SIGNIFICANCE OF THE STUDY

The present financial market is flooded with a lot investment instruments, viz., Shares,
Bonds, Mutual funds, Insurance plans, Fixed Deposits, other money and capital market
instruments and also various options of investment in Real Estate and Commodity Market
etc. Sometimes people refer to these options as "investment vehicles," which is just another
way of saying "a way to invest." Each of these vehicles has its own positives and negatives
and ultimate decision of investment is influenced by the individual investor’s perception
regarding the risk and return of concerned investment opportunity available in the market.

Further, the investment decisions is full of complexity because of volatility of market

conditions, Inflation rate fluctuations, impact of Global environment, Cash reserve ratio, and
Repo rates. Therefore, it is imperative to analyze these factors while taking an investment
decision.

Keeping above in mind, the study has been done to see the perception of investors which
provides understanding to readers about the various factors which should be keep in mind at
the time of investment. The study is useful to company in providing the understanding about
the investors’ perception to devise the suitable product/marketing strategies, which would
helps it in making their policies or strategies in order to attract them. Further. financial
planner get advent to make portfolio according to response given by respondents, which
belong to different occupations, having different income level, different age level or which
instrument is mostly like by the investors for investment.

The study would further helpful for readers in understanding about the various investment
opportunities available in the market.

1
 CONCEPTUALIZATION

The money you earn is partly spent and the rest is saved for meeting future expenses.
Instead of keeping the savings idle you may like to use savings in order to get return on
it in the future. This is called Investment. Investment is ‘the act of committing money or
capital to an endeavor with the expectation of obtaining an additional income or profit.’
There are ample Financial Instruments available in the market for investment; each
instrument has its own features. To invest money in financial instruments is not so easy.
It needs depth study where to invest so that their investment could be safe along with
the growth of money. In present scenario everyone wants to invest his money but
having their own different objectives. It may be growth of capital, tax minimization,
retirement planning, to balance out inflation rate, safety etc. The investors always mess
with these objectives which creates confusion of where to invest, which tendency they
have to prefer at the time of investment, which factors which influence their investment
decisions, how to plan their investment portfolio and to whom to prefer for taking that
all decisions.

So that study is based on investor’s perception regarding their investment. It includes

what they think at the time of investment, what are the various factors they keep in mind
at investment or affects their decisions regarding investment. The investment decision is
very typical to take, as it needs proper planning. So the concept of financial planning
has to be taken in this study.

2
 FOCUS OF THE PROBLEM

The present financial environment provides ample opportunities of investment to the

investors. The decision to invest in right instrument is too complex which can meet
their expectations perfectly. So a study has been done which explain about the
perception of respondents what they exactly see at the time of investment which
includes their tendency, preference and factors through which an investor influenced.
The study also focuses on analyzing the investment patterns of the investment.

3
 OBJECTIVES OF STUDY
The various objectives of the study are

1) To study the various financial opportunities available for investment.

2) To study about the investors perception regarding various investment

opportunities available in the market

3) To analyze the investment patterns of the investment.

4) To examine the investors changing behavior regarding various investment

opportunities.

4
 LIMITATIONS OF THE STUDY
1) The study is restricted to Delhi, Gurgaon and Bahadurgarh.

2) The sample size comprised of 100 respondents from different fields and income group,
and their responses are presumed to represent the wealth management market

3) The time period of the study in June-July 2008.

5
CHAPTER 2

6
 RESEARCH METHODOLOGY

Nature of Research:
The study is descriptive and analytical in nature. It is descriptive as it describes the existing
financial instruments available in the market. It is analytical as it analyses the perception of
the investors.,

Universe and Sample Size

NCR region have been taken as universe of the study. Convenient sampling technique is
used and a sample of 100 investors has been taken for the purpose of the study.

Data Collection and Sources

The study is based on both primary and secondary data. Following are the sources of
secondary data:

Research Instruments:

Interview and questionnaire have been used to conduct the study. A structured questionnaire
consisting close-ended questions have been made, which is filled by the trainee during
direct interaction with the respondents.

Interviews have been taken of Relationship managers of different NBFC's and BANKS to
seek the investor’s behavior towards investment.

ANALYSIS PATTERN:
Critical examinations of various investment instruments have been done and a comparison
is made, based on their merits and demerits.
7
The data collected form questionnaire is edited, tabulated and analyzed. Various graphical
techniques have been used to present the data in more meaningful way.

8
 REVIEW OF EXISITING LITERATURE

Various studies have been done to know Investors perception regarding various financial
opportunities available in market for investment. The different studies tell the perception
of investors i.e. where they want to invest and what they see at the time of investment.

Large costs associated with evaluating market conditions. Even Individual savers may
not have the ability to collect process and produce information on possible investments.
High information cost may prevent capital to flow to its highest value use. So Financial
intermediaries undertake the costly process of researching investment possibilities for
others. Savers do not like risk; but high-return projects are riskier; Financial systems that
ease risk diversification induce a portfolio shift towards higher return project.

- Banks, mutual funds, securities markets provide vehicles for trading, pooling and
diversifying risk
- Risk diversification —> savings rate —> resource allocation —> economic growth

The various studies done by various researchers which tells about the tendency which is
followed by investors at the time of investment are as follows:

- Gurley and shaw (1955)

- Greenwood and Jovanovic (1990)

- Saint- Paul (1992)

- Patrick (1966)

• Greenwood and Jovanovic (1990):

This study points out the effective information processing (entrepreneurs / projects)
induces higher growth. It Captures the link between risk-sharing, capital accumulation
and growth that how more risk increases capital accumulation and growth. It points out
effective information processing and Captures the dynamic interaction between finance
and growth. Intermediaries plays crucial role in improving resource allocation and foster
9
 growth.

- Growth —> more individuals can afford to join intermediaries —> improves efficiency of
intermediaries.

• Acemoglu and Zilibotti (1997): This study points out to Captures the interaction
between risk-diversification, capital accumulation and growth, it tells risk diversification
like to invest in different instruments accumulate growth in capital. It emphasizes
endogenous risk generation in the growth process. It also points out financial systems
allow agents to hold a diversified portfolio of risk like to invest in various instruments.
According to that

- more investments in high-return projects;

- higher growth

• Allen and Gale (1997):

Long-lived intermediaries can facilitate intergenerational risk sharing: invest

with a long-run perspective; according to this study which instruments offer returns that
are relatively low in boom times and high in slack times

• Diamond and Dybvig (1983):

According to this study, the investors or savers choose between an illiquid, high-return
project and a liquid, low-return project.A fraction of savers receive shocks, access their
savings before illiquid project produces. Prohibitive information (verification) cost creates
incentives for financial markets to emerge.

10
CHAPTER 3

11
 INDUSTRY PROFILE:

An investment industry is on the gloomy side. As now a day’s maximum people are
interested in investment in various instruments.

Behavior of Household Savings in India

Household savings in general and savings in the form of financial assets in particular
exhibited remarkable growth since late eighties. The aggregate household savings as share
to GDP, which was only 1.5 per cent during 1970-71, went up to 4.9 per cent in 1980-81. It
went up sharply to 14.2 per cent in 1990-91 and further to 19.7 per cent in 1994-95 before
coming down marginally to 18.5 per cent in 1998-99. The growth of household savings
during the decade of eighties has been facilitated by a simultaneous increase in physical as
well as financial assets. While household savings in physical assets increased from 3 per
cent of GDP in 1980-81 to 7.8 per cent in 1990-91, savings in the form of financial assets
increased from 2 per cent to 6.4 per cent for the corresponding period. Financial savings
during first half of the nineties registered remarkable growth from 6.4 per cent of GDP in
1990-91 to 11.9 per cent in 1994-95. However, the share of financial savings to GDP
fluctuated since 1995-96.

The Indian financial sector is on a roll. Driven by a strong investor interest and an
expanding market, the industry is also becoming more vibrant, with new types of products
and services being offered to meet the needs of the booming economy.

The buoyancy in the economy is estimated to lead to a four-fold increase in India's

investable wealth from US$ 250 billion in 2007 to US$ 1 trillion by 2012. Simultaneously,
according to a report by Celent, an international consultancy firm, India's wealth
management segment will rise to an estimated 42 million households by 2012 from about 13
million households in 2007.

Clearly, there is huge potential in this segment. Significantly, wealth management revenues
are expected to account for 32-37 per cent of the total full-service financial institutions by
12
2012. The market is also expected to undergo a structural transformation with organised
players increasing their market share. The attractiveness of India in the global financial
market is also reflected in the Indian cities - Mumbai, New Delhi and Bangalore - finding a
place of pride in the list of the world's top 75 commercial centres, as per the 2008
'Mastercard Worldwide Centres of Commerce Index'

There are many companies which includes banks and nbfc’s which helps in investment. The
top ten companies or major players in market including banks and nbfc’s are:

1) Religare
2) Karvy Investors Services Limited
3) Citi Bank
4) HSBC
5) UTI Bank

3.1) Karvy An Introduction :- KARVY, is a premier integrated financial services

provider, and ranked among the top five in the country in all its business segments, services
over 16 million individual investors in various capacities, and provides investor services to
over 300 corporate, comprising the who is who of Corporate India. Karvy has a professional
management team and ranks among the best in technology, operations and research of
various industrial segments.

History of Karvy :-The birth of Karvy was on a modest scale in 1981. It began with the
vision and enterprise of a small group of practicing Chartered Accountants who founded the
flagship company …Karvy Consultants Limited. We started with consulting and financial
accounting automation, and carved inroads into the field of registry and share accounting by
1985. Since then, we have utilized our experience and superlative expertise to go from
strength to strength…to better our services, to provide new ones, to innovate, diversify and
in the process, evolved Karvy as one of India’s premier integrated financial service
enterprise.

13
PRODUCT AND SERVICES OF KARVY GROUP

1. Karvy comtrade.
2. Karvy consultant ltd.
3. Karvy merchant banking.

4. Karvy global services ltd.

3.2. CITIBANK

3.2.1. Introduction
Citigroup in India Citigroup is the single largest foreign direct investor in the financial
services industry in India. Committed to India for over 100 years, Citigroup considers
itself a local bank with an international perspective backed by the largest global
network. With a staff strength of over 15,000, Citigroup has consolidated its position as the
most innovative and comprehensive financial products and services provider in the country,
and today has a customer base of over 1,000 large corporate, over 22,000 small and
medium enterprises and over 5.5 million retail customers.

A pioneer in consumer banking, Citibank was the first to introduce credit cards, focused
consumer lending programs and electronic banking in India. Today, the Citibank
network comprises of 39 bank branches across 27 cities and over 400 CitiCard Banking
centers-which combine ATMs and self-service phone and Internet banking—offering
CitiGold wealth management, credit cards, mortgage services, Auto Loans, Personal
Loans, Suvidha and NRI Services. Through CitiFinancial, Citigroup offers consumer
finance services in the country.

3.2.2. Services
Citibank has a well-organized system of Wealth Management services in India that give you
unparalleled advantage and opens up the opportunity to maximize your wealth.The
Citigold Wealth Management is an innovative feature to complement Citibank and their
range of banking services in India. The Citigold Wealth Management process assures

14
that Citibank's banking services in India are comprehensive and have been designed
keeping the long-term benefits and convenience of the customer in mind.

a) Mutual Funds
At CitiGold you can choose from a range of pre-selected Mutual Funds managed by some
of the biggest names in fund management such as Alliance Capital, Franklin Templeton
India, Birla SunLife, Zurich India, DSP Merril Lynch, HDFC, IDBI Principal and
Prudential - ICICI. The funds on offer are from a rigorously compiled list that ensures only
the best reaches you.

b) Tax Advisory Services

CitiGold has tied up with the leading tax advisory firm - Deloitte, Haskins & Sells to help
the clients with their tax management. Deloitte, Haskins & Sells, a member firm of Deloitte
Touche Tohmatsu (DTT), is amongst the leading global taxation-consulting firms. DTT
operates from 130 countries, has more than 6,000 partners and over 90,000 professionals
around the globe.

c) Real Estate Advisory Services

In today's market, real estate presents an attractive real estate investment option. To assist
the clients with advice on various real estate investments, or to help them in leasing,
buying or selling properties, CitiGold has tied up with a world-class real estate consulting
firm - Chesterton Meghraj Property Consultants.

d) Art Advisory Services

In today's market, art presents an attractive investment option. To assist the clients with
advice on various art investments, or to help them in buying or selling art, CitiGold has
tied up with a reputed art gallery, Apparao Galleries.

e) Insurance Services
In today's market, insurance presents an attractive investment option. To assist the clients
with advice on various insurance policies, or to help them in purchasing insurance, CitiGold
has tied up with Birla.
15
3.3) AXIS BANK LTD

3.3.1. Introduction

Axis Bank was the first of the new private banks to have begun operations in 1994, after the
Government of India allowed new private banks to be established. The Bank was promoted
jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life
Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and
other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India
Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance
Company Ltd.

The Bank today is capitalized to the extent of Rs. 358.56 crores with the public holding (other
than promoters) at 57.57%.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai.
Presently, the Bank has a very wide network of more than 713 branch offices and Extension
Counters. The Bank has a network of over 2904 ATMs providing 24 hrs a day banking
convenience to its customers. This is one of the largest ATM networks in the country.

3.3.2. Services

AXIS outsources its wealth management services from Capital Market because the content is
AXIS web site's life line. In such matters no one likes to cut corners, take chances. They choose
www.capitalmarket.com, because of its:

• Brand Equity: Capital Market has been supplying offline electronic database
content for the last 15 years to more than 800 clients, comprising FIs, FIIs, Banks,
Brokers and Corporate. It is in the business of online content supply to websites put
up by leading financial institutions / brokers / portals for the last three years.

• Reliability: The significance of data accuracy can never be over-emphasized. All

16
 data collected by us undergoes strict audit checks.

• Fast Updations: Speed is the essence of the web. Our record in speedy updation of
annual reports / corporate results and news has earned us a vast clientele on the web.

• One-stop shopping convenience: Would you like one vendor for Stock Prices,
another for Corporate Profiles, third for Market News and a fourth for data on
Mutual Funds? Well, our specialty is, we supply everything under one roof.

3.3.3. Service Offerings by Capital Market

a) Equity Market Content
Capital Market is pioneer in offer equity related content for AXIS Bank's portal which
includes:
• Equity Market Commentary
• Stock Price Data
• Charting Facility
• Financial Data
• IPO Data
• Portfolio Tracker

b) Mutual Funds Content

Indian Mutual Fund industry has picked up, It is fastest growing industry, with number of
growing investor, today, there are 36 Mutual Funds and over 200 schemes with total assets of
approximately Rs. 81,000 crores. So it has become essential for you to keep updated
information on your portal. Capital Market offers you range of content solution as follows:
• Mutual Fund NAV
• Fund Profile Sheet
• Dividend & Mobilization Details
• Mutual Fund - News
17
 • Mutual Fund - NFO
• Mutual Fund - Tools

c) Commodity Market
Commodities Market is growing in India and Capital Market offers following screens
pertaining to Commodity Market:

3.4. HSBC Bank

3.4.1. Introduction

The antecedents of the HSBC Group in India can be traced back to October 1853 when the
Mercantile Bank of India, London and China was founded in Bombay (now Mumbai).
The acquisition in 1959 by The HongKong and Shanghai Banking Corporation
Limited of the Mercantile Bank was a decisive factor in laying the foundation for today's
HSBC Group.
HSBC in India is proud to have retained the Group's pioneering streak by being an active
partner in the development of the Indian banking industry - even giving India its first ATM
way back in 1987. The organization's adaptability, resilience and commitment to
its customers have further enabled it to survive through turbulent times and prosper through
good times over the past 150 years

3.4.3. Service Offerings

a) Financial Planning Services
Inflation, falling interest rates and fluctuating market conditions require you to plan your
finances carefully. Celebrate important occasions in the future by managing your wealth
well now.

b) Mutual Funds

18
 Use the proven expertise and insights of the world's local bank for your investments. We offer
you investment options in funds that meet our selection criteria and fit your requirements,
helping you create and increase your wealth potential in the long-term scenario.

c) Insurance: You have probably planned your life with great care, working slowly and
steadily towards fulfilling your dreams and ambitions. Unfortunately you have no control
over certain natural and man-made events that may overturn your plans.

3.5) Religare Enterprises Limited

3.5.1. Introduction
Religare Enterprises Limited (A Ranbaxy Promoter Group Company) through Religare
Securities Limited, Religare Finvest Limited, Religare Commodities Limited and
Religare Insurance Broking Limited provides integrated financial solutions to its
corporate, retail and wealth management clients. Today, we provide various financial
services which include Investment Banking, Corporate Finance, Portfolio Management
Services, Equity & Commodity Broking, Insurance and Mutual Funds. Plus, there's a lot more
to come your way.

Religare is proud of being a truly professional financial service provider managed by a highly
skilled team, who have proven track record in their respective domains. Religare operations
are managed by more than 2000 highly skilled professionals who subscribe to Religare
philosophy and are spread across its country wide branches.

Today, we have a growing network of more than 150 branches and more than 300 business
partners spread across more than 180 cities in India and a fully operational international
office at London. However, our target is to have 350 branches and 1000 business partners in
300 cities of India and more than 7 International offices by the end of 2006.

3.5.2. Service Offerings

19
a) Equity & Derivative:
Religare is one of the heavyweight equity players in India with membership of National
Stock Exchange of India and Bombay Stock Exchange - both major exchanges of India. We
believe in innovative services that could cater a range of customers according to their
requirements.

b) Commodities: Religare Commodities Limited is a member of both the exchanges

(MCX & NCDEX) that allows you to trade in all the commodities traded at both the
exchanges. At present, trading in commodities is restricted to futures contracts only. Religare is
currently offering special services to our esteemed investors in commodities:. Portfolio
Advisory Services (COMPASS) - This allows investors to get the benefit of our in-depth
research services and generate better returns with
minimal risk.

c) Depository Services:

Religare is among the few major Depository Participants holding securities worth more than
Rs.6000 crore under its management. RSL provides depository services to investors as a
Depository Participant with NSDL and CDSL.

d) Portfolio Management Services

The main idea behind Portfolio Management Services is to manage our client's wealth more
efficiently, reduce risk by diversifying across assets, sectors and funds, and maximizing
returns.

20
 COMPANY PROFILE

Introduction

INDIABULLS FINANCIAL SERVICES LTD is listed on the National Stock Exchange,

Bombay Stock exchange, Luxembourg stock exchange and London stock exchange. The
market capitalization of Indiabulls is around USD 5910 crore (10th July, 2008), and the
consolidation net worth of the company is around USD 950 million (30th September
2007).

Indiabulls and its group companies have attracted USD 800 million of equity capital in
foreign direct investment (FDI) since march 2000 .some of the large shareholders of
Indiabulls are the largest financial institutions of the world such as Fidelity Funds,
Capital International, Goldman Sachs,Merrill Lynch, George and Farallon Capital.
India Bulls is India’s leading retail financial services company with over 640 locations
in more than 110 cities. At India Bulls, it offers clients a full suite of financial services, namely
Equities, Commodities, Mutual Funds, Insurance & Loans etc. Its over 4,400 client
relationship managers are dedicated to serving customers unique management team that has
invested crores of rupees into a world class infrastructure that provides our clients with real time
service & 24/7 access to all information & products.

Its flagship India Bulls Professional Network offers real time prices, detailed data & news,
intelligent analytical & electronic trading capabilities, right at customer’s finger-tips. This
powerful technology is complemented by its knowledgeable & customer focused Relationship
Managers. India Bulls is creating a world of smart investor.

21
HISTORY& EVOLUTION OF ORGANISATION

History

Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal started Indiabulls Group by acquiring a minor
brokerage company, Orbis Securities, in 1999. The group started it business as a stock-brokerage
firm and pioneered online brokerage business in India before diversifying into other financial
services areas such as consumer credit (2004) and mortgages (2005). The group partnered with
Farallon Capital to purchase land-mark Bombay land assets and is currently building one of the
largest integrated commercial real estate projects in India (valued at more than $2 billion). The
group recently entered the Power generation business and aims to have more than 5000 MW of
power generation under construction before 2008 end. The three founders today control the
Indiabulls Group.

Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbis
InfoTech Private Limited at New Delhi under the Companies Act, 1956 with Registration No. 55
– 103183. The name of our Company was changed to M/s. Indiabulls Financial Services Private
Limited on March 16, 2001 due to change in the main objects of our Company from InfoTech
business to Investment & Financial Services business. It became a Public Limited Company on
February 27, 2004 and the name of our Company was changed to M/s. Indiabulls Financial
Services Limited. Our Company was promoted by three engineers from IIT Delhi, and has
attracted more than Rs.700 million as investments from venture capital, private equity and
institutional investors such as LNM India Internet Ventures Ltd., Transatlantic Corporation Ltd.,
Farallon Capital Partners, L.P., R R Capital Partners L.P., and Infinity Technology Trustee Pvt.
Ltd. and has developed significant relationships with large commercial banks such as Citibank,
HDFC Bank, Union Bank, ICICI Bank, ABNAmro Bank, Standard Chartered Bank, Lord
Krishna Bank and IL&FS. Our Company and our subsidiaries have facilities from the above
mentioned banks and financial institutions aggregating to Rs. 1760 million.

22
Previous Name New Name Date of Change Reason for change

Orbis InfoTech Indiabulls March 16, 2001 Due to change in the main
Private Limited Financial objects of our Company
Services Private from InfoTech business to
Limited Investment & Financial
Services.

Indiabulls Financial Indiabulls February 27, 2004 Conversion from Private

Services Private Financial Limited to Public Limited
Limited Services Limited Company.

ISSUE PROGRAMME
BID / ISSUE OPENS ON September 6, 2004 BID / ISSUE CLOSES ON September 10, 2004

LISTING

The Equity Shares issued through this Red Herring Prospectus are proposed to be listed on The
Stock Exchange, Mumbai and the National Stock Exchange of India Limited. Indiabulls have
received in-principle approval from these Stock Exchanges for the listing of our Equity Shares
pursuant to letters dated May 14, 2004 and May 31, 2004 respectively. The Stock Exchange,
Mumbai is proposed to be the Designated Stock Exchange

23
ORGANISATIONAL STRUCTURE OF INDIABULLS

M/S Orbis Indiabulls

InfoTech Ltd.

Indiabulls
financial
services ltd.

Indiabulls Indiabulls Indiabulls Indiabulls

Securities Credit Insurance Real Estate
ltd. Services ltd. Advisors ltd ltd.

24
 COMPANY PEOPLE

An overview of company people

Sameer Rajiv Rattan

Gehlaut President & CFO
Chairman &
CEO

Gagan Divyesh T.S. Ashok Suresh

Banga B. Shah Miglani Sharma Jain
Head- Online [Head- Chief Techn- Finance Vice
Sales & Offline ology Officer Cont- Presiden
Insurance roller t

Aneeta Amit
Nagpal Jain
Head – Company
Human Secretary
Resourc
e

25
 INDIABULLS FINANCIAL SERICES LTD.

INDIABULLS SECURITIES LIMITED:-Indiabulls Securities Limited was incorporated as

GPF Securities Private Limited on June 9, 1995. The name of the company was changed to Orbis
Securities Private Limited on December 15, 1995 to change the profile of the company and
subsequently due to the conversion of the company into a public limited company; the name was
further changed to Orbis Securities Limited on January 5, 2004. The name of the company was
again changed to Indiabulls Securities Limited on February 16, 2004 so as to capitalise on the
brand image of the term “Indiabulls” in the company name. ISL is a corporate member of capital
market & derivative segment of The National Stock Exchange of India Ltd. At present, ISL
accounts for approximately 3% of the total daily turnover of the Exchange with 32,359 client
relationships and 70 branches spread across the country as of April 30, 2004.

26
INDIABULLS CREDIT SERVICES LIMITED:-
Indiabulls Credit Services has been valued at Rs263 crore with the Rs87.6-crore infusion.
Indiabulls Credit Services Ltd, the recently formed subsidiary of broking firm, Indiabulls
Financial Services Ltd. Faralon Capital, a San Francisco-based private equity fund, and its
affiliates have acquired 33.3 per cent stake for Rs87.6crore. Indiabulls Credit Services Ltd grants
loan against shares kept as security i.e. shares are pledged by the owner (borrower) in favor of
IBFSL from his existing demat account. Securities acceptable are the current A category list.
Loan disbursed via Cheque issued in the name of the borrower. Borrower does not need to open
a demat account with ISL. Margin call is given to the client in case margin drops from 33% to
30% i.e. if the amount disbursed/ value of stocks > 70%, the client has to immediately put in
more money or else part of his shares are sold off by IBFSL.

INDIABULLS REAL ESTATE:-

Indiabulls through its group companies has entered Indian Real Estate business in 2005. It is
currently evaluating several large-scale projects worth several hundred million dollars. Indiabulls
became the first company to bring FDI in Indian Real Estate through a JV with Farallon Capital
Management LLC, a respected US based investment firm. Indiabulls has demonstrated deep
understanding and commitment to Indian Real Estate market by winning competitive bids for
landmark properties in Mumbai and Delhi. In April 2006, Indiabulls announced demerger of its
real estate division to a separate entity.

INDIABULLS INSURANCE ADVISORS PVT. LTD:

-Indiabulls Insurance Advisors Pvt. Ltd. was incorporated as Orbis Technologies Private Limited
on February 18, 2002 and the name of the company was changed to Indiabulls Insurance
Advisors Pvt. Ltd. on February 9, 2004 due to the change in the main objects of the comp-any.
Indiabulls Insurance Advisors Pvt. Ltd. is a corporate agent for life insurance with Birla Sun life
Insurance Company Ltd. Our Company and our subsidiaries have a wide network of branches,
sales force and client relationships.

27
PRODUCT AND SERVICES

Indiabulls financial securities

ltd

Indiabulls Securities Indiabulls Insurance Indiabulls Commodities

Limited Advisors Pvt. Limited Pvt. Limited

Equity & Debt Stock Broking Insurance Commodity trading

Depository Services Product Distribution
Derivatives Broking Services
Equity Research Services
Mutual Fund Distribution
IPO Distribution

28
CHAPTER 4

29
 ANALYSIS OF INSTRUMENTS

Types of Investments / various instruments

Overview

There are many ways to invest your money. Of course, to decide which investment vehicles are
suitable for you, you need to know their characteristics and why they may be suitable for a
particular investing objective.

• Debt Market
• Public Provident Fund
• Fixed Deposits
• Bonds
• Mutual Funds
• Banks Deposits
• Equity Market
• Initial Public Offer
• Insurance
• Forex
• Cash
• Gold
• Real Estate

30
 FEATURES OF DIFFERENT TYPES OF INVESTMENTS:

Returns Safety Volatility Liquidity Convenience

Equity High Low High High Moderate

Bonds Low High Moderate Moderate High

Co. Debentures Moderate Moderate Moderate Low Low

FDs Moderate Low Low Low Moderate

Bank Deposits Low High Low High High

PPF Moderate High Low Moderate High

Life Insurance Low High Low Low Moderate

Gold Moderate High Moderate Moderate Moderate

Real Estate High Moderate High Low Low

Mutual Funds High Moderate Moderate High High

Forex Moderate Moderate Moderate High Moderate

31
1. DEBT INSTRUMENTS Debt
instruments protect your capital, therefore the importance of a solid debt portfolio. This not only
gives stability, but also offers you optimal returns, liquidity and tax benefits. Debt products,
besides safeguarding your capital, can be used to meet short, medium and long-term financial
needs.

1.1) SHORT TERM INVESTMENT

They are good for short term goals, you can look at liquid funds, floating rate funds and short-
term bank deposits as options for this category of investments. Liquid funds have retuned around
5% post-tax returns as compared to 5.6% post-tax that your one-year 8% bank fixed deposit
gives you. So, if you have funds for investment for over a period of one year, it is better to go in
for bank deposits. However, liquid funds are better, if your time horizon is less than one-year,
say around six months. This is because the bank deposit rates decrease proportionately with
lower periods, while liquid funds will yield the same annualized returns for any period of time.
Short-term floating rate funds can be considered at par to liquid funds for short term investments.

a) Fixed Maturity Plan (FMP):

If you know exactly for how much time you need to invest your surplus, a smarter option is to
invest in FMPs. They are shorter-tenured debt schemes that buy and hold securities till maturity,
thereby eliminating the interest rate risk. Try and opt for FMPs that offer a double indexation
benefit. Fund houses usually launch double-indexation FMP’s during the end of the financial
year so that they cover two financial year closings.

1.2. Medium & Long-Term Options:

These options typically offer low or virtually no liquidity. They are, however, largely useful
as income accumulation tools because of the assured interest rates they offer. These instruments
(small savings schemes) should find place in your long-term debt portfolio.

32
Table 4.4.1: Small Savings Schemes

Schemes Type Interest Term Min-Max Premature Tax

Rate Investment Withdrawal Benefit
Public Provident Recurring 8% pa 15 Min: Rs.500 Yes U/S
Fund years Max:Rs.70,000 80C

National Savings Growth 8% 6 years Min: Rs.100 No U/S

Certificate compounded Max:No upper 80C
half yearly limit

Kisan Vikas Patra Growth Amount 8 years Min: Rs.100 Yes Nil
doubles in 8 &7 Max:No upper
years & 7 months limit
months
Post Office Time & Fixed 6.25% - 1-5 Min: Rs.200 Yes Nil
Recurring Deposit Deposit 7.50% pa years Max: No upper
limit

Post Office Monthly Regular 8% pa 6 years Min: Rs.1, 000 Yes Nil
Income Scheme Income payable Max: Rs.3Lac
monthly (Single)
Rs.6Lac
(Jointly)

Senior Regular 9% pa 5 Min: Rs.1, 000 Yes Nil

Citizens Income payable years Max: Rs.15Lac
Savings quarterly
Scheme

33
2. BONDS
2.1. Overview
It is a fixed income instrument issued for a period of more than one year with the purpose of
raising capital. The central or state government, corporations and similar institutions sell bonds.
A bond is generally a promise to repay the principal along with a fixed rate of interest on a
specified date, called the Maturity Date. The main attraction of bonds is their relative safety. If
you are buying bonds from a stable government, your investment is virtually guaranteed, or risk-
free. The safety and stability, however, come at a cost. Because there is little risk, there is little
potential return. As a result, the rate of return on bonds is generally lower than other securities.

2.2. Tax Saving Bonds

These are those bonds that have a special provision that allows the investor to save on tax.
Examples of such bonds are:
a) Infrastructure Bonds
b) Capital Gains Bonds
a. Rural Electrification Corporation (REC) Bonds
b. National Highway Authority of India (NHAI)
c. National Bank for Agriculture & Rural Development
c) RBI Tax Relief Bonds

34
35
3. MUTUAL FUNDS
3.1. Overview
A mutual fund is a body corporate registered with SEBI that pools money from the
Individuals/corporate investors and invests the same in a variety of different financial
Instruments or securities such as Equity Shares, Government Securities, Bonds, Debentures, etc.
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
the most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. Mutual fund
units are issued and redeemed by the Asset Management Company (AMC) based on the fund’s
net asset value (NAV), which is determined at the end of each trading session.

Mutual funds are considered to be the best investments as on one hand it provides good
Returns and on the other hand it gives us safety in comparison to other investments avenues.
Figure: Below describes broadly the working of a mutual fund:-

36
4. EQUITY
4.1. Overview
Equities are often regarded as the best performing asset class vis-à-vis its peers over longer time
frames. However equity-oriented investments are also capable of exposing investors to the
highest degree of volatility and risk. There are a number of factors, which affect the performance
of equities ad studying and understanding all of them on an ongoing basis, can be challenging for
most.

Stock markets have always been a draw for investors for their ability to generate wealth over the
long-term. Fear, greed and a short-term investment approach act as hurdles that frustrate the
investor from achieving his/her investment goals. You need to keep in mind the risk associated
with the stocks. You also need to diversify your equity portfolio i.e., include more stocks and
sectors. This helps you diversify your investment risk, so even if something were to go wrong
with a stock/industry in your portfolio, other stocks/industries should help you shore up your
portfolio.

Two important resources that are critical to investing directly in stock markets are quality
stock research and a reliable and inexpensive stock broker. The first one – research on stocks is
the most critical input that investors need to identify before they begin investing in stock
markets. This is because even while you may have the risk appetite for equities, you still need
credible, stock market related research that can help you make the right investment decision.

The good thing about the Indian market, riding on the back of an economy that has grown by
over 7% in the last two years, is that you can’t miss being part of growth if you invest in the
stock markets carefully. The bad part is the CHOICE! Of the listed 4,758 stocks on BSE and the
NSE, how do you even get close to taking a call? Here comes the need of a financial advisor who
can make your investment decisions and monitor your funds. Clearly, as Indians earn more, save
more and accumulate more, financial advisors will play a crucial role in helping individuals
create, protect and manage wealth.

37
5. INSURANCE
5.1. Overview
Life insurance has traditionally been looked upon pre-dominantly as an avenue that offers tax
benefits while also doubling up as a saving instrument. The purpose of life insurance is to
indemnify the nominees in case of an eventuality to the insured. In other words, life insurance is
intended to secure the financial future of the nominees in the absence of the person insured.

The purpose of buying a life insurance is to protect your dependants from any financial
difficulties in your absence. It helps individuals in providing them with the twin benefits of
insuring themselves while at the same time acting as a compulsory savings instrument to take
care of their future needs. Life insurance can aid your family on a rainy day, at a time when help
from every quarter is welcome and of course, since some plans also double up as a savings
instrument, they assist you in planning for such future needs like children’s marriage, purchase
of various household items, gold purchases or as seed capital for starting a business.

Traditionally, buying life insurance has always formed an integral part of an individual’s annual
tax planning exercise. While it is important for individuals to have life cover, it is equally
important that they buy insurance keeping both their long-term financial goals and their tax
planning in mind. This note explains the role of life insurance in an individual’s tax planning
exercise while also evaluating the various options available at one’s disposal.

Life is full of dangers, but with insurance, you can at least ensure that you and your dependents
don’t suffer. It’s easier to walk the tightrope if you know there is a safety net.
You should try and take cover for all insurable risks. If you are aware of the major risks and buy
the right products, you can cover quite a few bases. The major insurable risks are as follows:

• Life
• Health
• Income
• Professional Hazards
• Assets

38
 • Outliving Wealth
• Debt Repayment.

6. GOLD
6.1. Overview
In India, gold has traditionally played a multi-faceted role. Apart from being used for adornment
purpose, it has also served as an asset of the last resort and a hedge against inflation and currency
depreciation. India has more than 13,000 tones of hoarded gold, which translates to around Rs.6,
50,000 crores. Gold is an asset class that’s associated with safety.
However, the ups and down that the yellow metal has seen over the last few months, has
made it look similar to other market investment assets. This is due to an unprecedented demand
for gold as an investment avenue since the last couple of years.

Gold has attracted a high level of attention in last couple of years, with an image shift from a
non-volatile asset to a hot investment avenue. The future outlook for the metal looks positive
given its proven linear relationship with the crude oil and non-linear with the US dollar. The
much-awaited gold exchange-traded funds would provide a very good vehicle to the investors
and a sensible alternative to the current forms available for investment

7. REAL ESTATE
7.1. Overview
Real estate is a great investment option, as it gives you capital appreciation and rental
income. It’s an investment option since it fights inflation. The fundamentals for investing in
property markets remain strong in India - relatively low interest rates, strong capital flows, high
employment growth, abundant liquidity, attractive demographics (young population and
migration from West), increase in affordability, and a large supply of stock to keep up with
demand and focus on quality. The price you pay for a property should reflect the future
rent/income at which you let it. As in the stock market, the prices in real estate are also driven by
sentiments. All that is required to reverse a price movement is a change in sentiment.

Start saving for a home the moment you begin your career. Early acquisition helps you to
39
repay your home loan well within your working life. Also, the EMI as a percentage of your
salary decreases as your pay increases making the outflows more affordable. If you lock into the
interest rate for the loan, the interest outflow will be less than the compounding effect of
inflation.

You should be very clear about why you want to invest in real estate. It is a very good tool for
wealth creation but like all other assets, has its share of risks. Careful planning, however, can
minimize the risks.

8) FOREX
8.1 Overview
If you read about investing, you've seen the word forex trading. But because forex doesn't get
much publicity in the major publications and websites, many investors don't know that forex is
just short for "foreign exchange". So trading the forex market is simply trading foreign
currencies.

As recently as ten years ago, currency trading had high barriers to entry, so only large banking
and institutional firms had access to the tools and systems required to play in the forex trading
game. Recently, however, technology has developed to the point that any individual investor can
hop right in and trade with one of the many online platforms.

When buying and selling in the forex currency trading system market, you'll see that there are
four "currency pairs" that dominate the percentage of trades. Those four are the Euro vs U.S.
Dollar, US Dollar vs Japanese Yen, US Dollar vs Swiss Franc, and US Dollar vs British Pound.

The goal when investing in currency is to be holding a currency that appreciates in value in
relation to the other currencies. To use an overly simplistic example, if you bought 50 British
Pounds for 100 US Dollars, held the Pounds for 1 week, and in that period the value of Pounds
increased in relation to US Dollars, you could then convert those Pounds back into dollars for,
say, $120.

40
Unlike the domestic stock markets, the forex currency trading is open for trades 24 hours a day.
Much like the phrase "it's always noon somewhere," it's always business hours at some region of
the globe. Since every country trades on the FX market, and it's open all day, the daily volume is
roughly $1.2 trillion, which dwarfs that of the NYSE. Another comparison to make in order to
truly realize the magnitude of the forex market is with the currency futures market (which has
around 1% of the daily volume).

9) FIXED DEPOSITS
The same as a term or time deposit. Money may be placed with a bank, merchant bank, building
society or credit union for a fixed term at a fixed rate of interest which remains unchanged during
the period of the deposit. Depositors may have to accept an interest penalty if they break the
deposit, ie, ask to take the money out before the agreed period has expired.
Few points which FD investors must consider at the time of investment,

1. Safety
FDs have conventionally been the premier choice for investors with a low risk appetite; assured
returns is the key factor which attracts investors towards deposits. Stick to FDs of the highest
credit rating i.e. those with a “AAA” rating even if their rates seem modest vis-à-vis those
offered by company deposits.

2. Tenure
Short tenured fixed deposits continue to be your best bet. With interest rates on the ascent, a
further hike in rates offered by fixed deposits cannot be ruled out. Locking your investments in
longer tenured instruments may lead to an opportunity loss.

3. Liquidity
Find out how FD fares on the pre-mature encashment front i.e. how easily can your investment
be liquidated. Also enquire about the penalty clauses, e.g. do you suffer a loss of interest and/or
principal amount. Compare how various FDs rank on this parameter and pick the best deal;
thereby try to minimise the impact of illiquidity which is typically associated with FDs.

41
4. Additional benefits
Fixed deposits from reputed entities offer additional benefits, e.g. they can be used as collateral
against which loans can be raised. Select a fixed deposit scheme which scores favourably on
such parameters

Any investment portfolio should comprise the right mix of safe, moderate and risky investments.
While mutual funds and stocks are the favorite contenders for moderate and risky investments,
fixed deposits, government bonds etc. are considered safe investments. Fixed deposits have been
particularly popular among a large section of investors in India as a safe investment option for a
long period.

With fixed deposits or FDs as they are popularly known, a person can invest an amount for a
fixed duration. The banks provide interest rates depending on this loan amount and the tenure of
deposit. Here are the benefits, drawbacks of fixed deposits and precautions one should take while
making such investments.

4.5) various factors which affects investment decision

1) CRR: Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with
RBI. If RBI decides to increase the percent of this, the available amount with the banks comes
down. RBI is using this method (increase of CRR rate), to drain out the excessive money from
the banks.
How It Affects :
a) From a stock market perspective
Rising interest rates have several implications including -

* slowing down the overall growth in the economy; this effectively means that demand for
goods and services, and investment activity, gets adversely impacted

* apart from the fact that overall growth is impacted, companies take a hit on account of
higher interest costs that they have to bear on their outstanding loans (to the extent their
cost of funds is not locked in)

42
* since some investors tend to leverage and invest in the stock markets, higher interest rates
increase expectation of returns from the stock markets; this has the impact of lowering
current stock prices

* an overall decline in stock prices has a cascading effect as leveraged positions are
unwound (on account of meeting margin requirements), leading to still lower stock prices

b) From a debt market perspective

If you are contemplating on investing monies in the debt market, you will benefit
from higher interest rates on offer. However, existing investors in debt oriented funds
may take a one time hit; but at the same time, since overall interest rates are higher,
from here on, such funds will yield higher return

c) From the perspective of borrower:

As a prospective borrower, you are the worst hit. The cost of money i.e. interest rates will
rise post the CRR hike. You will probably need to settle in for a lower loan amount given
the EMI.

If you are an existing borrower, as long as the rate of interest on your loan is fixed, you
are immune to any rise in interest rates. However, if you have a floating rate loan, then
expect either the tenure of the loan or the EMI to jump soon

2) Inflation:

Inflation is defined as an increase in the price of bunch of Goods and services that
projects the Indian economy. An increase in inflation figures occurs when there is an
increase in the average level of prices in Goods and services. Inflation happens when
there are less Goods and more buyers, this will result in increase in the price of Goods,
since there is more demand and less supply of the goods.

How it affects:

The investors have less money to invest if there is increase in prices of goods or
increase in inflation rate. So it restrict investor to invest in order to fulfill other needs.

3) Global factors: If there is any change in global environment then it also affects the
investors decision of investment, as present scenario there is change in crude price which
is very high due to that it affects Indian economy as increase in rates of each product

43
which results in high inflation rate. Due to that investors have less amount for investment.

Also these factors change the investors mind of investment. Still if they want to invest
they look to that instruments which are constant in prices like gold. If they have
handsome amount for investment then they look for real estate sector.

So due to these factors their investment decision goes affected and it changes their
behavior pattern towards investment.

44
 ANALYSIS
AND
INTERPRETATION

45
Sample Details

100 people belonging to different fields, who do investment, were asked to fill the questionnaire,
on the basis of which an attempt is made to study the prospects of Financial Planning in the
market. The sample unit consists of those people who are trading in secondary markets, mutual
funds, initial public offer, insurance, debt instruments as they can give the accurate information
about financial planning. A sampling frame has been developed so that everyone in the target
population has an equal chance of being sampled.

Personal Information:

Sex Ratio:
From the total 100 respondents 17 were females and 83 were males.

Geographical Distribution:
Majority of the respondents were from Delhi followed by Bahadurgarh and Gurgaon. The
percentage is 72% from Delhi, 13% from Gurgaon and 15%from Bahadurgarh.

Occupational Structure:
Samples include responses from Businessmen and a good number of service class which includes
Chartered Accountant, Engineer, Banker, CEO, Software Professionals, etc so as to include their
perception and awareness Regarding financial planners. The percentage of businessman is 40%
and servicemen are 60%.

Income Levels: Income levels were classified into 3 levels, namely below less than 5 lac, 5-
10 lac , more than 10 lac

46
Figure 5.1.4: Classification of Income Levels of the Sample

5.1.5) Age of Investor:

The survey includes the people having different age levels from 18 to above 60. The age between
35 – 45 includes 38 investors, which is followed by 45 – 60 which includes 30 investors. The
different age levels show their perception about investment. The younger investor which is
between 18 – 35 are likely to take risk and generally invest in more in equity than the people who
are between 45 – 60. The service man in age between 25 –35 also plan their future planning by
invests in P.P.F, insurance and gold.

47
Analysis of the Response
Given below are the graphical representations of the responses received on questions asked
through the questionnaire. The interpretation derived and the model adopted will be explained in
detail in the later part of the report. On asking the following questions, the replies were received
accordingly:

48
6.1. What is your objective behind investments?
Investing is a conscious decision to set money aside for a long enough periods in an avenue
that suits your risk profile. The questionnaire asked the respondents to reveal their objective
behind investments, majority of the respondents disclosed growth of capital/ returns as their
prime objective while safety of capital stands secondary. This response reflects the investor
willingness to take calculated risks for growth of their capital as also highlighted in Figure 6.1

Interpretation:
The research has highlighted that growth of capital is the most important factor which they
consider while investing as evident by the response where in 76% of the respondents voted for
the same. However, it can also be seen that 68% of the investors prefer safety of their capital as
their secondary objective which depicts that investors give greater emphasis to the returns and
willing to adjust with safety of capital. Liquidity is the least important factor as only 15% of the
respondents voted for it which signifies that the financial planner should designed the portfolio
giving more importance to growth and safety of capital as per individual financial goals while
liquidity should have the minimum focus.
In our sample, inflation has only been given 18% of the total sample which reflects that people
are still not giving much consideration to inflation even due to a sharp rise in the inflation rate.

The people who are business man are generally seen RETURNS/ GROWTH + TAX BENEFIT
at the time of investment. The 7.5% of business people keeps liquidity and beating inflation in
mind at the time of investment.

Serviceman generally gives preference to SAFETY and RETIREMENT BENFITS. 21.66% and
25% people who are serviceman also keep in mind the liquidity and beating inflation at the time
of investment. 36.67 people invest to get benefit from tax

49
Figure 6.1: Reader’s response towards Objective behind their Investments

50
6.2) Readers response on whether they plan their investment:

Interpretation
This question is asked to all investors to see whether they plan their investment. The Response
from the surveying people shows that 82% people plan or get planned their portfolio of their
investment in order to invest safely and get good returns. Most of the people prefer to invest
through NBFC’s as they think are specialized in their work and provide good suggestions.

The 18% people who do not plan just follow the trends of others investors and invest what their
friends, relatives, office mates and their bankers said to them. But they invest by keep in mind
their future, as they invests in insurance, P.P.F to make their future safe or keep retirement
planning in their mind.

Figure 6.2: Reader’s response on whether they plan their investment:

18%

No
yes

82%

51
6.3. What is your practice on saving money?
To determine the saving habits of the investors, the questionnaire enquired the respondents as
about their practice of savings. The greater the inclination of saving the more will be the funds
available for investment.

Interpretation:
Around 48% of the respondents try to save from their income, while only 30% of the respondents
always make an effort to save some part of their income, as depicted in Figure 6.3 below

No one respondent response that he don’t believe in savings, which substantiate high
Importance of savings in Indian households. However, it was also observed that majority of the
women respondents had high inclination for savings and try to save the maximum out of their
available income.

Figure 6.3 Respondents response practice on their saving:

52
6.4) Type of instrument prefers for investment?
On enquiring from the respondents about which instruments they prefer most for their
investment.

Interpretation:
The surveyed people give priority top to Insurance, which is followed by Mutual funds.
The businessmen people generally give preference to EQUITY + MUTUAL FUNDS +
INSURANCE. 55% businessmen also invest in property as they think investment in real estate
creates more growth/profit. As real estate needs huge amount as investment so only those people
whose income level is more than 10 lac invests in real estate. According to the surveyed people
response the Gold is also a safer and growth investment opportunity as its price is rising fastly.
Both service and business people invests in gold.

53
Figure 6.4) Respondents response about instrument they prefers for investment

54
6.5. What do you feel is considered to be the ‘fundamentally safe’ form of investment?

Interpretation:
On enquiring from the respondent about what are the fundamental secure forms of investments,
35.4% of the respondents feel that investing in property is the safest form of investment followed
by Insurance as depicted in Figure 6.5 below.

The least secured form of investment as revealed by respondents is investment in equity as

secondary market is subject to huge volatility & uncertainty. It can be seen from the response
that people are more willing to put their money in property or real estate in spite of the
economy experiencing a major climb in the property prices. About 14.4% of the respondents
feel that Bank deposits is also the safe form of investments as it gives assured returns on the
sum invested.

Figure 6.5: Reader’s response on fundamentally safe form of investment

55
6.6. How do you take financial decisions?
An individual’s decision has a vital role to play in achieving investment objectives and thereby
making investments in a systematic manner. Decisions can make or break investment avenues as
wrong decisions would merely lead to wrong investments resulting in major loss.

Interpretation:
On enquiring from the respondents about how they take their financial decisions, majority of the
respondents take their financial decisions independently which depicts they are not taking any
advisory services from financial experts. There are majority of respondents who feel that they
can handle their portfolio on their own and hence make their own decisions regarding
investments. On analyzing the response 48% of the respondents take their financial decisions
independently while only 6% of the respondents take investment decisions from financial
advisors, as also disclosed in Figure 6.6. This opens up the door for various financial advisors
who can target these investors and can give advisory services.
Figure 6.6: Reader’s response regarding taking financial decisions

1%

6%

16%
Independently
Friends
1% 48% Advice From Banks
NBFC's
Financial Advisor/CA
Others

28%

56
6.7) Reader’s response if they take Decisions Independently:

To know how they take financial decisions if independently then what they see at time of
investment.

Interpretation:
Analyzing the response of investors every investor keep in mind the future growth of investment
instrument, is that instrument can give the good growth or returns on their invested money.
Generally they make assumption of future growth on the basis of history of instrument and invest
accordingly. 95% investors also keep Risk Factor at time of investment in their mind, as they
want to invest in safer instrument as they said no one wants to lose their money. They also
accepts investment in equity is more risky but it adds higher returns.

34% investors doesn’t want to take risk of volatility they think of fixed returns by investing in
fixed deposits also they invests in insurance and P.P.F and gold.

Figure 6.7: Reader’s response if they take Decisions Independently

57
6.8) READERS RESPONSE TO WARDS INSURANCE POLICY

Response from investors discloses that they are wants to invest in insurance so this question is
asked from all investors why they want to invest in insurance.

Interpretation:

34% of the investors Response about investment in insurance discloses that they want
safety/security of their family in terms of money if any mishappening happens to him.
Security is followed by means of saving and saving tax. 28% investors invest in insurance to
save tax and keep it as investment. As they think by investment in insurance they can save
themselves by not paying tax. And after maturity period they will get the handsome amount of
money collectively.

Figure 6.8: Reader’s response for buying an insurance policy

58
6.9. Which all areas should be a part of Financial Planning?

It was an open question which was asked to the respondents and it was observed that out of the
total sample, 26.3% of the respondents wanted real estate to be a part of financial planning which
shows high demand for this product in the Indian market.

Interpretation:
Around 20% of the respondent felt that retirement planning should be a part of financial planning
which depicts that investors are no clear about the concept of financial planning as ‘financial
planning’ already takes care of retirement, insurance, mutual funds, IPOs, tax planning which
some respondents are unaware of as depicted in Figure 6.9 below.

Around 14% of the investors want commodity should also form a part of financial planning as it
is now a booming product in the financial market. There were 10% of the respondents who felt
that age factor should also be a part of financial planning so as to know the right age for
planning.
Figure 6.9: Reader’s response on areas to be a part of financial planning

59
6.10) Readers response towards preference of Investment:
Reader’s response about what way they prefer for their investment. Private banks, NBFC’s or
through government banks

Interpretation:
78% respondents prefer NBFC’s for their investment as they think they are specialize in their
work of giving advice, and they knows very well about various investment opportunities
available in market. Respondents who prefer private and public banks are only 22% they think
government bank gives reliable news.

But generally they prefer banks if someone is their known to them or if there is any good
relationship, which is made by giving them services at the time of their current and savings
accounts.

Figure: 6.10 Readers response towards preference of Investment:

60
6.11) Reader’s Response towards Tendency they prefer:
Respondent’s response to wards which tendency they prefer at time of investment shown in fig
6.11

Interpretation:
Respondents response shows 39% people like the tendency high risk high return , as they believe
unless and until we would not take risk how can we earn or get return more. That tendency is
generally prefer by business and servicemen whose income level is more than 10 lac.
The income level of 5 to 10 lac generally prefer moderate risk or low risk to invest in insurance,
mutual fund, gold .

The age level also influence the tendency the age level between 18 –30 likes to take risks but
above 45 they prefer low risk low return.

Figure 6.11) Reader’s Response towards Tendency they prefer:

61
6.12) Reader’s response towards Factors consideration at time of investment:
Respondents response about what factors they considered at the time of investment.

Interpretation:
According to respondents response they keep the CRR, Inflation and Global economy at 53%,
42%and 46%. As inflation rate increases the prices of goods and reduces value of money. Global
economy also affects their investment instruments. So according to them they invests in their
mon

Figure 6.12) Reader’s response towards Factors consideration at time of investment:

62
6.13) Investors changing behavior towards various investment instruments:

In present era the behavior of investment is changed as past. Previously, the investor looks for
the safest or very low risk instruments. As there mean to just keep their money along with the
some returns which they thought as the premium what they could not get if they keep it in
homes. So they look for the schemes like fixed deposits, post office schemes, and very nominal
looks towards insurance. But now there behavior is getting changed. Now they want high returns
on their savings which they can get only if they take high or moderate risk, so now they prefer
more investment in equity, mutual funds, real estate, forex, insurance etc. which provides more
returns in comparison to fd’s, and post office schemes.

Reasons for their changing behavior:

1) More awareness: now the investors have more awareness about the benefits of various
instruments like insurance benefits, so investors behavior is changed towards insurance
2) More income level: After globalization the incomes of the people in india has risen, so they
have more money in their hands. To which they want to invest where they can get good
returns and they are ready to take risk for that.
3) Changing mind set: due to more income level their mind set up is changed as they are ready
to take higher risks in order to get returns. Now they invest their money not only to keep,
also they want good returns from that.

63
 CONCLUSION

As it could be seen from the above factors that investors are having low saving potential, growth
of capital acts as a primary objective behind investments, investors taking financial decisions
independently, which depicts that there is a need of financial planners to approach these
investors in a proper manner so as to provide value additions to the saving potential and
portfolio.

64
CHAPTER 6

65
 RECOMMENDATIONS AND SUGGESTIONS

On studying the peculiarities of the wealth management industry and analysing the responses of
the investors on their perception, the following points are recommended which a general
financial advisor should consider while approaching the people.

India is seeing as a maturing financial environment. Options to attract savings exist through a
spate of financial products and services that have differing risk/growth and asset accretion
propositions. It is becoming increasingly obvious to people that their money, in real terms, would
fall in value if they were to keep their money in the bank. And hence the keenness to find out the
right avenue that would help grows their savings or assets.

While this is becoming a universally undeniable desire, the fact is that some people don’t have
the knowledge and inclination to understand the financial markets and others don’t have the time
to follow them. This then leads to financial decisions being taken by individuals based on either
relationship hearsay or the sales call of a vendor

Unbiased Advisory
Investment Advisory Services are in this business of managing the assets of individuals and
corporations. However, the distinct model of services should enable the advisors to offer
unbiased advice on the entire spectrum of personal finance, keeping the clients interest foremost
while doing so. The investment strategies developed across perpetuity should outline a detailed
financial plan with frequent reviews of investment decisions made to ensure that portfolios are in
line with what was planned. I’d like to add here that the financial advisory should not only be
unbiased with respect to an asset class but it should also be independent of biases across
manufacturers within an asset class.

Investment in Foreign Markets

A recent pioneering initiative is to facilitate for the clients investment in foreign markets, adding
to the advisory capability that spreads across the widest range of asset classes in the country. One

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needs to be cautious while investing and it is now important to hire a financial planner to plan
your wealth better.

Financial Planning Should Be Encouraged

‘Financial planning’ is the process of charting out the money course of your life. It’s like having
a financial roadmap that guides your every step till you pass on the baton to the next generation.
In other words, it is a process in which an individual sets long-term financial goals through
investments, tax planning, asset allocation, risk management, retirement planning and estate
planning. Most of us approach our financial lives like the disorganized traveller who gets to his
destination eventually and perhaps even enjoys the rough ride. We think we have a clear
roadmap in mind, but our financial lives are marked by ad-hoc decisions and capitulation to the
temptations of the flavors of the financial season.

One of the myths regarding financial planning is that only rich individuals and HNIs can
undertake this. This perception exists because most players in the market target these people, as
they are very profitable customers. However, anyone can use financial planning. In fact,
individuals should use effective financial planning to build their wealth over the years.

Awareness of the Benefits of Planning Early for Retirement

Anyone who will retire needs to plan for it. There is more than one reason to save for retirement.
The all-important reason is the rising cost of living. It’s called inflation. If you start planning for
retirement early on, you can bridge the gap between what you have in your hand today and what
you would like to have when you retire. If you begin saving for retirement early on in your life,
you can set aside smaller amounts. You can also take on more risk by investing larger amounts in
equities i.e., stocks and equity funds. If you delay saving for retirement, you will have to invest
larger sums of money to save for the same amount; also the share of equity investments as a
portion of your retirement savings will have to be lower. The older you are when you start, the
more risk averse you will have to be. Your retirement portfolio will actually be a mix of stocks,
debt securities, index funds and other money market instruments. This mix will change as you
do, moving increasingly toward low-risk guaranteed investments as you age. Unless planned
well, retirement phase will be a downhill ride.

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People should come out of the concept of just keeping their money in banks & should
concentrate on doing financial planning to maximize their returns by taking proper guidance
from financial planner.

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 BIBLIOGRAPHY
BOOKS:

1. Khan M.Y. and Jain P.K (2001), Financial Management, Tata McGraw Hill.

2. Kothari, C. R. (1978), Quantitative Technique, Vikas Publishing House Pvt. Limited,

New Delhi.

3. Pandey I.M. (2003), Financial Management, Tata McGraw Hill.

MAGAZINES

1. T S Harihar (2008), KARVY THE FINAPOLIS, June 5

WEBSITES

www.axisbank.com/aboutus/aboutaxisbank/About-Axis-Bank.asp

www.citibank.com

http://en.wikipedia.org/wiki/Indiabulls

http://en.wikipedia.org/wiki/Investment

www.hsbc.com

www.hsbc.com/1/2/about-hsbc

www.ibef.org

www.ibef.org/industry/financialservices.aspx

www.indiabulls.com

www.indiainfoline/INPO/FINA.com

www.isid.ac.in/~planning/Slides-ISI-LitReview.pdf

www.karvy.com/v2/showPage.asp?page=aboutUs.asp

www.online.citibank.co.in/portal/newgen/seo/prod/products-services.htm

www.religare.in/about_us.asp

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 QUESTIONNARIE

Name of the Investor -

Education -
Contact No. -

Q.1 What is the occupation of the investor?

a) Service
b) Business

Q.2 What is the age of the investor?

a) 18-25 years
b) 25-35 years
c) 35-45 years
d) 45-60 years
e) Above 60 years

Q.3 What is the annual income of the investor?

a) Less than 5 lac

b) 5 – 10 lac
c) More than 10 Lac

Q 4. What is your practice on saving money?

a) I don’t believe in saving.

b) I’d like to save, but my expenses & financial commitments do not permit me.
c) I try to save whenever & wherever possible.
d) I always save some percentage of my take-home salary without exception.
e) Others

Q.5 What is the annual savings of the investor?

a) 10 % to 20 %
b) 20 % to 30 %
c) 30 % to 40 %
d) More than 40 %

Q.6 Which type of instrument you prefer for your investment?

a) Public Provident Fund f) Gold

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b) Fixed Deposits g) Real estate
c) Mutual Funds h) Forex
d) Equity Shares i) Initial public Offer
e) Post Office Schemes j) Insurance
k) Government Bonds l) Bank deposits
m) Others

Q.7 What is the purpose of the investment?

a) Safety
b) Returns
c) Retirement Planning
d) Tax Benefits
e) Beating Inflation
f) Liquidity
g) Others

Q.8 Where do you prefer for investment?

a) Government banks
b) Private banks
c) NBFC's
d) Public sector
e) Private sector
f) Others

Q.9 How do you take Financial Decisions?

a) Independently
b) Advise from Friends/Relatives
c) Advise from banks
d) NBFC's advisers
e) Financial advisor
f) Others

Q 10 If independently, then what do you see while investing?

a) Risk Factor
b) Fixed returns
c) History of instrument
d) Future growth
e) Trend of other investors

Q11. Which Tendenacy do you prefer the most?

a) Low risk, low return

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 b) Moderate risk, moderate return
c) High risk, high return

Q.12 Which factors do you considered the most at time of investment?

a) Global Economy/prices
b) Inflation rates
c) CRR
d) Repo rate
e) Others

Q. 13 What are your expectations From?

Government
______________________________________________________________________________
__________________________________________________________________

Financial Advisor

______________________________________________________________________________
__________________________________________________________________

Investment Company

______________________________________________________________________________
__________________________________________________________________

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