ANALYSIS OF PREFERENCES OF PEOPLE FOR

INVESTMENT IN DEBT OR EQUITY MARKET

A PROJECT REPORT
Submitted by:

A Report submitted in partial fulfillment of the requirements

Of
BACHELORS OF BUSINESS ADMINISTRATION
In

CLASS OF 2010
ENROLLMENT NO. -

MAHARAJA SURAJMAL INSTITUTE

C-4 JANAK PURI
 ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide……………….., Sr. for his able

guidance, continuous support and cooperation throughout my project, without which the

present work would not have been possible.

I would also like to thank the entire team of RELIGARE SECURITIES LTD

(JANAKPURI BRANCH), for the constant support and help in the successful completion

of my project.
 CERTIFICATE

TABLE OF CONTENTS
CHAPTER 1 - INTRODUCTION
1.1 OBJECTIVES
1.2 EXECUTIVE SUMMARY
1.3 INTRO ABOUT THE TOPIC
1.4 RESEARCH METHODOLOGY
1.5 LIMITATIONS

CHAPTER 2 – COMPANY PROFILE

2.1 PROFILE
2.2 INDUSTRY PROFILE
2.3 OVERVIEW OFPROJECT
2.4 LITERATURE REVIEW

CHAPTER 3 – DATA ANALYSIS AND INTERPRETATION

3.1 PRIMARY DATA ANALYSIS
3.2 SWOT ANALYSIS

CHAPTER 4 - CONCLUSION AND RECOMMENDATIONS

QUESTIONNAIRE

REFERENCES
Chapter-1

INTRODUCTION

1.1

OBJECTIVE
 1) To understand the investment preferences of the people in the debt or equity
market
2) To understand how their investment preferences have changed with time
3) To analyze satisfaction level of the investors
4) To understand the factors related to changes in stock market which affect the
customer preference that is, what are the various factors due to which customers
invest in such diversified directions.

1.2

EXECUTIVE SUMMARY
In the last decade we have seen enormous changes in the debt and equity market. The

private sector has shown tremendous growth. With unmatched advances on the

information technology, increased role of the institutional investors in stock market and

through guidelines of SEBI, the financial structure of India have gained an unparallel and

unchecked power.

The research which is undertaken by me is to impart “preference of people for

investment in equity market and debt market”. The research gives the idea about

where, people in India prefer to invest their savings, in equity market or in debt market.

The research drives its conclusion by taking a sample size of 30 people. These people

include businessmen, servicemen, students, housewife, retired and professionals

generally. The study gives a brief detail about the difference in equity and debt market

and about the performance of both the sectors in India since it was emerged. Equity

market and debt market, both play an important role in the wealth generation of the

country.

The study examined the diversified portfolio of the sample concerned and also the

reasons behind such diversification especially for equity market and debt market. The
findings and recommendations along with conclusion is mentioned so as to make

improvements in the performance of equity and debt sector.

1.3

About the topic

EQUITY MARKET
 1. Equity market is a place to deal with equities of different companies. Equity

market and stock market are synonymous to each other. Stock Exchanges are an

organized marketplace, mutual organization, where members of the organization

gather to trade company stocks and other securities. The members may act either

as agents for their customers, or as principals for their own accounts.

Stock exchanges also facilitate for the issue and redemption of securities and

other financial instruments including the payment of income and dividends. The

record keeping is central but trade is linked to such physical place because

modern markets are computerized. The trade on an exchange is only by members

and stock broker do have a seat on the exchange.

There are 23 stock exchanges in India. Among them two are national level stock

exchanges namely Bombay Stock Exchange (BSE) and National Stock Exchange of India

(NSE). The rest 21 are Regional Stock Exchanges (RSE).

The Regional Stock Exchanges started clustering from the year 1894, when the first RSE,

the Ahmedabad Stock Exchange (ASE) was established. In the year 1908, the second in

the series, Calcutta Stock Exchange (CSE) came into existance.

During the early sixties, there were only few recognized RSEs in India namely Calcutta,
Madras, Ahmedabad, Delhi, Hyderabad and Indore. The number remained unchanged for

the next two decades. 1980s was the turning point and many RSEs was incorporated. The

latest is Coimbatore Stock Exchange and Meerut Stock Exchange

DEBT MARKET

Debt markets are a crucial source of funds. The debt market in India is amongst the

largest in Asia. It includes government securities – the largest component - and bonds

issued by public sector undertakings, other government bodies, financial institutions,

banks and companies. Debt markets are now considered an alternative route to banking

channels for finance.

Debt Instruments are obligations of issuer of such instruments as regards certain future

cash flows representing Interest & Principal, which the issuer would pay to the legal

owner of the Instruments. Generally debt instruments represent agreements to receive

certain cash flows as per the terms contained within the agreement. They can also be said

to be tradable form of loans.

Debt Instruments are of various types like Bonds, Debentures, Commercial Papers,
Certificates of Deposit, Government Securities (G secs) etc. A brief detail about some of

these investment options are given below.

Government Securities- G-Secs are issued by the Reserve Bank of India on behalf of the

Government of India. Normally the dated government securities have a period of 1 year

to 30 years. These are sovereign instruments generally bearing a fixed interest rate with

interests payable semi-annually and principle as per schedule. For shorter term, RBI

issues Treasury Bills which are discounted papers. At present T-Bills are issued for 91

days, 182 days & 364 days. G-Secs provide risk free (credit risk) return to investors.

Corporate Bonds- Corporate Bonds are issued by public sector undertakings and private

corporations for a wide range of tenors normally upto 15 years although some corporates

have also issued perpetual bonds. Compared to government bonds, corporate bonds

generally have a higher risk of default. This risk depends, of course, upon the particular

corporation issuing the bond, the current market conditions, the industry in which it is

operating and the rating of the company. Corporate bond holders are compensated for this

risk by receiving a higher yield than government bonds.

Certificate of Deposit- CDs are negotiable money market instruments issued in demat

form or as a Usance Promissory Notes.CDs issued by banks should have a maturity of not
less than seven days and not more than one year. Financial Institutions are allowed to

issue CDs for a period between 1 year and up to 3 years. CDs normally give a higher

return than Bank term deposit. CDs are rated by approved rating agencies(e.g. CARE,

ICRA, CRISIL, FITCH) which considerably enhances their tradability in secondary

market. CDs are issued in denominations of Rs.1 Lac and in the multiples of Rs. 1 Lac

thereafter.

Commercial Papers- A CP is a short term security (7 days to 365 days) issued by a

corporate entity (other than a bank), at a discount to the face value. One can invest in CPs

starting from a minimum of 5 lacs (face value) and multiples thereof. CPs are rated by

approved rating agencies (e.g. CARE, ICRA, CRISIL, FITCH). CPs normally give a

higher return than fixed deposits & CDs. We deal in investment grade CPs only. CPs can

be traded in the secondary market, depending upon demand. An element of credit risk is

attached to CPs

DIFFERENCE BETWEEN DEBT MARKET AND EQUITY MARKET

How are debt instruments different from equity instruments?

There are important differences between stocks and bonds. Let me highlight several of

them:

1. Equity financing allows a company to acquire funds (often for investment)

without incurring debt. On the other hand, issuing a bond does increase the debt
 burden of the bond issuer because contractual interest payments must be paid—

unlike dividends, they cannot be reduced or suspended.

2. Those who purchase equity instruments (stocks) gain ownership of the business

whose shares they hold (in other words, they gain the right to vote on the issues

important to the firm). In addition, equity holders have claims on the future

earnings of the firm.

In contrast, bondholders do not gain ownership in the business or have any claims

to the future profits of the borrower. The borrower’s only obligation is to repay

the loan with interest.

3. Bonds are considered to be less risky investments for at least two reasons. First,

bond market returns are less volatile than stock market returns. Second, should the

company run into trouble, bondholders are paid first, before other expenses are

paid. Shareholders are less likely to receive any compensation in this scenario.

Debt Equity
Must be repaid or refinanced. Can usually be kept permanently.
Requires regular interest payments. No payment requirements. May receive

Company must generate cash flow to pay. dividends, but only out of retained

earnings.
Collateral assets must usually be available. No collateral required.
Debt providers are conservative. They Equity providers are aggressive. They can

cannot share any upside or profits. accept downside risks because they fully

Therefore, they want to eliminate all share the upside as well.

possible loss or downside risks.
Interest payments are tax deductible. Dividend payments are not tax deductible.
Debt has little or no impact on control of Equity requires shared control of the

the company. company and may impose restrictions.

Debt allows leverage of company profits Shareholders share the company profits.

In return for sharing the risks equity providers also share all the profits. The choice,

therefore, depends on the balance between interest rates on debt and profits on equity.

In a static environment this choice becomes easy. If the after-tax cost of debt is lower

than the company's Net Return On Assets you should take on as much debt as you can.

This concept is known as leverage. If net profit margins are higher than net interest rates

you can maximize your Return On Equity by minimizing equity and maximizing debt. If

not, you do the exact opposite. If you cannot afford to pay debt then you have to

minimize debt and finance through equity.

As a result, a static situation is of no interest to venture capital firms. If the company is

doing well there should be no more need for outside equity. If a company is performing

so poorly that it cannot pay interest, then an outside equity provider certainly has no

incentive to join in.

ADVANTAGES AND DISADVANTAGES OF EQUITY AND DEBT

MARKET

EQUITY MARKET-

Advantages:

• The benefit of equity financing or venture capital is that you will be receiving

money in exchange for equity in your business in the form of stock or some other

form of equity like percentage of income or gross/net sales. A primary benefit of

this type of financing is that typically there is no monthly payment requirement to

investors. Instead, you are giving up ownership interest, most often, permanently.

Disadvantage:

• The main disadvantage of equity financing is that there are numerous fluctuations

in the market and the stock can give higher returns but there is a high risk

involved also.
DEBT MARKET-

Advantages:

The benefit of debt financing is that it is finite and you will pay down the debt over time

to a zero sum balance without any further obligation to the lender.

Disadvantage:

• The down stroke to debt financing is that traditional lenders will take a hard look

at your business including how long it has been in existence, income from

operation, expenses and will require hard assets for collateral for the loan.

Additionally, lenders will most certainly want you (and any other principals of the

organization) to personally guarantee repayments of the loan.

• Another disadvantage of debt financing is that your organization will be burdened

with some other type of regular payment (usually a monthly payment) depending

on the terms and conditions of the financing and this can absorb critical cash flow,

especially with small business.

1.4

RESEARCH METHODOLOGY

RESEARCH OBJECTIVES

The objective for the research is-

• To understand the investment preference of people in debt & equity market that

means where people want to invest their savings for desirable returns, in debt

market or in equity market.

• To understand in which ratio people invest in debt market and equity market.

• To understand that what percentage they invest in this sector out of their income.
 RESEARCH DESIGN

For studying the perceptions of investors, a primary survey was undertaken so as to know

how much savings, investors invest in debt market or equity market and which market

they prefer for their investments and which market gives them better returns.

To understand this, a descriptive research is made and a questionnaire (which contained

11 questions, was filled by people from Cannaught Place, Karol Bagh, Nehru place and

Janakpuri) was designed and analyzed on the basis of responses given by investors.
 SAMPLE SIZE

For primary research which was conducted, a sample size of 30 respondents has been

taken. This sample size included people from age group of 18years – 70 years.

For the given study, deliberate sampling also called convenient sampling is been used.

This is because of the limited resource and unavailability of time on the part of

respondents and researcher

 SCOPE OF STUDY

The present study is been conducted to impart the knowledge of equity & debt market,

about their functioning and the information provided by them in order to make the

investment decisions. On the part of an investor it is very important to analyze all the

aspects of the field in which he is investing his savings. Secondly the study also tells

about the present risk factors involved while investing in equity market or in debt market.

The role of government & SEBI in various workings of stock market( that is about short

term and long term investments). The study also examined the claims of each market for

providing diversified portfolio of returns is justified or not by measuring performance of

both, equity market and debt market.

 THE SOURCES OF COLLECTION OF DATA

PRIMARY DATA-

Primary data are collected through the questionnaire filled by the businessmen,

servicemen and the people who are already doing share and debt trading

SECONDARY DATA-

Secondary data are collected through various website, news papers,books and magazines.

List of the resources are mentioned in the bibliography.

1.5

LIMITATION

• Lack of time on part of investors for filling up the questionnaires.

• It is difficult to know about the investment of people because they don’t want to

disclose the amount of their savings.

• Lack of knowledge on part of the investors created problem for filling up the

questionnaires.

• Many respondents were not ready to give their personal details.

• As the data is based on convenience sampling so these samples are not

representative of any definable population.

Chapter-2

COMPANY PROFILE
2.1

PROFILE

RELIGARE Securities Ltd. (RSL) is a wholly owned subsidiary of RELIGARE

ENTERPRISES, a Company promoted by the late Dr. Parvinder Singh, Ex-CMD of

Ranbaxy Laboratories Ltd.

The primary focus of Religare Securities Ltd. is to cater to services in Capital Market

Operations to Institutional Investors. The Company is a member of the

National Stock Exchange (NSE) and OTCEI. The growing list of financial institutions

with whom RSL is empanelled as approved Broker is a reflection of the high levels of

services maintained by the Company.

As on date the Company is empanelled with UTI, IDBI, IFCI, SBI, BOI-

MF, Punjab National Bank, PNB-MF, Oriental Insurance, GIC, UTI-Offshore, ICICI Can

bank MF, Punjab & Sind Bank, Pioneer ITI, SUN F&C, IDBI Principal, Prudential

ICICI, ING Baring and J M Mutual Fund.

RELIGARE was founded with the vision of providing integrated financial

care driven by the relationship of trust. The bouquet of services offered by RELIGARE

includes Broking (Stocks and Commodities), Depository Participant Service, Advisory

on Mutual Fund Investments and Portfolio Management Services.

RELIGARE is a pioneer in the concept of partnership to reach multiple

locations in order to effectively service its large base of individual clients. Besides the

reach of RELIGARE, the clients of the company greatly benefit by its strong research

capability, which encompasses fundamentals as well as technical knowledge.

HISTORY

1994

- The Company was incorporated on 23rd March, and received the Certificate of

Commencement of Business on April 19. The Company was promoted by Ranbaxy

Laboratories Ltd. and its associates. The Company is engaged in business of leasing, hire

purchase, merchant banking and investments in capital and money markets.

- 19,70,700 no. of equity shares of Rs 10 each and 157,50,000 preference shares of Rs 10

each allotted to promoters. 10,29,300 No. of equity shares of Rs 10 each and 52,50,000 -

5% Convertible Preference shares of Rs 10 each were issued in February 1995 through a

prospectus as follows:

- (i) 2,75,300 no. of equity shares on firm allotment basis to promoters and associate

companies,

- (ii) 4,000 no. of equity shares to employees of the Company (all were taken up),

- (iii) 7,50,000 no. of equity shares of Rs 10 each and 52,50,000 Convertible preference

shares to public (all were taken up).

1995 –

The Company obtained its Category I Merchant Banking registration from SEBI on 18th

April.

- The company issued 52,50,000-5% Convertible Preference shares of Rs 10 each to the

public. These are to be converted into 1 equity share of Rs 10 each at par at the end of 30

months from the date of allotment.

- 7,59,150 No. of Equity shares allotted.

1996 –

The honourable High Court at Delhi and Mumbai on 26th March, approved the scheme

of amalgamation of the Company with Fortis Financial Services Ltd. As per the scheme

of amalgamation the erstwhile holders of Empire Finance were allotted one share of

Fortis Finance for every two shares held by them. Accordingly, 18,60,375 shares were

allotted.
GROUP

RELIGARE in recent years has expanded its reach in health care and financial services

wherein it has multiple specialty hospital and labs which provide health care services and

multiple financial services such as secondary market equity services, portfolio

management services, depository services etc.

RELIGARE financial services group comprises of Religare Securities

Limited, RELIGARE Comdex Limited and RELIGARE Finvest Limited which provide

services in Equity, Commodity and Financial Services business & Religare Insurance

Advisory Ltd.

RELIGARE SECURITIES LIMITED is a

1. Member of National Stock Exchange of India and Bombay Stock

Exchange of India.

2. Depository Participant with National Securities Depository

Limited (NSDL) and Central Depository Services Limited

(CDSL).

3. A SEBI approved Portfolio Manager.

RSL provides platform to all segments of the investor to leverage the immense

opportunity offered by equity investing in India either on their own or through managed

funds in Portfolio Management.

The ARN No. of the Religare Securities Ltd. is 33764. The ARN No. is required

by to be available with the broker who deals on behalf of investors or sell the mutual

funds of the different companies present in the market.

PRODUCTS & SERVICES

Equity Trading

Derivative Trading

Commodity Trading

Mutual Funds distribution

Depository Services

Margin Financing

NRI – Desk Management

Research & Technical Analysis

Portfolio Management Services

International Equity & Commodity

Institutional Business
 Investment Banking

Internet Trading ( RACE )

OFFICES

The company has offices located at prime locations like Mumbai, New Delhi, Kolkata

Chennai and many other cities . The offices are centrally located to cater to the

requirements of institutional and corporate clients and retails clients, and for ease of

operations due to proximity to stock exchanges and banks.

COMMUNICATIONS

The company has its disposal, an efficient network of advance communication system

and intends to install CRM facility; besides this it is implementing interactive client

information dissemination system which enables clients to view their latest client

information on web. It has an installed multiple WAN to interconnect the branches to

communicate on real time basis.

The company is equipped with most advanced systems to facilitate smooth

functioning of operations. It has installed its major application on IBM machines and uses

latest state-of the- art financial software.

MANAGEMENT

Mr. Sunil Godhwani is Chief Executive Officer and Managing Director of RELIGARE

Securities Limited. He is also the CEO & MD of the parent company RELIGARE

ENTERPRISES and is managing the entire operations of both the companies.

CEO is supported by various business heads who are creditable

professional of their respective fields and they are further working with team of

professionals consisting of Chartered Accountants, MBAs with varied experience in

financial services and stock broking functions.

The Board of Directors consists of Mr. Harpal Singh as Chairman and Mr.

V.K. Kaul, Mr. Malvinder Mohan Singh, Mr. Shivinder Mohan Singh as Directors.
MISSION

Providing complete financial care driven by the core values of diligence and

transparency.

VISION

To build Religare as a globally trusted brand in the financial services domain and

present it as the ‘Investment Gateway of India'.

Brand Essence

Core brand essence is Diligence and Religare is driven by ethical and dynamic processes

for wealth creation

2.2

INDUSTRY PROFILE

An extensive financial sector supports the rapidly expanding Indian Economy. India

boasts of a wide and sophisticated financial network. The sector also has a number of

national and state level financial institutions. These include foreign and institutional

investors, investment funds, equipment leasing companies, venture capital funds, etc.

Further, the Country has a well-established stock market, comprising 23 stock exchanges,

with over 9,000 listed companies. Total market capitalization, on the two dominant stock

exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE),

stood at Rs. 6,926 billion and Rs. 7,604 billion respectively, at the end of December

2000.

The Indian capital markets are rapidly moving towards a market that is modern in terms

of infrastructure as well as international best practices such as derivative trading with

stock index futures, addition to the list of compulsory De-mat trading and rolling

settlement in certain specified shares, commencement of internet based trading, etc. This

has also created an opportunity for the debt segment to enhance. This is very important

because it is one of the main constituent of financial sector which generates capital in an

economy.
EMERGENCE OF STOCK MARKET AND DEBT MARKET

India's equity and debt market have walked in very different directions in the decade of

the 1990s. Both markets started out alike. As of 1992 or so, both markets were profitable

clubs for a few intermediaries in Bombay, and were ridden with corrupt and fraudulent

market practice. The scam of 1992 helped diminish the prestige of the status quo, and

gave reformers in government the upper hand. The debt market made progress on

blocking fraud and improving systemic integrity, but there was no fresh vision on market

design. In the case of the equity market, we saw a complete revolution in market design,

and NSE was created.

The contrast between the debt and equity markets is now embarrassing. The debt market

never crosses a thousand trades a day, while NSE has become the fifth largest exchange

in the world (measured by trades per day) and is within striking reach of a million trades

a day. The debt market languishes as a club of two dozen dealers in one square kilometer

of South Bombay. The equity market has lively activity from Kashmir to Kanyakumari;

less than half of NSE's trades come from Bombay.

At first blush, it is glaringly obvious that RBI's vision for market design has been proved

inferior when compared with the innovations which have delivered results on the equity

market. Many observers are puzzled at RBI's unwillingness to learn from the success of

the equity market, and abandon the non--transparent, clubby nature of the bond market.

In this article, I will argue that the truth lies in between. There are some aspects where the

equity market is clearly the role model for the debt market, and RBI should not hesitate in

abandoning its existing vision for market design. At the same time, there are many
aspects where RBI's concerns are well founded, where existing market practice on the

equity market dubious, and should not feature in the future of the debt market.

BEGINNING & GROWTH OF EQUITY CULTURE

A new phase in the Indian stock markets began in the 1970s, with the introduction of

Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the

multinational companies, which created a surge in retail investing. The early 1980s

witnessed another surge in stock markets when major companies such as Reliance

accessed equity markets for resource mobilization that evinced huge interest from retail

investors.

A new set of economic and financial sector reforms that began in the early 1990s gave

further impetus to the growth of the stock markets in India. As a part of the reform

process, it became imperative to strengthen the role of the capital markets that could play

an important role in efficient mobilization and allocation of financial resources to the real

economy. Towards this end, several measures were taken to streamline the processes and

systems including setting up an efficient market infrastructure to enable Indian finance to

grow further and mature. The importance of an efficient micro market infrastructure

came into focus following the incidence of market abuses in securities and banking

markets in 1991 and 2001 that led to extensive investigations by two respective Joint

Parliamentary Committees.
MARKET STRUCTURE

Indian securities market is fairly large as compared to several other emerging markets.

There are 22 stock exchanges in the country, though the entire liquidity is shared between

the country’s two national level exchanges namely, the National Stock Exchange of India

and the Bombay Stock Exchange Ltd. The regional stock exchanges are in pursuit of

business models that make them viable and vibrant. Meanwhile, these exchanges have

become members of the national level exchanges through formation of subsidiaries

whose business is showing continuous growth and progress.

The number of brokers in various stock exchanges rose from 6,711 in 1994-95 to 9,335 in

FY06. The number of brokers in all the exchanges together peaked to 10,213 in the year

FY01 but gradually declined thereafter when the regional stock exchanges began to lose

business in the light of wide ranging market structure reforms introduced since then. as

against Rs 13,395.11 billion of the turnover at the National Stock Exchange and Rs

10,000.32 billion turnover at the Bombay Stock Exchange. With the abolition of the

deferral products and introduction of uniform T+2 settlement cycle, the liquidity in these

exchanges flowed to the national level system consisting of NSE and BSE.
MAJOR ASPECTS OF BUSINESS

A brief description of the major aspects of market developments in India with particular

reference to NSE and BSE are summarized below. In view of the need for consistent and

comparative data on a wide range of aspects, information published in official

publications that is available latest for the FY06 are used in the following write up.

i) Market Capitalization

Market capitalization of stocks in India rose from Rs 67.50 bn in 1980 to Rs 705.21 bn

in 1990 to Rs 11,926.30 bn in 2000. BSE market capitalization as of mid-2007 is about

Rs 40,000 bn, which in the background of the appreciating rupee, takes it to among the

small group of exchanges with a trillion dollar market cap. Market capitalization as

percent of gross domestic product which was about 25% in the early 2000s, now equals

it. Several leading emerging economies have market capitalization as a multiple of GDP,

and in the manner in which stock prices are appreciating in India, the prospects for

Indian market capitalization rising further look good. Information for the tables in this

chapter is sourced from the handbook published by the Securities and Exchange Board

of India and the websites of the Bombay Stock Exchange Ltd, and the National Stock

Exchange of India Ltd.

 2006

2005

2004

2003 BSE
NSE
2001

2001

0 10000 20000 30000 40000

Rising stocks of market from 2001 to 2006

Equity Issuance

Resources mobilized from the primary markets in India during FY06 were Rs. 273.82 bn

from 139 issues, of which 103 were public issues and 36 were rights issues. Of these, 79

were Initial Public Offerings and 60 were capital issuance from listed companies. The

issue size has greatly increased in the last few years and so has the extent of the

premium. In FY01, 44% of the issues were of less than Rs 0.05 bn size. In FY06, small

issues formed just 4% of the total number of issues. Capital issues with size more than

Rs 1 bn which formed just 12% in FY01 rose to 35% in FY06. The four years beginning

FY94 witnessed phenomenal growth in the new issuance leading to mobilization of Rs

870.85 bn, with the next six years being very subdued and lack luster with their

combined resource mobilization amounting to just Rs 356.95 bn. Equity issuance

showed an uptrend from FY04 onwards which continued in the next four years. In the

primary and secondary markets, banking sector emerged as an important industry

segment. In the total issuance raised in FY06, banking sector accounted for 45%

followed by power, engineering and cement & construction .Of the total resources

mobilized from the primary markets during the period FY-01 to FY-06, banking sector

accounts for 42%.

 2006

2005

2004
AMOUNT IN
2003 BILLION
NUMBER
2002

2001

0 50 100

Equity issuance at par

 2006

2005

2004
AMOUNT IN
2003 BILLION
NUMBER
2002

2001

0 100 200 300

Equity issuance at premium

Trading Volumes

Secondary market operations gained greater momentum in the last decade. In the last ten

years, the value of trading in both NSE and BSE rose six times making the Indian stock

markets the leading market in the Asian region, and is also remarkable as compared to

the growth in the world equity markets. A major development in Indian equity markets

is the dematerialization of shares which led to speedy securities settlement. Delays and

bad deliveries also reduced after dematerialization. Progress made in Indian markets in

dematerialization was noticed in the international markets as an important achievement

and landmark. By FY06, more than 6,000 companies signed agreements for

dematerialization with NSDL and 5,500 companies with CDSL. The number of shares

that were dematerialized moved from 37.21 bn in FY01 to 174.72 bn in FY06 in NSDL

and from 1.92 bn to 27.22 bn shares in CDSL during this period. Shares dematerialized

forms a major chunk of the market capitalization.

 2006

2005

2004

2003 BSE
NSE
2002

2001

0 1000 2000 3000

Average number of scrips traded daily

 2006

2005

2004

2003 BSE
NSE
2002

2001

0 20 40 60 80

Average value of trading daily (in bn.)

2.3

Overview of PROJECT

My project is to check the preference of people for investment in equity market and debt

market. It gives the idea about where, people in India prefer to invest their savings, in

equity market or in debt market. It drives its conclusion by taking a sample size of 30

people. These people include businessmen, servicemen, students, housewife, retired and

professionals generally. The study gives a brief detail about the difference in equity and

debt market and about the performance of both the sectors in India since it was emerge.

and also to check the preference of people for investment in debt market and equity

market. Equity market and debt market, both play an important role in the wealth

generation of the country. Both of these have their own features. If in equity market we

can gain good growth then in debt market we can cover our risk. So both the market have

their own implications. People invest in both the market according to their preference.

Like if someone want high growth and does nor care about risk can go for equity market

and if some one like to cover their risk and does not prefer high growth can go for debt

market. Also there are people who invest in both debt market and equity market for

getting better returns and also covering their risk.

2.4

LITERATURE REVIEW

There are many studies and researches already done on this topic. Books, magazines,

newspapers and websites were main sources of collecting secondary data. There have

been lot of articles through which I’ve gone while my training process.

Cookson Richard has suggested

Odd things are happening in corporate America. Anything with even the most tangential
relationship to all things techy can raise equity at the sort of price at which investors are
almost guaranteed to lose money. Everyone else seems to be buying their shares back.
One explanation might be that equity capital is being redistributed from those companies
that have little use for the stuff not many good investment opportunities, in other words
to those companies in the vanguard of the 'new economy' that have plenty of use for it.
To the extent that investors are indeed offering free equity to companies, this argument
has some merit. It is, however, a racing certainty that when the greater fool refuses to
stump up, equity investors in Internet start-ups will lose their shirts. Fast-growing
companies used to mean fast-growing profits. In the mid-1970s newly listed companies
made returns on equity of about 18%. Now they make only 3%, compared with about
11% for the market as a whole. Most lose money and always will for if history teaches
us anything, it is that first movers in a technology are usually not the winners, and even if
they are, investors in them are not. Be assured that since the Internet is such a potent
force in lowering barriers to entry, this will be doubly true this time round. For the time
being, though, and contrary to all the evidence, investors are convinced that new
economy equals profits.
Irrationality, of course, cuts both ways. To be consistent, investors must also think that
profitability in traditional companies is headed for oblivion. Perhaps this is why such
companies in the US and elsewhere are buying back their shares at such a giddy pace. To
keep up, they have to run increasingly fast otherwise their share prices will fall. Retiring
their equity is a splendid way of doing this because earnings per share are, obviously,
boosted by having fewer shares; in other words, by changing the denominator. Given that
the world of high-techery is so small, it should come as little surprise that, taken as a
whole, American companies are buying some 2% of their shares back every year.
And herein lies a problem. On present trends, in 100 years time or thereabouts, corporate
America will be financed almost entirely by debt. Perhaps 100 years is rather beyond the
average investment time horizon, but still, the issue is an important one now. American
and European companies are becoming more leveraged. Share repurchases are often
financed with debt.
In America, debt now accounts for getting on for 60% of total capital. Between 1979 and
last year the book value of net debt to market capitalisation has increased from 16.4% to
27.9% for America's 50 top companies, according to J.P. Morgan. Taken at market
prices, debt to market capitalisation has fallen, but this is probably only because the
market cap of the top companies has risen so far (this, you must understand, has nothing
to do with a bubble they really are just wonderful companies). For everyone else, the
story is very different.
This is rather mysterious. There have always been good arguments for raising debt rather
than equity: that interest payments are tax deductible whereas dividends are not, for
example. But these have long been true, and they do not explain why companies are
becoming more leveraged now. With the Dow, that repository of traditional companies,
at such stratospheric levels, it would be stretching a point to say that, in the long run, this
had much to do with the dismal value of their shares. Rather, it is because they have been
raising more debt to buy back their shares.

Why might this be? One reason is that, after nine years of expansion, investors have
become insensitive to risk (and their love affair with high-techery seems to bear this out).
The second reason is that companies' managers have every incentive to leverage their
balance sheets as much as possible. That second reason is called stock options. In essence
these provide an incentive for managers to sweat as much return from as little equity as
possible because then their company's share price will rise. While the good times roll,
stock options have created a huge incentive for firms' managers to borrow in order to buy
back shares.
There are two very good reasons why this is not in shareholders' long-term interest. The
first is that inflation is, at the very least, dormant. Why does this matter? Because debt is
the promise to pay back a fixed sum in the future. Inflation erodes the real value of that
debt. Much of the post-war era has been inflationary, so debt has been a relatively
attractive option for companies. But what if companies can no longer rely on inflation to
bail them out? Take the extreme example: deflation. This increases the real cost of debt.
Moreover, as prices fall so do returns on assets financed with borrowed money, for
companies must repay debts with declining profits. Even if the world is in a
disinflationary, rather than a deflationary, era this might still make excess leverage in
many industries unwise.
Look, for example, at Japan, an economy which relied on heady growth to sustain huge
debts. Slow growth, meagre profits and a disinflationary environment have, for much of
this decade, mauled many of the country's apparently best (but hugely leveraged)
companies. Nor, because the stock market has languished for almost all of the 1990s, has
it been cheap for companies to replace those debts with equity. Uniquely among rich
countries, the equity risk premium in Japan has risen.
And this leads to the second reason. In a disinflationary environment in America and
Europe, the equity risk premium has fallen sharply. Perhaps that is because a low
inflationary environment is a relatively less risky one for equities since profits are less
uncertain (though the Japanese experience seems to cast doubt on this). But equities in
both Europe and America shares are more than a little generously valued; in America,
indeed, they are, on some measures, more expensive than they have ever been. This is, of
course, absolutely as it should be: America is clearly in a golden age.
But what if it were not? What if the stock market crashed, pulling domestic demand and
America's economy down with it and causing a massive output gap and deflation? Surely
many a company would be kicking itself for not having more equity?

Dr. Econ has explained (October 2005)

It has explained about the difference between debt market and equity market. Like Equity
financing allows a company to acquire funds (often for investment) without incurring
debt. On the other hand, issuing a bond does increase the debt burden of the bond issuer
because contractual interest payments must be paid— unlike dividends, they cannot be
reduced or suspended. Also those who purchase equity instruments (stocks) gain
ownership of the business whose shares they hold (in other words, they gain the right to
vote on the issues important to the firm). In addition, equity holders have claims on the
future earnings of the firm.

In contrast, bondholders do not gain ownership in the business or have any claims to the
future profits of the borrower. The borrower’s only obligation is to repay the loan with
interest.

It also explained about the importance of the market. Like both markets are of central
importance to economic activity. The bond market is vital for economic activity because
it is the market where interest rates are determined. Interest rates are important on a
personal level, because they guide our decisions to save and to finance major purchases
(such as houses, cars, and appliances, to give a few examples). From a macroeconomic
standpoint, interest rates have an impact on consumer spending and on business
investment. Also the stock market is equally important for economic activity because it
affects both investment spending and consumer spending decisions. The price of shares
determines the amount of funds that a firm can raise by selling newly issued stock. That,
in turn, will determine the amount of capital goods this firm can acquire and, ultimately,
the volume of the firm’s production.
CHAPTER-3

DATA ANALYSIS AND FINDING

3.1

PRIMARY DATA ANALYSIS

PREFERENCE AMONG DEBT&EQUITY

20

15
Frequency

10

0
EQUITY DEBT BOTH

PREFERENCE AMONG DEBT&EQUITY

As investors prefer to invest in both debt and equity market to gain more profits from

equity market and to take themselves in safe side by investing in debt market too. But

still if we make comparison in debt and equity, investors prefer to invest in equity market
because of high growth prespective. According to chart we can analyze that majority

invest in equity market.

INVESTMEN IN ULIPS PLAN

25

20
Frequency

15

10

0
YES NO

INVESTMEN IN ULIPS PLAN

There are many investors who does not invest directly in debt and equity market. Like

some people take ulip insurance plans. Under which money is invested in debt and equity
market. So after interviewed the people it comes out that around 80% of people invest in

ulips plan also included those who does not invest in equity and debt market.

PLAN OF IN VEST IN ULIP

20

15
Frequency

10

0
EQU ITY BALA NC ED

PLA N O F IN VE ST IN U LIP

the people who invest in ulips majority of them go for balanced plan. Under which funds

are invested in both debt and equity market. Around 25% of them only invest in equity

market. So again investors prefer equity market for better returns.

 FINDINGS & ANALYSIS

• Most of the people are aware about equity market but not about debt market. .

Equity market in spite of its fluctuation also, attracts numerous people to invest in

it.

• Debt market is still not so popular among the general public. People invest in it

but stll they do not know about its functioning properly.

• People prefer to invest in equity market due to high returns that equity provides to

the investors because people are ready to take risk for their investments.

• On the other hand deb market do have fixed but low rate of returns. This is also a

draw back faced by debt market.

• Very less organizations deals in debt market. As a result there are less resources

which can impart knowledge about debt market.

• There are people who want to invest in fixed returns investments. But due to lack

of knowledge they do not know about all the options. (like debentures, bonds,

securities) available
 • Nearly 70% people invest in share market. Whether a small part of their savings

but still they want to invest in share market.

• In spite of investing in share market, many people lack knowledge about share

market. This is due to the reason that people deals in share market though some

stock broking organization and their dealing are done through relationship

manager.

• Generally people are satisfied with the respective stock broking firms through

which they are dealing. The main thing is the rate of brokerage people are paying

on every transaction and the services provided to them. But people who generally

deals in delivery period transactions they are not much concerned about

brokerage rate also

• Clients of religare are not aware about all the services provided by religare

securities ltd.

• Nearly 85% to 90% people are satisfied with the services of religare securities

3.2
SWOT - ANALYSIS

STRENGTH

• Brand Nameassociated:- A brand name Ranbaxy associated with the

Religare. Even Ranbaxy now is not the parent concern of Religare but still it

works for people who does not know about it.

• Nationwide Reach, Increasining Client Base.:- Religare has nationwide reach.

It has branches in major cities like Delhi, Bombay, Calcutta, Banglore and

many more cities. So by this it is continuously increasing its client base.

• Diversified Portfolio Of Products And Services With Good Growth Plans :-

Religare has great diversified portfolio of product and services which gives

maximum growth opportunity to the investment made by the clients.

WEAKNESS

• Low Marketing Strategies.:- Religare has low marketing strategy as compare to

others brokerage firm. It focus more on enabling warm relation with their clients

• Network Become Very Large To Handle:- Religare is now a very big firm with

lot of client base. Because of this the network become too large too handle for the

relationship manager..
 OPPORTUNITIES

• New People Are Gradually Started Knowing About Religare:- There are still

many people who does not know clearly about Religare. So it has good

opportunity for religare to increase its client base.

• Stepping Ahead To Create A New Customer Base

• As The Market Went Down To 8000 And Again It Move To Progress Fetch New

Investors:- As the market get recover in may the new customer ready to invest in

the market. So it is good opportunity for religare to fetch new investors towards

them.

THREATS

• Increasing Number Of Competitors:- As the number of competitor increasing , the

competition is increasing for Religare. .

• High fluctuation in inflation rate is forcing people to low down their investments.

• After the crash of stock market in 2008 made small investors to withdraw money

from this market

CHAPTER-4

CONCLUSION AND RECOMENDATION

Religare is a share trading company. I was in operational department. But I also did

selling during my training. It’s a virtual kind of job. So by this I learnt both marketing

and operational skills. The purpose of this is to over all grooming of a trainee. So that if

he or she further like to join the company in future, he or she would not face any kind of

problem while learning. So it will become easy for the company to teach the basic

things.

. My purpose of internship at the company was to know the actual market prevailing in

the economy. To learnt the different ups and downs of the market for various reasons.

When I was about to finish my trainng , a responsibility assign to me. Its for giving

guidance to knew trainees. I was suppose to teach them what my mentor taught me. I

gave them direction according to my knowledge and my experience. It was great

experience for me to do. And in the same time it was very difficult for me. because new

trainees some times ask such things which I did not handle before. So it also increase my

knowledge during this period.

During my training I learnt various things like how to behave with your colleouges and

seniors. I learnt different corporate ethics and their culture. Also during my training I

interact different types of clients, by this I able to learn their beahaviours, that how

different people take different things differently. Also different point of view and

different sentiments for the market.

So it was very good experience I learnt during my training in religare securities. It was

great time with them. I learnt many things but still there many things which I could not

learnt because of short span of time. And I think I myself have done well there and tried

to learnt different things. And further I would like to work with religare securities to learn

more things.

RECOMMENDATION
• People should be made aware about the debt market and share market as well

firms should focus on imparting knowledge about the working of debt market and

equity market.
 • New plans and schemes should be launched to attract new people towards equity

market and portfolio should be managed in such a manner to avoid losses in

equity market.

• New firms should come in to existence or already existing units should expand in

the fields of dealing in debt market.

• Religare should focus on its marketing strategies so a to make people aware about

its services and opportunities that it can give to its customers.

BIBLIOGRAPHY
Books –

• The future of india’s debt market by Bhardwaj Gautam

• PANDEY I M (2008) , Financial Management , Ninth Edition, Vikas Publisher

Magazines –

• Outlook profit article:kya lagta hai?, Denanshu Datta

• Business today

WEBSITES –

• http://www.economywatch.com/economy-business-and-finance-news/sensex-

roars-bombay-stock-exchange-surge.html

• http://www.economywatch.com/economy-business-and-finance-news/is-the-

stock-market-rally-over-24-6.html

• http://www.economywatch.com/investment/

• www.nseindia.com

• http://www.bseindia.com/deri/Deri/Introduction.htm?L=2&id=hd1&Lid=0

• www.equitymaster.com

• http://www.outlookprofit.com/
ANNEXURE
 QUESTIONNAIRE:-

Q1) PERSONAL DETAILS:

RESP ID-
AGE-
DESIGNATION-
Q2) WHAT IS YOUR OCCUPATION?
BUSINESS-
EMPLOYED-
PROFESSIONAL-
STUDENT
RETIRED
HOUSEWIFE

Q3)WHAT IS UR ANNUAL INCOME?

Less then 2 lac
2lac-5lac
5lac-10lac
more then 10 lac

Q4) DO U INVEST IN SHARE MARKET?

Yes
No

Q5)DO U INVEST IN DEBT MARKET?

Yes
No

Q6)HOW MUCH U INVEST IN EQUITY MKT?

_________

Q7)HOW MUCH U INVEST IN DEBT MKT?

___________

Q7) DO U INVEST IN ULIPS?

YES
NO

Q8)IF YES, THEN WHICH PLAN U PREFER?

FULLY EQUITY
 FULLY DEBT
BALANCED

Q9)IN PRESENT SCENERIO WHICH ONE IS PREFERRABLE

DEBT
EQUITY
BOTH

Q10)WHAT %AGE OF UR INCOME U LIKE TO INVEST IN THE EQUITY MKT?

________________

Q11) WHAT %AGE OF UR INCOME U LIKE TO INVEST IN THE DEBT MKT?

_______________