final report interns-harminder

8/8/2019 Final Report Interns-harminder

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A REPORT

ONINVESTORS RISK

PROFILING AND ASSET

ALLOCATION


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A REPORT

ON

INVESTORS RISK PROFILING

AND ASSET ALLOCATION

SUBMITTED TO:Prof. JASBIR SINGH MATHARU

SUBMITTED BY:

HARMINDER SINGH

P/MN/R/08/049


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EDELWEISS BROKING LTD DATE OF SUBMISSION

TABLE OF CONTENTS

Content Page no.

Authorization 04

Acknowledgment 05

Abstract 06

Introduction to Edelweiss 07

Products and Services 06Introduction to Stock Market 12

Main Text

Household savings 13

Asset Allocation 21Methodology adopted and Learning 24

Collection of Primary Data 24

Collection of Secondary Data 24

Key Findings From Data 26

Client visits and Presentations 38

Customer Relationship 41

Team Handling and Training 41

Recommendations 42Conclusions 44

References 45

Questionnaire 46


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AUTHORISATION

This report is submitted as partial fulfilment of the requirements of MBA Program of ISB&M. Thus

it has been authorised by the Company guide to share the information regarding Edelweiss Broking

Limited and snapshots of website of the company. The analysis of the data done for the purpose of

this project, has been shared with due permission of the company guide. All the above mentioned

data has been used for the purpose of preparation of this report and thus it will not be used for any

other purpose. This report should not be used by any person not authorised to do so.


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ACKNOWLEDGEMENT

It gives me great satisfaction on completion of Summer Internship Project entitled Investors Risk

Profiling and Asset Allocation.

On completion of this project, I would like to thank my company guide, Mr. Gyan Chand Jaiswal,

Area Sales Manager, Edelweiss Broking Ltd, Kolkata and my faculty guide, Prof. Jasbir Singh

Matharu, ISB&M, Kolkata for their constant support and cooperation during the course of thisproject.

I have received encouragement from their end which gives me immense pleasure when i am on the

verge of completing my 14 weeks of internship in Edelweiss Broking Ltd.

I would also like to thankMr. Akshay Puri, Regional Head, Edelweiss Broking Ltd, for giving me

an opportunity to work in the organization and help in fulfilling the objectives of the project and all

the valuable lessons that i have learnt on the way.

Last but not the least I would like to thank my colleagues in Edelweiss Broking Ltd, who have also

contributed in the project by giving me valuable feedback from time to time.

Data Research has been both primary and secondary. I would like to thank all the respondents who

have taken time to answer questions during the surveys undertaken at various fields.


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ABSTRACT

When I was young I thought money was the most important thing in life: now that I

am old I know that it is

- Oscar Wilde

Edelweiss Capital Limited is a Mumbai based company which started its operation in the year 1995.

The mission statement of the company is Ideas create, values protect. It provides services like

investment banking, institutional equities, private client broking, asset management, wealth

management, investment advisory services, treasury, insurance broking, wholesale financing,

and mutual funds. The major clients are corporations, institutional investors, and high net-worth

individuals.

This Project is a comprehensive study of Investors Risk Profiling and Asset Allocation. It talks

about studying the method of identifying customers investment needs and suggesting them suitable

financial products, thus the sales of various financial products of the company and analyze the

various distribution strategies exploited by the firm. The project also deals with customer

relationship; it gives a picture about how to build a good relationship with the clients who bring

business for the company. A comparative analysis of Edelweiss with other broking firms has also

been done.

As an intern, I have carried out research to track investment behavior of Kolkata based investors. I

went for the field work, talked to customers and tracked their investment pattern to help them

suggest the kind of financial product they should use according to theirrisk appetite. Adding to

this, I have communicated with different types of customers through various media, includingclient

visits, who fall under the sample space for this project. My job was to advice them to take the

suitable products offered by the company, depending on certain criteria, in order to make investing

easier for them. I have also worked as a part of sales force of the company and soldDemat

account. I have handled the team of 10 people who work on acquiring new clients for the company.I have also handled the profile ofCustomer Relationship Management. I have talked to existing

HNI clients of the company followed by client visits. In the visits the main focus was to convince the

clients to do more business with the company and telling them about the benefits provided by the

company. So tracking the transformation was really interesting and worth appreciating.

INTRODUCTION TO EDELWEISS BROKING LTD.


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EDELWEISS GROUP started its journey in Mumbai in the year 1995, by two IIM graduates,

Mr. Rashesh Shah and Mr. Venkat Ramaswami.

Ideas create, values protect

is the slogan and depict the mission statement of Edelweiss group.

Our Reputation and Image is more important than any financial reward. Reputation is hard to

build and even harder to rebuild. Reputation will be impacted by our ability to think for our

clients, maintain confidentiality and by our adherence to our value system.

Mr.Rashesh Shah

Mr. Venkat Ramaswami

The Logo: Edelweiss, a rare flower found in Switzerland. A graphic flower that represents ideas!

Around it, the protective arms of the letter E:

Edelweiss believes ideas create wealth, but values protect it.

It is the practice of this core thought that has led to Edelweiss becoming one of the leading

financial services company in India.Its current businesses include:

Investment Banking,

Securities Broking, and

Investment Management.

Edelweiss also provides a wide range of services to:

Corporations,

Institutional Investors and

High Net-Worth Individuals.

Headquarter based in Mumbai, India.


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KEY PEOPLE: Chairman & Founder: Mr. Rashesh Shah (IIM Graduate 1995 batch) and

Venkat Ramaswami.

Designated director: Naresh Kothari.

Directors: Rashesh Shah, Venkat Ramaswami and Hiralal Chopra.

Type of industry: investment banking, brokerage and asset management firm.

Total market capitalization: About Rs. 13,000 cr.

Total number of employees: 645

Edelweiss was previously into niche marketing only, dealing with the High Net Worth

Individuals (HNWI) clients only. Looking at the current market scenario, company is targeting the

Retail Segment with its new Online Trading Portal.

The company sight the need for entering into the retail segment by seeing the saturation of

the niche market and the exploration of the areas which was left untouched by the organization. The

idea behind this is toReposition the company from niche marketer to mass marketer. The brand

repositioning of the company is done in order to withstand the current market scenario (Global

Economic Crisis).

The product or the service that the company has come up with is thePrepaid Broking Plan

for both the retail as well as HNI customers. Basically every broking firm offers dematerialization

and the trading account with some charges associated to it and the main source of income is the

brokerage that is collected on every transaction made by the customer, which is a continues source

of income.

The prepaid account is like mobile cash card which has to be recharge first and then can be

used for a year. The client has to pay the brokerage in advance which will be deducted on every

transaction. The client can recharge the account as the balance gets over before the validity expires.

PRODUCTS AND SERVICES:


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a) Investment Banking

b) Institutional investment

c) Asset management

d) Wealth management

e) Private client brokerage

f) Insurance brokerage

g) Wholesale financing

Investment Banking:

AnInvestment Bankis a financial institution that deals with raising capital, trading in

securities and managing corporate mergers and acquisitions. Investment banks profit from

companies and governments by raising money through issuing and selling securities in the capital

markets (both equity, bond) and insuring bonds (selling credit default swaps), as well as providing

advice on transactions such as mergers and acquisitions.

At Edelweiss Securities Ltd, Investment Banking business is dedicated to providing

corporations, entrepreneurs and investors, the highest quality independent financial advice and

transaction execution.

Institutional Investment:

Institutional investors are organizations which pool large sums of money and invest those

sums in companies. They include banks, insurance companies, retirement or pension funds, hedgefunds and mutual funds. Their role in the economy is to act as highly specialized investors on behalf

of others.

In our approach lies our difference. In a short span of six years,Edelweiss Capitals

Institutional Equities Business (IE) has become one of the top five domestic brokerage

houses and top three derivatives desks.

Edelweiss is the only brokerage on the Street with a quant desk that provides a wide product

range, servicing all investor categories.

ItsInnovative Mindset, Unparalleled Research, Agile Sales Teams, and Intensive Execution

Systems have enabled it to relentlessly service its clients in newer and different ways.

Asset Management or Investment management:


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Investment managementis the professional management of various securities (shares, bonds

etc.) and assets (e.g., real estate), to meet specified investment goals for the benefit of the investors.

Investors may be institutions (insurance companies, pension funds, corporations etc.) or private

investors (both directly via investment contracts and more commonly via collective investment

schemes e.g. mutual funds or Exchange Traded Funds).

Private client brokerage:

ThePrivate Client Services Group

(PCG) at Edelweiss is focused on

providing products, strategies and

services to High Net worth Individuals

and Corporate Clients. It has geographic

reach through Branches, Channel

Partners & Investment Consultants in

over19 locations in India. The PCG

team has highly trained equity

professionals, who act as clients Equity Advisor. Its ESL Equity Advisor proactively helps you take

informed investment decisions and build a healthy portfolio.

INVESTORS OF EDELWEISS LIMITED


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INTRODUCTION TO THE INDIAN STOCK MARKET


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An Insight:

The Indian broking industry is one of the oldest trading industries that have been around even

before the establishment of the BSE in 1875. Despite passing through a number of changes in the

post Liberalization period, the industry has found its way towards sustainable growth.

History of broking house in India:

Stock markets refer to a market place where investors can buy and sell stocks. The price at

which each buying and selling transaction takes is determined by the market forces (i.e. demand

and supply for a particular stock).

In earlier times, buyers and sellers used to assemble at Stock Exchanges to make a transaction

but now with the dawn of IT, most of the operations are done electronically and the stock markets

have become almost paperless. Now, investors

do not have to gather at the Exchanges, and can

trade freely from their home or office over the phone or through Internet.

A broker is aperson or firm that facilitates trades between customers. A broker acts as a gobetween and, in doing so, does not assume any risk for the trade.

The broker does, however, charge a commission. A broking firm acts as an intermediary

between NSE and Client.

NSE

Broker

Client


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In India, the two major broking indexes are:

BSE

The BSE Index, SENSEX, is India's first stock market index that enjoys

an iconic stature, and is tracked worldwide. It is an index of 30 stocks

representing 12 major sectors. The SENSEX is constructed on a 'free-

float' methodology, and is sensitive to market sentiments and market

realities. Apart from the SENSEX, BSE offers 21 indices, including 12

sectoral indices.

NSE

On its recognition as a stock exchange under the Securities Contracts

(Regulation) Act, 1956 in April 1993, NSE commenced operations in the

Wholesale Debt Market (WDM) segment in June 1994. The Capital

Market (Equities) segment commenced operations in November 1994 and

operations in Derivatives segment commenced in June 2000.


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MAIN TEXT

Before delving into the studies and findings I would like to introduce the project terminologies on

the basis of which my project is based on.

What is Household savings?

Household saving is defined in the OECD's Economic Outlook as household sector saving as a per

cent of household sector disposable income.

The Office for National Statistics compiles the household saving ratio which is household saving

expressed as a percentage of total resources which is the sum of gross household disposable income

and the adjustment for the change in net equity of households in pension funds.

An Overview: Savings is the difference between Income and Expenditure. A high level of savings

helps the economy to progress on a continuous growth path since Investment is mainly financed out

of savings. Given the importance of savings there have been extensive studies on the behavioral and

other factors, which influence savings

The Former Patterns of Indian Household Savings: Gross Domestic Savings in India has shown

a steady and substantial rise from the 1950s along with the rise in income. As per Indian National

Accounts, Gross Domestic Savings includes current transfers from Indian emigrants and net factor

income from abroad.

The overall savings period in India is roughly divided into five phases based on the careful

identification of the distinctive phases starting from the year 1950.The household sector which is

comprised of the pure households, non corporate enterprises in agriculture, trade and industry and

private non-profit making trusts, has retained a high savings rate in comparison to public sector

savings and private corporate sector savings in all the phases.

The savings rate overall and the household savings rate took a sharp upturn in the 1970s, marginally

increased thereafter, and then again took an upturn from the 1980s. The first upturn is attributed to

the decline in the share of agriculture in GDP and the apparent high propensity to consume of the

agricultural sector, a theory yet to be corroborated by evidence. Another school of thought suggests


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that the rapid expansion of banks, after their nationalization in 1969, contributed to increased

savings of people by lowering the transaction costs of saving.

Another contributing factor was the remittances from the Indian expatriates from the Gulf countries.

Moreover, the Green Revolution in the late 1960s substantially contributed to increase in rural

incomes. Though it is difficult to quantify, a certain spillover of the increased income into domestic

savings cannot be denied.

The second expansion from the mid 1980s to present can be attributed to the Economic Reforms

initiated in 1985 and thereafter accentuated from 1991. 1984-85 to 1995-96 was a remarkable phase

of growth of the Indian economy. The jump in savings rate only substantiated the hypotheses that,

economic liberalization did promote savings through economic growth.

Factors Affecting the Indian Household Savings: The Keynesian theory explains that the prime

determinant of saving is income that has withstood the test of time, while empirical evidence does

not corroborate the ability of other variables like interest rates, inflation and tax rates to influence

savings.

A. Income: Gross Domestic Savings in India has shown a steady and substantial rise from the

1950s along with the rise in income (GDP). There is a correlation between the rise in

income and the rise in national savings. This proves that the Keynesian theory of income

being the primary determinant of saving holds true in India also. Moreover, it was

permanent income, which was the critical determining factor rather than transitory income.

In the initial stages of development, the level of income is an important determinant of the

capacity to save.

B. Economic Liberalization GDP Growth and Savings Rate: Economic liberalization

measures initiated in mid 1980s (accentuated from 1991) had contributed to GDP growth

rate (average growth rate 5.6%) and the savings rate (17%). This was the period 1984-85 to

1995-96. From 1996-97 to 2003-04, we observe that the GDP has continued to rise, albeit at

a fluctuating rate, but the savings rate has continued to rise regularly, without any

fluctuations. This only enforces the fact that income is the prime determinant of savings and

Economic liberalization helps to raise savings by raising income. In fact from independence

to mid 1980s the Indian economy was characterized by a slow growth rate of 3.5% p.a.

which changed from the mid 1980s.


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C. Interest rates: Financial liberalization initiated in the 1980s gathered momentum after 1991.

Presently, all interest rates, except those on all small savings schemes of Post Office, Provident

funds, Government of India Bonds and schemes for Senior Citizens (the instruments with sovereign

guarantee), are market determined. In post 1991 period there has been a steady decline in the

interest rates in the economy. But overall household savings increased from 17% of GDP in the

1980s to 25.5% of GDP in 2002-03 and 26.6% of GDP in 2003-04. The transformation from an

inefficient and sheltered economy to an efficient and a market determined economy have made

people more insecure and prompted them to accumulate savings to guard against future job losses,

giving limited importance to interest rates. The insecurity prompted to increase the savings rate.

Another fact considered by retired people who were pensioners was that since interest rates had

gone down to maintain the same income flow they had increased the volume of savings, to the

extent possible So it can be concluded that interest rates do not influence savings much.

D. Tax incentives: The Government of India, till March 2005, offered a slew of tax incentives. All

these tax rebates were available from instruments backed up by State Guarantee, barring ICICI

Bank. People invested heavily in these instruments because of the double benefits of tax avoidance

(not evasion) and State Cover. The funds raised from these instruments continued to feed the ever-

yawning Fiscal Deficit of the Government of India. The underlying logic behind all these changes is

to make it compulsory for people to arrange for their own retirement needs (which the bankrupt

exchequer cannot provide) in line with the global trends and gently nudge people towards the Stock

Market.

Recent Trends in Indian Household Savings:

The primary data which is market survey in my case as well as secondary data has helped me derive

the findings on the household savings of the Kolkata based investors who form the part of my

study.

An economic climate that favours the concept of spending beyond means, creating an

environment that pampers the consumer, should have resulted in a drastic reduction in household

savings. But the last decades savings figures show that Indian households have proved otherwise.

Indian household seems to secure its interest through adequate and prudent savings in a most

conservative manner, notwithstanding the systematic discouraging policy initiatives, aping the

West, to compel the household to blow the money. In the last decade, the interest rates on savings


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down to a third in the decade to Rs 5,699 crore in 2003-04. These include investment through

mutual funds (with the exception of UTI).

The risk-averse household has kept away from this avenue, although, the Comptroller of Capital

Issues has been replaced by SEBI (Securities and Exchange Board of India), and from 1993-94 on,

the capital market regulator has been framing regulations on various issues connected with capital

market. As the regulation became tougher and more stringent, investment came down, aggravated

by the investing community taking a beating with such mega scandals such as, Harshad Metha

and Ketan Parekh. Similarly, after the crisis in UTI, the country's single largest mutual fund, the

investors remained net sellers only.

The trends speak of an increased responsibility on one of the important components of the

mechanism responsible for servicing investors i.e. institution of stock exchange. But business trends

and other available evidences indicate that the performance of stock exchanges, particularly the

major ones did not prove to be in correspondence with the increased level of responsibilities that

resulted from important changes in new issues market.

Besides poor level of liquidity in most securities, at times the functioning and business trends of

stock exchanges tend to be influenced heavily by the forces detrimental to the interest of large

number of those investors, who put their money in corporate securities. In other words, market

influenced by these forces, prove to be detrimental to the interests of healthy saving and corporate

financing activity. Recent crash of stock exchanges is a case in point. Unrealistically high prices at

one point at time and sudden crash thereafter indicate only the weaknesses of the functioning of the

market.

In other words, these developments underline the need to improve the overall mechanism, of which

stock exchange is a part, responsible to service the increasing population of corporate securities'

holders. Efficiency of this mechanism should play an important role in serving better the investors'

base, which can prove to be a consistent source of finance for private corporate sector. Recent

happenings in capital market (like securities scam) only highlight that lack of an adequate

framework to monitor the various developments that are determining the fate of our financial sector

at large. A comprehensive examination of the role, expectations and need of increasing corporate

security holders and evolving the suitable responses thereto at various levels (like new issues


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market, stock market, corporate sector etc.) should form the part of the attempts necessary to evolve

this desirable framework.

SEBI is doing its bit on this front and it is expected that more reforms will come out from the apex

bodys kitty. Thus, a strong and powerful framework is on the cards of India.

RISK APPETITE AND INVESTMENT PATTERN

Risk appetite is usually discussed relating to the investment decisions of investors. An

investor considers his or her risk appetite when selecting from a range of investment options

presenting different risk/return trade-offs.

The challenge for an individual investor is to determine which point on this risk/return

tradeoffs

provide either:

The lowest level of volatility to meet financial needs and goals,

The highest return given the investors tolerance for risk, or

Some intermediate point that maximises utility.

Many individual investors are aware of the need to understand their own risk appetite, yet most

make decisions that affect the risk profile of their wealth and income only infrequently.

Investors need to make these decisions more regularly. In the case of the financial services

organisation, decisions affecting the risk profile of its business are made daily.

As a result, managing and profiting from calculated risks is a core skill for many financial

services organisations. Although these organisations are in the business of risk, defining an

Organisation-wide risk appetite can be complicated in practice.

Much like the basic risk/return trade-off decision presented to the individual investor, thecommon thread across these definitions is the need for the company to decide on the appropriate

amount of risk it can accept in order to enhance the organisations value over a given timeframe.

RISK ALLOCATION:

In a sense, risk allocation also referred to as risk budgeting is another step in the

evolution of investment management practices. In the mid-1900s, the dominant investment style


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What is Asset Allocation?

Asset allocation means diversifying your money among different types of investment categories,

such as stocks, bonds and cash. The goal is to help reduce risk and enhance returns.

This strategy can work because different categories behave differently, Stocks, for instance, offer

potential for both growth and income, while bonds typically offer stability and income. The benefits

of different asset categories can be combined into a portfolio with a level of risk you find

acceptable.

Establishing a well-diversified portfolio may allow you to avoid the risks associated with putting all

your eggs in one basket.

Right allocation for an investor:

Asset allocation decisions involve tradeoffs among 3 important variables:

Investors time frame

Their risk tolerance

Their personal circumstances

Depending on his age, lifestyle and family commitments, your financial goals will vary. You need

to define your investment objectivesbuying a house, financing a wedding, paying for your

children's education or retirement. Besides defining your objectives, you also need to consider the

amount of risk you can tolerate.

For example, when an investor retires and is no longer receiving a paycheck, you might want to

emphasize bonds and cash for income and stability. On the other hand, if you won't need your

money for 25 years and are comfortable with the ups and downs of the stock market, a financial

advisor might recommend an asset allocation of 100% stocks.


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Sample asset allocations followed during the project

Here are examples of 3 model portfolios that we follow while suggesting the right asset mix for any

investor. These models are for suggestions only and it may differ from person to person. When

reviewing the sample portfolios, we consider investors risk tolerance and other assets, income andinvestments.

Aggressive Portfolio: This portfolio emphasizes growth, suggesting 65% in stocks or equity funds,

25% in bonds of fixed - income funds and 10% in short-term money market funds or cash

equivalents. We recommend this portfolio for people who have a long investment time frame. The

portfolio provides for short-term emergencies and a mid-term goal such as building a home, but

otherwise assumes the investor has long-term goals such as retirement in mind.

Moderate Portfolio: This portfolio seeks to balance growth and

stability. It recommends 50% in stocks or equity funds, 30% in

bonds or fixed-income funds and 20% in short-term money

market funds or cash equivalents. This portfolio would seek to

provide regular income with moderate protection against

inflation. The equity component provides the potential for

growth, whereas the component in bonds and short-term instruments helps balance out fluctuations

in the stock market.

Conservative Portfolio: This portfolio suggests 25% in stocks or equity funds, 50% in bonds or

fixed-income funds, and 25% in money market funds or cash equivalents. This portfolio appeals to

people who are very risk averse or who are retired. The 25% equity component is intended to help


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investors stay ahead of inflation.

In the market survey which has been conducted during the course of this project my analysis

has revealed that 70% of the investors in Kolkata are risk averse and follow the conservative

portfolio. What is striking is that 45% of young people within good income bracket happen to

be risk averse as compared to 20% overall in the country.


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METHODOLOGY ADOPTED FOR THE PROJECT

I.MARKET SURVEY

A. Collection of Primary Data

The first step in the process is the collection of primary data with the help of questionnaire. The

questionnaire helped me in working on the field and getting a first hand knowledge of the

investment market of Kolkata. The process of collection of primary data is turning out to be an

enriching experience as the interaction with the investors has given me an insight into the minds

of the investors as regards to their demographic profile, household savings, income level,expenditure, asset allocation and risk profile.

B. Collection of Secondary Data

The data has been collected through primary and secondary sources. The primary data collection

involves formulating a questionnaire and getting it filled by the customers. Companies were visited

to know about their strategies and compare it with that of Edelweiss. This has been accompanied by

client calling, company visits and company meetings.

Companies visited during the project:

India bulls securities limited

Kotak Securities limited

ICICI direct

HDFC securities

ShareKhan

Religare


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Key findings

I. MARKET SURVEY

A. PRIMARY DATA:

The market survey has been conducted taking 80 as the sample size. Results of the same are as

follows:

1. Out of the 80 respondents 75 were male and remaining 5 were Females.

2. Following graph shows the age of respondents and the target respondents were only those

individuals whose age is above 25 years.


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3. Following graph shows the occupation of the Respondents

4. Graph below shows the annual income of the respondents. Only those respondents are

considered whose annual income is above 3 lakh rupees per annum. Even the target

customers for the company were only those individuals whose annual income is above Rs.


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300000.

5. Graph below shows the preferred sectors for investment in equities. The most preferred

sector is financial sector as it is expected that this sector will grow very fast. The second

most preferred sector is Oil & Gas sector because in this sector the major players are the

Government owned industries and as the economy will develop the consumption of oil and

gas will increase. The third most preferred sectors are FMCG and TELECOM sectors.

FMCG sector stocks are the defensive stocks and TELECOM sector is one of the fast


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growing sectors.

6. Following graph shows the different preferred tools of investment by the individuals. The

most preferred tool is the Mutual Funds. After the financial crisis and the collapse of stock

market many investors had lost their money and their confidence is shacked. Moreover


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mutual funds are more safer investment instruments in comparison to others and also the

rate of return on them is high and even the risk is lower than equities and they are preferred

because investing in them exempted from taxation. Mutual funds are followed by the bonds

which are risk free and also the rate of return is good.

7. Share Khan is the most preferred broking house followed by the India Bulls and then

MotilalOswal broking house. Edelweiss is least preferred because it has just entered into

retail segment in March 2008, and it will take some time for it make its presence felt in the

retail segment. Earlier it was catering only to the HIGH NET WORTH INDIVIUALS

(HNIs).


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Sare Khan

22%

MotilalOswal

18%

Indial Bulls

20%

ICICIDirect.com

14%

India Infoline

10%

Kotak Mahindra

6%

Religare

6%

Edelweiss

4%

PREFERRED BROKING HOUSE

8. The following pie chart shows the reason for its favourism and it is found that its brokerage

charges are very competitive in comparison to others. Besides this in interaction with the

respondents I discovered that apart from the brokerage share khan is preferred for its online

trading as well as the online portal provided by it. Though Kotak Mahindra also provides the

online trading and online portal but its brokerage charge is high. ICICIDirect.com charges

the highest brokerage i.e. minimum brokerage is Rs. 30 and normal brokerage charge is Rs.

7.50 per 1000 rupees. Even Edelweiss also provides online trading and it will launch its live

portal within 1 month but when it is targeting retail segment then it will make its brokerage

charge more competitive in its different brokerage plans.


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Brokerage

37%

Services

18%

Reaserch

9%

Online Trading

15%

Margin Trading

21%

REASONS FOR ITS FAVOURISM

9. The following chart shows the reason for the collapse of Sensex. Most of the respondents

believed that subprime crisis was the main reason for the downfall of Sensex as it forced the

FIIs to withdraw their money from Indian markets back to their parent countries. The

second most believed reason is the bankruptcy of the financial institutions.

Adverse Capital

Shock

4%Constant

Depreciation of

Home Currency

14%

Bankruptcy of Big

Financial

Institutions

22%

Sub Prime Crisis

44%

Credit Crunch

7%

Negative

Market

Sentiments

9%

REASON FOR THE DOWNFALL OF SENSEX

FROM 21k TO 8k


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10. The graph below shows the expectation of the respondents for the market recovery. Most of

the respondents believe that the market would recover within 6-12 months. The main reason

for this is that the FIIs inflow of the money in market which caused the market to go up by

400 points in a single trading day in this month. Besides this after the elections new

government will be formed and it is believed that it will take measures for the growth of

economy and various sectors.

11.When respondents were asked about their worry for the Indian stock market they reacted

aggressively for the volatility in the stock market. As Indian stock market is volatile and

there are two major factors in the stock market i.e. FEAR AND GREED. There is too muchfluctuation in the movement of share prices in the market. The second worry is the price

manipulation of the shares. Recently it was found that Akruty City share price was

artificially maintained high. It was trading around Rs. 2200 per share when all the other

shares of the Real Estate companies were trading at their life time value. Later its share was

banned on trading at future and options as well as Intra-day segments and at present it is

being traded only on the cash market. The third worry was related to corporate

mismanagement as was the case with Satyam, which was the biggest fraud in the Indian


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market.

Too much volatility

36%

Price manipulation

24%

Corporate

mismanagement

16%

Unfair practices of

brokers

10%

Market risks such

as inflation rate

risk, interest rate

risk, terrorism

activity, instability

of the government

14%

GREATEST WORRY ABOUT INDIAN

STOCK MARKET

12. 65% of the total respondents were satisfactory with the regulation of SEBI over capital

market and 25% were somewhat satisfactory. 10% of the respondents were of the view of

cant say and the reason behind their response was that in the recent past some of the

decisions made by SEBI were changed by SAT. So the decisions changed by the SAT puts a

question on the decision making of SEBI and its fairness in making the decisions.


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13. When respondents were asked about their preferred investment tool, it was found that

most of them preferred to invest in NFO (Mutual Funds) mainly because the risk is less and

rate of return is high. Apart from this investing in Mutual Funds is tax exempted. IPOs are

still preferred investment tools but since the Sensex is down so people are not too much

confident to invest in IPOs but again when the market will recover IPOs will be again

preferred as a good investment tool. At present people want to invest in equities but they

dont want to invest heavily in equities. Apart from this while investing in equities they

want to invest mostly in the defensive stocks to minimize their risk.

IPOs

24%

EQUITY

16%NFO37%

FPO

13%

Investing

10%

BETTER INVESTMENT ALTERNATIVE


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14.The following graph shows investment holding pattern of respondents. 30% of the

respondents had invested in Mutual Funds as they provide healthy return at less risk.

Besides this investing in them is tax exempted and same is the case with insurance policies

and apart from this investing in insurance is risk free and also the biggest advantage is that

insurance policies covers the risk. Investment in FDs is also risk free but the rate of interest

given in FDs is dependent on economic conditions. In equities the investment was made

prior to market fall and generally the people are holding their shares because they dont

want to sell their shares at half of the purchase price. Apart from this people are also buying

new shares because it is the right time to invest in shares as the blue chip companies shares

are trading at low price.

Bank FDs

26%

Equities

16%Mutual Funds

30%

PPF

4%

Govt. Securities

6%

Insurance Policies

18%

INVESTMENT AT PRESENT

15. During survey it was found that respondents are of conservative approach and 71% of the

total respondents were not willing to take any risk or very less risk.


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16.The main objective of investment is income generation and it is followed by retirement

benefits.


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17. Where do the investors get the information about the market and which source is the most

trusted one when it comes to stock market, the survey helped in gather that information from

the market. The results of the same are as follows:

Print Media

27%

Electronic Media

35%

Websites

23%

Brokers

11%

References

4%

RELAIBLE SOURCE OF INFORMATION FOR

CAPITAL MARKET

B. Key findings from the company visits:

HDFC securities

Strengths:

Own banking house within the company (fast fund transfer)

Flawless security system

Handles customer queries quickly


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Weaknesses:

Slow order processing

High demat account charges

Kotak securities

Strengths:

Good customer relationship

Suggestive buy or sell calls to customers on a daily basis

Weaknesses:

High brokerage

Does not allow more than 25 scripts at a time

ICICI Direct

Strengths:

Good market reputation

Highest market share

Weaknesses:

Slow order execution

Flaw in providing online tickers

Premium brokerage

Indiabulls securities

Strengths:

Fast implementation of orders

Real time quotes

Low brokerage rates


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Weaknesses:

Delayed response to customer queries

Delayed client instructions

II. Paying Client visits and Presentations made to them:

The financial services are different from the consumer products offered. If we make a comparativeanalysis following points can be highlighted:

Interaction with the customer - In case of consumer products the company has no direct

contact with its customers. It distributes its products to the distributors and after that does

not come in the picture. They come in contact with the customers only in case of any

complaints. In case of a financial product the company personnel interact directly to the


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customers and convince them to buy the product. Thus the responsibility of company

increases in case of financial products.

Buying Pattern- Many consumer products are taken by the customer on an impulse while

taking a financial product involves a long thought process.

Advising the clients about the products of the company which suits

their need:

A retail brokerage company that provides quality service, through its research and the Unique

Selling Proposition (USP) are: Simplest and fastest Online trading portal

Dealer support and a toll-free no.

Turtle services portfolio Doctor for each client

High quality research and much more . . .

One of the strategies adopted by Edelweiss to counter the existing competitors is:

The website; by the Edelweiss is in itself a Unique Selling proposition as it assist to attractand retain the client. By analysing the website portals of other competitors like

- Sharekhan

- MotilalOswal

- Indiabulls

- IndiaInfoline and etc.

It has been found that, their online trading portals are very complicated to understand and

use. Any new client will have to go through many problems to understand how to use those portals.

Even though being in the market for a considerable time, none of the existing players could predict

or comprehend the demand of the customers.

Changing business environment every firm to evolve with time, which the existing financial

players failed to do so! Thus Edelweiss comes up with an Online Trading Portal called -

www .edelblue.com


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This website has been designed to provideAdvice Based Broking Services to retail investors.

Following things have been kept in mind while

conceptualizing the website:

Clutter free pages

Easy to use navigation

Presenting information in intuitive

way

Avoid data overload on any page

Easy access to Edelweiss research and recommendations

Intelligent tools to cut through tons of information

The site has been divided in the following sections:

Trade

My Edelweiss

Research & Strategies

Trade sections offers host of Equity and

derivative products to retail investors. It is explained in detail in the next section of the manual.

My Edelweiss offers investors to maintain there

portfolio online. All the transactions done with Edelweiss

broking limited will automatically flow in the portfolio.

Research & Strategies section has the market data,

news, data tools, research reports and Edelweiss strategies or

recommendations. The section has been intuitively divided in 3 sections: Markets (data about

company, sectors, index, MF, commodities, etc.), Research (Edelweiss reports on companies,

sectors, economy, etc.) and Strategies (actionable recommendations, derivative strategies, model

portfolios, etc.).


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During the visit to the clients I have first collected information regarding their broker house, if any

and then as per the requirements of the clients I suggest them the product which we are offering

them.

Customer Relationship:

The customer relationship is aimed at creating strong long lasting, fruitful relationships by

developing long-term bonds. As a result the customer starts identifying and associating him

with the product, prefers and accepts the companys products and services over competitors

offerings and recommend others to buy. Moreover it costs less to retain customers than to


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compete for new customers. My job profile entails me to interact with the clients of the

company and that includes the existing HNI clients and the clients who are in a dormant stage.

Convincing them to start business with the company and maintain their association with the

company is the primary focus. This involves calling the existing clients and making client visits.

This will help me get an insight into the various aspects of customer relationship.

Team Handling and Training:

During the tenure of my internship I was fortunate to be appointed the team leader and I was asked

to handle a team of 10 people under me whom I have given the guidance and training in acquiring

new clients for the company. The team consists of interns from different management institutes

such as Icfai Business School, Kolkat;, Eastern Institute of Management, Kolkata; J.D. Birla

Institute of Management, Kolkata; Kolkata Institute of Management; Kolkata Christ Academy of

Management Studies and Nalanda University of Management Studies.

Recommendations

Edelweiss is an established name in the market but when it comes to competition in the retail

broking, the company has certain limitations which it needs to overcome in order to establish itself

in this scene. There are other players in the market who have certain edge in terms of offerings


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which the company has to fulfil if it wants to compete in the market. The opportunities and

challenges faced by the company are as follows:

Opportunities for the company:

Untapped Retail Segment- the Company has a huge opportunity before it as it has a vast

untapped retail segment.

Increasing affluent class- The rise of the affluent class will aid the growth of the company.

Competitive edge The research of the company is its Unique Selling Proposition and the

retail segment looks for good and reliable research.

Challenges before the company:

Business Volatility- The business in which the company is in is very volatile and keeps

changing with the market situation. So to keep a good pace of growth is the challenge that

lies ahead

Competition- The competition is fierce among different market players and standing in this

situation is a challenge

Risk management- The business is prone to a high risk and minimizing risk is the need of

the time

People- The company should maintain the good working force that it has with it at present

and improve it to gain competitive advantage.


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Limitations of the study:

The information regarding the investors is being collected through market survey

where there are some discrepancies on the part of the clients who do not divulge the

right information.

The Jacob Model followed in the questionnaire sometimes does not suit all the

clients.

There are changes happening in the industry every time and due to this some of the

information collected becomes obsolete or irrelevant for the study.

Some of the secondary data collected becomes outdated with the passage of time but

overall the information so collected is relevant for the study.


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Conclusion

The 14 weeks of internship at Edelweiss Broking Limited has been a fulfilling experience

where the learning was immense. At the end of the period what I can say is that now I am

ready to step into the corporate world with complete zest and enthusiasm.

Here I got to understand the integrities of the stock market and the working pattern of

broking houses as well.

Financial Planning is an important part of each person and what I learnt in Edelweiss is to

understand the factors which come into play while planning the financials of each investor.

The 14 weeks of internship has been a grueling experience at times where procuring data

had become very difficult with lot of limitations becoming impediments during the period

but nevertheless the teachings provided me with things which go beyond the books.

My role in the organization was to not only perform at the personal capacity but also at the

capacity of a team who was under me. As a team leader I have been able to guide my sales

team well and given justice to the role assigned to me by the company from time to time.


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References:

Books:

AMFI Certification Module Workbook.

Financial Management by Khan and Jain.

Financial Management by Icfai University Press.

NCFM Capital Market Module workbook.

Periodicals:

Outlook Money Understanding investors mind (Issue-Nov08).

Web sources:

www.franklintempletonindia.com

www.moneycontrol.com

www.rediff.com


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www.edelblue.com

www.edelcap.com

www.nseindia.com

www.wikipedia.com

www.google.com

www.traderji.com

www.investopedia.com

final report interns-harminder

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