A STUDY ON INVESTMENT IN STOCK BROKING

SUMMER INTERNSHIP REPORT

BY

NALLENDIRAN K

(MB20B25)

Under the guidance and supervision of

Prof.Dr. C.NATESON MBA., M.Phil., F.D.P.M

MASTER OF BUSINESS ADMNISTRATION

JANSONS SCHOOL OF BUSINESS
(AUTONOMOUS)
COIMBATORE – 641 659

OCTOBER
2019

i
 DECLARATION

I NALLENDIRAN K (MB20B25) hereby declare that the INTERNSHIP REPORT submitted to

JANSONS SCHOOL OF BUSINESS, an autonomous Institution Affiliated to Bharathiar
University, in partial fulfillment of the requirements of the award of the degree of MASTER OF
BUSINESS ADMINISTRATION, is a record of original work done by me during the internship at
Coimbatore Capital, Coimbatore from 5th May 2019 to 30th July 2019 under the guidance of
DR.C.NATESON, and it has not formed the basis for the award of any Degree / Diploma / Associate
ship / Fellowship or other similar title of any candidate of any university.

Student's Signature: Date:

Student's Name: Student’s Roll No:

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 ACKNOWLEDGEMENT

I express my deep sense of gratitude to Prof. S.MOHAN CEO, Jansons School of Business,
Karumathampatti, Coimbatore, for permitting me to undertake this project work and providing with
all the necessary facilities and support to complete the work.

I am obliged to thank my project guide Prof. Dr. C.NATESON MBA., M.Phil., F.D.P.M-IIMA,
Ph.D, Jansons School of Business for his valuable guidance, suggestions, and which enabled me to
complete the project work successfully.

I take great pleasure in thanking the management of KARVY STOCK BROKING Ltd., Chennai, for
providing me this opportunity to do my project in esteemed organisation and Mr. S.
RAMALINGAM, Cluster manager, T Nagar branch for his guidance and support without which this
project work would not have been completed.

I take this opportunity to thank all non-teaching and computer centre staff who helped me to prepare
my project work. I also express my gratitude to my loving parents and friends who are a constant
source of motivation to me and for their support and encouragement throughout this project work.

I am indebted to the powerful almighty for all the blessings showered upon me and helping me
throughout this project.

NALLENDIRAN K

(MB20B25)

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 TABLE OF CONTENTS

CHAPTER NO. CONTENTS PAGE NO.

EXECUTIVE SUMMMARY 1

OBJECTIVE OF THE STUDY

2
1 INTRODUCTION 3
SECURITIES MARKET IN INDIA 4
2
NATIONAL STOCK EXCHANGE 7
3
4 COMPANY PROFILE 9

5 SERVICES OF THE COMPANY 10

5.1 GROWTH AND DEVOLEPMENT 10

5.2 VISION OF KARVY 11

5.3 MISSION OF KARVY 11

SERVICE PROFILE 12
6
KARVY CONSULTANCY LTD. 14
7
INDUSTRY ANALYSIS 16
8
9 MUTUAL FUNDS CONCEPT 18
9.1 PERFOMANCE OF MUTUAL 18
FUNDS
9.2 ADVANTAGES OF MUTUAL 20
FUNDS
9.3 DRAWBACK OF MUTUAL FUNDS 21

9.4 EQUITY SHARES 22

KYC 23
10
LEARNINGS 25
11
SUGGESTIONS 26
12
CONCLUSION 27
13
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 EXECUTIVE SUMMARY
This study was under taken at “Karvy Stock Exchange Ltd.” at Chennai District. The study mainly
deals with providing advisory services investor. This study is to conduct an analysis of the pattern
of investment made by the investors at Karvy stock broking Ltd. in the Mutual Funds and to suggest
possible solutions to increase awareness among the investors in Mutual Funds.

In order to undertake this study, statistical tools such as Pie Charts, Tabular data analysis, etc…,
Secondary data provided by the firm and direct interaction with the investors have been used.

In this study majority of respondents neglecting the Mutual Funds and Bank deposits; Majority
preference for long term investment and average performance of Mutual Funds Compared to other
investment avenues, etc…, have come to light.

Primary data was collected through a set of structured Questionnaires, which have been asked to the
respondents. Various suggestions have been provided for increasing the awareness and investment
pattern. The firm should communicate to the investors about the opportunities and benefits of
investing in Mutual Funds. It should communicate to the investors about the opportunities and
benefits of investing in Mutual Funds. It should start an investor club to create awareness, etc….

The study of this conclusion part is that the project by stating the current scenario of Mutual Funds
in our Indian Market and the investors general perception about the Mutual Funds.

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 OBJECTIVE OF THE STUDY

This Study undertaken at the Karvy Stock Broking Limited at Chennai City. Following
objectives are as follows:-

➢ To know the attitude of investors towards Mutual Funds & Stock Broking.
➢ To know the advantages and dis-advantages of Mutual Funds & Stock Broking.
➢ To come up with the awareness of Mutual Funds & Stock Broking.
➢ To understand about the future Mutual Funds & Stock Broking.

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 INTRODUCTION :-

Economic Liberalization has accelerated the pace of development in the India Securities
Market which has undergone a sea exchange during the last 2 decades. The role of securities Market
in mobilizing and canalizing private capital for the Economic Development of the country has
increased over the years and the Securities itself has undergone Structural transformation with the
introduction of the computerized online interconnected Market System.

Over the years as investment in securities gathered momentum and the need for the national
analysis. Only recently security analysis and portfolio management has emerged as an important
tool for investors and it is evident that rational investment activity involves creation of an investment
portfolio.

A portfolio is a group of securities held together as an investment. By constructing a portfolio

investors attempt to spreads risk by not putting their eggs into 1 basket.

Each individual security has its own risk and return characteristics which can be measured and
express quantitatively. Each portfolio by combining the individual securities has its own specific
risk and returns characteristics, which are not just the aggregate, the individual security
characteristics. The return and risk of each portfolio has to be calculated mathematically and
expressed quantitatively. This demands the process of selecting of optimum portfolio.

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 SECURITIES MARKET IN INDIA

Introduction:

Capital market is the backbone of any country’s economy. It facilitates conversion of

savings to investments. Capital market can be classified as primary and secondary market. The fresh
issue of securities takes place in primary market and trading among investors takes place in
secondary market. Primary market is also known as new issue market. Equity first enter capital
market though investment in primary market. In India, common investors participating in the equity
primary market is massive. The number of companies offering equity though primary markets
increased continuously in the post independence period till the year 1995. After 1995, there is a
continuous slump experienced by the primary market offering equity. The main reason for slump
is lack of investors’ confidence in the primary market. So it is important to understand the causes
and measures of revival of investors’ confidence leading to capital mobilizing and investment in
right avenues creating, economic growth in the country.

Globally, there are increased evidences to suggest that investor confidence has assumed an
important role in the economic development of a country. The economist (1998) indicated that a lot of
issues need to address to make capital markets safer. Transparency, strengthening financial system
and managing crises are the issues, which cannot be quickly fixed. But they add up to a stronger
system.

“The Securities market is the market for equity, debt and derivatives.” The securities market has
essentially 3 categories that is the issuer of securities, the investors in the securities and
intermediaries. The issuers are the borrowers or deficit savers, who issue securities to raise funds.
The investors, who are surplus savers, deploy their savings by subscribing to these securities. The
intermediaries were the agents who match the needs of the users and suppliers of funds for a
commission.
These intermediaries pack and unpack securities to help both the users and investors to
achieve their respective goals. There are a large variety and number of intermediaries providing
various services in the Indian Securities market. This process of Mobilizing of resources is carries
out under the supervision and overview of regulators. The regulators develop fair market practices
and regulate the conduct of issuer’s securities and intermediaries. They are also in charge of
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 protecting the interest of the investors. The regulator ensures a high service standard from the
intermediaries and supply of equity securities and non manipulated demand for them in the market.

EQUITY CULTURE IN THE INDIAN FINANACIAL SYSTEM

The capital market services as a reliable guide to the performance and the financial position of
companies and ties up companies and there by promoters efficiency. It values firms accurately and
ties up manager composition to stock value and there by provides incentives to managers to maximize
firm value. It thus helps to align the interests of the managers and there by efficient resources
allocation growth.

A near continuous valuation of companies as reflected in share prices and the implied possibility of
mergers and takeovers are conducive to financial discipline and more efficient allocation of capital.

Stock market promoter’s growth through the creation of liquidity. Many profitable investments
require long term capital but investors are often reluctant to control over their savings for long periods.
Equity market makes investment less risky, more profitable and more attractive by making it more
liquid. By facilitating long term and more profitable investment, liquid stock market improves the
allocation of capital and enhances growth. Through these effects, stock market liquidity can lead to
more savings and investment also.

Historically, many investors and been made much before they become innovations. Inventions
become innovations and ignited industrial revolution when liquid financial market made it possible to
develop projects that require large capital injections for long periods. The industrial revolution had wait
the financial revolution took place.

Since high projects tend to comparatively risky, stock market that facilitates risk diversification
through international integration can encourage a shift to higher return projects and thereby help to
promote growth.

Large active and liquid stock markets induce investors to research and monitor firm and the resulting
improved information improves resource allocation and accelerates growth.

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 STOCK EXCHANGE IN INDIA

The market for long term securities like bonds. Equity stock and preferred stocks are
divided in two primary and secondary markets. The primary market deals with the new issues of
securities. Outstanding securities are traded in the secondary market which is commonly known as
stock market or stock exchange. In the Secondary market the investors can sell n buy securities.
Stock markets predominantly deal in the equity share. Debt instruments like bonds and debentures
are also traded in the stock market. Well regulated and active stock market promotes capital
formation. Growth of the primary market depends on the stock market. The health of the company
reflected by the growth of the stock market.

The origin of the stock exchange in India can be traced back to the later of the 19th century.
After the American civil war (1860-61) due to the share mania of public, the number of brokers
dealing in share increased. The brokers organized an informal association of brokers dealing in
share increased. The brokers association” in 1975. At presently in India there are 23 stock
Exchanges are there and situated in various part of the country. All the stock exchanges in India are
controlled by SEBI (Security Exchange Board of India).

FUNCTIONS OF STOCK MARKET

• Provide quotations of share/ stock for facilitating trading and

marketability.
• Extend liquidity to such stock as they are easily marketable and traded.
• Promotes savings and investment in the economy by attracting funds for investment
incorporate shares securities.
• Ensures safe and fair dealing.
• Maintain active trading.

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 NATIONAL STOCK EXCHANGE

The National stock Exchange (NSE) is India’s leading stock exchanges covering various cities and
towns across the country. NSE was set up by leading institution to private a modern, fully
automated screen -based trading system speed and efficiency. Safety and market integrity. It has set
up facilities that serve as a model for the securities industry in terms of systems, practices and
procedures.

NSE has played a catalytic role in reforming the Indian securities market in terms of microstructure,
market practices and trading volumes. The market today uses state –of- art information technology
to provide an efficient and transparent trading, clearing and settlement mechanism, and has
witnessed several innovation in product and services viz. demutualization and electronic transfer of
securities, securities lending and borrowing, professionalization of trading members, find-tuned risk
management system, emergence of clearing corporations to assume counterparty risk, market of
dept and derivative instruments and intensive use of information technology.

The National stock Exchange of India Ltd as genesis in the report the high powered study group
on establishment of new stock exchange, which recommended promotion of national stock
exchange, by financial institution [Fls] to provide access to investors from all across the country
on an equal footing. Based on the recommendations, NSE was promoted by leading financial
institution at the behalf of the GOVT of India and was incorporated November 1992 as a tax paying
company unlike other stock exchange in the country.

On its recognition as a stock exchange under the securities contracts (Regulations) Act, 1956 in
April 1993 NSE commenced operations in the Wholesale Debt Market (WDM) segmenting JUNE
1994. The capital market (Equities) segment commenced operation in November 1994 and
operations in derivatives segment commenced in June 2000.

The Main Objectives of NSE As follows

• To establish a nationwide trading facility for equities, debt instruments and hybrids.
• To ensure equal access to investors all over the country through appropriate

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 communication network.
• To provide a fair, efficient and transparent securities market to investors using an
electronic communication network.
• To enable shorter settlement cycle and book entry settlement system.

• To meet current international standards of securities market.

RECENT TRENDS IN NSE

Expansion

After establishing operation in Mumbai. The NSE had expanded its operation to the other cities;
NSE has installed 2580 VASTS in 317 cities across the country. A break up of VSATs across 317
cities is given below.

Quality:- Apart from the consolidation of the market at the national level, the transaction cost along
with the bad deliveries has declined. The affective fun cottoning on National Securities Clearing
Corporation Limited is another reason for it.

MoreLiquidity:- With its online system and quick trading facilities the NSE has introduced some
liquidity into the capital marker. In the last quarter of 1997, the NSE was more liquid for the 835
scraps that accounted for 97% of total trading volume. In number of trades, an indicator of the
presence of the retail investor, the NSE was ahead of the BSE.

Less Brokerage:- Transparency in NSE allows the breaking up of the costs into brokerage fees,
market impact costs and clearing and settlement. The brokerage fee at the BSE terminals outside
Mumbai is 0.5% of the value transacted. On the NSE, it’s around 0.1% of the value transacted.

Quick Clearing andSettlement: NSE has introduced a full range of clearing house facilities; a pan
of securities is processed at the regional clearing centers (Delhi, Chennai and Calcutta). The inter
region clearing facility provided at present, reduced that risk of the members because of not getting
timely delivery of shares or loss of shares in transit. The facility is also expected to boost delivery
based trading.

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 COMPANY PROFILE

The KARVY group was formed in 1983 at Hyderabad, India. Karvy ranks among the top
player in almost all the field it operates. Karvy Computers shares Ltd is India’s largest Register
and Transfer Agent with a client base of nearly 500 blue chips corporate managing over 2 core
accounts. Karvy stock brokers Ltd, member of National stock Exchange of India. With over
6,00,000 active accounts, it ranks among the top 5 Depository Participated in India, registered with
NSDL and CDSL karvy COM trade, Member of NCDEX and MCX ranks among the top0 3
commodity brokers in the country. Karvy Insurance Brokers is registered as a Broker with IRDA and
ranks among the top 5 insurance agent in the country. Registered with AMFI as a corporate Agent
Karvy is also among the top Mutual fund mobilize with over Rs. 5,000 cores under management.
Karvy Realty Services, which started in 2006, has quick established itself as broker who adds value,
in the realty sector. Karvy global offers niche off shoring services to client in the US.

Karvy the name comes from the names of the directors:

K – Mr. Krishna Prasad

A- Mr. Arun
B- R- Mr. Radha Krishna
C- V- Mr. Venkat Krishna
D- Y- Mr. Yogendar

The birth last of Karvy was on a modest scale in 1979. It began with the vision and enterprise of a
small group of practicing Chartered Accounts who founded the flagship company. Karvy started with
consulting and financial accounting and carved inroads into the field of registry and share
accounting by 1985. Since then, Karvy have utilized its experiences and superlative enterprise to
go from.

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SERVICES OF KARVY STOCK BROKING LIMITED

The following are the various products and services offered by Coimbatore Capital limited

• Equity, Equity Futures, Equity Options, Currency Futures and Interest rate Futures.

• Depository services

• Internet Trading

• Commodity Derivatives

• Mutual Fund Distribution

• IPO services

GROWTH AND DEVELOPMENT OF KARVY

Over the last 20 years Karvy has traveled the success route, towards building a reputation as an
integrated financial services provider, offering a wide spectrum of services. And they have made
the journey by taking the route of quality service. Path breaking innovation in service, versatility
in service and finally totality in service.

Their highly qualified manpower, cutting-edge technology, comprehensive infrastructure and total
customer- focus has secured for us the position of an emerging financial services giant enjoying the
confidence and support of an enviable clientele across diverse fields in the financial world.

With the experience of years of holistic financial behind us and years of complete expertise in the
industry to look forward to, they have now emerged as a premier integrated financial services
provider.

And today, they can look with pride at the fruits of their mastery and experience Comprehensive
financial services that are competently segregated to service and manage a diverse range of customer
requirements.

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PRESENT STATUS OF KARVY

Present Karvy is a member of National stock Exchange (NSE), the Bombay stock Exchange
(BSE), and The Hyderabad stock Exchange (HSE).Market analysis and market predictions are done
by professional management team.

KARVY as covering the spectrum of financial services such as stock Broking Services, Advisory
Services, Stock broking ,Depository Participants, Distribution of financial products – mutual
funds, fixed deposits, equities, Insurance Broking Commodities Broking, Personal Finance Advisory
Services, Merchant Banking and corporate Finance, Placement Finance, Placement of equity,
IPO’s, among other.

VISION OF KARVY

To achieve and sustain market leadership, Karvy shall aim for complete customer satisfaction, by
combining its human and technological resources to provide world class quality services. In the
process Karvy shall strive to meet and exceed customer’s satisfaction and set industry standards.

Their values and vision of attaining total competence in their servicing has served as the building
block for creating a great financial enterprise, which stands solid on their fortresses of financial
strength – their various companies.

MISSION OF KARVY

“Our mission is to be a leading and preferred services provider to our customers, and we aim to
achieve this leadership by building an innovative, enterprising, and technology driven organization
which will highest standards of services and business ethics.

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SERVICES PROFILE OF THE KARVY GROUP COMPANIES KARVY
STOCK BOKING LIMITED
Member – National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the Hyderabad
Stock Exchange (HSE),

Karvy Stock Broking Limited, one of the cornerstones of the Kavry edifice, flows freely toward
attaining diverse goals of the customer through varied services, creating a plethora of opportunities
for the customer by opening up investment vistas backed by research-based advisory services.
Here, growth knows no limits and success recognizes no boundaries. Helping the customer create
waves in his portfolio and empowering the investor completely is the ultimate goal.

Why should Investors choose for KARVY …?

Excellence is next to nothing and here at Karvy everybody tries to offer excellence services to its
client through its offerings maintaining the Karvy culture which included:-

1. Controlled and low cost services culture:- Karvy is there to serve its client at the minimum
possible costs.

2. Longer volume processing capability:- Being the largest financial service provider in the country.
It has the unique distinction of operating its activities on a large scale which benefits all the parties
cordially.
3. Adherence to strict time Schedule:- Karvy knows that time is money and tries it best to finish the
task within the stipulated time schedule

4. Expertise in coordinating Multi-location Responses:- Karvy has got a wide network and hence I
can find its branches at most of the places in India. Thus it enjoys its presence everywhere and co-
ordinates among itself in solving the quarries and in responding to any situation.

5. Expertise in managing independent entities such as Banks, Post- offices, etc:- The work
culture of Karvy and the ethics followed inside Karvy Makes its workforce with everybody. So the
Karvy person establishes good coordination with independent entities too.

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 6. Pooling of Group Resources:- Karvy group consists of 8 subsidiaries. So it can
easily pool up its resource for accomplishment of its goals, whenever needed. The group can help
each other whenever there are peaks and lows and even in the case when they have huge targets
just as we saw few years’ bank, Tata group pooling its resources to acquire Corus.

Karvy has attained a position of immense strength as a provider of across the board transfer
agency services to AMCs, Distributors and Investors. Nearly 40% of the top AMCs including
prestigious client like Deustsche AMC and UTI swear b y the quality and range of services that karvy
offers. Beside providing the entire bank office processing. Karvy provides the link between various
Mutual Funds and the investors including services to the distributor, the prime channel in this
operation. Carrying the limitless ideology forward. Karvy has explored new dimensions in every
aspect of Mutual Fund Servicing right from volume management, cost effective pricing, and
delivery in the least turnaround time, efficient back office and front office operations to customize
services. Karvy has explored new dimensions in every aspect of Mutual fund servicing right from
volume management, cost effective pricing, and delivery in the least turnaround time, efficient back
office and front office operations to customize services. Karvy has been with the AMCs every step
of the way, helping them serve their investors better by offering them a diverse and customized
range of services.

The first to market approach that is Karvy’s Service enhancements such as Karvy Covers, a full-
fledged call center, top-line website (www.Karvymfs.com), the investors and many more, creating
a of galaxy of customer advantages.

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 KARVY CONSULTANCY LIMITED

As the flagship company of the Karvy Consultants limited has always remained at the
helm of organizational affairs, pioneering business policies, work ethic and channels of progress.

Having emerged as a leader in the registry business, the first of the businesses that they
ventured into, they have now transferred this business into a joint venture with Computer share
Limited of Australia, The world’s largest registrar. With the advent of depositories in the Indian
capital marked and the relationships they have created in the registry business, they believe they
were best positioned to venture into this activity as a Depository Participant. They were one of the
early entrants registered as Depository in the country and then with CDST (Central Depository
Services Limited). Today, they service over 6 lakhs customer accounts in this business spread
across over 250 cities/towns in India and are ranked amongst the largest Depository Participants in
the country. With a growing secondary market presence, they have transferred this business to
karvy stock Broking Limited (KSBL),their associate and a member of NSE, BSE and HSE.

KARVY COMMODITIES BROKING PRIVATE LIMITED

Commodities market, contrary to the belief of many people, has been in existence in India
through the ages. However the recent attempt by the Government to permit Multi-commodity
National levels exchanges has indeed given it, a shot in the arm. As a result two exchanges Multi
Commodity Exchange (MCX) and National Commodity and derivatives Exchange (NCDEX) have
come into being. These exchanges, by virtue of their high profile promoters and stakeholders,
bundle in themselves, online trading facilities, robust surveillance measures and a hassle-free
settlement system. The future contracts available on a wide spectrum of commodities like Gold,
Silver, Cotton, Steel, Soya beans, Wheat, Sugar, Channa etc., provide excellent opportunities for
hedging the risks of the farmers, importers, exporters, trades and large scale consumers, they also
make open an avenue for quality investments in precious metals. The commodities market, as it is
not affected by the movement of the stock market or debt market provides tremendous
14
opportunities for better diversification of risk. Realizing this fact, event mutual funds are
contemplating of entering into this market.

Karvy COM trade Limited is another venture of the prestigious Karvy group. With their
well established presence in the multifarious facets of the modern financial services industry from
stock broking to registry services, it is indeed a pleasure for us to make foray into the commodities
derivatives market which opens yet another door for us to deliver their service to their beloved
customers and investor public at large. With the high quality infrastructure already in place and a
committed Government providing continuous impetus, it is the responsibility of us, the
intermediaries to deliver these benefits at the door-steps of their esteemed customers.

With their expertise in financial services, existence across the lengths and breadths of the
country and an enviable technological edge, they are all set to bring to you, the pleasure of investing
in this burgeoning market, which can touch upon the lives of a vast majority of the population from
the farmer to the corporate alike. They are confident that the commodity futures can be a good value
addition to their portfolio.

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 INDUSTRY ANALYSIS

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry can be broadly put into 4 phases according to the development of the sector.
Each phase is briefly described as under.

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 and functioned under the Regulatory and administrative control of 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 and 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 corers of Assets Under Management
(AUM).

SECOND PHASE (1987-93) :- ENTRY OF PUBLIC SECTOR FUNDS

Energy of non-UTI Mutual Funds. SBI Mutual Funds was the first followed by can

Bank Mutual Fund (Dec-87),

Punjab National Bank Mutual Funds (Aug-89), Indian Bank Mutual

Funds (Nov-89),
Bank of India Mutual Funds (June-90), Bank of
Baroda Mutual Fund (Oct-92),
LIC in 1989 and GIC in 1990. The end of 1993 marked Rs. 47,004 as Assets Under Management.

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THIRD PHASE(1993-2003):-

ENTRY OF PRIVATE SECTOR FUNDS

With the entry of private sector Funds in 1993, a new Era started in the Indian Mutual Fund Industry
giving the Indian investors a wider choice of fund families. Also in 1993 was the year in which the
first mutual fund regulation came into existence under which all Mutual Funds, except UTI were to be
registered and governed. The Erstwhile Kothari Pioneer (now merged with Franklin Templeton) was
the 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 Regulation in 1996. The industry now function under the SEBI (Mutual Funds)
Regulations 1996.

The number of Mutual Funds houses went on increasing with many foreign mutual funds setting up
funds in India and also the industry has witnessed several mergers and acquisition. As at the end of
January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 corers. The UTI with Rs.
44,541 corers of assets Under Management was way ahead of the Mutual Funds.

FOURTH PHASE ( SINCE FEBRURARY 2003):-

This phase had bitter experience for UTI. It was bifurcated into @ separate entities. 1 is the specified
undertaking of the UTI with AUM of Rs. 29,835 corers (as on January 2003). The specified
undertaking of the UTI, functioning under an administrator and under the rules frames by
Government of India and does not come under the preview of the Mutual Funds Regulations.

The second in the UTI Mutual Funds LTD, sponsored by SBL, PNB and LIC. It is registered with
SEBI and functions under the Mutual Funds Regulation. With the bifurcation of the Erstwhile UTI
which has in March 2000 more than Rs. 76,000 corers of AUM and with the setting of the UTI Mutual
Fund, confirming to the SEBI Mutual Fund Regulations and with recent mergers taking place among
different private sector funds, the Mutual Fund industry has entered his current phase of consolidation
and growth. As at the end of September 2004, there were 29 Funds which manage assets of Rs.
1,53,108 corers under 421 schemes

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 MUTUAL FUNDS CONCEPT

A Mutual Fund is trust that pools the savings of a number of investors who share common financial
goal, investments may be in shares, debt securities, money market securities or a combination of
these. Those securities are professionally managed on behalf of the unit-holders, and each investor
holds a pro-data share of the portfolio i.e. entitled to any profits when the securities are sold, but
subject to any losses in value as well.

The income earned through these investments and the capital appreciations realized are shared by
its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is most
suitable investment for the common man as it offers an opportunity to invest in diversified,
professionally managed basket of securities at a relatively low cost.

PERFORMANCEOF MUTUAL FUNDS IN INDIA

Let us start the discussion of the performance of Mutual Funds in India from the day of concept of
Mutual Fund took birth in India. The year was 1963, UTI invited investors or rather to those who
believed in saving, to park their money in UTI Mutual Funds.

For 30 years it goaled without a single second player. Through the 1988 year saw some new Mutual
Fund companies, nut UTI remained in monopoly position.

The performance of Mutual Funds in Indian in initial phase was not closer to satisfactory level.
People rarely understood and course investing was out of question. But yes some 24million
shareholders were accustomed with guaranteed high returns by the beginning of liberalization of
the industry 1992. This good record of UTI became marketing tool for new entrants. The
expectations of the investors touched the sky in profitability factor. However, people were miles
away from the preparedness of risks factor after the liberalization.

The AUM of UTI was Rs. 67billion, by the end of 1987. Let me concentrate about the performance
of Mutual Funds in India through figures. From Rs. 67billion, the AUM raise to Rs. 470billion in
March 1993 and the figure had a 3 times higher performance by April 2004. It raise as high as Rs.
1,540billion.

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 The Net Asset value (NAV) of Mutual Funds in India declined when stock prices started
falling in the year 1992. Those days, the market regulation did not allow portfolio shifts into
alternative investments. These were rather no choices apart from holding the cash or to further
continue investing in shares. One more thing to be noted, since only closed-end Funds were floated
in the market, the investors disinvested by selling at a loss in the secondary market.

The performance of Mutual Fund in India suffered qualitatively. The 1992 Stock Market scandals
the losses by dis-investments and off course the lack of transparent rules in the where about rocked
confidence among the investors. Partly owing to relatively weak Stock Market performance. Mutual
Funds have not yet recovered, with Funds trading at an average discount of 1020% of their NAV.

The supervisory adopted a set of measures to create a transparent and competitive environment in
Mutual Funds. Some of them were like relaxing investment restrictions into the market,
introduction of Open-ended Funds and paving the gateway for Mutual Funds launch pension
Schemes.

The measure was taken to make Mutual Fund the key instrument for long-term saving. The more
the variety offered, the quantitative will be investors.

At last to mention, as long as Mutual Funds Companies are performing with lower risks and higher
profitability within a short span of time, more and people will be inclined to invest until and unless
they are fully educated with the dos or don’ts of Mutual Funds.

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 ADVANTAGES OF MUTUAL FUNDS
The Advantages of Investing in a Mutual Fund :-
Diversification:-
The best mutual fund designs their portfolio so individual investment will react differently to the
same economic conditions. For example, economic conditions like rise in interest rates may cause
certain securities in a diversified portfolio to decrease in value. Other securities in portfolio will
respond to the same economic conditions by increasing in value. When a portfolio is balanced in
this way, the value of the overall portfolio should gradually increase over time, even if some
securities lose value.

Professional Management:- Most mutual funds pay topflight professional to manage their
investment. These managers decide what securities the fund will buy and sell.

Regulatory Oversight:- Mutual funds are subject to many government regulations that protect
investors from fraud.

Liquidity:- It’s easy to get your money out of mutual fund. Write a check, make a call, and you’ve
got the cash.

Convenience:- You can usually buy mutual fund shares by mail, phone or over the Internet.

Low cost:- Mutual fund expenses are often no more than 1.5% of your investment. Expenses for
Index finds are less than that, because index funds are not actively managed. Instead they
automatically buy stock bin companies that are listed on specific index.

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 DRAWBACK OF MUTUAL FUNDS
Mutual funds have their drawbacks and may not be for everyone No Guarantees:-
No investment is risk free. If the entire stock market declines in value, the value of
mutual fund share will go down as well, no matter how balanced the portfolio. Investors
encounter fewer risks when they invest in mutual funds than when they buy and sell stock on
their own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and Commission:-

All funds charge administrative fees to cover their day-to-day expenses. Some funds also
charge sales commission or “loads” to compensate broker, financial consultants, or financial
planner. Even if you don’t use a broker or other financial advisor, you will pay a sales
commissions if you but shares in a Load Fund.

Taxes:-

During a typical year, most actively managed mutual funds sell anywhere from 20% to
70% of the securities in their portfolio. If your funds make a profit on its sales, you will pay taxes
on the income you receive, even if you reinvest the money you made.

Management Risk:-

When you invest in mutual fund, you depend on the fund’s manager to make the right
decision regarding the fund’s portfolio. If the manager does not perform as well as you had hoped,
you might not make much money on your investment as you expected. Of course, if you invest in
index funds, you forego management risk

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 EQUITY SHARES
Equity shares were earlier known as ordinary shares. The holders of these shares are the real owners
of the company. They have a voting right in the meetings of holders of the company. They have a
control over the working of the company. Equity shareholders are paid dividend after paying it to
the preference shareholders.
Equity shares have the following features:
(i) Equity share capital remains permanently with the company. It is returned only when the company
is wound up.
(ii) Equity shareholders have voting rights and elect the management of the company.
(iii) The rate of dividend on equity capital depends upon the availability of surplus funds. There is
no fixed rate of dividend on equity capital.

FUTURES
It is just a contract between a buyer and seller that the buyer agrees to buy a specified quantity of
equity shares on a future date at the agreed price. Starts from Last Friday of a particular month and
ends by last Thursday of the next month. In Futures, the clients will buy a contract which will have
a specific lot size depending on the stock.

OPTIONS
Starts from Last Friday of a particular month and ends by last Thursday of the next month. An option
is a contract between the buyer and seller where the buyer will buy the right but not the obligation
of a stock. An option can be a 'call' option or a 'put' option. A call option gives the buyer, the right
to buy the asset at a given price. A put option gives the buyer, the right to sell the asset at a given
price. The given price is called as strike price. When the buyer having call option has a right asks
the seller to sale, the seller has only the obligation and not the right. Similarly a 'put' option gives the
buyer a right to sell the asset at the 'strike price' to the the buyer. Here the buyer has the right to sell
and the seller has the obligation to buy. The right to exercise the option is in the hands of the buyer
of the contract. The seller of the contract has only the obligation and no right. As the seller is paid a
price called as 'premium'. The price paid for buying an option contract is called as premium.

KYC

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I started to learn how to open all these types of accounts and the basic necessary documents for
opening the D-MAT and Trading accounts. They are called as Know Your Customer Documents
also known as KYC documents. The following are the mandatory documents for opening an account
in a Depository Participant (DP).
1. PAN card
2. AADHAR card
3. Bank account details
4. Photos
5. Cancelled cheque leaves
In order to clarify the customers address and identity these documents were requested from the
clients.
Then the procedure for account opening was taught.
It starts from a client approaching the stock brokers and getting the application form. There are two
types of application forms like one is for opening individual accounts and another is to open both
the trade and D-Mat account. Both have the same procedure. First it starts with submitting the
required documents along with the filled application form. Then the introducer needs to give his
necessary details. It will be checked by the office staffs. Then the form is send to the head office for
further proceedings. After everything is clarified the client will be able to get his/her client code.
Then an account will be opened for the client.
The works which I did in the KYC process were the following. In order to change the bank account
which was attached with DMAT account the client need to come to the branch for getting the
application form. The client will be given a Consolidated Application form where he/she needs to
fill basic details like name, client code etc., after that in section 3
The client need to fill the following details like
• New bank account Number
• MICR Number
• IFS Code
• Account type
• Bank Name
• Branch Address.
Then the client will be asked to enclose the new bank Passbook Xerox and cancelled cheque leaf for
the clarification process. Then the details were checked and then the application was send to the
Head Office for the further process. In order to cancel the nominee the client will be given the form
of nomination form which can be used for both assigning the nominee and also cancel the
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nomination.
In the nomination cancel form the client needs to fill the details of the present nominee. There can
be 3 nominees
• Name of the Nominee
• Share
• Address and Communication details
• Relationship with nominee
• Identification and also other basic details.
After filling the application the details were checked and the form was submitted to the manager’s
desk for the further process.
When a client brought the necessary documents (PAN card, AADHAR card, Bank account details,
Passport size Photos and Cancelled cheque leaves) for opening the account I will be asked to fill the
application for the client. Then I will be doing the KYC process like checking the documents whether
everything is his own or not. The spellings were checked the addresses in all the documents were
checked whether it is same or not some documents had different address so I will asking the proof
for the change of address. Everything will be clearly checked and submitted in our manager’s desk.
After that the applications will be sent to the head office for the next process. There the validation
of AADHAR and PAN card will be done and an OTP will be sent to the registered mobile number.
After the validation the applications will be processed further and there will be an in person
verification f the client. Then only the unique client code will be generated. I will be notifying the
client about the code and then help them to login with their code. The clients were given options to
change the bank account, signature etc.

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 LEARNINGS
• I came to know about all the procedures of account opening and also how to make
changes in the existing accounts.
• I also learned how to handle a client politely and also how to use the diplomacy whenever
it is required.
• Based on my observations I came to know that the KYC is the important process for the
organization to know their clients well.
• It is also mandatory that the client need to be analyzed from different aspects.
• Patience and humble are the main quality that is required to manage any client.
• And also got to know about the basic requirements that a client would ask for making
orders.
• Coping up with the clients let me to understand the concept of analyzing a company and
also what are all the factors that needed to be noted before making any orders. They are
closing and opening price, news about the company, dividend policies etc.

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 SUGGESTIONS

From the learning during my internship I would give following suggestions to the company
• The company has well experienced employees but still they must be updated with
proper training.
• The company may also go for an aggressive marketing policy in order to acquire
more clients like their competitors do.
• The companies may become transfer agents for some companies which will add values to the
company.

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 CONCLUSION

I had the great opportunity to work for KARVY STOCK BROKING LTD during my internship
program. I learned how stock markets works and how the markets fluctuate according to
economic, political factors etc. In earlier days very few people were aware of share markets,
but now people started investing in stocks. In India only 5% of people are into stock
market investment, if many people start investing we need not depend on Foreign Institutional
Investors (FII). I have also shown many demos to people about the app and also about the
trading in stock broking and mutual funds. It was a worthwhile and learning experience
working in Coimbatore Capital. They provided a friendly environment where I could able to
approach anyone freely and also at any time whenever required. As an intern I had only little
space to work but still I had lot of
opportunities to learn. But still I managed to gain plentiful of experience. As well I also had
chances to exhibit my academic knowledge and it also helped me to put my theoretical
knowledge in to the practical working environment especially in finance. I was totally unaware
of the operations of a stock broking company. But after starting the internship I came to know
all the operations in a stock broking company. At first it was quite tough to understand because
everything was taught theoretically first. But once when I started involving into the working
environment everything seems to be very easy. And there were also some differences between
the bookish knowledge and practical implementation. Apart from the operations in a stock
broking company I came to know various aspects of share market. Share market from distance
is totally different. There was lot more areas I gained knowledge like SEBI’s regulations,
functions of exchanges and depository participants, CDSL and NSDL, then also about NCFM
modules etc.
From the internship undergone I could conclude that I have improved my knowledge about
the share market. And also I practically learned the various operations in a stock broking
company. Share market will get impacted even if there is a small change in any industry or
economy or political or social aspects of a nation. It is a very sensitive industry. I used all the
opportunities given to me and made the utmost use of my academic knowledge to fulfill my
learning requirements and to carry out the responsibilities given to me. And there was an
encouraging working environment where my works were highly acknowledged by my
superiors.

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