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INTRODUCTION:This project discusses the development of the debt market in India. The profile of the debt market in terms of outstanding issues, instruments and participants is highlighted along with the institutional arrangements. This is followed by an articulation of the broad objectives of development of financial markets by the Reserve Bank of India (RBI). The subsequent sections consider the important issues faced by the RBI in the simultaneous development of the debt and money markets in India, the dilemmas encountered in its role as monetary authority and debt manager, its function as regulator vis--vis supervisor of the banking system and its role as regulator of debt markets. The penultimate section discusses the processes adopted in the implementation of reforms in the financial markets. The last section gives the medium-term outlook for debt market reforms.

RECESSION MEAN:A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income & wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country gross domestic product (GDP); although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession. Recession is a normal part of the business cycle; however, one time crisis event can often trigger the onset of a recession.

MEANING OF RECESSION
Recession is a normal part of a business cycle; however; one time crisis event can often trigger the onset of a recession. The global recession of 2008-2009 brought a great amount of attention to the risky investment strategies used large financial institutions, along with the truly global nature of the financial system. As a result of such a wide spread global recession. A recession generally last from 6 to 18 months, and interest rate usually fall in during these months to stimulate the economy offering cheap rate at which to borrow money.
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the present economic slow down results in a huge loss to the business & ultimetly reduction of job. the banks are facing huge loss due to sub-prime crisis. the big banks like lehman brothers, Merrill lynch etc. have gone bankrupt. india is facing recession not due to indigenous reasons but because of U.S.A. & European countries since Indian economy is more dependent on these countries. CAUSES OF RECESSION According to the National Bureau of Economic Research (NBER), recession is defined as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production and wholesale-retail sales". More specifically, recession is defined as when businesses cease to expand, the GDP diminishes for two consecutive quarters, the rate of unemployment rises and housing prices decline.

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INTRODUCTION OF RBI
The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934 Though initially RBI was privately owned, it was nationalized in 1949. Its central office is in Mumbai where the Governor of RBI sits. RBI has 22 regional office and most of them are located in state capitals. The Reserve Bank of India also has three fully owned subsidiaries: National Housing Bank (NHB), Deposit Insurance and Credit Guarantee Corporation of India (DICGC), Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL). The functions of Reserve Bank are governed by central board of directors. The board is appointed by the Government of India. The directors are nominated / appointed for a period of four years. As per the Reserve Bank of India Act there are Official Directors and NonOfficial Directors. The Official Directors are appointed by the government and include Governor and Deputy Governors of RBI. There cannot be more than four Deputy Governors. Non-Official Directors are nominated by the government. These include ten Directors from various fields and one government official. Apart from these, there are four other NonOfficial Directors, one each from four local boards in Mumbai, Kolkata, Chennai and New Delhi.

Main Functions of RBI

Reserve Bank of India is the main monetary authority of the country. It

formulates, implements and monitors the monetary policy and thereby plays a key role in maintaining price stability and ensuring adequate flow of credit to productive sectors.

RBI is the regulator and supervisor of the financial system in the country.

It prescribes broad parameters of banking operations within which the country's banking and financial system functions.

It manages the foreign exchange of the country. Performs merchant banking function for the central and the state Maintains banking accounts of all scheduled banks.
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governments; also acts as their banker.

Issues and exchanges or destroys currency and coins not fit for

circulation.

Main objectives of RBI

* To manage the monetary and credit system of the country. * To stabilizes internal and external value of rupee. * For balanced and systematic development of banking in the country. * For the development of organized money market in the country. * For proper arrangement of agriculture finance. * For proper arrangement of industrial finance. * For proper management of public debts. * To establish monetary relations with other countries of the world and international financial institutions. * For centralization of cash reserves of commercial banks. * To maintain balance between the demand and supply of currency. Main Functions Monetary Authority:

Formulates, implements and monitors the monetary policy. Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors.

Regulator and supervisor of the financial system:

Prescribes broad parameters of banking operations within which the country's banking and financial system functions. Objective: maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public.

Manager of Foreign Exchange

Manages the Foreign Exchange Management Act, 1999. Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

Issuer of currency:

Issues and exchanges or destroys currency and coins not fit for circulation. Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

Developmental role

Performs a wide range of promotional functions to support national objectives.

Related Functions

Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker. Banker to banks: maintains banking accounts of all scheduled banks.

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FUNDAMENTALS OF DEBT MARKET: FEATURES Debt instruments are contracts in which one party lends money to another on pre-determined terms with regard to rate of interest to be paid by the borrower to the lender, the periodicity of such interest payment, and the repayment of the principal amount borrowed (either in instalments or in bullet). In the Indian securities markets, we generally use the term bond for debt instruments issued by the Central and State governments and public sector organizations, and the term debentures for instruments issued by private corporate sector.

DEBT INSTRUMENT FEATURES The primary features of a bond are: a) Principal b) Coupon c) Maturity Principal is the amount that has been borrowed, and is also called the par value or face value of the bond. The coupon is the product of the principal and the coupon rate. Typical face values in the bond market are Rs. 100 though there are bonds with face values of Rs. 1000 and Rs. 100000 and above. All Government bonds have the face value of Rs.100. In many cases, the name of the bond itself conveys the key features of a bond. For example a GS CG2015 10.44% bond refers to a Central Government bond maturing in the year 2015, and paying a coupon of 10.44%. Since Central Government bonds have a face value of Rs.100, and normally pay coupon semi-annually, this bond will pay Rs. 5.22 as six- monthly coupon, until maturity, when the bond will be redeemed. Coupon Rate refers to the periodic interest payments that are made by the borrower (who is also the issuer of bond) to the lender (the subscriber) and the coupons are stated upfront either directly specifying the number (e.g. 8%) or indirectly tying with a benchmark rate (e.g. MIBOR+0.5%). Coupon rate is the rate at which interest is paid, and is usually represented as a percentage of the par value of a bond. In the bond markets, the terms maturity and term-to-maturity, are used quite frequently. Maturity of a bond refers to the date on which the bond matures or date on which borrower has agreed to repay the principal amount to the lender. The borrowing is ends with redemption, and the bond ceases to exist after that date. Term to maturity, on the other hand, refers to the number of

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years remaining for the bond to mature. Term to maturity of a bond changes everyday, from the date of issue of the bond until its maturity. INDIAN DEBT MARKETS: A PROFILE Indian debt markets, in the early nineties, were characterized by controls on pricing of assets, segmentation of markets and barriers to entry, low levels of liquidity, limited number of players, near lack of transparency, and high transactions cost. Financial reforms have significantly changed the Indian debt markets for the better. Most debt instruments are now priced freely on the markets i.e. WDM and RDM; trading mechanisms have been altered to provide for higher levels of transparency, higher liquidity, and lower transactions costs; new participants have entered the markets, methods of security issuance, and innovation in the structure of instruments have taken place; and there has been a significant improvement in the dissemination of market information. MARKET SEGMENTS a) Government Securities b) Public Sector Units (PSU) bonds c) Corporate Securities The market for Government Securities comprises the Central, State and Statesponsored securities i.e. G-Sec and T-Bill. In the recent past, local bodies such as municipalities have also begun to tap the debt markets for funds. The PSU bonds are generally treated as surrogates of sovereign paper, sometimes due to explicit guarantee and often due to the comfort of public ownership i.e. PSU Bonds and CDs. Corporate Securities markets comprise of Corporate Debenture and commercial paper. These securities typically are structured to suit the requirements of investors and the issuing corporate, and include a variety of tailor- made features with respect to interest payments and redemption. The less dominant

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fourth segment comprises of short term paper issued by banks, mostly in the form of certificates of deposit. Table 2.1: Security-wise Distribution of Turnover on WDM Percentage Share of Turnover 2006-07 2007-08 2008-09 72.67 70.00 68.84 22.13 23.71 23.40 02.56 02.02 03.27 02.64 04.27 04.49

Securities Government Securities Treasury Bills PSU/Institutional Bonds Others

(Source: FIMMDA-NSE Debt Market Module Curriculum) PARTICIPANTS IN THE DEBT MARKETS Debt markets are pre-dominantly wholesale markets, with dominant institutional investor participation. The investors in the debt markets concentrate in banks, financial institutions, mutual funds, provident funds, insurance companies and corporate. More information given in Table 2.2

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Table 2.2: Participants and Products in Debt Markets Issuer Instrument Maturity 2-30 Years Investors RBI, Banks, Insurance Companies, Provident Funds, Mutual Funds, PDs, Individuals RBI, Banks, Insurance Companies, Provident Funds, Mutual Funds, PDs, Individuals Banks, Insurance Companies, Provident Funds, RBI, Mutual Funds, Individuals, PDs. Banks, Insurance Companies, Corporate, Provident Funds, Mutual Funds, Individuals Banks, Mutual Funds, Corporates, Individuals Banks, Corporate, Financial institutions, Mutual Funds, Individuals, FIIs Banks, Corporations, Individuals, Companies, Trusts, Funds, Associations, FIs, NRIs Corporations, Individual, Companies, Trusts, Funds, Associations, Fis, NRIs

Central Dated Sec. Government (G-Sec) Central T-Bills Government State Dated Sec. Government (G-Sec) Bonds, Structured Obligations Debentures

91/182/ 364 Days

5-13 years

PSUs

5-10 Years 1-12 Years

Corporates Corporates, PDs

7 days to Commercial 1 Paper Year 7 days to 1 Year 1 to 3 Years

Scheduled Certificates Commercial of Deposit Banks (CDs) Fis

Bank Bonds Scheduled 1-10 Commercial Years Banks Municipal Corporation Municipal Bonds

Banks, Corporations, Individuals, Companies, 0-7 Years Trusts, Funds, Associations, FIs, NRIs

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(Source: FIMMDA-NSE Debt Market Module Curriculum)

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Table 2.3: Participant-wise Distribution of Turnover (%) Participant Foreign Banks Indian Banks Primary Dealers FIs, MFs and Corporates Trading Members TOTAL 2005-06 14.11 28.07 21.89 3.92 32.01 100.00 2006-07 20.57 26.03 19.82 2.70 30.88 100.00 2007-08 27.09 23.78 8.64 2.34 38.15 100.00

(Source: FIMMDA-NSE Debt Market Module Curriculum)

SECONDARY MARKET FOR DEBT INSTRUMENTS A. WHOLESALE DEBT MARKET (WDM) The NSE- WDM segment provides the formal trading platform for trading of a wide range of debt securities. Initially, government securities, treasury bills and bonds issued by public sector undertakings (PSUs) were made available for trading. This range has been widened to include non-traditional instruments like, floating rate bonds, zero coupon bonds, commercial papers, certificates of deposit, debentures, state government loans, units of mutual funds and many more. B. RETAIL DEBT MARKET (RDM) With a view to encouraging wider participation of all classes of investors across the country (including retail investors) in government securities, the Government, RBI and SEBI have introduced trading in government securities for retail investors. Trading in this retail debt market segment (RDM), on NSE has been introduced w.e.f. January 16, 2003.

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RDM Trading: Trading takes place in the existing Capital Market segment of the Exchange and in the same manner in which the trading takes place in the equities (Capital Market) segment.

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WHAT ARE THE DIFFERENT DEBT INSTRUMENTS? A. GOVERNMENT SECURITIES

Securities issued by a government to raise the funds necessary to pay for its payments. Government securities also called as a G-Sec. G-Sec is the longterm mean of fund for government, having a maturity of more than one year. B. TREASURY BILL

Treasury Bill is a negotiable debt obligation issued by the government and backed by its full faith and credit, having maturity of one year or less. Exempt from state and local taxes. Also called T-Bill or Treasury bill. C. BOND

A bond is a debt security, in which the authorized issuer owes the holders a debt and depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity. Thus a bond is a loan: The issuer is the borrower, the bond holder is the lender, and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure.

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D. CERTIFICATE OF DEPOSIT (CD) A certificate of deposit (CD) is a promissory note (time deposit) issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will often incur a penalty. E. CORPORATE DEBENTURE Debenture is a long-term debt instrument used by large companies to obtain funds. It is defined as "a debt secured only by the debtors earning power, not by a lien on any specific asset. Bond buyers generally purchase debentures based on the belief that the bond issuer is unlikely to default on the repayment. F. COMMERCIAL PAPER An unsecured obligation issued by a corporation or bank to finance its shortterm credit needs, such as accounts receivable, inventory. Maturities typically range from 2 to 270 days. Commercial paper is available in a wide range of denominations, can be either discounted or interest bearing, and usually have a limited or nonexistent secondary market. Companies with high credit ratings usually issue Commercial Paper.

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G. CBLO CBLO stands for, Collateralized Borrowing and Lending Obligation", a money market instrument as approved by RBI, is a product developed by CCIL for the benefit of the entities who have either been phased out from inter bank call money market or have been given restricted participation in terms of ceiling on call borrowing and lending transactions and who do not have access to the call money market. CBLO is a discounted instrument available in electronic book entry form for the maturity period ranging from 1 day to 90 days (can be made available up to 1 year as per RBI guidelines). In order to enable the market participants to borrow and lend funds, CCIL provides the Dealing System through: Indian Financial Network (INFINET), a closed user group to the Members of the Negotiated Dealing System (NDS) who maintain Current account with RBI. CBLO is explained as under: An obligation to the borrower to return the money borrowed, at a specified future date. An authority to the lender to receive money lent, at a specified future date with an option/privilege to transfer the authority to another person for value received. An underlying charge on securities held in custody (with CCIL) for the amount borrowed/lent.

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ter 4 Chap ntal ame Fund tual f Mu O fund

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FUNDAMENTALS OF MUTUAL FUND WHAT IS AN INVESTMENT? Investment means parking money somewhere for some specific period of time and getting a higher amount after the period. The money earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle person may like to use savings in order to get return on it in the future. This is called Investment. SECURITIES Securities as defined under Section 2(h) of the Securities Contracts (Regulations) Act, 1956 of India, include shares, stocks, bonds, debentures, warrants, instruments, obligations, money market instruments, debt instruments or any financial or capital market instrument of whatsoever nature made or issued by any statutory authority of body corporate, incorporated or registered by or under any law; or any other securities, assets or such other investments as may be permissible from time to time under the regulations. MUTUAL FUND The Definition: A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments and other securities. Mutual funds have a fund manager who invests the money on behalf of the investors by buying / selling stocks, bonds etc. 1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution. 2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution.

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3) If fund holdings increase in price but are not sold by the fund manager, the fund's units increase in price. He can then sell the investors mutual fund units for a profit. Funds will also usually give the investor a choice either to receive a check for distributions or to reinvest the earnings and get more units. NET ASSET VALUE Net asset value (NAV) stands for fund's assets minus liabilities. NAV per unit is the value of one unit in the mutual fund. Simplistically speaking one can think of NAV per unit as the price of a mutual fund unit. Generally NAV fluctuates everyday as fund holdings changes. When one buys units, he pays the current NAV per share plus any front-end load. When he sells his shares, the fund will pay him NAV less any back-end load. Types of Mutual Fund Scheme: a) OPEN-ENDED FUNDS An open-end fund is one that is available for subscription all through the year. It doesnt have fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV"). The key feature of open-end schemes is liquidity. b) CLOSED-ENDED FUNDS A closed-end fund has a stipulated maturity period. Investors can invest in the scheme at the time of the new fund offer (NFO) and thereafter they can buy or sell the units of the scheme on the stock exchanges if they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. c) EQUITY FUND
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Equity Funds are defined as those funds, which have at least 65% of its Average Weekly Net Assets, invested in Indian Equities. Equity funds essentially invest the investors money in equity shares of companies. Fund managers try and identify companies with good future prospects and invest in the shares of such companies. They generally are considered as having the highest levels of risks (equity share prices can fluctuate a lot), and hence, they also offer the probability of maximum returns. However, High Risk, High Return should not be understood as If I take high risk I will get high returns. Equity Funds can be classified on the basis of market capitalization of the stocks they invest in namely Large Cap Funds, Mid Cap Funds or Small Cap Funds or on the basis of investment strategy the scheme intends to have like Index Funds, Infrastructure Fund, Power Sector Fund, Quant Fund, Arbitrage Fund, Natural Resources Fund, etc. d) INDEX FUND Index Funds invest in stocks comprising indices, such as the Nifty 50, which is a broad based index comprising 50 stocks. There can be funds on other indices, which have a large number of stocks such as the CNX Midcap 100 or S&P CNX 500. Here the investment is spread across a large number of stocks. In India today we find many index funds based on the Nifty 50 index, which comprises large, liquid and blue chip 50 stocks. The fund manager will not indulge in research and stock selection, but passively invest in the Nifty 50 scrip only, in proportion to their market capitalization. Due to this, index funds are known as passively managed funds. e) DEBT FUND Debt funds are funds which invest money in debt instruments such as short and long term bonds, government securities, t-bills, corporate paper,

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commercial paper, call money etc. The fees in debt funds are lower, on average, than equity funds because the overall management costs are lower. The main investing objective of a debt fund is usually preservation of capital and generation of income. f) GILT FUND Money of Gilt Funds invests only in securities issued by the Central Government or State Governments. Gilt funds are safe to the extent that they do not carry any Credit Risk. However, it must be noted that even if one invests in Government Securities, interest rate risk always remains. There are many other mutual funds in Indian Financial market, which I not stated here. Each mutual fund having its distinguished features like: Arbitrage Fund.

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CTION U TROD IN

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4.1 RESEARH DESIGN: Redman and Mory define research as a systematic efforts to gain new knowledge. Some people consider research is a movement from known to unknown. Research covers the search for and retrieval of systematic and scientific facts, findings and information for a specific purpose. Research is essential an act finding process which influences decision-making. It is a careful search or inquiry into any subject matter, which is an endeavour to discover or find out valuable facts, which would be useful for further application or utilization.

4.2 BACKGROUND TO THE PROBLEM DEFINITION: The idea of study on this topic came into mind due to the condition of the Indian Financial System in financial year 2008-09. Where government under pressure to cut interest rates because of providing liquidity in market to revive Indian Economy from global slowdown and another reason that after every forth night at least one bank reducing interest rate. The aim of this study is to find out relationship between market fluctuation and performance of Debt fund.

4.3 OBJECTIVES OF THE STUDY: The research objective is the researchers version of the business problem. Defining what standard the research should accomplish. The objectives must, however, specify the information needed to make a decision. The objectives of my study are to find out:

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1.

The relationship between a declining market and performance of Debt Funds. Infusion of money in debt fund as per change in equity investment.

2.

3. Find out the reliability of debt fund for investment purpose.

4.

Comparative performance of debt fund with equity fund while market is falling.

4.4 HYPOTHESIS OF STUDY: Between market condition and performance of Debt fund there is an inverse relationship. 4.5 TIME DURATION OF STUDY: The time period of study is 3 months, (from January 2009 to March 2009). 4.6 SAMPLE SIZE: LIC MF Floating Rate Fund (G), HDFC Floating Rate Income Fund LTP (G), Kotak Floater Long Term Plan (G), Canara Robeco Floating Rate Short Term Plan (G), Tata Floater Fund (G) are the sample debt funds. On the basis of findings of above funds we can relates those findings to all debt funds.

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4.7 LIMITATIONS OF PROJECT: 1. The Time duration of the study is from January 2009 to March 2009. 2. Selected five Funds represent the all debt funds in market. 3. Returns and NAV are basically depends upon the fluctuating market conditions.

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t er 6 Chap
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DATA COLLECTION
A research design is one, which simplifies the framework of plane for the study and adds itself in the quick collection and analysis of the data. It is a blue print that has been filled in completing the study. PRIMARY DATA Primary data is the data which is not available. This data is especially collected which is known is first hand data. Primary sources: Discussion with experts

SECONDARY DATA Secondary data is the data already collected by someone else. This data is not especially collected to solve present or specific problem. The information relevant and can be used for our purpose. There are sources of secondary data collection they are: Books Websites Fact sheets Publications

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DATA ANALYSIS AND INTERPRETATION

6.1 DATA ANALYSIS A] Debt Funds- Floating Rate 1. LIC MF Floating Rate Fund (G): N Fund Family Jeevan Bima Sahayog AMC Ltd. UCTIO D Fund Class Debt- Floating Rate INTRO Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 1152.68 (Feb 09) Returns 1 month 0.5 % 3 months 2.1 %

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6 months Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call

4.7 % 0.00 0.00 71.69 N.A 0.00 28.31

2. HDFC Floating Rate Income Fund - LTP (G): Fund Family HDFC Asset Management Co. Ltd. Fund Class Debt- Floating Rate Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 113.09 (Feb 09) Returns 1 month 0.5 % 3 months 2.0 % 6 months 4.4 % Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call 0.00 0.00 83.42 N.A 09.24 07.34

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3. Kotak Floater Long Term Plan (G): Fund Family Kotak Mahindra AMC Ltd. Fund Class Debt- Floating Rate Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 3,648.47 (Feb 09) Returns 1 month 0.5 % 3 months 1.9 % 6 months 4.7 % Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call 0.00 0.00 16.12 N.A 80.12 3.76

4. Canara Robeco Floating Rate - Short Term Plan (G): Fund Family Canara Robeco Asset Management Company Ltd. Fund Class Debt- Floating Rate Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 118.97 (Feb 09) Returns 1 month 0.5 % 3 months 2.1 % 6 months 4.7 % Asset Allocation (%)
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Equity Others Debt Mutual Funds Money Market Cash / Call

0.00 0.00 00.00 N.A 100 00.00

5. Tata Floater Fund (G): Fund Family Tata Asset Management Limited Fund Class Debt- Floating Rate Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 6,121.66 (Feb 09) Returns 1 month 0.5 % 3 months 1.8 % 6 months 4.3 % Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call 0.00 0.00 79.62 N.A 0.00 20.38

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B] Equity Diversified Funds 1. Birla Sun Life Dividend Yield Plus (G): Fund Family Birla Sun Life Asset Management Company Ltd. Fund Class Equity Diversified Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 178.91 (Feb 09) Returns 1 month 0.3 % 3 months -2.7 % 6 months -18.5 % Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call 79.57 0.00 0.00 N.A 0.00 20.43

2. ICICI Pru Infrastructure Fund - Retail Plan (G): Fund Family ICICI Prudential AMC Ltd Fund Class Equity Diversified Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 2,534.55 (Feb 09) Returns
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1 month 3 months 6 months Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call

5.2 % 2.4 % -27.0 % 60.46 26.86 0.00 N.A 0.00 12.68

3. DSP Black Rock Top 100 Equity Fund - Regular Plan (G): Fund Family DSP Black Rock Investment Managers Limited Fund Class Fund Type Investment Plan Asset Size (Rs. Cr) Returns 1 month 3 months 6 months Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call Equity Diversified Open Ended Growth Rs. 976.03 (Feb 09) 2.2 % 0.3 % -22.4 % 70.22 15.30 7.04 N.A 0.00 7.44

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4. IDFC Imperial Equity Fund (G): Fund Family IDFC Asset Management Company Private Limited. Fund Class Equity Diversified Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 140.29 (Feb 09) Returns 1 month 4.2 % 3 months 3.0 % 6 months -20.9 % Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call 65.73 0.00 0.01 N.A 30.03 4.24

5. UTI Dividend Yield Fund (G): Fund Family UTI Asset Mgmt Company Pvt. Ltd. Fund Class Equity Diversified Fund Type Open Ended Investment Plan Growth Asset Size (Rs. Cr) Rs. 870.85 (Feb 09)
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Returns 1 month 3 months 6 months Asset Allocation (%) Equity Others Debt Mutual Funds Money Market Cash / Call

2.7 % 1.7 % -17.9 % 67.65 0.00 8.96 N.A 0.00 23.32

6.1 DATA INTERPRETATION

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Graph 3.1: Debt Fund Returns (in %) The interpretation of the Debt Fund Returns represents that, in the recession period funds are performing in positive direction, where the investors are getting more returns as compare to equity fund investment. Where last 6 month returns of all debt funds are good.

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Graph 6.2: Equity Fund Returns (in %) In the case of diversified equity funds returns are very less, as comparison with the debt funds 6 months returns of fund are negative, where as debt funds cultivating the positive returns.

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Graph 6.3: Asset Allocation of Debt Funds In debt fund asset allocation there is a common methodology to invest in Debt, money market and in cash/call.

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Graph 6.4: Asset Allocation of Diversified Equity Funds In the asset allocation of the equity fund total focus on the equity investment, where as falling equity market results the fall in equity returns.

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ter 8 Chap
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CONCLUSIONS: 1. There is an inverse relationship between market conditions and performance of debt funds. Whenever equity market falls then debt fund shows positive performance while whenever equity market go up then debt fund shows negative performance. 2. When market funds of the Debt Funds increases it means fund manager invest its fund in long-term maturity debt instrument and exactly opposite situation when market gets up. 3. Whenever market falls then fund size of debt fund increases due to following two reasons:

N UCTIO falls then TROD IN average maturity period

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a.

Appreciation of invested money in debt market because of value of those debt instrument increases.

New money comes in fund, because performance of the fund attracts new investors to invest their money into these funds. 4. Asset allocation of debt funds is very focused by all fund houses because due to fall in equity market manager moves total investments towards debt instruments.
b.

5. Equity market investments diversified in various sector, however market fall results loss in equity returns.

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7.2

SUGGESTIONS:

On the basis of above study following suggestion can be drawn. This suggestion will help to investors, distributors and everyone who deals with debt fund. 1. Whenever there will be any expectation that, the equity market will come down then investors should put their money in debt funds. And whenever expectation like, the equity market will rise then investors should pull out their money from these funds. 2. In interest rates falling scenario investors and fund manager must invest their money for long-term period in debt instrument. And exactly opposite in interest rates rising scenario. 3. To predict exact position of debt funds in market for investor should keep watch on RBIs (Reserve Bank of India) and Government policy monitory policy. At the same time investor should track not only national economic situation but also the global economic situation.

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ter 9 Chap
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TION DUC

REFERENCES AND BIBLIOGRAPHY: 1. Funds Factsheets 2.Web Sites Referred:

Sr. No. 1. 2. 3. 4. 5. 6. 7. http: http: http: http: http: http: http: m

Website

www.rbi.org.in www.sebi.gov.in www.moneycotrol.com investopedia.com www.nseindia.com wikipedea.com

www.valueresearchonline.co

Books Referred: Sr. No. Book Name: 1 Investing in Mutual Fund 2 Research Methodology

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Author Name: Mr. Ashutosh Publication: Wakhare BSE Publication Team

Mr. Mukul Burghare Mrs. Aparna Samudra TMC, Nagpur

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