RESEARCH PROJECT REPORT

ON

MARKET RESEARCH ON INVESTORS ATTITUDE TOWARDS SECONDARY MARKET

PREFACE

Education becomes more meaningful when its theoretical aspects are combined with practical experience. These provide an opportunity to the students to improve their understanding of the studies. Project report is an integrated part of MBA course. The emphasis in the course is providing the student an insight into Indian share market Scenario. The project is designed to enhance the knowledge. The education of future manager would be incomplete without exposure to working in an organization. Therefore a Project assignment is essential academic requirement for all the students.

Reliance Securities, A Reliance Capital Limited Company, is the financial services division of Reliance Anil Dhirubhai Ambani (ADA) Group. Reliance ADA group is among top 3 business houses in India with wide range of presence across various sectors. Group's major interests ranges from communications (Reliance Communications) and financial services (Reliance Capital Ltd), to generation, transmission and distribution of power (Reliance Energy), infrastructure and entertainment. Reliance Ssecurities has over 22 lakhs customers and more then 10'000 branches in around 5000 cities in India. Company is among the largest broking and distribution house of financial products and having share of more then 3% of total stock market volume at BSE & NSE. Rsec.co.in is the web based investment portal (with Online Stock Trading) from Reliance Securities. This website enables its customer to invest & manage most of the services provided by Reliance Securities including Equity (Stock) Trading, Commodity Trading, Derivatives, Mutual Fund Investment, IPO Investment, Life Insurances, General insurances, Money Transfer, Currency Derivatives, Gold Coins and Credit Cards Services. Company recently entered in to Wealth Management with tools like investment in equity-linked portfolio management services, structured products, insurance and mutual funds. The Reliance Securities website uses special security features 'Security Token', which makes your online trading experience more secure without complexity. Trade In: NSE, BSE & MCX-SX, MCX, NCDEX, NMCE

Investment Options
The investment options available with Reliance Securities are as below:

1. Equities

Trading

Delivery,

Intraday,

leveraged

trading

based

on

Cash+Collaterals, Cover order along with stop loss, After market Hours Orders, Regular Stock Purchase Plans, R-Mobile Trading 2. Equities Derivatives Trading 3. Currency Derivatives Trading 4. IPO Investment 5. Commodity Trading (Gold, Silver, Crude etc....) at MCX, NCDEX and NMCE 6. Mutual Fund, Liquid funds, Bonds, FD's Investment, Structured Products, Wealth Management and Portfolio Management Services, Premium Research 7. Life & General Insurance 8. My Gold Plan, Gold ETF's, NRI Investment Services, QFI Investment Services

Reliance Securities Trading Platforms

Reliance Securities provides different platforms for trading: 1. Easy Trade Easy Trade ia a browser based platform for first time investors. 2. Insta Plus Insta Plus is a web browser based trading system which helps you to directly place orders through market watch and helps to apply online in various products such as MF, FD, Bonds, IPO, OFS, AMO orders, Stop loss cover order, Systematic equity plans, etc. 3. Insta Xpress - Live streaming quotes InstaXpress is an EXE based, high speed trading tool that allows you to monitor what is happening in the market at real time speed. It provides an investor with Live streaming quotes & Research Calls, integrated fund transfer system along

with multiple watch list facility. Investor can also do technical analysis with the help advance charting tools. 4. R Mobile Xpress (Mobile Trading) RMobile Xpress is a smart mobile trading application that allows you to be in touch with market anytime and anywhere during market hours at your finger tips.

Reliance Securities Research

Reliance Securities Research Desk provides independent Equity Research to Retail Clients. It has a strong and highly experienced team of Analysts enjoying a rich blend of youth and experience. In terms of sector coverage we cover sectors like Automotives, Auto Components, Capital Goods, Engineering, Cement, Infrastructure, Banking, Software, Pharma, Telecom, FMCG, Media and Oil. The Fundamental Research is broadly idea based and gives a mix of large-cap and mid-cap ideas. actively providing more comprehensive financial solutions to optimize all business units through implementing building a strong platform to enhance a sustainable growth in coming years by consistentyly provide monitoring to prepare defenses of the risks likely to arise. a high integrity value mechanism of quality service standards to its customer. Meanwhile, we strives to improving the sustainably human latest resource quality improvement,integrated branch offices and financial galleries, and technology of financial service facilities, we secure our position in continuation of

Vision and Mission

Vision
To become a world class diversified financial services company through excellent quality services with the highest value of integrity (reliable).

Mission
To To broaden focus its in ability to deliver human comprehensive resources financial competency.

solutions. developing To develop an integrated infrastructure services

Company Brief
PT Reliance Securities, Tbk (herein after we, or Reliance, or Company) is a securities company with business activity as securities brokerage in both equity and fixed income markets, and underwriting activities. Reliance was established in Jakarta on February 22, 1993 by the name PT Istethmar Finas Securities, then in September 13, 1999 the companys name changed to PT Ludlow Securities, and again changed its name to PT Reliance Securities, when it joined Reliance Group on March 28, 2003. Continuing its activity as securities brokerage with broker code LS. The boad of management initiated to carry the Company into higher level and exposure. Good financial reports of previous years made them confident to offer Reliance share to public. May 19, 2005, he Company went public and changed its name to PT Reliance Securities, Tbk. On July 13, 2005 Reliance listed its shares on Indonesia Stock Exchange (was Jakarta Stock Exchange)with ticker coder RELI,making Reliance the first publicly listed joint venture security company in Indonesian Stock Exchange.

Currently Reliance Securities included in the top 20 securities, with a focus on the retail market with 6.000 clients, supported by 29 offices and galleries in major cities in Indonesia.

Management Profile
Anton Budidjaja - Presiden Komisaris

Founder and President Commissioner since 2003, 44 years old, previously worked for Victoria Investindo Advisory as Managing Partner and Panin Group (1993- 2000). Began his career in some local banks since 1992, and received Bachelor of Science in Business Administration from California State University, United States.

Idrus Hermawan Widjajakusuma - Komisaris Independen

Indonesia citizen, born in Malang on June 10, 1969. Held the position as Company Commissioner since 2003. Previously worked for Victoria Investindo Advisory as Senior Manager, Group Head Corporate Finance Division of PT Panin Overseas Finance Tbk (19962001). Began his career in PT Bank Danamon Indonesia Tbk as a manager in Commercial Bank Division in 1995. Received Bachelor of Science in Business Administration from Ohio State Universities Columbus, Ohio, United States in year of 1992. Nicky Hogan - Presiden Direktur Born in Sambas on October 14th 1968, and received his Bachelor Degree in Accounting from Tarumanagara University. Nicky joined in Reliance as Vice President Director since 2007, previously worked for PT Valbury Asia Securities as a Managing Director (2001- 2007). Since 2010 Nicky hold position as President Director. Nicky began his career in Dharmala Group as an Auditor in 1990 and as a Finance and Administration Manager in a subsidiary of Sampoerna Group. His debut in capital market was started in 1998 at PT Sarijaya Permana Sekuritas with last position as Operational Director.

Herry Harto Direktur Born in Jakarta on June 23rd,1974. Held the position as Company Director since 2004. He previously worked for PT Valbury Asia Securities (2001-2004), PT United Capital Indonesia (2000-2001), PT Sarijaya Permana Sekuritas (1997-2000). Received his Bachelor of Economics Degree in Accounting from Tarumanagara University in 1997. Herry is a Broker Dealer professional certificate holder. Anak Agung Gde Arinta Kameswara - Direktur Born in Gianyar, August 6, 1972, Agung is Computer Engineering Bachelor from Gunadharma University, Jakarta. Started his career in 1996 at PT Peregrine Sewu Securities as Database Supervisor at Research Department, his career in brokerage industry moved higher to Database Manager at Research Department at PT ABN Amro Securities (2000), Operational Manager at PT Mahastra Capital (2001), and as Head of Operational at PT Reliance Securities Tbk (2006-2008). Prior to rejoining PT Reliance Securities, Tbk, Agung is Vice President of Operational Division at PT Batavia Prosperindo Securities and Vice President for Online Trading Division at PT Erdhika Elit Securities. Agung is a Broker Dealer professional certificate holder T Ludlow Securities joined Reliance Group and changed its name to PT Reliance Securities. 2004 Head Office Jakarta-Pluit, Branch offices Sudirman Menara Batavia, Malang, and Surabaya-Bangka 2005 PT Reliance Securities went public with the listing of shares in the Indonesia Stock 2006 Exchange established.

Opening of Jakarta-Kebon Jeruk Branch Office Fixed Income brokerage services was launched First employee gathering was held at Bandung. 2007

Opening of Bandung and Yogyakarta Branch Offices Starting its activity as underwriter for both equity and bonds Full remote trading applied in all Reliance Securities branch offices RELI moved from the development board to the main board Reliance Group Budget meeting was held at Genting Malaysia 2008

Inauguration of first and second IDX Corner Reliance at UKDW Yogyakarta and Universitas Surabaya Reliance Securities participate as Sales Agent of ORI004 and ORI005 Opening of Branch Office Bandung Supratman 2009

Reliance Securities participate as Sales Agent of SR001 and ORI006 Opening of Branch Offices in Tasikmalaya, Surabaya-Diponegoro, Denpasar, and Jakarta-Pantai Indah Kapuk As Lead Underwriter of PT Inovisi Infracom, Tbk (INVS) in Indonesia Stock Exchange CSR ORI untuk Bumi and Reliance Peduli Gempa for Padang and Tasikmalaya earthquakes 2010

Acknowledgement for Reliance Securities from Alpha South East Asia As Sales Agent for SR002 and ORI007

The launch of ReliTrade, Reliance online trading facilities, at 17th Reliance Securities anniversary CSR of Sukuk Negara Ritel untuk Restorasi Habitat Badak Bercula Satu held at Ujung Kulon National Park CSR ofORI007 untuk Kearifan Tradisi Suku Dayak Reliance Group employee gathering at Lido, Sukabumi Reliance Securities issued its first bonds, Obligasi Reliance I Tahun 2010 with nominal value of Rp 40 billion Solo Branch and Jakarta Bumi Serpong Damai Branch Opening Aware that it cant exist without others, Reliance is committed to developing its environment, with emphasis on the countrys capital market, and the sustainability of its nature environement. We devote some of the companys resources to upgrading the quality of Indonesias young fellows to become reliable professionals, and donate some of our profits to nature conservation activities.

2011

September

Peresmian Pojok Bursa BEI-Universitas Jember dan Galeri Investasi Reliance 2011 diadakan 2011 Sukukku 2010 pahlawan 2010 bagi di Universitas April Surabaya Maret Sepatuku Agustus dunia Juni

Partisipasi dalam Stock Exchange Game tingkat Nasional untuk SMA yang

ORI007 untuk Kearifan Tradisi Suku Dayak. Penjaga zamrud khatulistiwa,

17 Tahun Reliance Securities: 1,7% dan 17 minggu untuk Bumi Indonesia

2010

Mei

Peresmian Pojok BEI Universitas Brawijaya dan Galeri Investasi Reliance 2010 diadakan 2010 Malang 2010 Sukuk Ritel untuk Restorasi Habitat Badak Bercula Satu

April di Universitas Surabaya April

Partisipasi dalam Stock Exchange Game tingkat Nasional untuk SMA yang

Partisipasi pada Pra-Muktamar Muhammadiyah di Universitas Muhammadiyah

Maret

2010

Maret

Peresmian Pojok BEI Universitas Negeri Malang dan Galeri Investasi Reliance 2010 Reliance

Maret

Peresmian Pojok BEI Universitas Muhammadiyah Malang dan Galeri Investasi

2010

Februari

Kuliah Umum Pasar Modal Universitas Pembangunan Nasional Veteran Jakarta 2009 Reliance Peduli Gempa

November

2009 ORI untuk Bum

Agustus

Equity Brokerage

With retail equity brokerage as its core, Reliance strives to expand its base by establishing as many branches as possible throughout Indonesia. Today, tens of branches, IDX Corners, dan investment galleries are running at most of primary cities, and a lot more are on the pipeline. All outlets are equipped with reliable human resources, advanced technology, and responsive back-office support, all three integrated are known as Reliance outstanding services that clients have been relying on in their daily transaction activities. In addition, ReliTrade, online trading facility of Reliance Securities, proved very helpful in make buying and selling shares. In addition to real-time transaction that greatly save time and cost, the owners of capital equip ReliTrade application with the information real-time market, news of up-to-date, reliable research analysis, and control devices are good against his stock portfolio

ABOUT THE COMPANY

Reliance Securities Ltd (Reliance Securities), a Reliance Capital company is one of the leading brokerage houses and distribution arms of the Reliance Anil Dhirubhai Ambani Group (RDAG). The firm was established in 2005 and offers comprehensive services such as trading in equity, derivatives, investment banking, portfolio management services (PMS), wealth management services (WMS), research & distribution of financial products such as mutual funds, insurance and IPOs among others. Reliance Securities is present in the currency and debt market segment as well.

Market & Network

Reliance Securities acquired memberships of the premium stock exchanges in India, namely BSE and NSE in 2005 and 2006 respectively. It offers trading facilities in the

cash and derivatives market segment of both NSE and BSE. The company provides trading in the debt market segment as well. It also acts as a DP with CDSL. Reliance Securities website www.rsec.co.in also facilitates trading in commodities for its partner company, Reliance Commodities Ltd which,holds memberships in NCDEX, MCX and NMCE. Reliance Securities is headquartered in Mumbai with operations across all major Indian cities. Majority of the companys terminals are located in Mumbai. It has a vast network spread across 3,393 cities, with 116 offices, and 2,822 equity broking terminals allocated to 2,943 registered sub-brokers As on Dec 31, 2009, Reliance Securities had 73 NEAT terminals, 40 BOLT terminals and 2,709 CTCL licenses. During the same period, the company added 1,84,550 client accounts of which 1,82,720 were e-broking accounts. Products and services Trading: Reliance Securities facilitates trading activities in all the major market segments including, cash, derivatives, debt and currency futures. The company offers online trading facility through its website, www.rsec.co.in. Reliance Securities has recently migrated all its customers to its new trading platform, Insta Plus and Insta Express. Apart from internet trading, customers are also provided with the option of trading through the Call & Trade facility and through RSec.mobi, a personal mobile phone service. Clients can place and track their orders on BSE and NSE on a real time basis with access to RSec.mobi. This facility is available to Reliance Securities trading account holders across all mobile platforms independent of device, operator and the underlying carrier technology. Investment Banking: Reliance Securities also offers Investment Banking services. Distribution of Financial Products: Reliance Securities is involved in the distribution of financial products such as mutual funds, insurance and IPOs. DEMAT Services: The company offers DEMAT services through Reliance Capital and is a registered member with NSDL and CDSL.

PMS: Reliance Securities is a SEBI registered portfolio manager and offers customised services to their client which is designed to meet their investment objectives. These services cover all administrative aspects while providing periodic reporting to clients. WMS: The Company makes available Wealth Management Solutions to its customers Research: Reliance Securities offers research based services to its clients. Its research wing encompasses 100 companies across 20 sectors. This division offers complete research solutions on IPOs, mutual funds, economic research and other special reports and newsletters. Insurance: Reliance Securities also provides a range of insurance products including life insurance and general insurance through Reliance Composite Insurance Broking NRI Services: NRI clients can place orders using the new their trading platform such as Insta plus and Insta Express. NRIs can execute their securities transactions under the provisions of the RBI guidelines for NRI Portfolio Investment Scheme (PIS). Future Plans Reliance Securities plans for CY10 include offering new products to its clients. In the near future, the company also plans to raise additional capital through the private placement route. During the above period, it plans to add 100 terminals, open 20 new branches apart from adding 100,000 new E-broking accounts. Additionally, it intends to recruit 250 more employees

CONTENTS
PAGE NO Chapter I Chapter II Introduction Research Methodology Objectives of the Study Research Design Sample Design Methods of Data Collection Analysis and Interpretation Limitations of the project Chapter III Analysis and Interpretation of Data Chapter IV Findings, Suggestions and Conclusion Findings Suggestions Conclusion Bibliography Annexure

INTRODUCTION The past twenty five years have witnessed a process of accelerating change in the worlds financial markets. Driven by an interacting process of liberalization and innovation, regulations have been removed, New product have emerged and old boundaries between financial intermediaries have been blurred. At the same time, growth of capital markets has posed new challenges to economic and financial stability. The role of Indian capital market which is to provide long term resources required by industries for investment has observed buoyancy in share market with the liberalization of industries and fiscal policies of the government. Finance, the lie blood of industry is mobilized especially through Secondary Market Investors can obtain news of upcoming shares only on the secondary 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 Secondary 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 secondary 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.

Introduction of Secondary Market

The secondary market, also called aftermarket, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. Another frequent usage of "secondary market" is to refer to loans which are sold by a mortgage bank to investors such as Fannie Mae and Freddie Mac. The term "secondary market" is also used to refer to the market for any used goods or assets, or an alternative use for an existing product or asset where the customer base is the second market (for example, corn has been traditionally used primarily for food production and feedstock, but a "second" or "third" market has developed for use in ethanol production). With primary issuances of securities or financial instruments, or the secondary market, investors purchase these securities directly from issuers such as corporations issuing shares in an IPO or private placement, or directly from the federal government in the case of treasuries. After the initial issuance, investors can purchase from other investors in the secondary market. The secondary market for a variety of assets can vary from loans to stocks, from fragmented to centralized, and from illiquid to very liquid. The major stock exchanges are the most visible example of liquid secondary markets - in this case, for stocks of publicly traded companies. Exchanges such as the New York Stock Exchange, London Stock Exchange and Nasdaq provide a centralized, liquid secondary market for the investors who own stocks that trade on those exchanges. Most bonds and structured products trade over the counter, or by phoning the bond desk of ones broker-dealer. Loans sometimes trade online using a Loan Exchange. In the secondary market, securities are sold by and transferred from

one investor or speculator to another. It is therefore important that the secondary market be highly liquid (originally, the only way to create this liquidity was for investors and speculators to meet at a fixed place regularly; this is how stock exchanges originated,

see History of the Stock Exchange). As a general rule, the greater the number of investors that participate in a given marketplace, and the greater the centralization of that marketplace, the more liquid the market. Fundamentally, secondary markets mesh the investor's preference for liquidity (i.e., the investor's desire not to tie up his or her money for a long period of time, in case the investor needs it to deal with unforeseen circumstances) with the capital user's preference to be able to use the capital for an extended period of time. Accurate share price allocates scarce capital more efficiently when new projects are financed through a new primary market offering, but accuracy may also matter in the secondary market because: 1) price accuracy can reduce the agency costs of management, and make hostile takeover a less risky proposition and thus move capital into the hands of better managers, and 2) accurate share price aids the efficient allocation of debt finance whether debt offerings or institutional borrowing. he term may refer to markets in things of value other than securities. For example, the ability to buy and sell intellectual property such as patents, or rights to musical compositions, is considered a secondary market because it allows the owner to freely resell property entitlements issued by the government. Similarly, secondary markets can be said to exist in some real estate contexts as well (e.g. ownership shares of timeshare vacation homes are bought and sold outside of the official exchange set up by the time-share issuers). These have very similar functions as secondary stock and bond markets in allowing for speculation, providing liquidity, and financing through securitization.1) to facilitate liquidity marketability of long term instrument. 2)to provide instant valuation of securities caused by changes in the environment.

Market Actual or conceptual place in commercial world where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter. Markets include mechanisms or means for (1) determining price of the traded item, (2) communicating the

price information, (3) facilitating deals and transactions, and (4) effecting distribution. Market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it. All markets, ultimately, consist of people also called marketplace. Buyer 1. Party which acquires, or agrees to acquire, ownership (in case of goods), or benefit or usage (in case of services), in exchange for money or other consideration under a contract of sale also called purchaser. 2. Professional purchaser specializing in a specific group of materials, goods, or services, and experienced in market analysis, purchase negotiations, bulk buying, and delivery coordination. Seller Entity that makes, or offers or contracts to make, a sale to an actual or potential buyer. Also called vendor, particularly the one selling a real property. Negotiation 1. General: Bargaining (give and take) process between two or more parties (each with its own aims, needs, and viewpoints) seeking to discover a common ground and reach an agreement to settle a matter of mutual concern or resolve a conflict. 2. 3. 4. Banking: Accepting or trading a negotiable instrument. Contracting: Use of any method to award a contract other than sealed bidding. Trading: Process by which a negotiable instrument is transferred from one party (transferor) to another (transferee) by endorsement or delivery. The transferee takes the instrument in good faith, for value, and without notice of any defect in the title of the transferor, and obtains an indefeasible title. Business Economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. Every business requires some form of

investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis.

Intermediary Firm or person (such as a broker or consultant) who acts as a mediator on a link between parties to a business deal, investment decision, negotiation, etc. In money markets, for example, banks act as intermediaries between depositors seeking interest income and borrowers seeking debt capital. Intermediaries usually specialize in specific areas, and serve as a conduit for market and other types of information. Also called a middleman. See also intermediation. Reseller One who buys goods from a manufacturer and resells them to customers unchanged

Recent Developments in Secondary Commodity Markets Since mid-1997 - that is, just before the beginning of the crisis in Thailand s financial and foreign exchange markets - prices of Secondary commodities as a group have fallen by more than 10 percent.(1) These price declines are sufficiently great in magnitude to have far reaching implications for producers and consumers around the world.

Effects of the Asian Crisis To a large degree these price declines are associated with the Asian crisis. During the early and mid-1990s, consumption of primary commodities in most Asian developing countries increased at rates much higher than in the rest of the world. Asian developing countries accounted for about two-thirds of the increase in world consumption of petroleum products over the period 1992-96, and their share in world consumption

increased from 12 percent to 15 percent. Korea and the ASEAN-4 countries (Indonesia, Malaysia, the Philippines, and Thailand), in turn, accounted for about one-half of the increase in consumption of petroleum products in Asian developing countries, and the share of these five countries in world consumption rose from 5 percent to 6 1/2 percent. A similar pattern of growth in consumption is observed for base metals, rubber, coarse grains, oil meals, and fats and oils. For most of these non-fuel commodities, the share of Asian countries in world consumption in 1996 was much greater than their share in the world consumption of petroleum products. China's contribution to the growth in the markets for these commodities, however, has tended to be much greater than that of Korea plus the ASEAN-4. In the countries most directly affected, the Asian crisis has brought in its wake much reduced construction activity, much higher import costs in terms of national currencies, less available credit to finance imports, and, at a minimum, sharp reductions in demand. These conditions have led to reductions in the rate of growth of demand, not only in the ASEAN-4 countries and Korea but also, through the spillover and contagion effects of the crisis, in many other countries in Asia and elsewhere. Thus certain commodity markets that as recently as mid-1997 were expected to show a high rate of growth of demand are now facing a period of considerable uncertainty with regard to demand prospects. Furthermore, for some non-fuel commodities such as timber, rice, natural rubber, and vegetable oils, the large depreciations of currencies of the southeast Asian countries may also have had supply effects insofar as they create incentives to increase exports from current inventories and to increase current and prospective production.

Effects of Weather This year weather conditions generally favorable to crop production have also been an important factor that has tended to weaken the prices of several agricultural commodities. This seems true notwithstanding the unusual weather patterns in many parts of the world that have been attributed to El Nino and have received much press coverage.

At least so far, the adverse consequences of El Nino for commodity production that are sufficiently great to have discernible effects on world prices for individual commodities have been limited to the fish catches off the west coast of South America and to palm oil production in southeast Asia. Elsewhere - for example, in the case of cereal production in southern Africa - El Nino may have reduced production locally, but the consequence for world prices is not of great importance. In addition, warmer than usual weather this winter in the Northern Hemisphere has reduced the demand for heating oil and hence contributed to the downward trend in the price of petroleum and other energy commodities. Developments in Specific Markets The interplay of the Asian crisis and other factors affecting commodity markets in recent months comes more into focus in a review of developments in specific primary commodity markets. Price decreases in excess of 10 percent (with prices measured in terms of SDRs) over the period June 1997 through January 1998 that were in some way associated with the effects of weaker demand from Asian countries were recorded for nearly one-third of the commodities included in the IMF's commodity price index. The price declines for five commodities - copper, nickel, natural rubber, wool, and hides appear to be associated mainly with the Asian crisis. The Asian crisis also played an important role, but probably not the predominant role, in the price declines of four other commodities - crude petroleum, timber, zinc, and lead. For certain other commodities, such as aluminum, iron ore, meat, maize, and soybean meal, ...

Withdrawal of IPOs: Another problem lies in the fact that these days, IPOs are increasingly being withdrawn. An expert has rightly said that there is no point expressing disappointment in the withdrawal of the IPOs because it may be taken not as an indication of failure of the company and hence the secondary market but it may be considered as a disagreement of

price between the seller and the buyer. The secondary markets are undulating the world over. The incidents occurring in the secondary markets are reflections of what is actually happening in the secondary markets. It was fathomed that the IPOs, which were lately taken back had very "aggressive" price bands. The price bands could have been aligned as per existing conditions of the market. The lead managers responsible for the IPOs may also be blamed for the catastrophe. Few are of the opinion that lack of judgment may have led to the withdrawal. "Investors fatigue" is being accounted for in the withdrawals. "Cornering" of shares: Recently, there was an instance when investors "cornered" shares, which were to be alloted to the public. The investor was actually a big investor who camouflaged as a small investor cornered many shares. The most important factor shaping in today's global economy is the process of globalization. Indian companies are moving in search of low-cast markets, technology is driving growth in production and competition is becoming more intense. A second factor is the fastest growth in private capital flows, mainly short-term flows by banks and financial institutions, portfolio flows by mutual funds and pension funds and foreign direct investment into India. A third factor is the increasing share of India and other emerging market economies in world trade. The outburst in communication technology has led to greater integration of Indian financial markets across the world. The impact of these changes could be felt from the extremely buoyant activity in Indian stock markets. A number of foreign financial service providers have entered into the Indian financial market like Morgan Stanley, Templeton, and Goldman Sachs. Currently FII investment is at $ 6.5 Billion compared to $ 2 Billion in 2001. The stock market is booming with Sensex hovering around 16000-17000. SEBI has put in place appropriate guidelines and controls to regulate the markets in tune with the changing environment and attendant risks. All this is happening because of large amounts of investment in the country. People often invest in various asset classes to: * To beat Inflation

* To fund future needs * To meet contingencies * To maintain same standard of living after retirement All these factors matters a lot to the investors and the mutual fund route is one way through which people can meet these needs. Free economies are generally characterized to have financial markets to serve as channels through which the savings of the society are made available to business enterprises. Such financial markets may be classified as (1) Capital market, and (2) Money market where the former refers to the market mechanism which envisages institutional arrangements for marketing of long term and equity claims such as equity shares, preference shares, debentures, bonds, etc., while the latter refers to the market mechanism which concerns with floating of liquid funds and their short term uses in trade and industry through the banking system. The capital market which concerns with demand and supply of long term funds is again dichotomized as primary or new issue market and secondary or stock market where the former deals with new securities offered to the investing pubic, while the latter deals with the existing securities. The joint stock companies raise funds from new issue markets but such new issue are also listed with stock markets which provide them a regular market, ensure regular valuation of and stability in prices of such securities, assure safety in dealings of the securities, channelise funds in the desired direction and ensure wider ownership of the securities. The stock exchanges are, thus, primarily concerned with providing marketability to the existing securities but these also activate the new issue markets which serve as primary source of funds to the industrial enterprises for their new projects or for expansion, diversification or modernization of existing ones. Both the primary and the secondary markets are integral parts of the capital market and are susceptible to common influences. Public responses are generally encouraging in the new issue market when there is boom in the stock market and vice versa. Similarly, the secondary market is very sensitive to the impact of development in the country and the same is transmitted to the new issue market.

New issues include initial issues as well as further issue where the former refers to the securities issued buy the companies for the first time either on incorporation or on conversion from private to public company while the latter refers to the new issues floated by existing companies which needed funds for expansion/ diversification/ modernization. The initial and further issues may be combined under new money issue which refer to the issues for mobilization of new money for the corporate enterprises and there can be no new money issue which include bonus/capitalization issues and exchange issues where the former results from the capitalization to retained earnings enabling existing shareholders get new shares without paying and the latter results from conversion of private company into public, amalgamation, merger and equity dilution by FERA companies. INITIAL PUBLIC OFFERINGS (IPO) A corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the secondary market. It is the largest source of funds with long or indefinite maturity for the company. IPO Stocks: When the company wants to release their shares into the market for the first time, they will invite the public to participate in an exercise called the IPO (Initial Public Offering). This is when you see people filling in application forms and buying bank drafts to purchase the company's shares (some countries do it electronically). Some call it "applying for new shares". Prices when applying for new shares are always much cheaper than what it should be listed in the market later. However, if it is a very attractive company, there will be more people who will participate in the IPO exercise and the draw-lots method will be used to determine who will be allocated the shares. Then, after the first stage, the company's shares will be listed in the stock market. That is when if you have managed to purchase the shares during the IPO offering, you will be able to sell them into the market to buyers who want a part of these shares.

Buying stocks through applying for IPO shares in general is always a safer method of investing in the stock market as most companies price them attractively.

FUNCTIONARIES OF INITIAL PUBLIC OFFER The functionaries in IPO are those concerned with the formation of joint stock companies and the issue of their securities to the public. Public issue is essentially an exercise involving active participation of a number of agencies. At earlier stages it was sole effort on the part of the company and its personnel. However with the growth of the number of public issues and the complexities in the efforts involved, it has now become necessary to enlist active participation and support of a number of agencies in making any public issue a success. The promoter, as a principal representative of the company which is making the public issue, should be clear in his mind about the number of agencies involved and their respective roles in the entire exercise so as to be able to coordinate effectively the efforts of these agencies. These functionaries are: Promoters Modern industrial enterprises require large amounts of capital which can only be raised by resorting to the joint stock company is done by company promoters and syndicates. It is the promoter who is responsible for conception or discovery of the idea to exploit the possibility of some industrial proposition. He has to work up details, formulate the financial plan, which he usually does with the help of an issue house and finally he has to put his proposition into active operation. The work of the promoter entails difficulties and risks and sometimes he has to stake his whole fortune and reputation in order to make the venture a success. Prior to founding the company a lot of expenditure has to be incurred by the promoter on employment of engineers, technical and other experts. In case the company is successfully established and investors come forth to take up its shares, the promoter is duly rewarded, otherwise he stands to lose not only his money he had sunk in the venture but his reputation as well. The promoter, if he is well endowed financially, will work alone, but in the case of projects of large dimensions he usually form a syndicate. All members of the syndicate work up the possibilities of the proposition and undertake the investigation and

examination of the scheme. It may be turned over to the technical staff employed and on its favorable report the formulation of the financial plan will be taken up by the financial experts who are supposed to be well conversant with the conditions in the capital market. After completing the financial plan, the work of drawing up the prospectus, the memorandum of association and articles of association for the formal incorporation as a company is proceeded with. After all the formalities are completed, the new company is ready to be launched and its issue is to be placed before the public. Managers to the issue These persons are actively associated in the selection of various agencies involved with new issue planning the timing of the issue, strategies to be adopted by way of publicity and marketing of the issue, etc. they advise the company on selection of the registrars to the issue, underwriters, brokers and bankers to the issue, advertising agents, printer etc. and also give a sense of direction to the various agencies involved in the entire issue. Besides, the other activities mainly performed buy them are drafting of prospectus, preparing project profiles for underwriters, preparing budget of expenses, suggesting the appropriate timings for the public issue, assisting in marketing the public issue successfully, etc. there are a number of agencies specializing in the role of managers to the issue. These merchant banking divisions of some all India financial institutions, subsidiaries of commercial banks and also some private agencies where traditional stock brokers have graduated into providing specialized merchant banking services. SEBI has made the registration of merchant bankers compulsory to ensure that only professionals with requisite qualification and financial background enter into the job. These MBs are classified into four categories where the first category MBs must have a minimum net worth of Rs. 100 lacs and can undertake all activities of issue management (preparation of prospectus, determining financial structure, final allotment and refund of subscription) portfolio management, underwriting, consultant or advisers in the issue. The second categories of MBs must have a minimum net worth of Rs. 50 lacs and can undertake all activities except issue management. The third categories of MBs must have a minimum net worth of Rs.20 lacs and can undertake works of underwriter,

adviser and consultant while there is no minimum net worth requirement for fourth category of MBs but they can function as adviser or consultant only. Registrars The registrars sometimes, also called the issue house are responsible normally for receiving the share applications from the various collection centers through controlling branches of bankers to the issue, analyzing them, recommending the basis of allotment in consultation with the managers to the regional stock exchange for approval arranging for dispatch of allotment letters and preparing the register of members, etc. their job normally starts with the opening of the subscription list, and continues till the share certificates are dispatched, and register of members along with other related registers/details are handed over to the company. Sometimes, the registrars to issue continue their association with the company in the role of share transfer agents, even after the issue is completed. Underwriters The underwriters are the people who actually ensure that the company is able to raise the capital issued by it for a commission charged by them. They make a commitment to get the issue subscribed either by others or themselves. Usually the underwriters can be divided into two categories, namely, financial institutions and banks, on the one hand, and broker underwriters and approved investment companies/trust, on the other. Brokers These are the people who actually bring the prospective investors and the company together. It may not be an exaggeration to state that the success or failure of a public issue depends to large extent on the reaction of the brokers. Generally, they are the members of recognized stock exchanges, with a view to providing better and professional services to investing public and to promote development of capital market on healthy lines, the government has since allowed multiple membership to members of stock exchanges and accorded recognition to corporate entities and the financial institutions including subsidiaries of the banks.

Bankers These are the commercial banks, which will receive the application money along with the share application forms from the prospective investors. Depending upon the size of the issue, at least 4 or 5 banks are designated as bankers to the issue. Different branches of these banks are named at various locations where such application money is accepted. These collecting branches send the application forms and the money received by them to specified branch, where the details of the application are consolidated. Such specified branch of the banker to the issue is called controlling branch/ the controlling branch is usually selected in the city where the managers to the issue/registrars to the issue/registered office of the company is situated. However, it is not necessary that controlling branch should be at a place where the managers to the issue/ registrars to the issue/registered office of the company is situated. Publicity and advertising agents Public issue is an effort to motivate and persuade members of the public to invest in the shares of the company. It is, therefore, essential that the general public is made aware of the company, its activities, its plans for future, etc. it is of vital importance that publicity is given before the public issue by giving newspaper and TV advertisements. Press releases, press conference, leaflets and brochures, hoardings and posters and even audio visual shows are the usual media of publicity used for public issue. There are some advertising agencies, which specialize in financial advertising and publicity campaign for public issues. Financial institutions Term lending financial institutions at the time of sanctioning underwriting support loans to the company, usually stipulate that the draft of the prospectus and also the proposed program for public issue is approved by them. The three principal all India financial institutions are the IDBI, IFCI and ICICI. Even when all the three institutions jointly finance a project under their participating finance scheme, one of them is generally chosen as the lead financials institution which acts on behalf of the other two. Hence, it is generally adequate if the company obtains the necessary approval from the regional office of the lead institution only. In some cases where other institutions like the LIC, GIC, UTI, etc. have also given financial assistance,

it might be necessary to seek separate approvals from them, if insisted for. But generally an advance copy of the draft prospectus is sent to them with a request forward their comments, if any, direct to lead institution. Other Agencies In addition, the company will also have a interaction with other agencies like auditors, legal advisors, taxation or technical experts whose names or statements are mentioned or quoted in the prospectus. Government/Statutory Agencies Besides the various agencies which are directly connected with a public issue whose efforts will have to be coordinated by the company, there are some statutory/government agencies that are connected with public issue. These are: (1) SEBI which provides guidelines for public issue, (2) registrar of the companies with whom the prospectus has to the filed and registered before the public issue under section 60 of the companies act, 1956, (3) reserve bank of India from whom necessary permission has to be obtained for non resident investment, of any in the company, (4) the stock exchanges where the companys share are to be listed (5 industrial licensing authorities for necessary industrial license to be obtained for the project or other statutory bodies like DGTD etc. with whom the capacity of the project has to be registered, and (6) pollution control authorities and other local authorities from whom the clearance may have to be obtained and such clearance is referred to in the prospectus.

A NEW CONCEPT OF IPO MARKETBOOK BUILDING SEBI guidelines defines Book Building as "a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and builtup and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document". Book Building is basically a process used in Initial Public Offer (IPO) for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date. As per SEBI guidelines, an issuer company can issue securities to the public though prospectus in the following manner: 1. 100% of the net offer to the public through book building process 2. 75% of the net offer to the public through book building process and 25% at the price determined through book building. The Fixed Price portion is conducted like a normal public issue after the Book Built portion, during which the issue price is determined. The concept of Book Building is relatively new in India. However it is a common practice in most developed countries. Difference between Book Building and Public Issue In Book Building securities are offered at prices above or equal to the floor prices, whereas securities are offered at a fixed price in case of a public issue. In case of Book Building, the demand can be known everyday as the book is built. But in case of the public issue the demand is known at the close of the issue.

The book building process:

The company approaches lead manager for IPO

The company and lead manager suggest a price band at which shares are to be offered

Application are invited

Based on demand for the shares a certain price is established by promoters and the lead manger

The allotment is made on the basis of the market clearance price

Post issue the price stabilization is undertaken by the lead manager.

WHAT SEBI DID TO ENCOURAGE RETAIL INVESTOR

SEBI has announced a series of measures to encourage retail participation in the secondary market. This is perhaps the first instance where the market regulator has got the timing of reform measures spot on.

Coming close on the heels of the hugely successful Maruti IPO, these measures should arouse retail interest in some of the big public offers expected in the near future BPCL, Idea Cellular, TCS and Nalco. The principle of these changes seems to be that greater participation of retail investors in the secondary market is possible only when they have a reasonable chance of making gains, certainly not the case earlier. To enable such participation, Sebi has adopted a two-fold approach. First, the market watchdog has made sure that retail investors actually get an allotment in book-built IPOs. Hence, the 10% increase in the allocation for retail investors. But more significant is the change in the definition of what constitutes retail from those applying for up to 1,000 shares to applications for shares worth Rs 50,000 or less. This would ensure that retail is truly retail. Take the i-flex IPO, priced at Rs 530 a share. An application for 1,000 shares entailing investment of Rs 5.3 lakh would have qualified for the retail category. Second, to ensure some quality, the regulator has introduced the concept of net tangible asset, making certain that issuing company has some pre-IPO history. Additionally, to discourage fancy ideas being sold to public and subsequently abandoned (plantation schemes), issuers have been asked to tie-up funds for a project before the issue. Of course, willful defaulters have been barred. Lastly, to fix accountability, the CEOs or the CFOs of the issuing company would have to certify disclosures in the offer document. These measures should translate into higher allotment for retail investors and keep a check on the quality of issuers as well. The decision to disallow withdrawal of bids by institutional investors and the shift to price band instead of a floor price will prevent manipulation in pricing and subscription, both inimical to retail interest while the availability of a green shoe option should deliver price stability post listing in the case of over subscription. Beyond this, there is precious little a regulator can do. The rest is upto the market and investors. HOW TO BE WATCH FUL OF IPO BOOM The Indian capital market is on the verge of an unprecedented IPO boom. Reports emanating from the office of the Securities and Exchange board of India clearly indicate that the year 2004 is all set to emerge as a record breaking year for initial public offer as over 600 companies big, medium as well as small are planning to raise a whopping sum

of Rs. 60,000 crore! Interestingly, it had taken 15 years for over 5,600 companies to raise this amount! The 2004 performance will, thus, be a historical feat in the realm of the Indian capital market. Of course, the IPO market was literally comatose for the last six years after the previous five-year (1992-96) boom period when about 5,000 companies had raise around Rs 45,000 crore! At least one third of this amount has vanished into thin air as several cheaters, unscrupulous businessmen belonging to select industrial groups and fly by night operators had palmed off worthless scrap papers in the name of share certificates to millions of hapless investors. The watchdog could not see in which direction the promoters fled after downing the shutters of their companies and stock exchange authorities took easiest route to forget about the fraud by de-listing the shares of these companies. And the poor investors are still burdened with these worthless papers, originally valued at millions of rupees. This body blow was enough to disenchant the investing public from the new issue market which wore a deserted look for the last six years. But now that business activity has picked up, economy is on the path of rapid growth and wheels of industries have started running at a fast pace, the new issue market is showing some activity once again. On the one side, the government is in dire need of funds to meet its budgetary plans and, for this, disinvestments of PSU offers the easiest route. And on the other hand, with business activity picking up, there is need for larger production of industrial and consumer goods, which, in turn, needs funds for expansion and setting up new plants. At he same time, as interest rates on various instruments of saving have come down drastically and equities have emerged as more remunerative avenue for investment, the public is willing to go for equities. The buoyancy in the stock market has further aided this trend. Taking advantage of this favorable climate, over 600 companies have planned to come out with issues to raise over Rs 60,000 crore. It is almost certain that cheaters and looters among businessmen will once again be at their game mopping up funds through bad or bogus issues. Lured by hefty fees and heftier out of pocket expanses, merchant bankers will also try to hard sell these shares. The capital market watchdog, SEBI has already washed its hands of any say in it by declaring that SEBI does not take any

responsibility either for the financial soundness of any scheme or the project for which the issues are proposed to be made or for the correctness of the statements made or opinion expressed in the offer document. The SEBI clarification raises a pertinent question: have we moved forward or backward from the controller of capital issues days in investor protection? By and large, merchant bankers are more interested in their fees rather than in the quality of the issues. Can you rely on analysts? Just recall the paeans they had sung on issues which shook the very foundation of a giant institution like UTI The best thing for investors to do to ensure that thy are not cheated in this IPO boom, is to follow the following evaluation process THE EVALUATION PROCESS Backed by aggressive merchant bankers, the pink papers, and gung ho TV channels. Rs. 40,000 crore is hard to resist. But dont forget that your personal rs 4000 are as valuable to you as it will be with a couple of zeroes more. Before you jump on to the bandwagon. Do your homework. Its not easy to analyze the performance even of al listed company that has been around for a while and has a record of market performance; for a company making an initial public offer, this analysis is rather more difficult. But some point to be considered are as follows THE BUSINESS Make sure you understand the companys business. The attempt should be to understand the long-term sustainable advantage of the business and the companys position in it. The prospectus has a section dedicated for such information and this is a must read. A voluminous offer document can seem daunting but if you focus on the key aspects, it gets less tedious. Study the document to understand product portfolio, competitive strengths, new business initiatives and strategy, regulations and so on. THE COMPANY Next, choose companies with leadership positions. Three successful recent issues have been Maruti, TV today and Patni computers. Maruti is an industry leader and the largest passenger car manufacturer in India with a diverse product portfolio, which

includes 10 basic models with over 50 variants. In 2003, Marutis share stood at 54.6 percent; the balance was divided among nine other manufacturers. Similarly, TV Today is Indias leading news broadcaster and Patni computer is Indias largest IT services company. THE PROMOTER An old business adage says, its better to have an a team with a c team with an a product, and even better to have an a team with a a product. After all its people who run the business. Hence, its important to focus on the credentials of the promoter and key management figures. Invest in companies with a proven management track record, since its the management philosophy and ability that determines attitude towards minority shareholders and the likely success of a venture. For instance, the promoters of Indraprastha gas and Maruti have proven management credentials. On the other hand, theres a Tips industry, where there were allegations against one to the promoters in the Gulshan Kumar murder case such issues are best avoided. THE LOCK IN During an IPO, the underwriter makes the companys key shareholders sign a lock-in agreement. The agreement is legally binding on the promoters and other key shareholders, prohibiting them from selling their shares for a specified period of time. The inevitable supply overhang when these previously restricted investors are permitted to sell shares can put downward pressure on the stock price. For example, in Patni computers, the lock in period for key promoters is three years, but for general Atlantic, a foreign venture capital investor holding 28.3 percent of outstanding shares, the lock in period is 180 days from listing. THE FINANCES A good management and a sound business model count, but what matters most is performance. Check for consistency in revenue and profit growth and margins for at least three years before the IPO. Also, check if the company has an overly high debt equity

ratio, or carries contingent liabilities, or has disputed tax claims, or faces litigation in short, factors bearing on the companys operations and results. THE RISK This is the most relevant part of the offer document. Although the offer document is tailor made to sell the issue, the risk factors help you get a fair idea of the impact of such risks on the companys operations. For example, in the case of Bharti Televenture the biggest risk came from regulations governing Indian telecom. Increased competition in cellular services, unrestricted competition in fixed line services and the decision to allow fixed line operators to provide limited mobility using WLL were some of the risks at the time of the IPO.

THE OBJECTS In bull markets, price increases defy fundamentals, and companies are prone to capitalize on this sentiment to raise money. If you study the objects of the issue, you will be able to weed out the chaff. For example, if the money is being raised to repay loans or to provide and exit option to existing investors investigate. If the business is doing well, the company should not need to raise fresh capital to repay its debt. However, a proceeds of the issue going towards research, marketing, or capacity expansion paints a better picture. Companies like Bharti and Divis have used the funds raised to create infrastructure, which will drive growth for these companies in future. On the other hand, BAG films had earmarked 60 percent of he issue proceeds towards production to feature films, which exposes it to significant risks considering that film production is not a safe business, especially when the company does not have prior experience in it. THE FINE PRINT Often, the most critical bits of information on a companys financial health are buried in the prospectus. Expect the red flags, in particular, to be lost in acres of fine print. For example, BAG films converted its 14 percent fully convertible debentures and

accumulated interest into equity shares and issued them to UTI and IDBI at a 10 percent discount to the issue price at Rs. 9 per share. Rarely, some good news also gets buried and goes unnoticed. The discounts and royalty waivers by Suzuki to Maruti, for instance, will result in savings of over Rs.80 crore, which will directly flow to the bottom line. This means Marutis Rs.146 crore net profit in 2003 will get a boost of 40 percent by just this little clause. THE PRICE The pricing of the issue determines the demand for the stock. Although issues are usually attractively priced to attract investors, benchmarking it with valuations of comparable listed companies is a good idea. This will give you a sense o f the relative attractiveness of the issue and scope for appreciation. For valuation purposes, compare the companys profit margins, capital efficiency, price earning ratio and other financial parameters with that of similar payers. For example, Patni scores high on the valuation front but low on performances parameters like operating margins. THE HYPE Given that there is only one IPO for a company, they are often presented as not to be missed opportunity and much hype is created by lead managers and brokers to get as much attention as possible. Remember that it is their business to make clients buy and sell stocks. Our advice: dont buy stocks just because they are making a debut in the market. THE BROKER The lead managers track record is as important as that of the companys. History suggests that the best merchant bankers usually undertake some due diligence before associating themselves with an issue. Since business fortunes of merchant bankers depend on their track record, there is more reason for them to handle only quality issues. Look for known lead managers like Kotak investment, SBI capital markets, DSP Merill lynch, Enam, JM Morgan. Be wary of smaller investment banks that may be willing to make any company public.

RESEARCH METHODOLOGY
Research in common parlance refers to the search for knowledge. One can define research as a scientific and systematic search for pertinent information on a specific topic. It is the voyage of discovering new facts. This inquisitiveness is the mother of all knowledge and the method employed in this quest is known as research. Research is thus an original contribution to the existing stock of knowledge making for its advancement. Research methodology is an attempt to solve the research problem systematically. Research methodology plays an important part in any investigation. Unless the methodology is correct, the analysis and conclusion may not be scientific. Research methodology is a way to solve the problems sceintifically and systematically. RESEARCH PROBLEM The research problems, in general refers to some difficulty with a researcher experience in the contest of either a particular a theoretical situation and want to obtain a salutation for same, The problem statement are to Market Research On Investors attitude towards Secondary market.

RESEARCH DESIGN Research design is the blue print of conditions for collection and analysis of data in manner that aims to, combine relevance to the research purpose with economy in procedure. The research design used in my study is basically analytical in nature. OBJECTIVES OF THE STUDY The main objective of investment portfolio management is to maximize the returns from the investment and to minimize the risk involved in investment. Moreover, risk in price or inflation erodes the value of money and hence investment must provide a protection against inflation.

Secondary objectives: The following are the other ancillary objectives: To know about the perception of secondary market. To know about the risk of secondary market. To study about the regular return. To study how to earn more liquidity. To study the safety of investment.

Portfolio management services helps investors to make a wise choice between alternative investments with pit any post trading hassles this service renders optimum returns to the investors by proper selection of continuous change of one plan to another plane with in the same scheme, any portfolio management must specify the objectives like maximum returns, and risk capital appreciation, safety etc in their offer. PRIMARY DATA COLLECTION: - Primary data collection, which is collected through observation or direct communication with the respondent in one form or another. These are two methods for primary data collection. Observation Method Through Questionnaire

But as the time was limited I used the Questionnaire method for data collection SECONDARY DATA: - Secondary data is also collected by me from various documents of the company from the Internet. But two main methods to collect it i.e. Books and Journals and Official sources.

DATA COLLECTION INSTRUMENTS: The data collection instruments used in the study are following: QUESTIONNAIRE: - This method of data collection is quiet popular, particularly in care of inquiries. As we know Questionnaire should be comparatively short and simple in the size of the questionnaire should be kept to minimum questions should proceed in logical sequence moving from easy to more difficult. Hence questionnaire made by me is structured. Structured questionnaire is that in which these are define concrete and predetermine questions. The questions were presented with exactly with same wording and in the same order to all respondents. Structured questionnaire are simple to administer and relatively inexpensive to analyze. The provision of alternatives replies at times helps to understand the meaning of question clearly but such questionnaire have limitations too for instance, wide range of data and that too in respondents own words cant be obtained with structured questionnaire. Questions that put too much strain on the memory or intellectual of the respondent.

SAMPLING: Sampling may be defined as the selection of some part of an aggregate or totality on the basic of which a judgment or inference about the aggregate and totality is made. Sampling is used in practice for various reasons. All items in any field of inquiry constitute a universe or population complete enumeration of all items in the population is known as census inquiry. It can be presumed that in such an inquiry, when all items are covered, element of chance is left and highest accuracy is obtain. But in practice this may be not true. Even the slightest element of bias in such an inquiry will get larger and as the numbers of observations increased more over there is no way checking the element of bias or it extend except through a survey or used sample checks besides this type of inquiry involves a great deal of time, money and energy. Therefore when the field of inquiry is large this method becomes difficult to adopt because of the resources involve.

SAMPLING UNIT: - Every researcher has to take a decision regarding a sample unit before selecting sample. Sampling unit may be a geographical one such as district, state and village etc or a social unit such as family, club, school, etc or it may be an individual. SAMPLE SIZE: - Size of samples refers to the numbers of items to be selected from the universe to constitute a sample. This is a major problem before every researcher. The size of sample should neither be excessively large, nor too small. It should be optimum. An optimum sample is one, which fulfills the requirements of efficiency representatives, reliability and flexibility. While deciding the size of sample researcher must determine the desired precision as also an expectable confidence liable for the estimate, the size of population variance needs to be consider as in case of large variance usually a bigger sample is needed. The size of population must be kept in view for this also limits the sample size. As such budgetary constraints must invariable to taken into consideration when we decide the sample size looking at the above consideration I have decided the 180 sample size of sample unit i.e. users. SAMPLING PROCEDURE: - This refers to the procedure by which the respondents should be chosen. In order to obtain a representative sample, a sample of the population was drawn non-random sampling can be of following types: Sample Random Sample Stratified Random Sample Cluster (Area) Sample In this case, random sampling was done. DATA ANALYSIS For analysing data, bar diagrams and pie charts have been used. Tables showing data over past years have also been included.

LIMITATIONS OF THE STUDY The result must be viewed in a quantitative terms. Findings must be verified and tested through further conclusive investigations. However, the main drawbacks of the present study are:-

Less Time Period: As the time period that is given to us for doing training was also too less. In a short time period that is very difficult that we can get the knowledge about each and everything related to our project. Lack of knowledge: Conducting the research makes it very difficult for us to perform out task without any problem. The lack of experience made the task difficult.

Less Response from respondents: Getting the informations from the respondents is also a tedious task. As there are many respondents that are not in a position to tell us correct information about the project or study and also sometimes they do not show any interest.

In spite of all the above mentioned limitations and constraints, every sincere efforts has been made to complete the study and to derive the reliable and viable results for analyzing.

ANALYSIS AND INTERPRETATION

Q.1 Which age group do you belong? Age Group 18-30 30-45 45-55 Above 55
89 90 80 No. of Respondents 70 60 50 40 30 20 10 0 18-30 30-45 45-55 Above 55 Age Groups 14 19 58

No. of Respondents 14 89 58 19

Analysis: The above diagram shows that 14 respondents were from 18 to 30 age group, 89 respondents were from 30 to 45 age group, 58 respondents were 45 to 55 age group and 19 respondents were from above 55 age group.

2)

Have you ever invested in stock market? Invested in Stock Market Yes No No. of Respondents 150 30

150 160 140 No. of Respondents 120 100 80 60 40 20 0 Yes No 30

Invested in Stock Market

Analysis: The above diagram shows that 150 respondents said that they are invested in the stock market and 30 respondents said that they did not invest in the stock market.

Q3)

If yes, in which type of market? Type of Market Primary Secondary Both No. of Respondents 100 30 20

100

100 90 No. of Respondents 80 70 60 50 40 30 20 10 0 Primary Secondary Type of Market Both

30 20

Analysis: The above diagram depicts that 100 respondents said that they invest in secondary market, 30 respondents said that they invest in secondary market and 20 respondents said that they invest in both markets i.e. primary as well as secondary.

Q4)

What is the source of information regarding secondary market? Source of Information News Broker TV Internet Any Other
89 90 80 70 No. of Respondents 60 50 40 30 20 10 0 News Broker TV Internet Any Other Source of Information 6 2 16 7

No. of Respondents 16 89 6 2 7

Analysis: The above diagram shows that 89 respondents i.e. maximum from total 120 respondents said that they got the knowledge from their brokers, 16 respondents said that they got knowledge about secondary market from News/newspaper, 6 respondents got information through TV, 2 from Internet and 7 respondents said any other sources for information.

Q5)

In which of the following you would like to invest your money? Like to Invest Private Co. Govt. Co. Semi Govt. Any Other No. of Respondents 43 18 37 22

45 40 No. of Respondents 35 30 25 20 15 10 5 0

43 37

22 18

Private Co.

Govt. Co.

Semi Govt.

Any Other

Like to Invest

Analysis: The above diagram depicts that 43 respondents said that they like to invest in Private companies, 18 respondents said Govt. companies, 37 respondents said they like to invest in Semi-Govt. companies and 22 respondents said they like to invest in any other companies.

Q6)

How much % of your income you invest yearly? %age of Income Invest 0-20% 20-35% 35-50% Above 50% No.of Respondents 49 32 29 10

49

50 45 No.of Respondents 40 35 30 25 20 15 10 5 0 0-20% 20-35% 35-50% Above 50%

10 32 29

%age of Income Investment

Analysis: The above diagram shows that 49 respondents said that they invest upto 20% of their income in secondary market, 32 respondents said that they invest upto 20% to 35% of their income, 29% respondents said they like to invest in 35% to 50% of their income, and 10 respondents said that they invest above 50% of their income in secodnary market.

Q7)

In which sector you like the invest the money? Investment Sector Insurance Infrastructure Telecom IT Sector Any Other No. of Respondents 16 48 33 23 10

50 45 40 No. of Respondents 35 30 25 20 15 10 5 0
Insurance

48

33

23 16 10

Infrastructure

Telecom

IT Sector

Any Other

Investment Sector

Analysis: The above diagram shows that 16 respondents said that they invest in insurance sector, 48 respondents said they invest in Infrastructure sector, 33 respondents said that they invest in Telecom sector, 23 respondents said that they invest in IT sector and 10 respondents said that they invest in any other sectors.

Q8)

How much is your portfolio? Portfolio Rs.10000 to 50000 Rs.50000 to 1 Lac Above Rs.1 Lac No.of Respondents 41 58 21

58 60 50 No.of Respondents 40 30 20 10 0 21 41

Rs.10000 to 50000

Rs.50000 to 1 Lac

Above Rs.1 Lac

Portfolio

Analysis: The above diagram shows that 41 respondents said that their yearly portfolio has been between Rs.10000 to 50000, 58 respondents said that their yearly portfolio has been between Rs.50000 to 1 Lac and 21 respondents said that their yearly portfolio has been above Rs. 1 Lac.

Q9)

For how much period you would prefer to invest? Investment Time Short Term Long Term No. of Respondents 96 24

96 100 90 No. of Respondents 80 70 60 50 40 30 20 10 0 Short Term Long Term 24

Investment Time

Analysis: The above diagram shows that 96 respondents said that they invest for short time and 24 respondents said that they invest for long term.

Q10) Investing in secondary market is risky or not? Risky Investment Yes No No. of Respondents 26 94

Risk of of Investment inin Primary Market Risk investment secondary

Yes 22%

No 78%

Analysis: The above diagram shows that 78% respondents i.e. 94 said that secondary market investment is risky and 22% respondents i.e. 26 said that secondary market investment is not risky.

Q11) If yes, then how much risky in this? Risk Highly Moderately Lower No. of Respondents 6 2 18

18

18 16 No. of Respondents 14 12 10 8 6 4 2 0 Highly Moderately Lower

2 6

Risk

Analysis: The above diagram shows that 6 respondents said that seondary market is highly risky, 2 respondents said moderately risky and 18 respondents said secondary market is risky but not highly or moderately.

Q12) How much return has been earned from secondary market? %age of Return 10-50% 50-100% 100-150% 150-200% No. of Respondents 63 31 18 8

70 60 No. of Respondents 50 40 30

63

31

18 20 8 10 0 10-50% 50-100% 100-150% 150-200%

%age of Return

Analysis: The above diagram shows that 63 respondents said that they earn 10-50% return from their secondary market investments, 31 respondents earn 50-100% return, 18 respondents earn 100 to 150% return and 8 respondents said that they earn between 150 to 200% return from secondary market.

Q.13

What criteria you used to invest in any IPO? Criteria for Invest Past Experience Company Results Any Other No. of Respondents 29 59 32

59 60 50 No. of Respondents 40 29 30 20 10 0 32

Past Experience

Company Results Criteria for Investment

Any Other

Analysis: The above diagram shows that 29 respondents said that they use their past experience for new investment into secondary market, 59 respondents said they watch current results of companies in which they want to invest and 32 respondents said they watch other things whenever they go for investment in secondary market.

Q.14

From where you get to know about these criteria? Knowledge about Criteria Share Broker Newspaper Magazine No. of Respondents 87 25 8

87 90 80 No. of Respondents 70 60 50 40 30 20 10 0 Share Broker Newspaper M agazine 8 25

Knowledge about Criteria

Analysis: The above diagram shows that 87 respondents said that know about their criteria from their Share brokers, 25 respondents said they got knowledge from Newspapers and 8 respondents said they got knowledge from Magazines.

FINDINGS
Most of respondents said that they are invested in the stock market and few of them said that they did not invest in the stock market. Maximum respondents said that they got the knowledge from their brokers, & some of them said that they got knowledge about secondary market from News/newspaper & very few respondents got information through TV from Internet and any other sources for information. Retail investor divert their fund from the banking system to the Secondary market. As the interest rate of saving account deposit decreased very much. Most of respondents said that they invest less portion of their income in secondary market. Very few investors like to invest major portion of their income in secondary market. Respondents view is that secondary market investment is risky. So there is a fear in the mind of respondents about to invest in secondary market. The study shows that maximum respondents among the sample respondents are getting information related to the different services from the agents. It implies that most powerful source of information about services is an agent. There is a need to bring awareness among the general public about secondary market.

SUGGESTIONS
On the basis of the Market survey conducted has put very interesting findings in the Market. The very first suggestion to the investor is that the best thing for the investors to do to ensure that they are not cheated in this IPO boom, is to study the prospectus themselves, read various comments and take their own decision. Investors have to beware as all those who are keen to grab a piece of the cake of the impending IPO boom, are doing so at their cost. Keep in mind three Ps before investing in any IPO & Three Ps are Promoter Performance Price The next best suggestion to the investor is that they should be steer clear of IPOs from lesser known industry and focus on offerings by well known industry leader with quality management and strong financials. The investor should not follow the IPO boom blindly as they can get cheated as they during nineties IPO fiasco. The companies should make regular contact with his customer through his marketing executives. This would not only help in strengthening the business relation but would also help in taking proper feedback of their products. The majority of customers are price conscious so they should improve or decrease their price/commission rate. The companies should concentrate more on the sale promotion activities through different media. The market is not well aware of the product line of the companies, so companies should give full information of there product line to the investors. In corporate and institutions, people are looking for better service. So by providing this it can gain the big reach its break even as soon as possible and can earn profit from there.

Customers get dissatisfied very soon. So they must be supported by a good customer care unit. They need care and by providing that a long customerorganization relationship can be built.

CONCLUSION
This project is based on the study of Investors attitude towards Secondary market. In the today scenario its very important to study the customers psychological behaviour regarding the various services provided by them. In the end, I conclude that investor should not invest their hard earned money blindly in the IPOs but they should invest their money by taking different safeguards like understand the company business, who its promoter are, how is its management, its risk factor and pricing of the issue etc. Although there is SEBI to protect the investor but he company which follow the legal binding of the SEBI is not fool proof that the company is a good one. It has been concluded that on the one hand the customers are somewhat satisfied but on the other hand, still some improvements are required. So, the broking companies segment is flooded with the new schemes from new & existing players and moreover, lot many schemes are waiting to hit the ramp in the coming years. The main reason behind people not wanting to have investing of a particular company is the lack of proper information. Moreover, people dont want to come out of cocoon of their seemingly uncomplicated life. They seem satisfied with their old ways and are wary of modern, new age products. The most important factor that attracts the people towards investment in secondary market is the communication factor. This is the most important reason and for this, people feel persuaded to buy it.

BIBLIOGRAPHY
1) 2) 3) 4) M.Y Khan., Financial Services, Himalaya publishing house Pvt. Ltd. New Delhi, 2001, p-10-20. Kothari, C.R, Research methodology methods & techniques, 2nd edition, New age international ltd. Publishers, 2005, P. No. 27-42. Wilkinson & Bhandarkar, Business Research Methodology, 6th edition, Tata McGraw Hill Publications, Delhi, 2005, PP 237-243. Dr. Bansal K Lalit, Merchant Banking & Financial Services Publications, 2002, (Page 152- 155) (Page 175-185) JOURNALS and MAGAZINES:1) 2) 3) Applied Finance, page no 261-268, volume 5 / Dec.2007. Financial review, edition January 2007, pages no 34-40. Management Accountant, May 2006 P. No.- 359-412. Vikas

Websites 1. 2. 3. 4. www.thehindubusinessline.com www.indiainfoline.com www.prowessdatabase.com www.indiatimes.com

QUESTIONNAIRE
Q1) General Information 1. Name ____________________________ 3. Occupation a) c) 4. a) c) Q2) Q3) Q4) Q5) Q6) Q7) 18 - 30 Yes Primary Market News Private Co. 0-20% 35-50% Q8) Insurance IT Sector Q9) How much is your portfolio? Rs.10000 50000 Short term Yes Rs.50000 1 Lac Long term (5 & above) No Above 1 Lac Broker Govt. Co. 20-35% 50% & above Infrastructure Any Other Telecom Businessman Professional Rs.50000 to 1 Lac Above Rs.3 Lacs 30 - 45 No Secondary Market TV Semi Govt. Internet Any other 45 - 55 above 55 b) d) b) Serviceman Any other Rs.1 Lac to 3 Lacs 2. Age ______________

Annual Income

Which age group do you belong? Have you ever invested in stock market? If yes, in which type of market? What is the source of information regarding Secondary market? In which of the following you would like to invest your money? Any other How much % of your income you invest yearly?

In which sector you like the invest the money?

Q10) For how much period you would prefer to invest? Q11) Investing in secondary market is risky or not?

Q12) If yes, then how much risky in this? Highly 10% 50% Q.14 Q.15 Past Experience Share Broker Moderately 50%-100% 100%-150% Lower 150% - 200% Any Other Magazine Q13) How much return has been earned from secopndary market? What criteria you used to invest in any IPO? Company Result Newspaper From where you get to know about these criteria?