EXECUTIVE SUMMARY:-

‘Perception of Customers Preferences towards Life Insurance, Mutual Fund and Share
Trading’ is the topic head of the project report. In present scenario, is not only
confined to the selling of products, advertisement and sales promotion but it
includes consumer satisfaction as a whole. Marketing is a phenomenon which
emphasizes in making new customers and keeping the relations with the existing
customers. Financial products are those products which have values in monetary
terms. The Financial products are intangible in nature that means the customer
cannot even touch, smell or feel it. In this manner, it becomes a challenge for
the sales personnel in financial sector to convince the customer to invest in it.
The sales personnel can only guarantee for the benefit that the customer will get
after a certain period of time span. The evaluation of financial planning has been
increased through decades, which is best seen in customer rise. Now a day’s
investment of saving has assumed great importance. According to the study of the
Market, it is being observed that markets are doing well in investments like,
Mutual funds, Shares, Life Insurance etc. In near future a proper financial
planning is required to invest money in all type of financial product because
there is good potential in market to invest. The main objective of this project is
to know the Perception of Customers Preferences towards Life Insurance, Mutual
Fund and Share Trading and the people’s

1
awareness of various instruments available for Tax planning and Personal Financial
Advising facility provided by RELIANCE MONEY LTD.

RELIANCE CAPITAL
Business overview
Reliance Capital is one of India’s leading private sector financial services
companies , and ranks among the top 3 private sector financial services and
banking companies, in terms of net worth. Reliance Capital has interests in asset
management and mutual funds, stock broking , life and general insurance ,
proprietary investments, private equity and other activities in financial services
. Reliance Capital sees immense potential in the rapidly growing financial
services sector in India and aims to become a dominant player in this industry and
offer fully integrated financial services . Reliance Life Insurance is an
associate company of Reliance Capital Ltd. , a part of Reliance - Anil Dhirubhai
Ambani Group. Reliance Capital is one of India’s leading private sector financial
services companies, and ranks among the top 3 private sector financial services
and banking companies, in terms of net worth. Reliance Capital has interests in
asset management and mutual funds, stock broking, life and general insurance, 2
proprietary investments, private equity and other activities in financial
services. Reliance Anil Dhirubhai Ambani Group also has presence in
Communications, Energy, Natural Resources, Media, Entertainment, Healthcare and
Infrastructure

India ( Mutual Fund ) Regulations, 1996. RCL primarily focuses on funding projects
in the infrastructure sector and supports the growth of its subsidiary companies,
Reliance Capital Asset Management Limited , Reliance Capital Trustee Co. Limited,
Reliance Limited . As of March 31, 2005 , the company’s investment in
infrastructure projects stood at Rs. 1071 Crores. The investment portfolio of RCL
is structured in a way that realizes the highest post- tax return on its
investments.

Reliance Capital Ltd According to newspaper According to newspaper reports,

Reliance Capital Limited has decided to convert itself into a special purpose
vehicle cum venture capital outfit. The company plans to develop infrastructure
projects and invest in InfoTech, Internet, media and biotech startup. The company
is also drawing up plans to enter the insurance sector and to expand its mutual
fund business. Reliance Capital Limited (RCL) is India’s largest private sector
financial services company. RCL has a net worth in excess of Rs. 11 bn. The
Reliance group owns a 53% stake in the company. RCL is moving away from the
traditional non-banking finance company mould by reducing business activities
pertaining to inter corporate deposits and corporate loans. The company is setting
aside Rs. 10 bn to invest in its new business focus areas.

THE RELIANCE ADA GROUP

3
The Reliance Group founded by Dhirubhai H. Ambani (1932-2002) is India's largest
business house with total revenues of over Rs 99,000 crore (US$ 22.6 billion),
cash profit of Rs 12,500 crore (US$ 2.8 billion), net profit of Rs 6,200 crore
(US$ 1.4 billion) and exports of Rs 15,900 crore (US$ 3.6 billion).

The Group's activities span exploration and production (E&P) of oil and gas,
refining and marketing, petrochemicals (polyester, polymers, and intermediates),
textiles, financial services and insurance, power, telecom and Communication
initiatives.

Setting global benchmarks…

The largest private sector group in India accounting for 9% of the government’s
indirect tax revenues, about 2.3% of country’s capital formation and 5% of
country’s exports. The company that set up the world’s largest grassroots
refinery at Jamnagar in just under 36 months at a cost 30-50% less than that of
global undertakings. The company that set up the world’s largest grassroots
multi-feed cracker complex. The world’s second largest producer of polyester
staple fiber and polyester filament yarn.

4
 The world’s largest shareholder family of 5 million. The only Indian company
in Business Week's 1994 listing of the 50 largest companies from developing
countries Distinction of becoming India’s first private sector company to
achieve a ranking in Fortune Global. Among the world's top 425 companies by
turnover, among world's top 300 companies by net worth, among world's top 225
companies by net profits

Reliance group's business activities encompass all major growth sectors of the
Indian economy:
Oil and gas exploration Refining and marketing Petrochemicals including
intermediates Textiles Power Telecom Communication Insurance
Financial services Assets and finance management. Brokerage firm (Online
trade services)

5
Reliance Money Ltd., an Anil Dhirubhai Ambani Enterprises group company, it’s a
part of Reliance Capital Group. Its India's one of the largest private which
provides best services in share trading and financial services. It starts business
from last 4 months. And millions of people have joined it. The Anil Dhirubhai
Ambani Enterprises group, comprising of Reliance Communication, Reliance Energy
and Reliance Capital are part of the Reliance Group, founded by Shri Dhirubhai H.
Ambani (1932-2002).

6
RELIANCE CAPITAL
Reliance Capital is today India's fastest growing financial services powerhouse,
with over 5 million customers. Our customer base is served by one of the most
extensive and technologically advanced distribution networks, comprising over
3,600 outlets in nearly 700 towns and cities across the country. An integral
member of the Reliance ADA Group, Reliance is the bearers of a proud name, and an
even prouder legacy. Reliance ADA Group, barely two years in the making, now ranks
among India's top 3 business houses. We have a strong presence across a wide array
of high-growth consumer-facing businesses – from telecom and financial services to
energy and power, from media and entertainment to healthcare. Across different
companies, Reliance ADA group touch the lives of over 100 million customers, or
over 1 in every 10 young and inspirational Indians every single day. Reliance ADA
group enjoys the unparalleled trust, faith and confidence of nearly 7 million
shareowners – the largest such family in India, perhaps even in the world.
Reliance ADA Group is among the largest employers in the country, with a young,
highly trained and motivated workforce approaching 1,00,000-strong. Reliance have
a Group market capitalization of over Rs 1,57,000 crore, having added over Rs
1,42,000 crore or over Rs 300 crore of shareholder wealth creation every single
working day over the past two years. Reliance ADA group net worth is in excess of
Rs 40,000 crore. It’s cash flows across the Group are approximately Rs 9,000 crore
and Net profit is over Rs 5,000 crore.

We have zero net debt at the group level.

7
It’s current Group net worth and debt structure gives us the capacity to borrow,
on a conservative basis, over Rs 1,00, 000 crore. But Reliance Capital, like the
Reliance ADA Group, is not just about scale and size. It is also the about the
pursuit of excellence; of values that embody the spirit of New India — the new
resurgent India of the 21st century. It’s goal is not just to build a great
enterprise for its stakeholders, but also to build a great future for our country:
To give millions of young Indians the power to realize their dreams, the
opportunities to shape their own destiny and the means to realize their true and
diverse potential.

Performance Review
It’s accounts for the year ended 31st March, 2007, along with the Director's
Report, Letter to Shareholders and Management Discussion and Analysis, have been
circulated to you. • Gross income of Rs.2,158 crore - an increase of 128 per cent
• Net profit of Rs.703 crore - an increase of 23 per cent • Earnings per share of
Rs.30.73 - an increase of 16 per cent • Book value of Rs. 215.7 per share - an
increase of 18 per cent • Total Assets of Rs. 6,708 crore

Strong Financial Platform

It have created a strong financial platform that will be the bedrock for
accelerated future growth. • It’s net worth now stands at over Rs. 5,297 crore, as
on 31st March, 2007, placing us among the top 3 private sector Indian companies in
the financial services sector, after lClCl and HDFC. • As before, It’s enjoy the
highest credit ratings, of `A1' and `F1+', awarded by ICRA and FITCH,
respectively.

8
COMPANY PROFILE
Reliance Money is a comprehensive financial solutions provider offering a complete
basket of financial services. Through Reliance Money , currently , a customer will
be able to transact amongst others, in equity and commodity , derivatives ,
offshore investments, IPO’s , mutual funds and insurance products. At present the
company has more than 350 employees across 75 locations with a total number of 42
offices. Reliance Money can be segregated into 4 main products which include: 1-
Reliance Life Insurance Plans 2- Reliance General Insurance policies 3- Reliance
Mutul Funds 4- Reliance On line trading facility

Board Of Directors:1. Anil Dhirubhai Ambani,Chairman 2. Amitabah Jhunjhunwala,Vice

Chairman 3. Rajendra P. Chitale,Director 4. C.P. Jain,Director

9
RELIANCE LIFE INSURANCE

Reliance Life Insurance offers you products that fulfill your savings and
protection needs. Our aim is to emerge as a transnational Life Insurer of global
scale and standard. Reliance Life Insurance is an associate company of Reliance
Capital Ltd. Which along with its associates has acquired 100% shares in AMP Samna
Life Insurance Co Ltd. Reliance Life Insurance has a pan presence and a range of
products catering to individual as well as corporate needs. Reliance Life
Insurance is another step forward for Reliance Capital Limited to offer need based
life Insurance solution to individuals and corporate . There are various plans
which are offered for individuals & employees by Reliance Life insurance. With
largest number of life insurance policies in force in the world, Insurance happens
to be a mega opportunity in India. It’s a business growing at the rate of 15-20
per cent annually and presently is of the order of Rs. 450 billion. Together with
banking services, it adds about 7 per cent to the county’s GDP. Gross premium
collection is nearly 2 per cent of GDP and funds available with LIC for
investments are 8 per cent of GDP. A well-developed and evolved insurance sector
is needed for economic development as it provides long-term funs for
infrastructure development and at the same time strengthens the risk taking
ability. It is estimated that over the next ten years India would require
investments of the order of one trillion US dollar. The Insurance sector, to some
extent, can enable investments in infrastructure development to sustain economic
growth of the country.

10
Historical Perspective
The history of life insurance in India dates back to 1818 when it was conceived as
a means to provide for English Widows. Interestingly in those days a higher
premium was charged for Indian lives than the non-Indian lives as Indian lives
were considered more riskier for coverage. Insurance regulation formally began in
India with the passing of the Life Insurance Companies Act of 1912 and the
provident fund Act of 1912. Several frauds 20’s sullied insurance business in
Indian. By 1938 there were 176 insurance companies. The first comprehensive
legislation was introduced with the Insurance Act of 1938 that provided strict
State Control over insurance business. The insurance business grew at a faster
pace after independence. Indian companies strengthened their hold on this business
but despite the growth that was witnessed, insurance remained an urban phenomenon.
The Government of India in 1956 , brought together over 240 private life insurers
and provident societies under one nationalized monopoly corporation and Life
Insurance Corporation (LIC) was born. Nationalization was justified on the grounds
that it would create much needed funds for rapid industrialization . This was in
conformity with the Government’s chosen path of State lead planning and
development. The (non-life) insurance business continued to thrive with the
private sector till 1972. Their operations were restricted to organized trade and
industry in large cities. The general insurance industry was nationalized in 1972.
With this, nearly 107 insurers were amalgamated and grouped into four companies-
National Insurance Company, New India Assurance Company, Oriental Insurance
Company and United India Insurance Company and

11
United India Insurance Company. These were subsidiaries of the General Insurance
Company (GIC)

Vision & Mission

Vision
Empowering everyone live their dreams.

Mission
Create unmatched value for everyone through dependable, effective, transparent and
profitable life insurance and pension plans.

Our Goal
Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below:
• • •

Emerge as transnational Life Insurer of global scale and standard Create best
value for Customers, Shareholders and all Stake holders Achieve impeccable
reputation and credentials through best business practices

Achievements

12
•

RLIC has been one of the fast gainers in market share in new business premium
amongst the private players with an incremental market share of 4.1% in the
Financial Year 2007- 08 – from 3.9% in April 07 to 8% in Feb 08. ( Source: IRDA)

Also continues to be amongst the fast growing Private Life Insurance Companies
with a YOY growth of 195% in new business premium as of Mar’08.

A Company that has crossed 1.7 Million policies in just 2 years of operation, post
take over of AMP Sanmar business.

Initiated Express Life – an Unique ’Over the Counter’ sales process for Unit
Linked Insurance Policies in the Industry.

Accomplished a large distribution ramp-up in the Industry in a short span of time

by opening 600 branches in 10 months taking the overall branch network above 740.

RLIC continues to be one of the two Life Insurance companies in India to be

certified ISO 9001:2000 for all the processes.

Awarded the Jamnalal Bajaj Uchit Vyavahar Puraskar 2007-Ceritificate

of

Merit in the Financial Services category by Council for Fair Business Practices
(CFBP).

13
PRODUCTS
RELIANCE LIFE INSURANCE offers a complete range of insurance products INDIVIDUAL
PLANS: SAVING (Endowment)
Reliance Super Invest Assure Plan

Reliance Total Investment Plan Series I

Reliance Wealth + Health plan Reliance Automatic Investment plan Reliance Money
Guarantee plan Reliance Cash Flow plan Reliance Market Return plan Reliance
Endowment plan Reliance Special Endowment plan Reliance Whole Life plan Reliance
Connect 2 Life plan

14
RETIREMENT
Reliance Total Investment Plan -Pension Reliance golden years plan
Reliance golden years plan value Reliance Automatic Investment Plan Reliance
golden years plan plus

UNIT LINKED
Reliance Total investment plan (new)

Reliance automatic investment plan (new) Reliance money guarantee plan

Reliance market return plan Reliance child plan

RISK/PROTECTION
Reliance term plan Reliance simple term plan Reliance special term plan
Reliance credit guardian plan Reliance credit guardian plan

15
What if customer already has Life Insurance?
As an individual, for the extent of financial protection you need is different
from that as a married man which in turn is different from that as a parent. At
each life stage, it is necessary to re-evaluate the amount of protection and
provision you require and adjust for the same. Below are some of the events in you
life for which you should reevaluate and plan your life insurance needs.

Life Stages

Marriage Birth of a child Schooling of child College education of child Marriage

of child

16
ULIP OF RELIANCE LIFE INSURANCE:
Reliance Super InvestAssure Plan:RLIC Super Investassure Plan promises guaranteed
additions, with a complete flexibility to gain control our your investments vis –
a –vis your finanical needs and yourrisk appetite. How do Guaranteed Additions
work ? Get upto 250% of your first year basic premium as Guaranteed Additions. On
the 10th policy anniversary, 50% of first year basic premium will be added to the
fund as guaranteed additions. There after on every 5th policy anniversary 50% will
be added to the fund

Who is the Insured?

Proposer or who so ever above age 30 days and up to 60 years at inception of the
policy. However insurance cover depends on entry age of life assured.

Flexible Premium
We give you the flexibility to choose your premium amount.

Who pays the Premium?

Proposer.

What happens on the Death of Life Assured?

Total Fund Value OR Sum Assured whichever is higher at the time of intimation of
death is payable to nominee.

What happens on Maturity?

On survival up to maturity total fund value is payable.

17
What are the charges applicable under the plan?
The charges applicable under the plan are Premium Allocation charge, Fund
Management charge, Policy Administration charge Miscellaneous charge (based on Sum
Assured), Mortality charge and Service Tax

What are the additional benefits available?

Top up Switching Money @ your wish Flexibility Premium Redirection

18
When does risk commence under the plan?
Risk cover depends on the entry age of life assured, not earlier than 6th year
last birthday.

Investment Option
Unmatched flexibility to choose funds out of eight fund options in order to suit
your risk appetite:

1. Equity Fund 2. Pure Equity Fund 3. Infrastructure Fund 4. Energy Fund 5. Midcap
Fund 6. Corporate Bond Fund 7. Money Market Fund 8. Gilt Fund.

What are the tax benefits available under this plan

Tax deduction under Section 80C and premiums paid tax deduction under Section 80D
of the Income Tax Act, 1961.

19
Reliance Market Return Plan:You have always aspired for the best in life. And we
help you achieve just that. With Reliance

Market Return plan you can have the twin advantage of insurance protection as well
as reaping the benefits of investment growth. It is a flexible plan which works
all through your life and meets the changing requirements like additional
protection, liquidity through cash, option to invest in different asset class,
steady golden years and many more.

Key Features – Reliance Market Return Plan:

1.

Twin benefit of market linked return and insurance protection A Unit Linked Plan,
different form traditional Life Insurance products, with maximum maturity age of
80 years Option to create your own portfolio depending on your risk appetite
Choose from 4 different investment funds Flexibility to switch between funds

2.

3.

4.

5.

20
6.

Option to pay regular as well as single premium & Top-ups Option to package with
Accidental riders Flexibility to increase the Sum Assured Liquidity through
partial withdrawals

7.

8.

9.

Reliance Automatic Investment Plan :The Key benefits of Reliance Automatic

Investment Plan are as follows:
•

A smart plan which adapts to your changing risk profile with increasing age Option
to lower the average cost of units through systematic transfer of your funds
Flexibility to switch between funds and plans Options for additional Insurance
cover available through riders

Key Features Reliance Automatic Investment Plan

Two plan options to choose from Ready-made and Tailor-made Life Stage asset
allocation to ensure automatic change in investment patterns, under the Ready-made
Plan option

21
•

Freedom to decide your own fund mix based on your risk profile under the
Tailormade Plan

Regular, limited, single premium paying options Unmatched flexibility through our
‘Exchange Option’ Liquidity in the form of partial withdrawal Option to avail of
Accidental Death Benefit, Accidental Total, Premium Disability

and Term Insurance riders .

Reliance Total Investment Plan Series 2:Often we notice in our own lives and those
of others, how the smallest alteration makes us change our dreams. And sometimes ,
we are even forced to let go of these very dream that have been the cause of hope
and happiness in our lives. All of us desire a security, a security that will not
just help us hold on to our dreams, but also make them larger and fulfill them. It
is this security that Reliance Life Insurance Company Limited promises to bring to
you with its Total Investment Plan Series II Pension. To know more, read further…
We value your dreams in this journey of life. Reliance Total Investment Plan
Series- II Pension (TIPS-II Pension) are the eye to let you see them becoming
reality. Your need for investment keeps changing at different stages of life.

22
We promise to walk through every need with you in the span spent with us and ever
beyond that and so on… Whether it is start of your career, your marriage, birth of
child, education of children, their marriage, your old age requirements everywhere
you would find Reliance Total Investment Plan Series II- Pension assisting you
financially and

thereby providing relief mentally too in totality .Utilize our multifarious

flexibility options at par as per your convenience. As you progress on this ladder
of life we provide you the platform to increase your investment component. With
the

Reliance TIPS- II Pension you can meet all your financial needs, without the
complexity of managing multiple products.

Key Features:This is a Single premium unit linked pension plan with options to
purchase the same plan ith reduced allocation charges in subsequent policy years.
Since more premium is allocated towards investment due to lower allocation charges
on subsequent purchases greater would be the returns. Purchasing the same plan in
the subsequent years is an option. 1st purchase would be called as “Classic” 2nd
purchase would be called as “Silver” 3rd purchase would be called as “Gold” 4th
purchase would be called as “Diamond” 5th purchase would be called as “Platinum”
Once the client purchases the first policy there will full flexibility for the
client as to when second and subsequent purchase can be made and how much premium
should be paid for each purchase subject to the following -

23
1. The minimum premium on each purchase should be at least Rs. 25,000. 2. The
maturity date on each purchase cannot exceed 70 years. 3. All the polices should
mature on maturity date of the First purchase.

4. The term of the polices purchased during second , third , Fourth and fifth
policy years will be 9, 8, 7 and 6 respectively.

Plan Objectives:1. 2. 3.
Tax benefit undr Sec. 80CCC of Income Tax Act 1961. Investment opportunity with
flexibility. Control over your investments.

Reliance Child Plan:As a parent, it is only natural to dream of a smooth and

blissful life for your child. Which is exactly why you need to secure your child’s
tomorrow, today.

24
Reliance Child Plan helps you save systematically so that you can give your child
the muchneeded financial security in the future. Simply put, Reliance Child Plan
gives you the freedom to enjoy every moment with your child today, without
worrying about his/her tomorrow.

Key Features:-

Risk protection for you during the term of the Policy Accumulated bonus at the end
of the Policy Term 25% of Sum Assured payable every year as lump sum benefit
during the last four Policy anniversaries

All future premiums are waived in the event of unfortunate loss of life Guaranteed
Fixed Benefits continue even after loss of life of the Policyholder More value for
your money by way of High Sum Assured Rebate Choose to add the benefit of two
riders – Critical Illness Rider and Accidental Death Benefit & Accidental Death
Benefit & Total and Permanent Disablement Rider

Policy participates in profit even after the loss of life of the Life Assured

25
Reliance Golden Year Plan:-

Retirement means different things to different people, while some want to relax
and take a trip around the world, some want to start up a venture of their own,
and pursue a dream harnessed for years.

The power to make your autumn years special lies only with you. The Reliance
Golden Years Plan gives you the power and the right kind of solution - A
retirement plan that allows you to save systematically and generate the much-
needed corpus to make your olden years look golden.

UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE
POLICYHOLDER.

Key Features :-

Invest systematically and secure your golden years

26
•

A flexible unit-linked pension product that is different from traditional life

insurance products with Vesting Age between 45 and 70 years

Four different investment funds to choose from Flexibility to switch between funds
Option to pay Regular, Single as well as Top-up Premiums Flexibility to
advance/extend your Vesting Age Tax free commutation up to one third of Fund Value
at Vesting Age.

Reliance Golden years plan Plus:-

There will come a day when you will hang up your boots and relax. But in order to
achieve that ultimate stress free mind set for your autumn years, it is important
that you plan now! Fulfill your dream of building up a minimum desired retirement
fund which will ensure the independence you deserve.

Key Features:-

27
•

A flexible Unit-linked Pension product, different from traditional products with

Vesting Age between 45 and 64 years

Invest systematically and secure your golden years Four different investment funds
to choose from Choose to switch between funds Flexibility to advance your Vesting
Age Tax free commutation up to one third of fund value at Vesting Age .

28
Fund Performance

Fund Name GG - Balanced Fund GG - Capital
Corporate Bond Fund GLE - Equity Fund GLE
- Balanced Fund GSA - Capital Secure Fund
Fund AIP - Equity Fund AIP - Fund A AIP -
- Money Market Fund
Secure Fund GG - Growth Fund GLE -
- Gilt Fund GLE - Money Market Fund GSA
AIP - Corporate Bond Fund GSA - Growth
Fund B AIP - Fund C AIP - Gilt Fund AIP

NAV per Unit 10.5562 11.1466 10.0422 10.2861 6.5224 10.1693 10.5236 13.4130
10.1979 10.7679 8.7013 9.1736 9.8436 10.3985 10.3582 10,8559

Fund Performance

29
GYP - Balanced Fund GYP - Capital Secure Fund GYP - Equity Fund GYP - Growth Fund
MGP - Fund D MGP - Fund E MGP - Fund F MGP - Return Shield Fund MRP - Balanced
Fund MRP - Capital Secure Fund MRP - Equity Fund MRP - Growth Fund SCP - Equity
Fund SCP - Fund G SCP - Fund H SCP - Return Shield Fund SIP - Corporate Bond Fund
SIP - Energy Fund SIP - Equity Fund

13.5755 12.3290 10.2406 11.8946 10.5308 10.4514 10.4340 10.7290 13.5666 12.2918
20.6010 14.9157 6.6446 9.4353 8.6480 10.1227 9.9022 9.5228

MAJOR PLAYERS OF LIFE INSURANCE IN INDIA:1. Life Insurance Corporation of India 2.

ICICI prudential Life Insurance 3. HDFC Standard Life Insurance 4. Max New York
Life Insurance

30
5. Birla Sun Life Insurance 6. Om Kotak Mahindra Life Insurance 7. Reliance Life
Insurance 8. Allianz Bajaj Life Insurance 9. Ing Vyasa Life Insurance 10. SBI Life
Insurance 11. Metlife Insurance 12. Sahara Life Insurance 13. Aviva Life Insurance
14. TATA Aig life Insurance

MUTUAL FUNDS
A Mutual Fund is trust that pools the savings of a number of investors who share a
common financial goal . The money thus collected is then invested in capital
market instrument such as shares , debentures and other securities . The income
earned through these investments and the capital appreciation realized are shared
buy its unit holders in proportion to the number of unit owned by them. Thus a
Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified , professionally

31
managed basket of securities at a relatively low cost. The flow chart below
describe broadly the working of a mutual fund : The history of mutual funds in
India can be broadly divided into four distinct phases .

First Phase-1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament . It was
set up by the Reserve Bank of India . In 1978 UTI was de linked from the RBI and
the Industrial Development Bank of India (IDBI) took over the regulatory
administrative control in place of RBI . The first scheme launched by UTI was unit
Scheme 1964 .At the end of 1988 UTI had Rs. 6,700 crores of assets under
management .

Second Phase–1987–1993(Entry of Public Sector funds )

The year 1987 marked the entry of non – UTI , public sector mutual funds set up by
public sector banks a Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC) .SBI Mutual Fund was the first non-UTI Mutual
Fund established in June 1987 followed by Cenrabank Mutual Fund Mutual (Jun 90),
Fund ( Aug 89 ) ,Indian Bank of Baroda Bank Mutual ( Dec 87 ) , Punjab Mutual Fund
Fund National Bank

(Nov 89 ), Bank of India

(Oct 92). LIC established its fund in

June 1989 while GIC had set up its mutual fund in December 1990. At the end of
1993 , the mutual fund industry had assets under management of Rs. 47,004 crores
and then the mutual funds industry flourished further.

Third Phase – 1993-2003 ( Entry of Private Sector Funds )

With the entry of private sector funds in 1993, a new era started in Indian mutual
fund industry, giving he Indian investors a wider choice of fund families. Also,
1993, was

32
the year in which the first Mutual Fund Regulations came into being , under which
all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton ) was he first private sector
mutual fund registered in July 1993. The 1993 SEBI ( Mutual Fund ) Regulations
were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI ( Mutual Fund) Regulations 1996. The number of mutual
fund houses went on increasing , with foreign mutual funds setting up funds in
India and also the industry has witnessed several mergers and acquisitions. As at
the end of January 2003, there were 33 mutual funds with total assets of Rs.
1,21,805 crores. The Unit Trust of India with Rs. 44,541, crores of assets of
assets under management was way ahead of other mutual funds .

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities . One is the Specified Undertaking of the
Unit Trust of India with assets under management of Rs. 29,835 crores as at the
end of January 2003, representing broadly , the assets of US 64 scheme, assured
return and certain other schemes. The Specified Undertaking of Unit Trust of
India, functioning under an administrator and under the rules framed by Government
of India and does not come under the purview of the Mutual Fund Regulations. The
second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC, it is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000
crores of

33
assets under management and with the setting up of a UTI Mutual fund, conforming
to the SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds.

Reliance Mutual Fund (RMF)

Reliance Mutual Fund, a part of the Reliance – Anil Dhirubhai Ambani Group (R-
ADAG) is one of the fastest growing mutual funds in the country . Reliance Mutual
Fund offers investors a well rounded portfolio of products of meet varying
investor requirements . Reliance Mutual Fund has a presence in over 115 cities
across the country , an investor base of over 3.1 Million and manages assets over
Rs. 39019 crore as on 31 Jan 2007.
st

Reliance Mutual Fund constantly endeavors to launch innovative products and

customer service initiatives to increase value to investors. Reliance Mutual Fund
schemes are managed by Reliance Capital Asset

Management Ltd. A wholly owned subsidiary of Reliance Capital Ltd. Reliance

Capital is one of India’s leading and fastest growing private sector financial
services companies, and ranks among the top 3 private sector financial services
and banking companies, in terms of net worth . Reliance Capital has interests in
asset management and mutual funds , life and general insurance , private equity
and proprietary investments , stock broking and other financial services .

34
There are three types of schemes which are provided to the investors under these
mutual funds and they are as follows.

Equity / Growth Schemes.

The aim of growth funds is to provide capital appreciation over the medium to
longterm. Such schemes normally invest a major part of their corpus un equities .
Such funds have comparatively high risks. These schemes provide different options
to the investors like dividend option , 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 .

Debt/ Income Schemes

The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income Government securities such as bonds.
Corporate debentures, less risky

securities an money market instruments . Such funds are

compared to equity schemes. These funds are not affected equity markets. However,
opportunities

because of fluctuations in limited in

of capital appreciation are also

such funds . The NAV’s of such funds are affected because of change in interest
rates in the country. If the interest rates fall, NAV’s of such funds are likely
to increase in the

35
short run and vice versa. However, long term investors may not bother about these
fluctuations.

Sector Specific Schemes

These are the funds / schemes which invest in the securities of only those sectors
or industries as specified in the offer documents . e.g. Pharmaceuticals,
Software, Fast Moving Consumer Goods ( FMCG), Petroleum stocks, etc. The returns
in these funds are dependent on the respective sectors / industries.

ADVANTAGES OF MUTUAL FUND :Mutual Funds are of great importance to the investors.
Some of the advantages of mutual funds could be summarized as follows:

The advantages of investing in a Mutual Fund are

Professional Management Diversification Convenient Administration
Return Potential Low Costs Liquidity Transparency Flexibility
Choice of schemes Tax benefits

36
Well regulated

TYPES OF MUTUAL FUND SCHEMES;Wide variety of Mutual Fund Schemes exist to cater to
the needs such as financial position , risk tolerance and return expectations etc.
The table below gives an overview into the existing types of schemes in the
Industry .

TYPES OF MUTUAL FUND SCHEMES :BY STRUCTURE

Open – Ended Schemes Close – Ended Schemes Interval – Schemes

BY INVESTMENT OBJECTIVE
Growth Schemes Income Schemes Balanced Schemes Money Market Schemes

OTHER SCHEMES
Tex Saving Schemes Special Schemes Index Schemes

37
 Sector Specifies Schemes

Demat Account
Demat account allows you to buy, sell and transact shares without the endless
paperwork and delays. It is also safe , secure and convenient .

What is Demat account ?

Demat refers to a dematerialized account. Just as you have to open an account with
a bank if you want to save your money, make cheque payment etc, you need to open a
Demat account If you want to buy or sell stocks. So it is just like a bank account
where money is replaced by shares. You have to approach the DPs ( remember, they
are like bank branches ) , to open your Demat account. Let’s say your portfolio of
shares looks like this : 40 of Infosys, 25 of Wipro , 45 of HLL and 100 of ACC.
All these will show in your Demat account . So you don’t have to possess any
physical certificates showing that you own these shares. They are all held
electronically in your account As you buy and sell the shares, they are adjusted
in your account . Just like a bank passbook or statement, the DP will provide you
with periodic statements of holdings and transactions .

Is a Demat account a must ?

38
Nowadays, practically all trades have to be settled in dematerialized form .
Although the market regulator, the Securities and Exchange Board of India (SEBI) ,
has allowed trades of upto 500 shares to be settled in physical form , nobody
wants physical shares any more . So a Demat is a must for trading and investing.

Why Demat ?
The Demat account reduces brokerage charges , makes pledging / hypothecations of
shares easier, enables quick ownership of securities on settlement resulting in
increased liquidity , avoids confusion in the ownership title of securities , and
provides easy receipt of public issue allotments . It also helps you avoid bad
deliveries caused by signature mismatch, postal delays and loss of certificates in
transit , Further, it eliminates risks associated with forgery , counterfeiting
and loss due to fire, theft or mutilation . Demat account holders can also avoid
stamp duty ( as against 0.5 per cent payable on physical shares ), avoid filling
up of transfer deeds , and obtain quick receipt of such benefits as stock splits
and bonuses.

Demat Benefits ;The benefits are enumerated below –

A safe and convenient way to hold securities ; Immediate transfer of
securities; No stamp duty on transfer of securities

39
Elimination of risks associated with physical certificates such as bad delivery ,
fake securities , delays , thefts etc. Reduction in paperwork involved in
transfer of securities; Reduction in transaction cost; No odd lot problem ,
even one share can be sold; Nomination facility. Change in address recorded
with DP gets registered with all companies in which investor holds securities
electronically eliminating the need to correspond with each of them separately;
Transmission companies; Automatic credit into Demat account of shares , arising
out of bonus / split / consolidation / merger etc. Holding investments in equity
and debt instruments in a single account. of securities Is done by DP
eliminating correspondence with

40
Standard document require to open an Online Trading Account
1- Proof of residence ( Address proof)
o Driving license o Voter’s ID o Passport o Photo credit card o Utility Bill
( Telephone, Electricity etc) Bank Statement o

2- Proof of identity
o Driving license o Voter’s ID o Passport o Photo ration card

3- PAN Card 4- Three photographs

41
Brokerage and fees :
Reliance Money is offering lowest brokerage rates in today’s online stock trading
industry . The brokerages are as low as 0.075% for delivery based trading and 0.02
for now delivery . Note: The above figures may not accurate , pleases contact your
nearest Reliance Money broker to check the brokerages they are offering .

Advantages of Reliance Money :1- Extra security features with “Security Token”
which is the most secure and tested technology in computer world . 2- Simple, easy
and fast online stock trading . 3- Almost all investment options are available
under one account including Equity Trading , Derivatives , Forex, Commodity , IPO
Mutual Funds and Insurance. 4- Branches are now available in all major cities and
the number is growing Branches are open from 9 am to 9pm.

42
Benefits of having a Reliance Money Account
1- It’s Cost – effective
You pay comparatively lower transaction fees. As an introductory offer, we invite
you to pay a flat fee of Just Rs. 500/ and transact through Reliance Money . This
fee is valid for two months or a specified transaction value. See the Table for
details .

Validity (whichever is earlier )

Access Fee Time Validity Turnover Validity 500 1350 2500 2 months 6 months 12
months Rs. 1Cr. Rs. 3Cr. Rs. 6Cr.

Turnover limit

Non-deliver turnover Rs.90 Lac Rs.2.7 Cr. Rs.5.4 Cr.

Delivery turnover Rs. 10 Lac Rs. 30 Lac Rs. 60 Lac

2- It’s offers Single- Window Access

Through Reliance & Commodity Money’s associates you can transact in Equity, ,
equity IPOs ,

Derivatives , Offshore Investments

, Mutual

Funds

Life Insurance , Money Transfer, Money Changing and Credit Cards , amongst other.

3- Its Covenient

43
You can assess Reliance Money’s services through 1- The Internet , 2- Transaction
Kiosks, 3- The phone (Call & Transact ) and through 4- Our all – India network of
associates On an assisted trade ( through the Call Centre or our network of
associates ) a charge of Rs. 12 per executed trade will be applicable.

4- It’s Safe
Your account is safe guarded with a unique security number that changes every 32
seconds. This number works as a dynamic password to keep your account extra safe.

5- It provides you a Demat Account

You get your own Demat Account with Reliance Capital at an annual fee of just Rs.
50/-

6- It provides you a 3… in … I facility

You can access your Banking, Trading and Demat Account through a single window and
transfer funds across accounts seamlessly !

7- It provides you value – added services

44
At www.reliancemoney.com you get 1- Reliable research, including views of external
experts with an enviable track record. 2- Live news updates from Reuters and Dow
Jones. 3- CEOs/ Epert views on the economy and financial markets. 4- Tools that
help you plan investments , tax retirement, etc , in the personal finance section
. 5- Risk Analyzer for analysis of your risk profile . 6- Asset allocates to bold
an appropriate investment portfolio.

45
STOCK BROKING…

Bombay Stock Exchange (BSE)

Heritage
The oldest exchange in Asia and the first exchange in the country to be granted
permanent recognition under the Securities Contract Regulation Act, 1956, Bombay
Stock Exchange Limited (BSE) has had an interesting rise to prominence over the
past 130 years. While the BSE is now synonymous with Dalal Street, it wasn’t
always so. In fact the first venues of the earliest stock broker meetings in the
1850s were amidst rather natural environs

46
- under banyan trees - in front of the Town Hall, where Horniman Circle is now
situated. A decade later, the brokers moved their venue to another set of foliage,
this time under banyan trees at the junction of Meadows Street and Mahatma Gandhi
Road. As the number of brokers increased, they had to shift from place to place,
and wherever they went, through sheer habit, they overflowed in to the streets. At
last, in 1874, found a permanent place, and one that they could, quite literally,
call their own. The new place was, aptly, called Dalal Street.

The Journey Of BSE

The journey of BSE is as eventful and interesting as the history of India’s
securities markets. India’s biggest bourse, in terms of listed companies and
market capitalisation, BSE has played a pioneering role in the Indian Securities
Market - one of the oldest in the world. Much before actual legislations were
enacted, BSE had formulated comprehensive set of Rules and Regulations for the
Indian Capital Markets. It also laid down best practices adopted by the Indian
Capital Markets after India gained its Independence.

47
48
The Bombay Stock Exchange Building

Perhaps, there would not be any leading corporate in India, which has not sourced
BSE’s services in resource mobilization. BSE as a brand is synonymous with capital
markets in India. The BSE SENSEX is the benchmark equity index that reflects the
robustness of the economy and finance. At par with international standards, BSE
has been a pioneer in several areas. It has several firsts to its credit even in
an intensely competitive environment. They are: • • • • First in India to
introduce Equity Derivatives First in India to launch a Free Float Index First in
India to launch US$ version of BSE Sensex First in India to launch Exchange
Enabled Internet Trading Platform 49
• •

First in India to obtain ISO certification for Surveillance, Clearing & Settlement
BSE On-Line Trading System’ (BOLT) has been awarded the globally recognized the
Information Security Management System standard

BS7799-2:2002. • • First to have an exclusive facility for financial training

Moved from Open Outcry to Electronic Trading within just 50 days

An equally important accomplishment of BSE is the launch of a nationwide investor

awareness campaign - Safe Investing in the Stock Market - under which nationwide
awareness campaigns and dissemination of information through print and electronic
medium was undertaken. BSE also actively promoted the securities market awareness
campaign of the Securities and Exchange Board of India. In 2002, the name The
Stock Exchange, Mumbai, was changed to BSE. BSE, which had introduced securities
trading in India, replaced its open outcry system of trading in 1995, when the
totally automated trading through the BSE Online trading (BOLT) system was put
into practice. The BOLT network was expanded, nationwide, in 1997. It was at the
BSE's International Convention Hall that India’s 1st Bell ringing ceremony in the
history Capital Markets was held on February 18th, 2002. It was the listing
ceremony of Bharti Tele ventures Ltd. BSE with its long history of capital market
development is fully geared to continue its contributions to further the growth of
the securities markets of the country, thus helping India increase its sphere of
influence in international financial markets.

50
SENSEX Calculation Methodology
SENSEX is calculated using the "Free-float Market Capitalization" methodology. As
per this methodology, the level of index at any point of time reflects the Free-
float market value of 30 component stocks relative to a base period. The market
capitalization of a company is determined by multiplying the price of its stock by
the number of shares issued by the company. This market capitalization is further
multiplied by the free-float factor to determine the free-float market
capitalization. The base period of SENSEX is 1978-79 and the base value is 100
index points. The notation 1978-79=100 often indicates this. The calculation of
SENSEX involves dividing the Freefloat market capitalization of 30 companies in
the Index by a number called the Index Divisor. The Divisor is the only link to
the original base period value of the SENSEX. It keeps the Index comparable over
time and is the adjustment point for all Index adjustments arising out of
corporate actions, replacement of scripts etc. During market hours, prices of the
index scripts, at which latest trades are executed, are used by the trading system
to calculate SENSEX every 15 seconds and disseminated in real time.

51
National Stock Exchange (NSE)

The Organization
The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide
access to investors from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions at the behest
of the Government of India and was incorporated in November 1992 as a tax-paying
company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation)

Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market
(WDM) segment in June 1994. The Capital Market (Equities) segment commenced
operations in November 1994 and operations in Derivatives segment commenced in
June 2000.

NSE Group

The group of National Stock Exchange Of India comprises of the following

organizations:• • • • • NSCCL IISL NSE.IT NSDL DOTEX INTL LTD.

52
The logos of these subsidiaries of NSE are: -

NSCCL

IISL

NSDL

NSE

NSE.IT

DotEx Intl. Ltd.

IMPACT OF TECHNOLOGY ON BROKERAGE BUSINESS

The trading on stock exchanges in India used to take place through open outcry
without use of information technology for immediate matching or recording of
trades. This was time consuming and inefficient. This imposed limits on trading
volumes and efficiency. In order to provide efficiency, liquidity and
transparency, NSE introduced a nation-wide on-line fullyautomated screen based
trading system (SBTS) where a member can punch into the computer quantities of
securities and the prices at which he likes to transact and the transaction is
executed as soon as it finds a matching sale or buy order from a counter party.
SBTS electronically matches orders on a strict price/time priority and hence cuts
down on time, cost and risk of error, as well as on fraud resulting in improved
operational efficiency. It allows faster incorporation of price sensitive
information into prevailing prices, thus increasing the informational efficiency
of markets. It enables market participants, irrespective of their

53
geographical locations, to trade with one another simultaneously, improving the
depth and liquidity of the market. It provides full anonymity by accepting orders,
big or small, from members without revealing their identity, thus providing equal
access to everybody. It also provides a perfect audit trail, which helps to
resolve disputes by logging in the trade execution process in entirety. This
sucked liquidity from other exchanges and in the very first year of its operation,
NSE became the leading stock exchange in the country, impacting the fortunes of
other exchanges and forcing them to adopt SBTS also. Today India can boast that
almost 100% trading take place through electronic order matching. Technology was
used to carry the trading platform from the trading hall of stock exchanges to the
premises of brokers. NSE carried the trading platform further to the PCs at the
residence of investors through the Internet and to handheld devices through WAP
for convenience of mobile investors. This made a huge difference in terms of equal
access to investors in a geographically vast country like India.

The trading network is depicted in Figure below NSE has main computer which is
connected through Very Small Aperture Terminal (VSAT) installed at its office. The
main computer runs on a fault tolerant STRATUS mainframe computer at the Exchange.
Brokers have terminals (identified as the PCs in the Figure 1) installed at their
premises, which are connected through VSATs/leased lines/modems. An investor
informs a broker to place an order on his behalf. The broker enters the order
through his PC, which runs under Windows NT and sends signal to the Satellite via
VSAT/leased line/modem. The signal is directed to mainframe computer at NSE via
VSAT at NSE's office. A message relating to the order activity is broadcast to the
respective member. The order confirmation message is immediately displayed on the
PC of the broker. This order matches with the existing passive order(s), otherwise
it waits for the active orders to enter the system. On order matching, a message
is broadcast to the respective member. The trading system operates on a strict
price time 54
priority. All orders received on the system are sorted with the best priced order
getting the first priority for matching i.e., the best buy orders match with the
best sell order. Similar priced orders are sorted on time priority basis, i.e. the
one that came in early gets priority over the later one.

Figure: Trading Network

The computer keeping the system transparent, objective and fair matches orders
automatically. Where an order does not find a match, it remains in the system and
is displayed to the whole market, till a fresh order comes in or the earlier order
is cancelled or modified. The trading system provides tremendous flexibility to
the users in terms of kinds of orders that can be placed on the system. Several
time-related (good till cancelled, good till day, immediate or cancel), price-
related (buy/sell limit and stop loss orders) or volume related (all or none,
minimum fill, etc) conditions can be easily built into an order. The trading
system also provides complete market information on-line. The market screens at
any point of time provide complete information on total order depth in a security,
the five best buys and sells available in the market, the quantity traded during
the day in that security, the

55
high and the low, the last traded price, etc. Investors can also know the fate of
the orders almost as soon as they are placed with the trading members. Thus the
NEAT system provides an Open Electronic Consolidated Limit Order Book (OECLOB).
Limit orders are orders to buy or sell shares at a stated quantity and stated
price. If the price quantity conditions do not match, the limit order will not be
executed. The term “limit order book” refers to the fact that only limit orders
are stored in the book and all market orders are crossed against the limit orders
sitting in the book. Since the order book is visible to all market participants,
it is termed as an ‘Open Book’.

ACHIEVING AN INDIVIDUAL INVESTOR FRIENDLY SYSTEM USING THE POWER OF THE INTERNET

Some key alterations to the existing system of investor education and protection
can introduce a lot of transparency and efficiency into it. The way to do this
will be to introduce a major leveling agent, which will do away with the
opaqueness that the existing system is shrouded with. This leveling agent is the
internet. It has to be understood that the internet is primarily an information
transfer agent and has a very vital role in our proposed system. However, my
system is not restricted to a mere website and an email address. The website will
act as a facilitator, very much like a lubricating system, but needless to say,
human will and effort have to be the key forces that will make it a success.

56
This system will have the following functions :

1. To effectively inform, educate and support the investor through his business
dealings. The information will have an encouraging tone rather than the
unsympathetic and cold legal and financial chatter that is generally found in
support documentation. This is not a rule booklet but a resource for the layman.

2. To give prior warnings to an investor about any investment or any financial

firm to which he might be investing his money in where such a warning is required.
For example, his investment profile may not match his choice of investment or his
financial firm may have a long record of ill treatment of investors.

3. To give the small investor the power to fight back any threat to his hard
earned money. This will be achieved by the Reputation Rating System (RRS), which
is explained later. This particular rating system would also ensure that the
opportunities for ill-treating or harassing investors diminish with the growing
popularity of reputation ratings.

4. To modify the arbitration and dispute resolution system so that even smaller
investors with very low net worth can also seek & obtain expedited justice.

57
Stock Broking
You can invest your money in stock market in two ways:

1. Primary Market 2. Secondary Market

Primary market
Primary markets bring together buyers and sellers - either directly or through
intermediaries by providing an arena in which sellers’ investment propositions can
be priced, brought to the marketplace, and sold to buyers. In this context, the
seller is called the issuer and the price of what’s sold is called the issue
price. It is the initial market for any item or service. It also signifies an
initial market for a new stock issue. The jargon also means a firm, trading market
held in a security by a trader who performs the activities of a specialist by
being ready to execute orders in that stock.

Secondary Market
Secondary Markets are the stock exchanges and the over-the-counter market.
Securities are first issued as a primary offering to the public. When the
securities are traded from that first holder to another, the issues trade in these
secondary markets.

58
Top five shares traded at Bombay stock exchange are:
1. Tata Steel 2. Dr.reddy 3. Ranbaxy 4. ONGC 5. BHEL

Basic Information
Besides familiarity with the stock market, the transaction process, and having an
account at a broker or sub-broker, knowledge of basic investment information is
also important to making investment decisions. In this section, you can read about
the basics of investment that often appear in stock market reports and
discussions. 1. Market information Important data and information about the
overall market situation that you often come across include:

Stock market index :There are a number of stock market indices but the most widely
used is the SET Index, which calculates the average price of all listed shares
weighted by the number of registered shares. Thus, price movements of large
capitalization stocks have a greater influence on the movement of the SET Index
than price changes of small capitalization stocks. Besides the SET Index , other
stock price indices have been constructed to track market trends, for example the
SET50 Index, Book Club Index, TISCO Price Index, and Sector Indices to track the
price movements of individual sectors.

59
Market turnover:It's often quoted together with the SET Index to indicate how
active the trading activities are. In a bullish market, turnover is high as
investors trade actively.

2.

Stock information
In addition to the market information above, it's essential to understand how to
pick good stocks. Here are some basic investment principles.

Price:Stock price is an important factor to investors, as buying and selling

influence stock price movements. At the end of the day, investors like to know how
their stocks fared. Did they close higher? Lower? And by how much? The change in
price of a stock also reflects the amount of money for investor decision-making
whether to buy, sell, or hold. In stock valuation, price has to be considered in
conjunction with other performance variables such as earnings per share and
dividends. Stock price is therefore only one factor in your initial investment
consideration.

Price-Earnings Ratio (P/E Ratio): The ratio is derived by comparing the Close
Price (P) with Earnings per share (E). It is a measure of the stock's fundamental
value. P/E Ratio is calculated by dividing the Close Price (P) with Earnings per
share (E).

P/E = Close price or market price (P) 12-month earnings per share (E)

60
P/E ratio tells you how many years it will take the company's earnings to add up
to its stock price at the time of calculation. For example, if the close price of
stock ABC (P) is 100 Rs and its earnings per share (E) is 20 Rs, then its P/E
Ratio equals 100/20 = 5. That is, at the time of calculation, it will take only 5
years of company ABC's earnings to equal its stock price A stock with low P/E
ratio is preferable to one with a high P/E. Conversely, suppose stock DEF closes
at 200 Rs and its earnings per share (E) is 20 Rs, its P/E Ratio equals 200/20 =
10. At the time of calculation, it will take 10 years of company DEF's earnings to
equal its stock price. Comparing stock ABC with stock DEF, we can draw an initial
conclusion that stock ABC is more attractive than stock DEF. In brief, a low P/E
stock has more earnings potential or is cheaper than a high P/E stock, considering
its earnings ability. Dividend Yield: Rate of dividend return, shown in percentage
form. A stock with a high Dividend Yield is more attractive because you get a
Higher rate of return in the form of dividends.

The formula for calculating Dividend Yield is

Dividend Yield = Dividend x 100 Stock Price

For example, if stock ABC has a market price of 20 Rs and pays a 2 baht dividend,
its dividend yield is

2 20

100

10%

61
Trading Volume: -

Trading volume or liquidity of a stock is important. It's easier to trade in/out

of a stock with high liquidity or large trading volume. It's difficult to buy a
stock which has a low liquidity or low trading volume because there are few
sellers. And selling is difficult if there are few or no buyers when you want to
sell because you urgently need the cash.

Financial Analysis:-

Analysis of a company's growth potential, stability, financial and management

strengths, and profit potential for its investors. Financial analysis is a rather
complex exercise and can be left until you've mastered more basic investment
knowledge. Besides market conditions and individual stock factors, a myriad of
other variables influence stock market and stock price movements Investors can
follow them in various media reports

What is a Stock Share?

Corporations issue official-looking sheets of paper that represent ownership of
the company. These are called stock certificates, and each certificate represents
a set number of shares.

Why invest in the stock market?

When you buy stock in a corporation, you own part of that company. This gives you
a vote at annual shareholder meetings, and a right to a share of future profits.

Why Sell Stock?

62
The reasons people sell their stock are more complex. A person may just need the
money. He or she may have watched the price go up, and have a hunch this is a good
time to lock in their profit and sell some or all their shares.

How are shares bought and sold on the NASDAQ?

If an investor asked his or her broker to buy shares in a company, the broker
would call a few dealers, known as market makers, finding the best price for the
customer.

How are stocks traded on the New York Stock Exchange?

Stocks that are bought and sold on the NYSE and the American Stock Exchange (AMEX)
use an auction system.

What are ECNs?

Mutual Funds do much of their trading among themselves and with other
institutional investors directly through electronic computer networks (ECNs), the
largest being Instinet.

Supply and Demand

A stock's price movement, up and down until the end of the trading day, is
strictly a result of supply and demand. The SUPPLY is the number of shares offered
for sale at anyone one moment. The DEMAND is the number of shares investors wish
to buy at exactly that same time.

American Stock Exchanges

63
American stock exchanges by year of inception.

International Stock Exchange

International stock exchanges by location.

What fuels demand for a stock?

Wall Street has said for years that the market is efficient, and the price of a
stock represents everything that is known about a company up to that moment.
Wrong, stock prices over-react to news, both good and bad.

More to Know About Stock Trading

Probably the first thing you must understand, is that with any investment, there
is always some risk. Even your savings account, insured by the United States
Government, has the very real risk of inflation rising faster than the interest
the bank pays you.

What is a Limit Order?

Most new investors place market orders, just buying or selling at the moment's
current price. But you can place a limit order, in which you name the price that
triggers your order to buy or sell.

Preferred Stock

64
When I was about 13 and first heard about ?preferred Investors that buy preferred
stock are generally the conservative type, who are looking for a steady dividend
that may be higher than they can achieve with A-rated bonds.

How to Buy Stock?

Buying stocks is not as simple as walking into a stockbroker's office and buying
shares like you would a pair of shoes from a store. You are required to open an
account with the brokerage, like opening an account at a bank.

How much money do you need to open a brokerage account?

Although most traditional full-service brokerage houses such as Merrill Lynch,
Dean Witter, and Paine-Webber, and giant "discount" brokers such as Fidelity and
Charles Schwab require a $2,000 ($1,000 for IRA's) opening balance, I have located
10 brokers who will establish your account with no money - $0.00!

Money Market Funds

Investments such as bank certificates of deposit (CDs) which are insured by the
federal government, sound pretty good. You agree to tie up your money for anywhere
from 30 days to 5 years to earn a guaranteed rate of interest.

Margin Loans and Investment

If you have at least $5,000 in cash and investments in your account, you can use
available margin to increase your profits. But using margin doubles your risk!

65
Useful links about Reliance Money
Reliance Money Website: www.reliancemoney.com
1-

2- Branch Locator : Reliance Money Branch Locator

Contact Information –
Website : www.reliancemoney.com
1-

Email: CustomerCare@relianceMoney.com
2-

3- Phone : 022-39886000

66
METHODOLOGY

SAMPLING
In Sampling the random sampling method is selected .

SAMPLE SIZE
In the sample there are 45 Remisers, 8 Franchisees, 4 Web World and 20 Web
Express, and 23 Direct Channel taken as samples and these the studied.

RESARCH DESIGN
It is a descriptive research design.

67
FINDINGS
AGE 18-25
As a % of total 0.25 0.58 0.17 1

Income above5 b/w 2-5 below 2

No. 6 14 4 24 INCOME

17%

25%

a bove 5 b/ w 2-5 be low 2

58%

Life Insurance Cover Yes No

No. 10 14 24

As a % of total 0.42 0.58 1

LIFE INS URANCE COVER

42% 58%

Ye s No

68
Invest or Not Yes No

No. 13 11 24

As a % of total 0.54 0.46 1

INVES OR NOT T

46% 54%

Ye s No

Reasons for Investment Asset Purchase Building Cash Reserves Retirement Others

No. 8 4 3 2 17

As a % of total 0.470588235 0.235294118 0.176470588 0.117647059 1

REAS ONS FOR INVES TMENTS Asset Purchase 12% 18% 24% 46% Building Cash Reserves
Retirem ent Others

69
PORTFOLIO Mutual Funds Fixed Deposits ULIP Share markets Others

No. 10 5 4 7 3 29

As a % of total 0.344827586 0.172413793 0.137931034 0.24137931 0.103448276 1

PORTFOLIO 10% 24% 14% 17% Mutual Funds Fixed Deposits ULIP Share m arkets Others

35%

ULIP Scheme ICICI LIC AVIVA

No. 2 1 1 4

As a % of total 0.5 0.25 0.25 1

ULIP S CHEME

AVIVA 25% ICICI 50%

LIC 25%

ICICI LIC AVIVA

70
M.F Co. Franklin ICICI Fidelity Reliance Others

No. 4 2 2 4 4 16

As a % of total 0.25 0.125 0.125 0.25 0.25 1

MUTUAL FUNDS Others 25% Franklin 24% ICICI 13% Franklin ICICI Fidelity Reliance
Others

Reliance 25%

Fidelity 13%

RETURNS ON M.F. 10%-20% 20%-30% above 30%

No. 5 3 2 10

As % of total 0.5 0.3 0.2 1

RETURNS ON M.F.

20% 50% 30%

10%-20% 20%-30% above 30%

71
AGE 25-35
Income above5 b/w 2-5 below 2 No. 11 19 5 35 Incom e As a % of total 0.314285714
0.542857143 0.142857143 1

14%

31%

55%

above5 b/ w 2-5 below 2

Invest or Not Yes No

As a % of No. total 26 0.74285714 9 0.25714286 0 35 1 INVES OR NOT T

26% Yes No 74%

Life Insurance

No.

As a % of 72
Cover Yes No

total 25 0.71428571 10 0.28571429 0 35 1 LIFE INS URANCE COVER

29% Yes No

71%

Reasons for Investment Income replacement Asset Purchase Building Cash Reserves
Retirement Funding for Children Others

No. 4 6 16 7 9 2 44

As a % of total 0.090909091 0.136363636 0.363636364 0.159090909 0.204545455

0.045454545 1

REASONS FOR INVESTMENT

Income replacement Asset Purchase Building Cash Reserves Retirement Funding for
Children Others

20% 16%

5%

14%

36%

73
PORTFOLIO Mutual Funds Fixed Deposits ULIP Share markets Others

No. 13 14 16 10 8 61

As a % of total 0.213114754 0.229508197 0.262295082 0.163934426 0.131147541 1

PORTFOLIO Mutual Funds Fixed Deposits ULIP Share m arkets Others

13% 16% 27%

21% 23%

ULIP Scheme ICICI LIC Bajaj Allianz Others

No.

As a % of total 6 0.285714286 7 0.333333333 4 4 21 0.19047619 0.19047619 1

ULIP Schem e

19% 19%

29% 33%

ICICI LIC Bajaj Allianz Others

74
Type of Fund Equity Balanced Cash

No. 13 3 5 21

As a % of Total 0.619047619 0.142857143 0.238095238 1

Type of Fund

24%

14%

62%

Equity Balanced Cash

Returns Below 10% 10%-20% 20%-30% Above 30%

No. 2 7 3 4 16

As a % of Total 0.125 0.4375 0.1875 0.25 1

Returns

25%

13%

19%

43%

Below 10% 10%-20% 20%-30% Above 30%

M.F Co. Franklin

No.

As a % of total 3 0.115384615 75
ICICI Fidelity Reliance HDFC Others

3 5 5 3 7

0.115384615 0.192307692 0.192307692 0.115384615 0.269230769 M.F Co. 12% Franklin

ICICI Fidelity Reliance HDFC Others

26%

12% 19%

12%

19%

RETURNS ON M.F. 10%-20% 20%-30% above 30%

No. 3 4 6 13

As % of total 0.230769231 0.307692308 0.461538462 1

RETURNS ON M.F.

23% 46% 31%

10%-20% 20%-30% above 30%

AGE 35- 45

76
Invest No Yes

1 7

Invest 13% No Yes 87%

Life Insurance No Yes

1 9

Life Insurance

10% No Yes 90%

Investment reasons Asset Purchase Building Cash reserves

2 6

77
Funding for children Income replacement Retirement

4 2 2 Investm Reasons ent Asset Purchase Building Cash reserves Funding for
children Incom e replacem ent Retirem ent

13% 13%

13%

37% 24%

Most Important High returns Safety Liquidity Tax free proceeds Flexibility
Most Im portant 8 7 6 5 4 3 2 1 0

5 7 4 3 1

Series1

Tax free proceeds

Hig returns h

Portfolio Government securities

Flexibility

Liquidity

Safety

4 78
Mutual funds ULIP Share Markets Fixed Deposits Bonds

5 7 3 1 3

Portfolio

Governm ent securities Mutual funds ULIP Share Markets

13% 4% 13%

17%

22% Fixed Deposits 31% Bonds

ULIP SCHEME ICICI LIC UTI Others

2 3 2 0

ULIP SCHEME 0%

29%

29%

42%

ICICI LIC UTI Others

Returns Below 10% 10%-20%

1 4

79
20%-30% Above 30 %

1 1

Return in ULIP 14% 14% 58% 14%

Below 10% 10%-20% 20%-30% Above 30 %

MUTUAL FUND CO. Reliance ICICI HDFC SBI GLSS

2 2 1 1 1

Mutual Fund Co. 14% 14% 14% 29% Reliance ICICI HDFC SBI GLSS

29%

45 AND ABOVE

80
Life Insurance No Yes

4 20

Life Insurance 17% No Yes 83%

Invest No Yes

7 17

Invest

29% No Yes 71%

Portfolio Government securities Mutual funds

8 5

81
ULIP Share Markets Fixed Deposits Bonds

9 6 13 5

Portfolio

Governm ent securities Mutual funds ULIP Share Markets Fixed Deposits Bonds

11%

17% 11%

28%

13%

20%

Investment reasons Asset Purchase Building Cash reserves Funding for children
Income replacement Retirement

3 11 6 1 5 Asset Purchase Building Cash reserves Funding for children Incom e

replacem ent Retirem ent

Investm Reasons ent 12%

19% 4% 23%

42%

Most Important High returns Safety Liquidity

12 16 6

82
Tax free proceeds Flexibility

10 6

Most Im portant 20 15 10 5 0

Series1 Safety Liquidity Flexibility ICICI LIC UTI Aviva Hig h returns Tax free
proceeds 1 4 4 2 2 7 83

ULIP SCHEME ICICI LIC UTI Aviva

ULIP SCHEME 9% 37% 36%

18%

FUNDS Equity Balanced

Debt Cash

0 0

0% 0%

FUNDS

22%

78%

Equity Balanced Debt Cash

Returns Below 10% 10%-20% Above 30 %

2 6 1

Returns in ULIP 11%

22%

67%

Below 10% 10%-20% Above 30 %

MUTUAL FUND CO. Reliance ICICI

1 2 84
HDFC Franklin Fidelity UTI IDBI

1 1 1 1 1

Mutual Fund Co. 13% 13% 13% 13% 12% 24% 12%

Reliance ICICI HDFC Franklin Fidelity UTI IDBI

BUSINESS
INCOME Below 2 b/w 2-5 Above 5 No. 3 9 6 18 INCOME As a % of Total 0.16667 0.5
0.33333 1

33%

17%

50%

Below 2 b/ w 2-5 Above 5

Invest or Not Yes No

As a % No. of Total 13 0.72222 5 0.27778 85

18

0 1

Invest or Not

28% Yes No 72%

Life Insurance Cover Yes No

No. 15 3 18

As a % of Total 0.83333 0.16667 0 1

Life Insurance Cover

17% Yes No 83%

Reasons for Investment Asset Purchase Building Cash Reserves Retirement

No.

As a % of total 7 0.26923 8 0.30769 3 0.11538

86
Others

8 0.30769 26 1

Reasons for Investm ent Asset Purchase 31% 27% Building Cash Reserves Retirem ent
Others

12%

30%

Investment Factors High returns Safety Liquidity Tax free proceeds Flexibility

Very Importa Somewhat Important nt Important 10 1 8 4 3 6 6 5 3 3

Less Important 1 1 1 0 3 1 2 3 2 2

Investment Factors Rating

100% 80% 60% 40% 20% 0% Tax free proceeds Flexibility Safety Liquidity High
returns Less Important Somewhat Important Important Very Imporant

PORTFOLIO Mutual Funds

No.

As a % of total 0.187 6 5

87
Fixed Deposits ULIP Share markets Government Securities Others

7 5 7 5 2 32

0.218 75 0.156 25 0.218 75 0.156 25 0.062 5 0.843 75

PORTFOLIO

16%

6%

19%

Mutua Funds l Fixe Deposits d ULIP Sha m rkets re a Governm Se ent curitie s
Others

22%

21% 16%

ULIP Scheme ICICI LIC Others

No. 1 3 2 6

As a % of total 0.16667 0.5 0.33333 1

88
ULIP Sche me

33%

17% ICICI LIC 50% Othe rs

Type of Fund

17% Equity Balanced 83%

M.F Co. Franklin ICICI Reliance Others

No. 1 3 4 4 12

As a % of total 0.08333 0.25 0.33333 0.33333 1

89
M.F Co. 8% 25%

33%

34%

Franklin ICICI Reliance Others

SERVICE

Income above5 b/w 2-5 below 2

No. 15 32 6 53

As a % of total 0.28301886 8 0.60377358 5 0.11320754 7 1

Incom e

11%

28%

61%

above5 b/ w 2-5 below 2

90
Invest or Not Yes No

No. As a % of total 36 0.679245283 17 0.320754717 0 53 1 Invest or Not

32% 68%

Yes No

Life Insurance Cover Yes No

No. As a % of total 34 0.641509434 19 0.358490566 0 53 1

Life Insurance Cover

36% 64%

Yes No

Reasons for Investment Income replacement

No.

As a % of total 0.03636363 2 6

91
Asset Purchase Building Cash Reserves Retirement Funding for Children Others

0.16363636 9 4 22 9 9 4 55 0.4 0.16363636 4 0.16363636 4 0.07272727 3 1

Reasons for Investm ent

Incom e replacem ent Asset Purchase 16% Building Cash Reserves Retirem ent Funding
for Children Others

16% 16%

7%

4%

41%

PORTFOLIO Mutual Funds Fixed Deposits ULIP Share markets Government Securities
Others

No. 19 19 18 15 6 7 84

As a % of total 0.22619047 6 0.22619047 6 0.21428571 4 0.17857142 9 0.07142857 1

0.08333333 3 0.92857142 9

92
PORTFOLIO 7% 8% 18% 21% 23%

Mutual Funds Fixed De posits

23%

ULIP Share m ts arke Gove e rnm nt Securities Othe rs

Investment Concerns High returns Safety Liquidity Tax free proceeds Flexibility

Very Importa Somewhat Imporant nt Important 23 9 20 13 12 18 7 14 19 15

Less Important 4 4 6 8 5 2 1 2 4 4

Investment Factor Rating

100% 80% 60% 40% 20% 0% Tax free proceeds Flexibility Liquidity High returns
Safety

Less Important Somewhat Important Important Very Imporant

ULIP Scheme ICICI LIC Reliance

No.

As a % of total 0.363 8 64 0.363 8 64 3 0.136

93
Others

3 22

36 0.136 36 1

ULIP Scheme ICICI 36% LIC Reliance Others

14% 14% 36%

Type of Fund

14% 32% 54%

Equity Balanced Cash

Returns on ULIP Below 10%

No.

As a % of Total 4 0.181

94
10%-20% 20%-30% Above 30%

11 4 3 22

82 0.5 0.181 82 0.136 36 1

Returns on ULIP Below 10% 10%-20% 20%-30% Above 30%

14% 18%

18%

50%

M.F Co. Frankl in ICICI Fidelit y Relian ce Other s

No. 7 4 5 5 10 31

As a % of total 0.225 81 0.129 03 0.161 29 0.161 29 0.322 58 1

95
M.F Co. Franklin ICICI Fidelity Reliance Others

32% 16%

23% 13% 16%

Learnings
Based on the work done in the company major findings of the study have been
highlighted below…. 1. Most of the people are satisfied with the extent of their
life insurance cover. They are not interested in buying more life insurance. 2.
People do not consider life insurance as a good savings because of low returns. 3.
As life insurance is a long-term contract. Maximum people do not have faith on
private life insurance companies, they still prefer LIC. 4. Because of less
advertising not many people are aware about private life insurance companies. 5.
Most of the people do not know about broker, corporate agents and banc assurance,
they rely on their agents only 6. The most preferred type of plan is money back.
The reason being availability of funds after every five years, which can be used
for paying further premium, thus

96
saving the regular income. Some people have no idea about what type of cover they
have. 7. Most of the people feel that life insurance is essential but they think
returns are low. 8. Some people have their doubts on the credibility and long stay
of private insurance companies.

Suggestions
1. Advertising of the insurance product should stress on the need of security. 2.
Insurance should be popularized as the means of securing future rather than saving
tax. 3. New entrants should come out with innovative riders. 4. Policies should be
issued quickly and with less formalities 5. Other service should also be improved.
6. Newspaper/Magazines and television are the most effective medium of advertising
life insurance. 7. Insurance agents should be well trained.

97
S.W.O.T. ANALYSIS
STRENGTH:

1. Multi-channel distribution and one of the largest distribution networks in

India. 2. Customer centric product and services. 3. Superior investment and risk
management framework. 4. Company has maximum number of MDRT as well as good number
of advisers. 5. Training process of the company is very strong. 6. Different plans
for different peoples. 7. According to the change in surrounding environment like
change in customer requirement.

WEAKNESS:

1. 2. 3.

Companies are not focusing on outskirt and remote areas and villages. There is no
plan for the low-income group. Fees of the adviser are high than the other
company.

98
OPPORTUNITY:

1. Insurance market is very big where company can expand its horizon in insurance
industry. 2. Through good investment and insurance it is easy to top Indian
customers. 3. The huge insurance market (77%) is left so company has opportunity
to expand out products.

THREATS:

1. Its still difficult task to win the confidence of public towards private
company. 2. The companies are facing major threats LIC that is an only government
company. 3. Plans for all income groups are not available which can create adverse
effect later on the market share of the company.

99
CONCLUSION
After having done all the analysis we come to the conclusion that customers who
are businessman prefer demat account . By analyzing the various results obtained
from the market survey following points van concluded about Reliance Money. 1-
Customers are preferring Reliance Money for opening Demat Account because of less
brokerage charges. 2- Some customers preferring Reliance Money because of their
brand image and credibility in the market . 3- From all the products of Reliance
Money customers prefer to buy Mutual Funds. 4- Customer are preferring investing
in shares in Delivery form . 5- Maximum no. of customer are not aware about the
share trading . 6- Company needs more advertisement to aware people about the
products of Reliance Money . 7- Concept of fixed coupon based brokerage has good
and satisfactory acceptance in market and will become popular in near future like
pre paid mobiles.

100
RECOMMENDATIONS
1- One of the major factors on which the company should really put there efforts
is in improvement of the services . 2- The company should try to enhance its image
among the customers by increasing advertisement in print and mass media which will
help in making its brand image. 3- The company should take feed back from
customer. 4- The company should make provisions frequent visits to the Customer .
This would increase communication between Consumer and Company. 5- The company
should come with attractive schemes like lucky draws , gifts, discount , etc. 6-
Company should bring new feature based product according the need and requirement
of economy class segment.

101
BIBLIOGRAPHY

1.BOOK
Marketing Management By- Philip Kotler Research Methodology By- C.R Kothari

2.MAGAZINE Business Today Business India Business World

3.NEWSPAPER
The Economic Times

102
QUESTIONNAIRE

Name: ______________ Contact No. ___________ Age: ______ 1. Occupation: Government

Salaried Business Others (specify) ____ Below 2 2 2 -5 More than 2 above 5

2. What is Your Family‘s Annual Income (Rs. Lakhs): 3. How many dependents you
have? None Yes 1 No

4. Do you have a Life Insurance Cover? 5. Do you invest? Yes No

if yes, what is your investment concerns? Building Cash reserves Retirement

Income replacement at death/disability Asset Purchase Funding for children

Others_____________________

(If ‘No’ - proceed to Q.13)

6. Rate the following investment factors in your order of importance. Very

Important ‘1’ S.NO 1. 2. 3. 4. 5. Important ‘2’ Somewhat Important ‘3’ Less
Important ‘4’ RATING 1 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4 4

PARAMETERS High Returns Safety Liquidity Tax Free Proceeds Flexibility

103
7. Your current portfolio consists of? Share Markets Fixed Deposits Government
Securities Mutual Funds Bonds

ULIP Others (Please specify) ____________ Attempt (Q.8 – Q. 10) if you invest in
ULIP schemes 8. With which company do you have the ULIP scheme? PRUDENTIAL BAJAJ
ALLIANZ LIC RELIANCE ICICI

OTHERS _________ Debt Balanced Cash

9. Which type of fund you invest in? Equity

10. How much returns are you getting on your ULIP investments annually
(approximately)? Below 10% 10% - 20 % 20%-30% above 30%

Attempt (Q.11 – Q. 12) if you invest in Mutual Funds

11. Which mutual funds are you investing in presently? _______________________

12. How much returns are you getting on your investments annually (approximately)?
Below 10% 10% - 20 % 20%-30% above 30%

13. Reliance Money is offering an opportunity to participate in investment schemes

generating high returns, would you like to avail it? Yes No

THANK YOU!!!!!

104