Pension System (NPS), Corporate Fixed Deposits, Capital Gain
Bonds and many more. Advance research and customized solution for
investment is also provided by Karvy.
8. Karvy Registry services for Corporate and Mutual funds:
Karvy Computershare is joint venture between Karvy and Australia-
based Computershare. The Company core business include Issue
registrar, Corporate Shareholder Services and Mutual Fund Services.
9. Karvy Research:
Report Karvy as stock broker is having strong hold in market. Daily
market summary in morning and evening, weekly, monthly and long
term investment research reports are available for register users.
Research reports are also available for commodity trading, Mutual
Funds.
10. Karvy Margin Funding:
Karvy as stock broker provide margin funding to his investors. Margin
against shares option is lso available to get margin on your long term
holdings.

55
 11. Karvy NRI Trading Services:
Invest in Equities, Initial Public Offerings, ETFs, Mutual Funds and
Futures & Options with Karvy NRI trading account. Karvy providing
end to end solution for NRI by opening NRI Trading account, NRI
Demat account, NRI Bank account, Assisted Trading, PAN Card Service
and many more.
12. Karvy Priority Account:
Karvy Priority Account is specially planned account for High Net worth
Individuals (HNIs) and Corporate. This service include stock
recommendations to exclusive trade reports, from various trading
options available to personalized portfolio management, Knowledgeable
Support by research experts, personalized guidance by dedicated
relationship managers and equity advisors, live chat, investor awareness
programs, skype sessions and many more. Minimum requirement for
Karvy Priority account is maintain initial margin amount of Rs. 5 Lac
and above.
13. Karvy IPO Investment:
Investment in IPO is applicable via ASBA process via giving karvy
demat account details.

56
 Competitors of Karvy Stock Broking Ltd.

 India Bull
 Motilaloswal Securities
 Bonaza Securities
 Kotak Securities
 Eastern Financiers
 India Infoline
 Reliance Money
 Indira Securities and etc.

NON-Financial Services

Data Management Service

International BOP
Alternate Energy
Data Analytics

57
 Research Methodology

To define any research problem and give a suitable solution for any research, a
sound plan is inevitable. Research methodology underlines the various steps
involved by the researcher in systematically solving the problem with the objective
of determining various facts.

Research Design
Descriptive research is a study designed to depict the participants in an
accurate way. More simply put, descriptive research is all about describing
people who take part in the study. I want to describe the every
characteristic of my study that’s why I choose descriptive research.

Data Collection Sources

In the study both primary and secondary data have been used.

Primary source

The data required for the study have been collected from.

 Questionnaire &
 External guide

Secondary source

 Website
 Text book
 Articles

Sample size
 The sample size which I targeted was 40 but only 38 of them responded so the
final sample size is 38.

58
  For conducting this research I used Google docs. With the help of my friend
I placed questionnaire in the docs and then forwarded the link to all my
respondents. With the help of the data collected from the respondents.

Data analysis and interpretation

1) AGE GROUP OF RESPONDENTS

Below21 7 18.4%
21-35 20 52.6%
35-45 7 18.4%
45 above 4 10.5%

10.50%
18.40%

1st Qtr
18.40%
2nd Qtr

3rd Qtr

4th Qtr
52.60%

Sample size of my research is 38 and from those 38 respondents more than 50% is between the
ages of 21-35, 18.4% where below the age of 21 and 35-45 and only 10.5% of the respondents
where above the age of 45.
59
ANNUAL INCOME SLAB

Below 1lakh 11 29.7%

1-5 lakh 10 27%
5-10 lakh 10 27%
Above 10 lakh 6 16.2%

16.20%

29.70% 1st Qtr

2nd Qtr
3rd Qtr
27%
4th Qtr

27%

29.7% of the respondents have the annual income slab of below 1 lakh, 27% of the respondents
earn 1-5 lakhs and 5-10 lakhs yearly while 16.2% come in the annual income slab of above 10
lakhs.

2) OCCUPATION

Business 5 13.5%
Private sector 19 51.4%
Public sector 3 8.1%
Student 8 21.6%
Retired 0 0%
Housewife 2 5.4%

60
 5.40%

13.50%
1st Qtr
21.60% 2nd Qtr
3rd Qtr
4th Qtr
8.10% 5th qtr
51.40% 6th qtr

13.5% of the respondents are from business class, 51.4% are working in private sector which is
more than half of the respondents, 8.1% are employees in public sector, the interesting thing to
notice is 21.6% are students and 5.4% of the respondents who invest in mutual fund are
housewife.

3) Which type of fund do you invest in

Equity fund 28 73.7%

Debt fund 2 5.3%
Balanced fund 7 18.4%
Treasury fund 1 2.6%
Sectorial fund 0 0%

61
 2.60% 0%

18.40% 1st Qtr

2nd Qtr
5.30% 3rd Qtr
4th Qtr
73.70% 5th qtr

It has been noticed that 73.7% of the respondents invests in the equity market, 5.3% in debt
funds, 18.4% invests their money in balanced fund and only 2.6% of the respondents invest in
treasury bonds.

4) What is your investment horizon.

Less than 3 year 10 26.3%

3 year 6 15.8%
5 year 8 21.1%
5-10 year 11 28.9%
More than 10 year 3 7.9%

62
 7.90%

26.30% 1st Qtr

2nd Qtr
28.90%
3rd Qtr
4th Qtr
15.80% 5th qtr

21.10%

26.3% of the respondents invest for less than 3 years, 15.8% for 3 years, 21.1% respondents for 5
years tenure, 28.9% of the respondents which is also the highest invest for the tenure of 5-10
year and only 7.9% invest for more than 10 years.

5) Which mode of payment will you prefer.

Instalment 27 71.1%
Lumsum 11 28.9%

63
 28.90%
1st Qtr
2nd Qtr

71.10%

71.1% of the respondents invest in mutual fund through SIP and 28.9% invest through Lump
Sum.

6) Are you aware about direct mutual fund

Yes 25 65.8%
No 13 34.2%

34.20%
1st Qtr
2nd Qtr

65.80%

65.8% people aware about direct mutual fund and 34.2% are not aware.

64
 7) Which type of investment/ risk level do you prefer

Low risk 8 21.1%

Moderate risk 17 44.7%
High risk 12 31.6%
Very high risk 1 2.6%

2.60%

21.10%

31.60% 1st Qtr

2nd Qtr
3rd Qtr
4th Qtr

44.70%

21.1% of the respondents prefer low risk investment, 44.7% in moderate risk which indicates
that more than 60% of the respondents don’t prefer high risk investment but at the same time
31.6% prefer high risk investment and only 2.6% prefer very high risk.

8) Service charges charged by Karvy Stock Broking

High 10 26%
Reasonable 20 53%
Low 8 21%

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 21%
26%

1st Qtr
2nd Qtr
3rd Qtr

53%

9) From which sources you know about mutual fund and equity fund

Self analysis 15 39.5%

Brokers advice 15 39.5%
Friends& relatives 8 21%

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 21

39.5 1st Qtr

2nd Qtr
3rd Qtr

39.5

Only 21% of respondents know by friends and relatives, and 39.5%of them
know by themselves and have the source of brokers advice.

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 Findings

The first and foremost finding is that investor studies the

industry, firm and market before taking investment decision
about investment.

Sample size of my research is 38 and from those 38 respondents more

than 50% is between the ages of 21-35 year, 18.4% where below the age
of 21 year and 35-45 & only 10.5% of the respondents where above the
age of 45.

Among the total respondents more than 50%

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