Chapter:-1

COMPANY PROFILE

VISION OF THE COMPANY

Vision is to be the most respected company in the financial services

space.

INTRODUCTION

5 paisa is the trade name of the India Infoline Securities private

limited, a wholly owned subsidiary of India Infoline ltd. 5 paisa holds
membership of both the leading stock exchange of India viz. the
Bombay stock exchange (BSE) and National Stock Exchange and is also
a Depository Participant with NSDL and CDSL. It has tied up with the
leading banks for funds transfer facilities Viz. City Bank, Centurion
Bank, ICICI Bank and UTI bank the group has a membership of a Multi
Commodities Exchange (MCX), National Commodities and Derivative
Exchange of India (NCDEX) and the Dubai Gold and Commodities
Exchange (DGCX).

India Infoline Ltd, was founded in 1995 by a group of professionals

with impeccable educational qualification and professional credentials.
India Infoline is listed on BSE and NSE with a market capitalization of
over $ 150 million.

The India Infoline group, comprising the holding company, the India
Infoline Ltd. And its wholly owned subsidiaries offers the entire gamut
of investment products ranging from Equities and Insurance ,Fixed

1
deposits ,GOI bonds , Loan products and other small saving
instruments. It also owns and operates web sites,
www.indiainfoline.com and www. 5paisa .com.

India Infoline is a forerunner in the field of equity research. India

Infoline’s research is acknowledged by none other than Forbes as “The
best of the web” and “----a must read for investor in Asia”. India
Infoline’s research is available not just over the internet but also on
international wire services like Bloomberg (code: ILL), Thomson first
call and internet securities where it is amongst the most read Indian
brokers. The India Infoline group has a significance presence across
the country with over 500 branches in over 300 cities across India. All
these offices are networked and connected with the corporate office in
Mumbai. The group has invested significantly in technology and
research, the result of which are there for every one to see. The 5
paisa trading interface is one of the most advanced platforms available
to retail investor in India. The group has membership on BSE and NSE
for equities trading. It has a SEBI license for Portfolio Management
under which, various schemes are offered, which have been
continentally beating the benchmark indices since inception.

THE INDIA INFOLINE LTD.

India Infoline Ltd, being a listed entity, is regulated by SEBI

(Securities and Exchange Board of India). It undertakes equities
research which is acknowledged by none other than Forbes as Best of
the web must read for investors in Asia'. Its various subsidiaries are
in different lines of business and hence are governed by different
regulators. The subsidiaries of India Infoline Ltd are:

2
  India Infoline Securities Private Ltd.:

India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline

Ltd, which is engaged in the businesses of Equities broking and
Portfolio Management Services. It holds memberships of both the
leading stock exchanges of India viz. the Stock Exchange, Mumbai
(BSE) and the National Stock Exchange (NSE). It offers broking services
in the Cash and Derivatives segments of the NSE as well as the Cash
segment of the BSE.

 India Infoline Commodities Private Ltd.:

India Infoline Commodities Pvt Ltd is a 100% subsidiary of India

Infoline Ltd, which is engaged in the business of commodities broking.
Our experience in securities broking empowered us with the requisite
skills and technologies to allow us offer commodities broking as a
contra-cyclical alternative to equities broking. We enjoy memberships
with the MCX and NCDEX, two leading Indian commodities exchanges,
and recently acquired membership of DGCX. We have a multi-channel
delivery model, making it among the select few to online as well as
offline trading facilities.

 India Infoline Distribution co. ltd.:

India Infoline.com Distribution Co Ltd is a 100% subsidiary of

India Infoline Ltd and is engaged in the business of distribution of
Mutual Funds, IPO’s, Fixed Deposits and other small savings products.
It is one of the largest 'vendor-independent' distribution houses and
has a wide pan-India footprint of over 232 branches coupled with a

3
huge number of 'feet-on-street', which help source and service
customers across the length and breadth of India. Its unique value
proposition of free doorstep expert advice coupled with free pick-up
and delivery of cheques has been met with an enthusiastic response
from customers and fund houses alike. Our business has expanded to
include the online distribution of mutual funds, wherein users can view
and compare different product offerings and download application
forms which they can later submit to the product provider.

 India Infoline Insurance services ltd.:

India Infoline Insurance Services Ltd is also a 100% subsidiary of

India Infoline Ltd and is a registered Corporate Agent with the
Insurance Regulatory and Development Authority (IRDA). It is the
largest Corporate Agent for ICICI Prudential Life Insurance Co Ltd,
which is India's largest private Life Insurance Company.

 India Infoline Investment Services Ltd.:

India Infoline Investment Service Ltd is also a 100% subsidiary of

India Infoline Ltd. It has an NBFC license from the Reserve Bank of
India (RBI) and offers margin-funding facility to the broking customers.

 India Infoline Insurance Broker Ltd.:

India Infoline Insurance Brokers Ltd is a 100% subsidiary of India

Infoline Ltd and is a newly formed subsidiary which will carry out the
business of Insurance broking. We have applied to IRDA for the
insurance broking license and the clearance for the same is awaited.

4
OPERATIONS

This is where the 5paisa subsidiary of the India Infoline

group, comes in. They operate their functions through their domain
knowledge and database on in depth research of complex paradigms
of commodity kinetics, offers their customers a unique insight into
behavioral patterns of these markets. Their customers are ideally
positioned to make informed investment decisions with a high
probability of success.

India Infoline commodities private ltd. offers the investors the

opportunity to participate in this market by facilitating trading in
commodities futures. They are the members of Multi commodity
Exchange of India (MCX) and National Commodity Exchange of India
(NCDEX).Their main function is to provide the investor with the
complete range of commodities for trading, in both the morning as well
as evening sessions.

Trading can be online, over the phone or at their branches.

Highly qualified, well trained relationship managers are available at
their investor points across the country, to help the investor make the
best of commodities trading!

Besides all the above functions, they also leverage their skills
in research, investments in cutting edge technology and understanding
of investor’s requirements to ensure that their needs are taken care of.
Thus, they perform the function of adding value to the investor’s
money.

5
MANAGEMENT TEAM

The management team of the INDIA INFOLINE includes the

following members:

 Mr. Nirmal Jain

Nirmal Jain is the founder and Chairman of India Infoline Ltd. He

holds an MBA degree from IIM Ahmedabad, and is a Chartered
Accountant (All India Rank 2) and a Cost Accountant. He has had an
impeccable professional and academic track record. He started his
career in 1989 with Hindustan Lever Limited. During his stint with
Hindustan Lever, he handled a variety of responsibilities, including
exports and trading in agro commodities with Rs3bn annual turnover.
He then joined hands with two local brokers to set up their equity
research division, Inquire, in 1994. His work set new standards for
equity research in India. In 1995, he founded his own independent
financial research company, now known as India Infoline Ltd.

 Mr. .R.Venkataraman

R Venkataraman is the co-promoter and Executive Director of

India Infoline Ltd. He holds a B. Tech degree in Electronics and
Electrical communications Engineering from IIT Kharagpur and an MBA
degree from IIM Bangalore. He has held senior managerial positions in
various divisions of ICICI Limited, including ICICI Securities Limited,
their investment banking joint venture with J P Morgan of USA and with

6
BZW and Taib Capital Corporation Limited. He has also held the
position of Assistant Vice President with G E Capital Services India
Limited in their private equity division. He has varied experience of
more than 14 years in the financial services sector.
The Board of Directors

Apart from Nirmal and R Venkataraman, the Board of Directors of India

Infoline comprises:

 Mr. Sat Pal Khattar (Non Executive Director)

 Mr.Sanjiv Ahuja(independent Director)
 Mr.Nilesh Vikamsey(independent director)
 Mr.Kranti Sinha(independent director)

Products:

The India Infoline group offers the entire gamut of financial

services from research and advisory to execution and services which
include:

Equity Broking:

It offers trading in both the cash as well as the derivative

segments. It is one of the largest online players.

Commodities broking:

7
 Commodities broking on the MCX and the NCDEX exchanges of
India and the DGCX of Dubai.

Portfolio management services:

Portfolio management services as a SEBI registered portfolio

manager.

Investment banking:

Investment banking and corporate advisory under the category-

1 merchant banking license.

Home loans:

Home loans and other loan products.

Mutual funds, fixed deposit, IPO’s, bonds, post office:

Saving and several other investment products

Insurance:

India Infoline is the largest corporate agent for ICICI prudential life
insurance company.

8
 Chapter:-2
INTRODUCTION
IPO:

1.1 What is IPO:

Stock available for the first time are offered through new issue
market. The issuer maybe new company or an existing company.

1.2 Parties involved in the IPO:

In the sixties and seventies, public issue managed by company
and its personnel. But, at present public issue involves a number of
agencies and parties.

• Manager to issue:
Lead managers are appointed by the company to manage
the public issue programmes. Their main duties are,
Drafting of prospectus
Preparing the budget of expense
Suggesting the time of the Public issue
Assisting the marketing
Advising the company to appoint registrar
Directing the various agencies
• Registrar to issue

9
 Quotation containing the details of the various functions
they would be performing and charges for them are called
for selection. Among them most suitable one is selected.
• Underwriters:
It means that a contract by means of which a person gives
assurance to the issuer to the effect that the former would
subscribe to the securities offered in the event of non
subscription by the person to whom they were offered.
• Bankers to issue:
Bankers to the issue have the responsibility of collecting
the application money along with the application form.
• Advertising agents:
Advertising plays a key role in promoting the public issue.
• The financial institution:
Financial institution generally underwrites the issue and
lend term loans to the company.

NFO:

CONCEPT

A Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal. The money thus collected is then
invested in capital market instruments such as shares, debentures and
other securities. The income earned through these investments and
the capital appreciation 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

10
securities at a relatively low cost. The flow chart below describes
broadly the working of a mutual fund:

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund:

ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a

Mutual Fund are:
 Professional Management
 Diversification
 Convenient Administration
 Return Potential
 Low Costs
 Liquidity
 Transparency
 Flexibility
 Choice of schemes
 Tax benefits

11
 Well regulated

2.1 TYPES OF MUTUAL FUND SCHEMES

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

FREQUENTLY USED TERMS

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the
scheme minus its liabilities. The per unit NAV is the net asset value of
the scheme divided by the number of units outstanding on the
Valuation Date.

12
Sale Price
Is the price you pay when you invest in a scheme. Also
called Offer Price. It may include a sales load.

2.3 History of the Indian Mutual Fund Industry

The mutual fund industry in India started in 1963 with the formation of
Unit Trust of India, at the initiative of the Government of India and
Reserve Bank the. The history of mutual funds in India can be broadly
divided into four distinct phases

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act
of Parliament. It was set up by the Reserve Bank of India 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
crores of assets under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector
mutual funds set up by public sector banks and Life Insurance
Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established
in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov
89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC

13
established its mutual fund in June 1989 while GIC had set up its
mutual fund in December 1990.

At the end of 1993, the mutual fund industry had

assets under management of Rs.47,004 crores.

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, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which
all mutual funds, except UTI were to be registered and governed. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was
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 Regulations in 1996. The
industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many
foreign mutual funds setting up funds in India and also the industry has
witnessed several mergers and acquisitions. As at the end of January
2003, there were 33 mutual funds with total assets of Rs. 1,21,805
crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit
Trust of India Act 1963 UTI was bifurcated into two separate entities.
One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and

14
certain other schemes. The Specified Undertaking of Unit Trust of
India, functioning under an administrator and under the rules framed
by Government of India and does not come under the purview of the
Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by

SBI, PNB, BOB and LIC. It is registered with SEBI and functions under
the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI
which had in March 2000 more than Rs.76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming
to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry
has entered its current phase of consolidation and growth. As at the
end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.

Chapter 3

15
 RESEARCH METHODOLOGY

Research Problem:

It’s not easy to know about the investors style of investments

unless and until some kind of research is not conducted to the
investors’ profile. So in order to solve the problem, I have decided to
conduct a research on the “Comparison between IPO vs NFO”.

Research Objective:

• To know which one is best to invest either IPO or NFO.

• To know customer preference of investment.
• To know which one is profitable for customers.

Research Design:
I have used the Descriptive Research Design for the purpose of
survey as it will enable me to describe the characteristics of a
particular individual or a group of people and their tendency towards
something and in our case it could be the investment options available.

Sampling Method:
I would use the method of Judgmental as it would give better
idea because we have to focus in target respondents.

Sample Size:

16
 It would be better to have a sample of 100 people to make
research.

Research Instrument:
A detailed questionnaire shall be used for purpose survey and it
is attached with this proposal.

Data analysis tool:

• In SPSS I use Frequency table, Chi-Square, Factor analysis.

Limitations:

The project was carried out on the subject “Comparison

between IPO vs NFO” During the project following hurdles are faced.

• Limited time of study.

• Because of judgmental sampling method it is difficult to target
more number of respondents.
• Some of the respondents are not willing to fill up the
questionnaire.

CHAPTER :- 4

17
 DATA ANALYSIS AND INTERPRETATION

(1) Do you like to save your money?

Save
Option Money

yes 100

No

GRAPH:-

Save Money

120
100
80
60 Save Money
40
20
0
yes No

Interpretation:

All Respondents are interested in saving

their money which we can see from the table that all respondents have
chosen the option of save money. It shows that they are 100%
interested in saving money.

(2) Please answer the following.

18
Option Aware Invest

IPO 55 62

NFO 30 52

Aware & Invest

70 62
55 52
60
50
40 30 IPO
30 NFO
20
10
0
Aw are Invest

Interpretation:-

From the above table & graph we can see that 55% and 30%
respondents Out of 100 respondents are aware about IPO and NFO and
in this respondents 62% in IPO and 52% are investing in it.

Cross tab of IPO Investment

IPO Invest Total

19
 Not Not
Invest Invest Invest

Age 20-
21 37 58
30

31-
12 18 30
40

41-
3 6 9
50

>50 2 1 3

Total 38 62 100

GRAPH:-

20-30 31-40 41-50 >50

120 100
100
80 62
58 ipo invest not invest
60
37 38 ipo invest invest
40 30
21
1218 9 Total not invest
20 0 0 0 3 6 0 2 1 3
0
age Total

Chi-Square Tests

20
 Asymp.
Sig. (2-
Value DF sided)

Pearson Chi-
1.260(a) 3 .739
Square

Likelihood Ratio 1.222 3 .748

Linear-by-Linear
.380 1 .537
Association

N of Valid Cases 100

Interpretation:

Explanation of pearsons chi-square:

The Chi-square test is carried out at 95% confidence

level (0.05 significance level). The Pearson Chi-square value comes
out as a probability of 0.739 which is greater than significance level of
0.05, it means exist no significant difference between IPO Investment
and Age.

Here we conclude that there exist no significant

difference between IPO Investment and Age.

Cross tab of NFO investment

21
 NFO Invest Total

Not Inves
Invest t

Age 20-30 28 30 58

31-40 16 14 30

41-50 4 5 9

>50 3 3

Total 48 52 100

GRAPH:-

120 100
100
80 nfo invest not invest
58
60 4852 nfo invest invest
40 2830 30
1614 Total
20 4 5 9 3 3
0
20-30 31-40 41-50 >50

age Total

Chi-square Tests

Value DF Asymp.sig (2-

22
 sided)

pearson chi-
square 3.158 3 0.369

Likelihood
Ratio 4.313 3 0.23

Linear-by-
Linear
Assocition 0.74 1 0.39

N of valid
cases 100

Interpretation:

Explanation of pearsons chi-square:

The Chi-square test is carried out at 95% confidence

level (0.05 significance level). The Person Chi-square value comes
out as a probability of 0.369 which is greater than significance level of
0.05, it means exist no significant between NFO Investment and Age.

Here we conclude that there exist no significant

difference between NFO Investment and Age.

(3) How much percentage(%) of your savings you would like to

invest in IPO and NFO?

23
Proportio
n IPO NFO OTHERS

5% - 10% 37 15 26

11% -
15% 26 36 31

16% -
20% 7 5 24

Above
20% 4 3 11

GRAPH:-

proportion of investm ent

40 37 36
31
30 26 26 24 IPO
20 15 NFO
11
7 OTHERS
10 5 4 3
0
5% - 10% 11% - 15% 16% - 20% Above 20%

Interpretation:-

From the above table & graph we can see that 37%, 15% and
26% of respondents are investing in IPO, NFO & OTHERS of the

24
proportion of 5% - 10% than after 26%, 36% and 31% are the
proportion of 11% - 15% than after 7%, 5% and 24% are in the
proportion of 16% - 20% and the last is the only 4%, 3% and 11% are
in the proportion of Above 20% of their savings.

Cross tab of Proportion of Investment in IPO

IPO Total

5% to 11% to 16% to Above

0 10% 15% 20% 20% 0

Incom 0 - 60,000 1 3 0 0 1 5
e
60,001 -
10 15 6 1 1 33
1,20,000

1,20,001 -
11 7 7 4 0 29
1,80,000

>1,80,001 4 12 13 2 2 33

Total 26 37 26 7 4 100

GRAPH:-

25
 120
100 income
80
60
40
20 Total
0
ipo Total

Chi-Square Tests

Asymp.
Sig. (2-
Value DF sided)

Pearson Chi-
19.215(a) 12 .083
Square

Likelihood Ratio 20.392 12 .060

Linear-by-Linear
2.938 1 .087
Association

N of Valid Cases 100

Interpretation:

26
 Explanation of pearsons chi-square:

The Chi-square test is carried out at 95% confidence

level (0.05 significance level). The Person Chi-square value comes
out as a probability of 0.083 which is bit greater than significance
level of 0.05, it means exist no significant between Investment
proportion in IPO and Income.

Here we conclude that there exist no significant

difference between Investment proportion in IPO and Income.

Cross tab of proportion of Investment in NFO

NFO Total
5% to 11% to 16% to above
0 10% 15% 20% 20% 0
Income 0-
60,000 3 1 0 1 0 5
60,001 -
1,20,000 13 6 11 1 2 33
1,20,001
-
1,80,000 14 5 8 1 1 29
>1,80,00
1 11 3 17 2 0 33
Total 41 15 36 5 3 100

GRAPH:-

27
 120

100

80 income

60

40

20 Total
0
nfo Total

Chi-Square Tests

Asymp.
Sig. (2-
Value DF sided)

Pearson Chi-
12.032(a) 12 .443
Square

Likelihood Ratio 13.658 12 .323

Linear-by-Linear
.523 1 .470
Association

N of Valid Cases 100

Interpretation:

28
 Explanation of pearsons chi-square:

The Chi-square test is carried out at 95% confidence

level (0.05 significance level). The Person Chi-square value comes
out as a probability of 0.443 which is greater than significance level of
0.05, it means exist no significant between Investment proportion in
NFO and Income.

Here we conclude that there exist no significant

difference between Investment proportion in NFO and Income.

Cross tab of proportion of Investment in Others

OTHER Total

5% to 11% to 16% to above

0 10% 15% 20% 20% 0

Incom 0 - 60,000 0 2 3 0 0 5
e
60,001 -
1 5 12 9 6 33
1,20,000

1,20,001 -
1 7 10 7 4 29
1,80,000

>1,80,001 6 12 6 8 1 33

Total 8 26 31 24 11 100

GRAPH:-

29
 120

100
income
80

60

40

20 Total
0
other Total

Chi-Square Tests

Asymp.
Sig. (2-
Value DF sided)

Pearson Chi-
18.801(a) 12 .093
Square

Likelihood Ratio 20.884 12 .052

Linear-by-Linear
5.155 1 .023
Association

N of Valid Cases 100

Interpretation:

Explanation of pearsons chi-square:

30
 The Chi-square test is carried out at 95% confidence
level (0.05 significance level). The Person Chi-square value comes
out as a probability of 0.093 which is bit greater than significance level
of 0.05, it means exist no significant between Investment in Other
options and Income.

Here we conclude that there exist no significant

difference between Investment in Other options and Income. and
Income.

(4) How much return you expect from your investment in IPO
& NFO?

Return IPO NFO OTHERS

10% -
20% 14 8 65

20% -
30% 46 34 19

30% -
40% 8 13 6

40% -
50% 7 3

GRAPH:-

31
 Return on Inves tm ent

70 65
60
46
50 IPO
40 34
NFO
30 19
20 14 13 OTHERS
8 8 6 7
10 3
0
10% - 20% 20% - 30% 30% - 40% 40% - 50%

Interpretation:-

From the above table & graph we can see that 14% , 8% and
65% of respondents are investing in IPO, NFO & OTHERS of the
proportion of 10% - 20% than after 46%, 34% and 19% are the
proportion of 20% - 30% than after 8%, 13% and 6% are in the
proportion of 30% - 40% and the last is the only 7% and 3% are in the
proportion of 40% - 50% of their savings.

Cross tab of Return Expect in IPO

32
 Age & return Expect in IPO Total

10 to 20 to 30 to 40 to
0 20% 30% 40% 50% 0

Age 20-
12 13 29 2 2 58
30

31-
9 1 11 5 4 30
40

41-
2 0 5 1 1 9
50

>50 2 0 1 0 0 3

Total 25 14 46 8 7 100

GRAPH:-

33
 120

100

80 Age

60

40

20 Total

0
return ipo Total

Chi-Square Tests

Asymp. Sig. (2-

Value DF sided)

Pearson Chi-Square 18.805(a

12 .093
)

Likelihood Ratio 20.526 12 .058

Linear-by-Linear
.192 1 .661
Association

N of Valid Cases 100

34
Interpretation:

Explanation of pearsons chi-square:

The Chi-square test is carried out at 95% confidence

level (0.05 significance level). The Person Chi-square value comes
out as a probability of 0.093 which is bit greater than significance level
of 0.05, it means exist no significant between Return in IPO and Age.

Here we conclude that there exist no significant

difference between Return in IPO Investment and Age.

Cross tab of Return Expect in NFO

Age & return Expect in NFO Total

10 to 20 to 30 to 40 to
0 20% 30% 40% 50% 0

Age 20-
21 7 21 8 1 58
30

31-
16 1 10 3 0 30
40

41-
5 0 2 1 1 9
50

>50 0 0 1 1 1 3

Total 42 8 34 13 3 100

35
GRAPH:_

120

100

80 age

60

40

20 Total

0
return nfo Total

Chi-Square Tests

Asymp.
Sig. (2-
Value DF sided)

Pearson Chi-
20.070(a) 12 .066
Square

Likelihood Ratio 15.988 12 .192

Linear-by-Linear
.484 1 .487
Association

N of Valid Cases 100

36
Interpretation:

Explanation of pearsons chi-square

The Chi-square test is carried out at 95% confidence

level (0.05 significance level). The Person Chi-square value comes
out as a probability of 0.066 which is bit greater than significance level
of 0.05, it means exist no significant between Return in NFO
Investment and Age.

Here we conclude that there exist no significant

difference between Return in NFO Investment and Age.

Cross tab of Return Expect in OTHER

Age & Return Expect in Other Total

10 to 20 to 30 to
0 20% 30% 40% 0

Age 20-
8 38 7 5 58
30

31-
2 19 8 1 30
40

41-
0 6 3 0 9
50

>50 0 2 1 0 3

Total 10 65 19 6 100

37
GRAPH:-

120

100

80 age

60

40

20 Total
0
return other Total

Chi-Square Tests

Asymp.
Sig. (2-
Value DF sided)

Pearson Chi-
7.820(a) 9 .552
Square

Likelihood Ratio 9.560 9 .387

Linear-by-Linear
.852 1 .356
Association

N of Valid Cases 100

38
Interpretation:

Explanation of pearsons chi-square:

The Chi-square test is carried out at 95% confidence

level (0.05 significance level). The Person Chi-square value comes
out as a probability of 0.552 which is greater than significance level of
0.05, it means exist no significant between Return of Investment in
Other options and Age.

Here we conclude that there exist no significant

difference between Return of Investment in Other options and Age.

(5) What would be your preference if you want to invest in IPO

& NFO or both?

Option IPO NFO BOTH

Short
Term 25 5 6

Long
Term 24 31 6

39
GRAPH:-

Preference of Investment

35 long term, 31
30 25
25
long term, 24
20 short term
15 long term, 6 long term
10 5 short term, 6
5
0
IPO NFO BOTH

Interpretation:-

From the table & graph we can see that 25% of the respondents
are investing in Short Term IPO and 24% respondents are investing in
Long Term IPO while only 5% of respondents are investing in Short
Term NFO and 31% respondents are investing in Long Term NFO and
in BOTH only 6% are invest.

40
 (6)Rate the following statement.

In Entry
IPO NF /Exit
NF tra O barri Expect
NF ma NF Tra nsa liqu er ation
O nag Comp Tax O Ret ner cti id NFO of
IPO bett ed -any s saf u-rn abil on mor make return
bette -er prof name affe e in ity cos e it in NFO
r tha essi imp't t-ts tha IPO eas t tha unatt satisfie
PARTIC than n ona in deci n mor y in aff n racte d than
ULAR NFO IPO l NFO sion IPO e IPO ect IPO d IPO

Strongly
Disagre
e 8 3 25 2 3 5 2 20 5

Disagre
e 14 23 3 8 40 1 4 36 15 20 12

41
Neither
Agree or
Disagre
e 18 34 23 32 13 8 14 29 42 45 40 39

Agree 29 18 47 35 16 58 34 50 16 35 20 29

Strongly
Agree 29 22 27 25 6 34 49 14 1 3 15

FACTOR ANALYSIS

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of
.782
Sampling Adequacy.

Bartlett's Test of Approx. Chi-

552.101
Sphericity Square

DF 66

Sig. .000

Communalities

Extracti
Initial on

IPO>NFO 1.000 .679

NFO>IPO 1.000 .712

42
NFO Managed
1.000 .745
Prof'l

Company name 1.000 .777

Taxes 1.000 .733

NFO is safer 1.000 .567

Return in IPO 1.000 .535

Transf IPO easy 1.000 .663

T.Cost affect 1.000 .586

NFO Liquidity 1.000 .614

Entry Barrir 1.000 .641

Satishfied Return 1.000 .631

Total Variance Explained

43
Componen Extraction Sums of Rotation Sums of Squared
t Initial Eigenvalues Squared Loadings Loadings

% of % of % of
Tota Varianc Cumulativ Tota Varianc Cumulativ Tota Varianc Cumulativ
l e e% l e e% l e e%

1 4.76 4.76 3.20

39.663 39.663 39.663 39.663 26.684 26.684
0 0 2

2 1.84 1.84 3.10

15.388 55.051 15.388 55.051 25.834 52.518
7 7 0

3 1.27 1.27 1.58

10.641 65.693 10.641 65.693 13.175 65.693
7 7 1

4 .872 7.267 72.959

5 .747 6.222 79.182

6 .597 4.977 84.159

7 .474 3.953 88.112

8 .420 3.503 91.615

9 .367 3.056 94.671

10 .268 2.237 96.908

11 .221 1.839 98.747

12 .150 1.253 100.000

Component Matrix(a)

Component

1 2 3

44
IPO>NFO -.801 -.144 .126

NFO>IPO .833 -.125 .055

NFO Managed
.730 -.326 .327
Prof'l

Company name .692 -.154 .524

Taxes .085 .563 .640

NFO is safer .467 -.590 .013

Return in IPO -.579 -.342 .287

Transf IPO easy -.503 -.281 .575

T.Cost affect .371 .652 .154

NFO Liquidity .742 .239 -.081

Entry Barrir -.563 .561 .100

Satishfied Return .770 .152 -.119

Rotated Component Matrix(a)

Component

1 2 3

IPO>NFO -.433 -.695 -.090

NFO>IPO .683 .494 .041

45
NFO Managed
.839 .180 .089
Prof'l

Company name .801 .127 .345

Taxes .019 -.025 .855

NFO is safer .667 .044 -.346

Return in IPO -.095 -.720 -.087

Transf IPO easy .048 -.795 .170

T.Cost affect -.037 .479 .596

NFO Liquidity .357 .674 .182

Entry Barrir -.670 -.186 .398

Satishfied Return .409 .674 .098

Component Transformation Matrix

Compone
nt 1 2 3

1 .708 .698 .104

2 -.560 .467 .684

3 .430 -.543 .722

46
Interpretation:

From the above table we have come to know that from

various parameters the investors have selected some major
parameters which are very essential for any investors who invest in
IPO or NFO. These all parameters helps the investors to take decision
whether to invest in IPO or NFO with existing portfolio or not.

So, on the basis of these parameters the investors choose

their investment pattern and it will also guide them also.

So, here the most important parameters investors

preferred is as under,

1st component

NFO managed by professional, Company Name.

2nd component

Liquidity and the satisfied return are most probably

same.

3rd component

The taxes.

So, these are the parameters are investors chosen while

47
 investing in IPO or NFO.

(7) Which criteria will you consider important while you investing in
IPO’s or NFO’s?

( Give RANK i.e. 1,2,3,4,5,6)

( 1 is the Most Important & 6 is the Least Important )

NF
IPO O

Ran Risk Tim Retu Safet Price Compan Ris Tim Retu Safet Pric Compa

48
 e
Ban ny
k e rn y Band y Name k e rn y d Name

1 10 6 8 36 11 6 9 1 7 37

2 37 7 7 4 13 4 11 4 33 4 6

3 10 7 34 15 2 3 21 11 15 5 3 3

4 5 5 18 38 5 18 18 1 19 2

5 4 50 3 6 7 1 1 25 25 5 2

6 5 2 3 8 52 2 4 43 8

FACTOR ANALYSIS

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling

.811
Adequacy.

Approx. Chi- 1092.93

Square 0
Bartlett's Test of
Sphericity
66
DF

.000

49
 Sig.

Communalities

Initial Extraction
IPO-risk 1 0.699
Time 1 0.819
Return 1 0.704
Safety 1 0.716
Price
band 1 0.572
Compan
y Name 1 0.645
NFO-risk 1 0.69
Time 1 0.9
Return 1 0.821
Safety 1 0.816
Price
band 1 0.744
company
Name
1 0.45

50
 Total Variance Explained

Co
mp
one Extraction Sums of Squared Rotation Sums of Squared
nt Initial Eigenvalues Loadings Loadings

% of
Varianc Cumulati % of Cumulati % of Cumulati
Total e ve % Total Variance ve % Total Variance ve %

1 6.418 53.485 53.485 6.418 53.485 53.485 5.049 42.079 42.079

2 2.157 17.978 71.463 2.157 17.978 71.463 3.526 29.384 71.463

3 .980 8.164 79.627

4 .683 5.691 85.318

5 .468 3.899 89.217

6 .346 2.883 92.101

7 .298 2.480 94.581

8 .224 1.869 96.450

9 .170 1.417 97.867

10 .115 .958 98.826

11 .088 .735 99.560

12 .053 .440 100.000

Component Matrix(a)

51
 Component

1 2

IPO-risk -.495 .674

Time -.804 .415

Return -.698 .465

Safety -.789 .305

Price
-.298 .695
band

Company
-.798 .091
Name

NFO-risk .788 .264

Time .894 .318

Return .802 .421

Safety .833 .349

Price
.839 .200
band

Company
.481 .468
Name

Rotated Component Matrix(a)

Component

52
 1 2

IPO-risk -.025 .836

Time -.427 .798

Return -.311 .779

Safety -.477 .699

Price
.149 .741
band

Company
-.606 .527
Name

NFO-risk .799 -.229

Time .916 -.245

Return .900 -.108

Safety .884 -.185

Price
.804 -.311
band

Company
.661 .113
Name

Component Transformation Matrix

Compone
nt 1 2

1 .824 -.567

53
2 .567 .824

Interpretation:

From the above table we have come to know that from

various parameters the investors have selected some major
parameters which are very essential for any investors who invest in
IPO or NFO. These all parameters helps the investors to take decision
whether to invest in IPO or NFO with existing portfolio or not.

So, on the basis of these parameters the investors choose

their investment pattern and it will also guide them also.

So, here the most important parameters investors

preferred is as under,

In IPO,

1st component

Safety and Return.

2nd component

Risk, Time, Return and Price Band.

54
In NFO,

1st component

Time and Return.

2nd component

Time and Risk.

So, these are the parameters are investors chosen while

investing in IPO or NFO.

Chapter:-5

FINDINGS

• Out of 100 respondents 62 are aware about IPO and in that 55

are investing in IPO.

55
• Out of 100 respondents 30 are aware about NFO and in that 52
are investing in NFO.

• In IPO 37 respondents out of 100 investing in proportion of 5% to

10% from their savings.

• In NFO 36 respondents out if 100 investing in proportion of 11%

to 15% from their savings.

• The return in IPO, 46% of respondents are expect 20% to 30%

return from their investment.

• In NFO also 34% of respondents are expect same return as in

IPO.

• 25% of respondents are investing in Short Term IPO and in NFO

only 5% of respondents are invest in Short Term NFO.

• In IPO 24% of respondents are invest in Long Term and NFO 31%
of respondents are invest in Long Term.

• In IPO, 29% respondents are Strongly Agree that IPO is better

than NFO.

• In NFO 34% respondents are neutral that NFO is better than IPO.

• 47% respondents are believes that NFO is managed by

professional managers.

• Respondents are agree that Company name is important in NFO.

• Most of the respondents are agreed that Transferability is easy in

IPO.

• Respondents are neutral about that liquidity in IPO and NFO.

56
• In IPO, Most of the respondents are prefer Price Band as a
important criteria for investment. while in NFO most of
respondents are prefer company name.

• In NFO most of respondents are prefer company name.

Chapter:-6

Conclusion

57
• Most of the respondents are aware about IPO and they are
investing in it.

• Compare with IPO, NFO is not as popular as IPO so less no. of

respondents are investing in it.

• People are taking less risk in NFO that is they investing more
no. of proportion in it and regardless they have reasonable in
invest in NFO.

• In terms of return the people are expect higher return in IPO

compare to NFO.

• For investment the most of the respondents are preferred

Medium Term investment.

• To prefer which is better, the respondents are preferred IPO is

better than NFO.

Chapter:-7

RECOMMENDATION

58
• Only 30% respondents are aware about NFO, so more
focus on that compare to IPO.

• Company should improve its advertising in NFO.

• NFO agents Provide help in selecting the best NFO for

investment.

Chapter:-8
BIBLIOGRAPHY

59
BOOKS:
• Punithavathy Pandian(2007), “Security Analysis & Portfolio
Management, Vikas Publishing Housing Pvt. Ltd.

• AMFI Module.
• Donald R Cooper & Pamela S Schindler(2003), “Business
Research Methods”, Tata McGraw-Hill, New York.

APPENDIX

60
 QUESTIONNAIRE

I am Pinkesh J. Lad student of MBA studying at SRIMCA

College, Bardoli. I had prepared this questionnaire for project work on
“Comparison between IPO v/s NFO” meant for educational purpose
only.

I ensure you to maintain highest degree of

confidentiality.

1. Do you like to save your money?

[ ] Yes
[ ] No

2. Please answer the following?

OPTION AWARENESS INVESTMENT

IPO
NFO

3. How much percentage (%) of your savings you would like to invest in IPO’s
and NFO’s?

PROPORTION OF IPO NFO OTHERS

INVESTMENT
5% to 10%
11% to 15%
16% to 20%
Above 20%

4. How much return you expect from your investment in IPO & NFO?

RETURN ON IPO NFO OTHERS

61
 INVESTMENT
10 to 20%

20 to30%

30 to 40%

40 to 50%

5. What would be your preference if you want to invest in IPO’s and NFO’s or
both?

OPTION SHORT TERM LONG TERM

IPO
NFO
BOTH

6. Rate The Following Statement

Sr.No. Statement Strongly Disagree Neither Agree Agree Strongly

Disagree Nor Disagree Agree

1: Do you think IPO is better than 1 2 3 4 5

NFO.

2: Do you think NFO is better than 1 2 3 4 5

IPO.

3: Do you think NFO is managed 1 2 3 4 5

by professionals, so it is better than
IPO.

4: Company name is important in NFO 1 2 3 4 5

than IPO.

5: Taxes affects my decision. 1 2 3 4 5

6: Investment in NFO is safer 1 2 3 4 5

than IPO.

62
 7: Return in IPO is more than NFO. 1 2 3 4 5

8.: Transferability in IPO is easier than 1 2 3 4 5

NFO.

9.: In IPO Transaction cost affect my 1 2 3 4 5

decision.

10.: In NFO liquidity more compare to IPO. 1 2 3 4 5

11.: Entry or Exit barrier on NFO makes it 1 2 3 4 5

unattracted than IPO for investment.

12.: Your expectation of return from 1 2 3 4 5

Investment in NFO is more satisfied
than IPO.

7.: Which criteria will you consider important while you investing in IPO’s or NFO’s? (Give
Rank i.e. 1,2,3,4,5,6)
( 1 is the Most Important & 6 is the Least Important )

OPTION IPO NFO

Risk
Time
Return
safety
Price Band
Company Name

SECTION: B
Personal details:-

63
Name:_______________________________

Address:_______________________

Contact no:_________________

Age Group: -
[ ] 20-30 [ ] 31-40
[ ] 41-50 [ ] >50

Occupation: -
[ ] Student
[ ] Businessman
[ ] service class
[ ] professional
[ ] Others

Household yearly Income: -

[ ] 0 – 60,000 [ ] 60,001 - 1,20,000

[ ] 1,20,001 - 1,80,000 [ ] >1,80,001

THANK YOU

64