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PREFACE
“THE KNOWLEDGE WHICH IS NOT PRACTICALLY IMPLEMENTED
IS A BURDEN”
Knowledge is wealth but it is proved when it is utilized wisely in practical aspects. In this day
and age the above statement is of paramount importance especially for an M.B.A. student.
Equipped with the theoretical knowledge, an M.B.A. student can apply the same in practical
life to gain some valuable experience. This project study provides such an opportunity. It
familiarizes me with the corporate world as well as the challenges, which are in store for me
after getting an M.B.A. degree.
I Mudrika Jain, the student of Faculty of Management Studies, Mohan Lal Sukhadia
University, Udaipur was placed with ICICI Securities Limited for a period of 45 days. . Being
thoroughly managed organization we had a good opportunity to put over theoretical
knowledge in to practices. During the 45 days in the company we worked on the
FINANCIAL SERVICES (SECURITIES MARKET). Needles to say these 45 days
constitute one of the most interesting and rewarding periods of our MBA programme.
I gained valuable experience working on this project and I hope that this presentation will
prove to be useful to all concerned. However I believe that there is no end to knowledge and
learning process changes from time to time.
MUDRIKA JAIN
ACKNOWLEDGEMENT
I dedicate this page to convey my deepest and heart-felt appreciation for all those people who
have purposefully and inadvertently assisted me in this project. Without their thought
fullness, the satisfactory completion of this project would not have been possible.
First of all, I would express my sincere regard to Mr. MITUL JANI (Senior Sales
Manager) for giving me a chance to pursue my project in ICICI SECURITIES LTD,
Udaipur for giving me an opportunity to do this project in Udaipur Branch under his
guidance. I sincerely thank him for being my project guide and for his guidance, valuable
suggestions and time which proved to be of immense importance to me.
I would pay my sincere regards to Dr. ANIL KOTHARI (Faculty Guide) for constantly
encouraging me during the training period. I am very much thankful for his involvement at
every stage of this project and extending maximum possible help.
Also I also give my sincere thanks to Prof. KARUNESH SAXENA (Director) for his moral
support and encouragement given to me.
I express thanks to Mr. YOGESH BHARDWAJ (Assistant Unit manager) for his valuable
suggestions and for providing necessary facilities and co-operation.
I obliged to Mr. MANISH SHARMA (Associate) for his valuable suggestion, feedback for
building up survey details, schedules and implementation of the survey analysis and sustained
interest and encouragement for the project.
And last but not least I am thankful to all the Members of ICICI SECURITIES LTD. for
their support and encouragement which I have received during the course of time.
MUDRIKA JAIN
CONTENTS
CORPORATE PROFILE
A subsidiary of ICICI Bank, ICICI Securities was set up in February 1993 to provide
investment-banking services to investors in India. As on date ICICI Bank holds 99.9% of the
share capital of ICICI Securities. The dematerialized form of shareholding and the depository
mode of trade (scrip less trade) have been in operation in developed financial markets for
over 15 years. In India, the first depository commenced operation a decade back and is
relatively new. The Indian financial market is in need of both scrip-based and scrip less trade,
but the investing community, which is used scrip-based trade, is bound to take some time to
accept the latter. The scrip less trading, till now a domain of the western world, institutional
investors and GDR holders is now mandatory even for small investors. All those who hold
physical share certificates have to get them dematerialized. If they do not, they will be forced
to do so at the time of sale.
The countless numbers of conservative Indians have to digest it, whether they like it or not.
First, the institutional investors succumbed. Then the high net worth individuals, trading in
more than a certain numbers of shares, were forced to give in. now, it is the turn of the small
investors of select-companies.
With their share certificates being replaced by small slips and receipts, naturally the average
investors will have their share of fears and apprehensions. It is necessary to educate and
convince these investors about the benefit of Demat rather than forcing them to take part in
the game.
Company’s Vision:
To make ICICI Direct the dominant online share trading by world class people and
services.
Company’s mission:
To judged by their sales and earnings growth rates than on the absolute value of their sales
and earnings. Look for companies that consistently grow faster than there peers.
Investors prefer companies that increase profit margins -- the percentage of sales that they
keep -- every year. This is accomplished either by lowering expenses or raising prices. Look
for companies that consistently find ways to squeeze more profits out of sales than their
peers.
ICICI Group has been a pioneer in Internet enabling of businesses, by starting the first
Internet enabled bank in India. ICICI Group believes in leveraging the power of the Internet
to create value for its customers by making their life easier. In December 1999, ICICI Group
created a dedicated E-Commerce Group to extend and explore the opportunities made
possible by the Internet. The Group has since been conceptualising and incubating Internet
based in-house projects. Bill Junction is one of the first offerings of this group.
Today, Bill Junction Payments Limited - a network company of ICICI Venture is India's
foremost player in the Electronic Bill Presentment and Payment (EBP) Bill Junction is at the
forefront of Internet electronic commerce, committed to the conversion of traditional modes
of bill payment through collection centre’s and drop boxes to an online and convenient
process. Bill Junction has used technology to create a superior product and has harnessed the
power of the Internet to deliver to you an easy hassle-free bill payment solution.
Bill Junction is dedicated to creating value for its customers by continuously upgrading its
product and by incorporating customer friendly features on an ongoing basis. With Bill
Junction taking care of your bills you will have more free time, fewer headaches and fewer
worries.
Financial planning and share trading have been the strong pillars of ICICI's growth. They
expect these to remain thrust areas in the future too. The financial institution sees significant
opportunities in the power sector, and in the rapid de-regulation of the Telecom sector. On
the retail side, ICICI has established a retail franchisee through a physical presence across 42
cities. Its retail thrust has been on the planks of technology enabled low cost distribution
channels like the Internet, Call centers and ATMs.
It occupies the number one position in automobile financing (over 20% of the market share),
number one in credit cards on an incremental basis. It also has a growing presence in home
finance and on-line trading.
ICICI Group
ABOUT THE ORGANISATION
Education & Certifications: Mrs. Kochhar joined Jaihind College for a Bachelors Degree in
Arts and after graduating in 1982, completed her MBA and Cost Accountancy. She did her
Masters in Management Studies (Finance) from the Jamnalal Bajaj Institute of Management
Studies, Mumbai and topped her batch and received the Wockhardt Gold Medal for
Excellence in Management Studies. In Cost Accountancy, she received the J. N. Bose Gold
Medal for highest marks in that year.
BOARD OF DIRECTORS
Mr. A Murugappan
Mr. A Murugappan
Mr.Gopakumar
MANAGEMENT TEAM
In order to assist/provide corporate clients and institutional investors with investment banking
services in the United States of America, ICICI Securities has set up two subsidiaries namely,
ICICI Securities Holdings Inc and ICICI Securities Inc, ICICI Securities Inc, has become the
registered broker dealer with the National Association of Securities Dealers Inc, empowering
it to engage in a variety of securities transactions in the U.S. market.
ICICI Brokerage Services Limited, a member of the National Stock Exchange of India
Limited, is the domestic broking subsidiary of ICICI Securities. ICICI Securities Ltd is the
largest equity house in the country providing end-to-end solutions (including web-based
services) through the largest non-banking distribution channel so as to fulfill all the diverse
needs of retail and corporate customers. ICICI Securities (I-Sec) has a dominant position in
its core segments of its operations - Corporate Finance including Equity Capital Markets
Advisory Services, Institutional Equities, Retail and Financial Product Distribution.
With a full-service portfolio, a roster of blue-chip clients and performance second to none,
we have a formidable reputation within the industry. Today ICICI Securities is among the
leading Financial Institutions both on the institutional as well as retail side.
Headquartered in Mumbai, I-Sec operates out of several locations in India. ICICI Securities
Inc.,the step-down wholly owned US subsidiary of the company is a member of the Financial
Regulatory Authority (FINRA). ICICI Securities Inc. activities include Dealing in Securities
and Corporate Advisory Services in the United States. ICICI Securities Inc. is also registered
with the Monetary Authority of Singapore (MAS) and operates
a branch office in Singapore.
Institutional
• ICICI Securities is awarded as the Best Investment Bank 2008 by Global Finance Magazine
• The Corporate Finance group also was awarded a runner-up Best Merchant Banker by
Outlook Money in 2007.
• ICICI Securities (I-Sec) topped the Prime Database League Tables 2007 for money raised
through IPOs/FPOs.
• The equities team was adjudged the 'Best Indian Brokerage House-2003' by Asia money.
Retail
• CMO Asia Awards for Excellence in Branding and Marketing -
Brand Leadership Award (overall)
'Campaign of the Year' for the Trade Racer Campaign
Brand Excellence in Banking and Financial Services for the store format
Award for Brand Excellence in the Internet Business
• Frost and Sullivan Award for Customer Service Leadership
• ICICIdirect wins the prestigious Outlook Money - India's Best e-Brokerage House for
2009.
• ICICIdirect, the neighborhood financial superstore won the prestigious Franchise India
`Service Retailer of the Year 2008 award.
• ICICIdirect wins the prestigious Outlook Money - India's Best e-Brokerage House for
2008.
• ICICIdirect been winning the prestigious Outlook Money - India's Best e-Brokerage House
for 2003-2004, 2004-2005, 2006-2007, 2007-2008 and 2009 - 2010
• ICICIdirect has also won the CNBC AWAAZ Consumer Award for the Most Preferred
Brand of Financial Advisory Services.
• Best Broker - Web 18 Genius of the Web Awards 2007
• Franchisor of the year award 2009
• Retail concept of the year awards 2009.
PRODUCT PROFILE
ICICIdirect.com allows the customers various options while trading in the following
businesses:
Products Subparts
EQUITIES Cash
Margin
Margin Plus
BTST
2. There is vast competition in the market and ICICI also feeling the heat of that. Now they
required to maintain their profitability.
DOCUMENTATION
1. Cheque :
(i) Cheque required of Rs. 500 (for investment a/c)
(ii) Rs. 975 (for DMAT a/c – if person is not salaried).
(iii)Rs. 250 (for DMAT a/c – if person is salaried along with salary proof )
2. PAN Card (mandatory)
3. 2 Passport size photo
4. Address proof: - Passport, Driving licence, Bank Statement, Telephone Bill (only
landline), Electricity bill.
5. If ICICI a/c holder then no proof is required.
6. Domicile proof can be given along with DL.
7. Ration card is not considered as address proof.
PROJECT
PROFILE
CAPITAL MARKET SCENARIO
The stock market in India dates back to the 18 th century when the East India Company was ruling
the roost in the country and was perhaps the most dominant and powerful institution and its
securities were traded. The securities trading were done in an unorganized form at Bombay and
Calcutta in early 19th century. The decade of 90’s has witnessed several changes in reformation of
capital market. Automation, transparency,. Strict surveillance, depository system, on line trading,
investor protection, new rules and regulations, etc. are some of the activities which only reflect
the growth of Indian capital market. By any reckoning Indian corporate sector has grown very
significantly in the last couple of decades whether to look at it in terms of public and private
limited companies, their share capitalization, their sales turnover or their contribution to capital
formation with this came the legislation of SEBI to act as a regulatory body to protect investors.
Deals with 'new securities', that is, securities which were not previously available and
are offered to the investing public for the first time. It is the market for raising fresh
capital in the form of shares and debentures. It provides the issuing company with
additional funds for starting a new enterprise or for either expansion or diversification
of an existing one, and thus its contribution to company financing is direct. The new
offerings by the companies are made either as an initial public offering (IPO) or rights
issue.
Features:
It is the market for buying and selling securities of the existing companies. Under this,
securities are traded after being initially offered to the public in the primary market
and/or listed on the stock exchange. The stock exchanges are the exclusive centre’s
for trading of securities. It is a sensitive barometer and reflects the trends in the
economy through fluctuations in the prices of various securities. It been defined as, "a
body of individuals, whether incorporated or not, constituted for the purpose of
assisting, regulating and controlling the business of buying, selling and dealing in
securities". Listing on stock exchanges enables the shareholders to monitor the
movement of the share prices in an effective manner. This assists those to take
prudent decisions on whether to retain their holdings or sell off or even accumulate
further. However, to list the securities on a stock exchange, the issuing company has
to go through set norms and procedures.
Features:
It includes:
• Capital markets provide the lubricant between investors and those needing to raise capital.
• Capital markets create price transparency and liquidity. They provide a safe platform for a
wide range of investors —including commercial and investment banks, insurance companies,
pension funds, mutual funds, and retail investors—to hedge and speculate.
• The secondary market gives important pricing information that permits efficient use of
limited capital.
• Prices for shares in capital markets can be very volatile. Their value depends on a number of
external factors over which the investor has no control.
• Different shares can have different levels of liquidity, i.e. demand from buyers and sellers.
SPN is a secured debenture redeemable at premium issued along with a detachable warrant,
redeemable after a notice period, say four to seven years. The warrants attached to SPN gives
the holder the right to apply and get allotted equity shares; provided the SPN is fully paid.
There is a lock-in period for SPN during which no interest will be paid for an invested
amount. The SPN holder has an option to sell back the SPN to the company at par value after
the lock in period. If the holder exercises this option, no interest/ premium will be paid on
redemption.
Ex-TISCO issued warrants for the first time in India in the year 1992 to raise 1212 crores.
A bond that sells at a significant discount from par value and has no coupon rate or lower
coupon rate than the prevailing rates of fixed-income securities with a similar risk profile.
They are designed to meet the long term funds requirements of the issuer and investors who
are not looking for immediate return and can be sold with a long maturity of 25-30 years at a
deep discount on the face value of debentures.
Ex-IDBI deep discount bonds for Rs 1 lac repayable after 25 years were sold at a discount
price of Rs. 2,700.
A warrant is a security issued by company entitling the holder to buy a given number of
shares of stock at a stipulated price during a specified period. These warrants are separately
registered with the stock exchanges and traded separately. Warrants are frequently attached to
bonds or preferred stock as a sweetener, allowing the issuer to pay lower interest rates or
dividends.
Ex-Essar Gujarat, Ranbaxy, Reliance issue this type of instrument.
This is a debt instrument that is fully converted over a specified period into equity shares.
The conversion can be in one or several phases. When the instrument is a pure debt
instrument, interest is paid to the investor. After conversion, interest payments cease on the
portion that is converted. If project finance is raised through an FCD issue, the investor can
earn interest even when the project is under implementation. Once the project is operational,
the investor can participate in the profits through share price appreciation and dividend
payments
They are fully convertible cumulative preference shares. This instrument is divided into 2
parts namely Part A & Part B. Part A is convertible into equity shares automatically
/compulsorily on date of allotment without any application by the allottee.
Part B is redeemed at par or converted into equity after a lock in period at the option of the
investor, at a price 30% lower than the average market price.
The phrase `sweat equity' refers to equity shares given to the company's employees on
favorable terms, in recognition of their work. Sweat equity usually takes the form of giving
options to employees to buy shares of the company, so they become part owners and
participate in the profits, apart from earning salary.
MBS is a type of asset-backed security, basically a debt obligation that represents a claim on
the cash flows from mortgage loans, most commonly on residential property.
Mortgagebacked securities represent claims and derive their ultimate values from the
principal and payments on the loans in the pool. These payments can be further broken down
into different classes of securities, depending on the riskiness of different mortgages as they
are classified under the MBS.
8) PARTICIPATORY NOTES
Also referred to as "P-Notes" Financial instruments used by investors or hedge funds that are
not registered with the Securities and Exchange Board of India to invest in Indian securities.
Indian-based brokerages buy India-based securities and then issue participatory notes to
foreign investors. Any dividends or capital gains collected from the underlying securities go
back to the investors. These are issued by FIIs to entities that want to invest in the Indian
stock market but do not want to register themselves with the SEBI.
9) FUND OF FUNDS
An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much
like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the
same price as the net asset value of its underlying assets over the course of the trading day.
Most ETFs track an index, such as the S&P 500 or MSCI EAFE. ETFs may be attractive as
investments because of their low costs, tax efficiency, and stock-like features, and single
security can track the performance of a growing number of different index funds (currently
the NSE Nifty)
Gold Exchange Traded Fund (ETF) is a financial instrument like a mutual fund whose value
depends on the price of gold. In most cases, the price of one unit of gold ETF approximately
reflects the price of 1 gram of gold. As the price of gold rises, the price of the
ETF is also expected to rise by the same amount. Gold exchange-traded funds are traded on
the major stock exchanges including Zurich, Mumbai, London, Paris and New York There
are also closed-end funds (CEF's) and exchange-traded notes (ETN's) that aim to track the
gold price.
MEANING OF RISK
A person making an investment expects to get some return from the investment in the future.
But, as future is uncertain, so is the future expected return. It is this uncertainty associated
with the returns from an investment that introduces risk into an investment.
We can distinguish between the expected return and the realised return from an investment.
The expected return is the uncertain future return that an investor expects to get from his
investment. The realised return, on the contrary, is the certain return that an investor has
actually obtained from his investment at the end of the holding period. The investor makes
the investment decision based on the expected return from the investment. The actual return
realised from the investment may not correspond to the expected return. This possibility of
variation of the actual return from the expected return is termed risk. Where realisations
correspond to expectations exactly, there would be no risk. Risk arises where there is a
possibility of variation between expectations and realisations with regard to an investment.
Thus, risk can be defined in terms of variability of returns. “Risk is the potential for
variability in returns.” An investment whose returns are fairly stable is considered to be a
low-risk investment, whereas an investment whose returns fluctuate significantly is
considered to be a high-risk investment. Equity shares whose returns are likely to fluctuate
widely are considered risky investments. Government securities whose returns are fairly
stable are considered to possess low-risk.
DEFINITION OF RISK
Risk can be defined as “Possibility of suffering losses”. T is the chance of something
happening that will have an impact upon objectives. It is measured in terms of consequences
and likelihood.
Risk can also be defined as “The chance that an investment’s actual return will be different
than expected” this includes the possibility of losing some or all of the original investments.”
ELEMENTS OF RISK
The essence of risk in an investment is the variation in its returns. This variation in returns is
caused by a number of factors. These factors which produce variations in the returns from an
investment constitute the elements of risk.
The elements of risk may be broadly classified into two groups. The first group comprises
factors that are external to a company and affect a large number of securities simultaneously.
These are mostly uncontrollable in nature. The second group includes those factors which are
internal to companies and affect only those particular companies. These are controllable to a
great extent. The risk produced by the first group of factors is known as systematic risk, and
that produced by the second group is known as unsystematic risk.
The total variability in returns of a security represents the total risk of that security.
Systematic risk and unsystematic risk are the two components of total risk. Thus,
I. SYSTEMATIC RISK:
As the society is dynamic, changes occur in the economic, political and social systems
constantly. These changes have an influence on the performance of companies and thereby on
their stock prices. But these changes affect all companies and all securities in varying
degrees. For example, economic and political instability adversely affects all industries and
companies. When an economy moves into recession, corporate profits will shift downwards
and stock prices of most companies may decline. Thus, the impact of economic, political and
social changes is system-wide and that portion of total variability in security returns caused
by such system-wide factors is referred to as systematic risk. Systematic risk is further
subdivided into interest rate risk, market risk, and purchasing power risk.
➢ Market risk
Interest rate risk is a type of systematic risk that particularly affects debt securities like bonds
and debentures. A bond or debenture normally has a fixed coupon rate of interest. The issuing
company pays interest to the bond holder at this coupon rate. A bond is normally issued with
a coupon rate which is equal to the interest rate prevailing in the market at the time of issue.
Subsequent to the issue, the market interest rate may change but the coupon rate remains
constant till the maturity of the instrument. The change in market interest rate relative to the
coupon rate of a bond causes changes in its market price.
A bond having a face value of Rs. 100 issued with a coupon rate of ten per cent when the
market interest rate is also ten per cent will have a market price of Rs. 100. If, subsequent to
the issue, the FII interest rate moves up to 12.5 per cent, no investor will buy the bond with
ten per cent coupon interest rate unless the holder of the bond reduced the price to Rs. 80.
When the price is reduced to Rs. 80, the purchaser of the bond gets interest of Rs. ten on an
investment of Rs. 80 which is equivalent to a return of 12.5 per cent which is the same as the
prevailing market interest rate.
Thus, we see that as the market interest rate moves up in relation to the coupon interest rate,
the market price of the bond declines. Similarly, the market price of the bond would move up
when there is a drop in market interest rate compared to the coupon rate. In other words, the
market price of bonds and debentures is inversely related to the market interest rates. As a
result, the market price of debt securities fluctuates in response to variations in the market
interest rates. This variation in bond prices caused due to the variations in interest rates is
known as interest rate risk.
Many companies use borrowed funds to finance their operation. When interest rates move up,
companies using borrowed funds have to make higher interest payments. This leads to lower
earnings, dividends and share prices. On the contrary, lower interest rates may push up
earnings and prices. Thus, we see that variations in interest rates may indirectly influence
stock prices. Interest rate risk is a systematic risk which affects bonds directly and shares
indirectly.
2) Market risk:
Market risk is a type of systematic risk that affects shares. Market prices of shares move up or
down consistently for some time periods. A general rise in share prices is referred to as a
bullish trend, whereas a general fall in share prices is referred to as a bearish In other words,
the share market alternates between the bullish phase and the bearish phase. The alternating
movements can be easily seen in the movement of share price indices such as the BSE
Sensitive Index, BSE National Index, and NSE Index etc.
Business cycles are considered to be a major determinant of the timing and extent of the bull
and bear phases of the market. This would suggest that the ups and downs in share markets
would follow the expansion and recession phase of the economy. This may be true in the long
run, but it does not sufficiently explain the short-term movements in the market.
The short-term volatility in the stock market is caused by sweeping changes in investor
expectations which are the result of investor reactions to certain tangible as well as intangible
events. The basis of the reaction may be a set of real tangible events, political, economic or
social, such as the fall of a government, drastic change in monetary policy, etc. The change in
investor expectations is usually initiated by the reaction to real events. But the reaction is
often aggravated by the intangible factor of emotional instability of investors. They tend to
act collectively and irrationally, leading to an overreaction.
The stock market is seen to be volatile. This volatility leads to variations in the returns of
investors in shares. The variation in returns caused by the volatility of the stock market is
referred to as the market risk.
3) Purchasing power risk:
Another type of systematic risk is the purchasing power risk. It refers to the variation in
investor returns caused by inflation.
Inflation results in lowering of the purchasing power of money. When’ an investor purchases
a security, he foregoes the opportunity to buy some goods or services. In other words, he is
postponing his consumption. Meanwhile, if there is inflation in the economy, the prices of
goods and services would increase and thereby the investor actually experiences a decline in
the purchasing power of his investments and the return from the investment. Let us consider a
simple example. Suppose a person lends Rs. 100 today at ten per cent interest. He would get
back Rs. 110 after one year. If during the year, the prices have increased by eight per cent,
Rs. 110 received at the end of the year will have a purchasing power of only Rs. 101.20, i.e.
92 per cent of Rs. 110. Thus, inflation causes a variation in the purchasing power of the
returns from an investment. This is known as purchasing power risk and its impact is
uniformly felt on all securities in the market and as such, is a systematic risk.
The two important sources of inflation are rising costs of production and excess demand for
goods and services in relation to their supply. They are known as cost-push and demand-pull
inflation respectively. When demand is increasing but supply cannot be increased, price of
the goods increases thereby forcing out some of the excess demand and bringing the demand
and supply into equilibrium. This phenomenon is known as demand pull inflation. Cost push
inflation occurs when the cost of production increases and this increase in cost is passed on to
the consumers by the producers through higher prices of goods.
In an inflationary economy, rational investors would include an allowance for the purchasing
power risk in their estimate of the expected rate of return from an investment. In other words,
the expected rate of return would be adjusted upwards by the estimated annual rate of
inflation.
I. UNSYSTEMATIC RISK:
The returns from a security may sometimes vary because of certain factors affecting only the
company issuing such security. Examples are raw material scarcity, labour strike, and
management inefficiency. When variability of returns occurs because of such firm—specific
factors, it is known as unsystematic risk. This risk is unique or peculiar to a company or
industry and affects it in addition to the systematic risk affecting all securities.
The unsystematic or unique risk affecting specific securities arises from two sources:
✔ The financing pattern adopted by the company. These two types of unsystematic risk
are referred to as business risk and financial risk respectively.
➢ Business risk
➢ Financial risk
1) Business risk:
This variability in EPS due to the presence of debt in the capital structure of a company is
referred to as financial risk.
Every investor invests money to receive returns. The risk/return trade-off could easily be
called the iron stomach test. Deciding what amount of risk you can take on while allowing
you to get rest at night is an investor’s most important decision. The risk/return trade-off is
the balance, an investor must decide on between the desires for the lowest possible risk for
the highest possible returns. Remember to keep in mind that low levels of uncertainty (low
risks) are associated with low potential return and high levels of uncertainty (high risks) are
associated with high potential returns. Therefore risks and return go hand in hand.
RLow
High
Risk
RISK/risk
risk
RETURN TRADE OFF
eHigh
Low return
return
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n
RESEARCH METHODOLOGY
Research problem
Risk Factors are the vital factors that are to be considered in the capital market. The interplay
of these factors on stock market requires a deep study about how these factors affect its
performance. Hence my research problem is risk factors in capital market. The study is based
on survey technique. For the purpose of the study 80 investors were picked up and their
views were solicited on different parameters.
Objectives of the research
Main objective
Every company has a particular goal. A study without objectives cannot reach the destination.
My project work programme was also directed to some particular targets and the main
objective of the study is -
Secondary objective
Scope of study
Globalization of the financial market has led to a manifold increase in investment. New
markets have been opened; new instruments have been developed; and new services have
been launched. Besides, a number of opportunities and challenges have also been thrown
open.
Research design
A research design is the basic framework which provides guidelines or the rest of research
process. It is a map or blueprint according to which the research is to be conducted. It
specifies the method of data collection as well as other features of study.
Place of study-
The study is carried out with the customers of ICICI securities at Udaipur city.
Type of research
It is a type of DESCRIPTIVE RESEARCH.
Method of research
The research is conducted by doing surveys with help of questionnaires and direct interview.
Research instrument
The basic research instrument used for my study is an interview schedule consisting 12
questions designed and framed in a set format.
Sampling plan
Sampling method
Customers are chosen as respondents on the basis of simple random sampling in which each
respondent have equal chance of selection.
Sample size
Sample size is 80.
Sampling unit
Sampling unit is customers of “ICICI securities ltd”
Initial field work has done for pre testing tools for data collection. The data is collected
through the direct interaction with the ICICI’s customers through questionnaires answered by
them. Fifty customers of ICICI were randomly chosen for the purpose of the study in
Udaipur.
To analyse and interpret the data statistical tools like tables, graphs & pie charts are used.
What all data was collected from customers is used to obtain material information. The
statistical techniques of classifying and tabulating of data was used to interpret useful data.
All questions are analysed and some of the conclusions are drawn out and on the basis of
lacunae in the system suggestions are made.
Report formation
It is the last stage of the project formulation. The collected data which was analysed and
interpreted is now systematically arranged and henceforth printed in the form of a report in
clear and understandable format.
ANALYSIS
AND
INTERPRETATION
Q.1) What percent of your total income is invested in different investment avenues?
Table – 1
From the above chart it is observed that 7.5% investors from the selected sample invest upto
10% of their earnings, 83.75% people invest 10 – 20% of their earnings, 7.5% invest 20 –
30% of their earnings, and rest 1.25% invest above 30% of their earnings in different
investment avenues.
Q. 2) Among the following avenues which would you prefer to invest in?
Table – 2
Interpretation:
As per the survey conducted 20% investors choose equity, 56.25% choose fixed income,
7.5% choose commodities, 12.5% choose real estate, and rest 3.75% choose others
investment avenues as their first priority. Thus it can be observed that large number of
investors still prefer fixed income securities as an investment option. They do not want to
take any risk. After fixed income securities investors give priority to equity and real estate.
Thus it can be concluded that still large number of investors are conservative in nature.
Q. 3) what percent of your total investment is in equity?
Table – 3
From the above chart it is observed that 37.5% investors invest upto 10% of their total
investments only in equity, 50% people invest 10 – 20%, and 12.5% invest 20 – 30% in
equity respectively. It is also observed that people do not invest or very few invest above
30% of their total investments in equity. It can be concluded that out of their total
investments people invest less portion in equity because returns in equity are not fixed.
Probably they invest major portion of their total investments in some other fixed or less risky
avenues.
Q. 4) What kind of returns have you generated on equity?
Table – 4
Interpretation:
According to the survey conducted 37.5% generated upto 10%, 56.25% generated 10 – 20%,
6.25% generated 20 – 30% returns in equity. It is also observed that none has generated
returns above 30%. This depicts that returns in equity are average.
Q.5) Are you satisfied with the returns in your equity investments?
Table – 5
Attributes Response Percentage
Yes 26 32.5
No 54 67.5
Total 80 100
Interpretation:
From the above chart it can be observed that 32.5% of the surveyed sample is satisfied with
the returns which they receive from equity, while 67.5% of the surveyed sample was not
satisfied with the returns from equity.
Q. 6) Do you consult financial advisors of ICICI before you make your investment?
Table – 6
Interpretation:
From the above chart it can be observed that 57.5% of the surveyed sample consults financial
advisors of ICICI before making investment decision, while 42.5% of the surveyed sample
either take investment decision on their own or consult other brokerage houses.
Q. 7) Are you satisfied with the services of icicidirect.com?
Table – 7
Interpretation:
According to survey 62.5% of customers are satisfied with the services of ICICI Direct .com
and 37.5% are not satisfied with its services. Hence it is observed that some investors are not
satisfied with the services of ICICI direct.com probably due to their high charges.
Table – 8
Table – 9
Interpretation:
According to the survey conducted 8.75% people consult news channels, 50% people consult
financial advisors, 6.25% consult friends and relatives, and rest 35% consult other means
while selecting stocks for investments.
Table – 10
Interpretation:
According to the survey conducted 10% investors invest in IT, 10% invest in metals, 16.25%
invest in automobiles, 37.5% invest in banking and 26.25% invest in other sectors. Hence it
can be observed that investors prefer banking sector most because in current scenario the
returns of banking sector are high.
Q. 11) Your purpose behind making investment?
Table – 11
Interpretation:
According to the survey conducted 8.75% investor invest for safety, 7.5% for liquidity,
26.25% for tax planning, and rest 57.5% for returns. Thus it can be concluded that the main
aim of large group of investors behind investing is to earn returns. Then average number of
investor invests for getting tax exemption. Then the rest segment of investors invests for
safety and liquidity.
Table – 12
Attributes Response Percentage
Yes 58 72.5
No 22 27.5
Total 80 100
Interpretation:
According to the survey conducted 72.5% of the investors follow capital market regularly
while 27.5% of the investors do not follow capital markets regularly.
Q. 13) Has the current trend of index on stock exchange added to your confidence in equity
as an investment option?
Table – 13
Interpretation:
According to the survey conducted the current trend of index in stock exchange has boost the
morale of investors. 75% of the investors are satisfied with the current trend of stock
exchange while 25% investors are not affected with the current trend of stock exchange.
CONCLUSION
Working with ICICI securities was really a great experience. From the study conducted
following conclusions can be drawn:
1) Investors consider that capital market is not predictable and that is the biggest risk. It
is a fluctuating market hence it cannot be trusted.
2) Investors invest large portion of their total amount to be invested in fixed income
avenues and less portion in equity because the returns in equity market are not sure
and it is a risky investment.
3) Also large numbers of investors choose fixed income avenues as their first priority to
invest in because they are safer investment avenues as compared to other investment
avenues. They contain less or no risk.
5) The brokerage charges of ICICI are a bit high so if it reduces its brokerage charges to
some extent then it will be able to retain more number of customers.
LIMITATIONS
➢ Since sample size is only 80, which is not a true representative of the population as a
whole.
➢ Since segment wise investors is not available in ICICI Securities Ltd. Overall concept
is taken for the study.
➢ Information is partly based on secondary data and hence the authentic of the study can
be visualized and is measurable.
➢ Level of accuracy of the results of research is restricted to the accuracy level with
which the customers have given their answers and the accuracy level of the answers
cannot be predicted.
QUESTIONAIRE
QUESTIONAIRE
PERSONAL INFORMATION:
NAME : _________________________________________________________
ADDRESS : _________________________________________________________
_________________________________________________________
AGE : 20 – 30 30 – 40
40 – 50 50 – 60
INVESTMENT
1, 00,000 – 1, 50,000 ABOVE 1, 50,000 __
_________________________________________________________________________
e) Others
Q 3) What percent of your total investment is in equity?
a) Yes b) No
Ans) ______________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Q 7) Do you consult the financial advisors of ICICI before you make your investment?
a) Yes b) No
a) Yes b) No
d) Others
a) IT b) Metals
c) Automobiles d) Banking
e) others
a) Safety b) Liquidity
a) Yes b) No
Q 14) What do you suggest can be done to minimise risk in equity investment?
Ans)
_______________________________________________________________________
______________________________________________________________________
_
______________________________________________________________________
_
Q 15) Has the current trend of index on stock exchange added to your confidence in equity as an
investment option?
a) Yes b) No
BIBLIOGRAPHY
www.investopedia.com
www.moneycontrol.com
www.icicidirect.com
www.cdslindia.com/FAQ/demat.htm
www.nsdl.co.in/services/demat.php
www.sebi.gov.in/faq/faqdemat.html