vineet rai 2

8/3/2019 VINEET RAI 2

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SUMMER TRAINING REPORT

ON

AWARENESS OF SYSTEMATICAWARENESS OF SYSTEMATIC

INVESTMENT PLAN (SIP) AS AN INVESTMENT PLAN (SIP) AS AN

INVESTMENT OPTION IN GAZIPUR CITY INVESTMENT OPTION IN GAZIPUR CITY

Under the Guidance of: Submitted by:Dr. O.P. VISHVAKARMA VINEET KUMAr RAI

Faculty of mba (UIM) MBA(UIM) 3RD SEMROLL.NO.1101170132


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DECLARATION

I VINEET KUMAR RAI student o f MBA -3 rd hereby declare that all

the information collected for this report is collected through my own effort and

correct to the best of my knowledge and belief. The Institutional Training

Report submitted in partial United Institute Of Management fulfillment of the

requirement of the degree of Masters Of Business Administration University is

my original work and the same has not been submitted to any other

university/institute for any degree or any professional diploma.

VINEET KUMAR RAI

ROLL NO-1001170132

MBA 3rd sem

UIM ,Allahabad


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Index

Acknowledgement 5

Preface 6

Research objectives 7

Brief history 8-35

Research methodology 36-51

Overview of SIP 52 -79

Analysis & Interpretation 80-103

Findings 104

Suggestions 106

Conclusions 110

Annexure 112-117

Bibliography 118


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ACKNOWLEDGEMENT

Sometimes words fall short to show gratitude, the same happened with meduring this project. The immense help and support received from Karvy stockbroking limited overwhelmed me during the project.

My sincere gratitude to Mr. ARJUN RAI (Branch Manager, KSBL) for

providing me with an opportunity to work with karvy stock broking limited.

I am highly indebted to Mr. ARJUN RAI (Branch Manager, Karvy) who is

my company project guide, and has provided me with the necessary

information and his valuable suggestion and comments on bringing out this

report in the best possible way.

Last but not the least, I would like to thank my Principal of UIM Dr .T BSingh and my HOD Dr Rakesh Srivastava sir and my mentor senior faculty of

UIM Dr. O.P Vishvakarma & my parents whose constant love, support and

blessed me throughout this project.


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PREFACE

Survey project is an integrated part of any management course. It

carried out to translate the theoretical knowledge of subject into the practical

fieldworks.

This survey project had been conducted on "Awareness of Systematic

Investment Plan as an investment option in Gazipur City".

After conducting the survey it shows that the people of Gazipur are

aware of systematic investment plan (SIP) and are very much concern about

the investment in the various systematic investments plans (SIP) because they

very well know that in this present era it plays a major role in ones life.

Reason behind this is people want to earn high return by taking moderate

level of risk while protecting capital.

This project is carried out in potential fulfillment of MBA course of

UIM, ALLAHABAD.


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RESEARCH OBJECTIVES

To know the awareness of systematic investment plan (SIP)

being as an investment mode in Gazipur city.

To know the most attractive scheme of systematic investment

plan (SIP) according to investor of Gazipur city.

To know the satisfaction level of systematic investment plan .

To know the most admired and attractive feature of systematic

investment plan (SIP).


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Organization overview

The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks amongthe top player in almost all the fields it operates. Karvy ComputershareLimited is Indias largest Registrar and Transfer Agent with a client base of

nearly 500 blue chip corporates , managing over 2 crore accounts. Karvy StockBrokers Limited, member of National Stock Exchange of India and theBombay Stock Exchange, ranks among the top 5 stock brokers in India. Withover 6,00,000 active accounts, it ranks among the top 5 Depositary Participantin India, registered with NSDL and CDSL. Karvy Comtrade, Member of

NCDEX and MCX ranks among the top 3 commodity brokers in the country.Karvy Insurance Brokers is registered as a Broker with IRDA and ranksamong the top 5 insurance agent in the country. Registered with AMFI as acorporate Agent, Karvy is also among the top Mutual Fund mobilizer withover Rs. 5,000 crores under management. Karvy Realty Services, which startedin 2006, has quickly established itself as a broker who adds value, in the

realty sector. Karvy Global offers niche off shoring services to clients in theUS.


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Karvy has 575 offices over 375 locations across India and overseas at Dubaiand New York. Over 9,000 highly qualified people staff Karvy.

Karvy has always believed in adding value to services it offers to clients. Atop-notch research team based in Mumbai and Hyderabad supports itsemployees to advise clients on their investment needs. With the informationoverload today, Karvys team of analysts help investors make the right calls,

be it equities, mf, insurance. On a typical working day Karvy:

Has more than 25,000 investors visiting our 575 offices

Publishes / broadcasts at least 50 buy / sell calls

Attends to 10,000+ telephone calls

Mails 25,000 envelopes, containing Annual Reports, dividend cheques /advises, allotment / refund advises

Executes 150,000+ trades on NSE / BSE

Executes 50,000 debit / credit in the depositary accounts

Advises 3,000+ clients on the investments in mutual funds.

FIVE CA WHO LAID THE

FOUNDTAION

*Mr. KUTUMBA RAO

*Mr. AJAY KUMAR

* Mr. RAMAKRISHNA

*Mr. VAIDHYANATHAN

* Mr. YUGANDHAR


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EVOLUTION OF KARVY

1979-1980 Karvy and company

Activity Audit and Taxation

People 5 Chartered Accountants

1981-1982 Karvy Consultants Ltd.

Activity Diversification into

financial and

accounting services

Capital Rs. 1, 50,000 /-

Milestone First investment in

technology

1985-1986 Foray into capital

market as Registrars

and Transfers Agents

1987-1988 First Branch in

Mumbai

1988-1989 Extension of financial

services into stock

broking

1990 Entry into Retail Stock Broking


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1992 Set up investor service

centers

1993 Financial products

distribution

1994 Entry into Mutual

Fund service

1995 Corporate Finance and

investment banking

1997 First Registrar in the

country to be awarded

ISO 9002

1999 IT enabled service-

BPO

2000 E-Business

www.Karvy.com

2001 Launch of retail arm

Karvy the Finapolis

2002 Launch of PCG

2003 Commencement of

secondary Debt and

WDM trading

2004 Launch of Karvy

global services

2005 Karvy Insurance

Broking Private Ltd.
http://www.karvy.com/http://www.karvy.com/


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KARVY WINGS

1. KARVY CONSULTANT LIMITED

As the flagship company of the Karvy Group, Karvy Consultants Limited hasalways remained at the helm of organizational affairs, pioneering business

policies, work ethic and channels of progress.

Having emerged as a leader in the registry business, the first of the businessesthat it ventured into, it have now transferred this business into a joint venturewith Computershare limited of Australia, the worlds largest registrar with theadvent of depositories in the Indian capital market and the relationship that ithave created in the registry business, it believe that it were best positioned toventure into this activity as a Depository Participant with one of the earlyentrants registered as Depository Participant with NSDL (National SecuritiesDepository Limited), the first Depository in the country and then with CDSL(Central Depository Services Limited). Today, it service over 6 lakhs customeraccounts in this business spread across over 250 cities/towns in India and areranked amongst the largest Depository Participants in the country. With agrowing secondary market presence, it has transferred this business to KarvyStock Broking Limited (KSBL), our associate and a member of NSE, BSE andHSE.


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2. KARVY STOCK BROKING LIMITED

Stock Broking Services Distribution of Financial Products / Depository

Participants / Advisory Services / Research / Private Client Group

Member - National Stock Exchange (NSE), the Bombay Stock Exchange (BSE)

and the Hyderabad Stock Exchange (HSE).

Karvy Stock Broking limited one of the cornerstones of the Karvy edifice,

flows freely towards attaining diverse goals of the customer through varied

services. Creating a plethora of opportunities for the customer by opening up

investment vistas backed by research based advisory services. Here, growth

knows no limits and waves in his portfolio and empowering the investor

completely is the ultimate goal.

Stock Broking Services:-

It is an undisputed fact that the stock market is unpredictable and yet enjoys a

high success rate as a wealth management and wealth accumulation option.

The difference between unpredictability and a safety anchor in the market is

provided by in-depth knowledge of market functioning and changing trends,

planning with foresight and choosing ones options with care. This is what it

provides in its Stock Broking services.

It offers services that are beyond just a medium for buying and selling stocks

and shares. Instead it provides services which are multi dimensional and

multifocused in their scope. There are several advantages in utilizing its


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Broking services which are the reasons why it is one of the best in the

country. It offers trading on a vast platform National Stock Exchange, Bombay

stock Exchange, Hyderabad Stock Exchange. More importantly, it makes

trading safe to the

maximum possible extent, by accounting for several risk factors and planning

accordingly. It is assisted in this task by its in depth research, constant

feedback and sound advisory facilities. Its highly skilled research team,

comprising of technical analysts as well as fundamental specialists, secure

result oriented information on market trends, market analysis and market

predictions. This crucial information is given as a constant feedback to its

customers, through daily reports delivered thrice daily. The Pre-session Report

where market scenario for the day is predicted, the Mid session Report- time

to arrive during lunch break, where the market forecast for the rest of the day

is given and the Post session Report- the final report for the day, where the

market and the report itself is reviewed. To add to this repository of

information, it publish a monthly magazine Karvy-The Finapolis, which

analyze the latest stock market trends and takes a close look at the various

investments options, and products available in the market, while a weekly

report called Karvy Bazaar Baatein, keeps more informed on the immediate

trends in the stock market. In addition, its specific industry reports give

comprehensive information on various industries. Besides this, it also offer

special portfolio analysis packages that provide daily technical advice on scrip

for successful portfolio management and provide customized advisory services

to help to make the right financial moves that are specifically suited to

portfolio.

Its Stock Broking services are widely networked across India, with the number

of its trading terminals providing retail stock broking facilities. Its services

have increasingly offered customer oriented convenience, which it provides to a

spectrum of investors, high-net worth or otherwise, with equal dedications and

competence.

But true to its spirit, this success is not its final destination, but just a

platform to launch further enhanced quality services to provide the latest in

convenient, customer friendly stock management. Over the years it has ensured


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that the trust of its customers is its biggest returns. Factors such as its success

in the Electronic custody business has helped build on its tradition of trust

even more. Consequentially its retail client base expanded very fast.

To empower the investor further it have made serious efforts to ensure that itsresearch calls are disseminated systematically to all its stock broking clients

through various delivery channels like email, chat, SMS, phone calls etc.

Its foray into commodities broking has been path breaking and it is in the

process of converting existing traders in commodities into the more organized

mainstream of trading in commodity future, both as a trading and risk hedging

mechanism.

In the future, its focus will be on the emerging businesses and to meet this

objective, it have enhanced its manpower and revitalized its knowledge base

which enhances focus on futures and options as well as commodities business.

Depository Participants:-

The onset of the technology revolution in financial services industry saw the

emergence of Karvy as an electronic custodian registered with National

Securities Depository Ltd (NSDL) and Central Securities Depository Ltd(CSDL) in 1998. Karvy set standards enabling further comfort to the investor

by promoting paperless trading across the country and emerged as the top 3

Depository Participants in the country in terms of customer services.

Offering a wide trading platform with a dual membership at both NSDL and

CSDL, it is a powerful medium for trading and settlement of dematerialized

shares. It have established live DPMs, internet access to accounts and an

easier transaction process in order to offer more convenience to individual andcorporate investors. A team of professional and the latest technological

expertise allocated exclusively to its Demat division including technological

enhancements like SPEED-e; make its response time quick and its delivery

impeccable. A wide national network makes its efficiencies accessible to all.

www.karvydp.com

Distribution of Financial Products:-

The paradigm shift from pure selling to knowledge based selling drives the business today. With its wide portfolio offerings, it occupies all segments in
http://www.karvydp.com/http://www.karvydp.com/


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the retail financial services industry. A 1600 team of highly qualified and

dedicated professionals drawn from the best of academic and professional

backgrounds are committed to maintaining high levels of client service

delivery. This has propelled Karvy to a position among the top distributors for

equity and debt issues with an estimated market share of 15% in terms of

applications mobilized, besides established as the leading procurer in all public

issues.

To further tap the immense growth potential in the capital markets it enhanced

the scope of its retail brand, Karvy the Finapolis, there by providing

planning and advisory services to the mass affluent. Here it understands the

customer needs and lifestyle in the context of present earnings and provide

adequate advisory services that will necessarily help in creating wealth.

Judicious planning that is customized to meet the future needs of the customer

deliver a service that is exemplary. The market savvy and the ignorant

investor, both find this service very satisfactory. The edge that it have over

competition is its portfolio of offerings and its professional expertise. The

investment planning for each customer is done with an unbiased attitude so

that the service is truly customized.

Its monthly magazine, Finapolis, provides up-dated market information onmarket trends, investment options, etc. Thus empowering the investor to baseevery financial move on rational thought and prudent analysis and embark onthe path to wealth creation.

http://mfportfolio.karvy.com

Advisory services:-

Under its retail brand Karvy-The Finapolis, it delivers advisory services to across section of customer. The service is backed by a team of dedicated andexpert professionals with varied experience and background in handling

investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses ontrading customers portfolio and providing through varied inputs, monitoringand managing the portfolio through varied technological initiatives. This ismade possible by the expertise it has gained in the business over the years.Another venture towards being investor friendly is the circulation of a monthlymagazine called Karvy-The Finapolis. Covering the latest of market news,trends, investment schemes and research based opinions from experts in variousfinancial fields.

www.the-finapolis.com

Private Client Group:-
http://mfportfolio.karvy.com/http://www.the-finapolis.com/http://mfportfolio.karvy.com/http://www.the-finapolis.com/


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This specialized division was set up to the high net worth individuals and

institutional clients keeping in mind that they require a different kind of

financial planning and management that will augment not just existing finances

but their life-style as well. Here it follows a hardnosed business approach with

the soft touch of dedicated customer care and personalized attention. For this

purpose it offers a comprehensive and personalized service that encompasses

planning and protection of finances, planning of business needs and retirement

and a host of other services, all provide on a one to one basis.

Its research reports have been widely appreciated by this segment. The delivery

and support modules have been fine tuned by giving its client access to online

portfolio information, constant updates on their portfolios as well as value

added advice on portfolio churning, sector switches etc. The investment

recommendations given by its research team in the cash market has enjoyed a

high success rate.


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3.KARVY INVESTOR SERVICES LIMITED

Merchant Banking:-

This reputation was built by capitalizing on opportunities in corporate

consolidations, mergers and acquisitions and corporate restructuring which have

earned it the reputation of a merchant banker. Raising resources for corporate

or Government undertaking successfully over the past two decades have given

it the confidence to renew its focus in this sector. Its quality professionals

team and its work oriented dedications have propelled it to offer value added

corporate financial services and act as a professional navigator for long term

growth of its clients, who Recognized as a leading merchant banker in the

country, and are registered with SEBI as a Category include leading corporate,


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state government, foreign institutional investors, public and private companies

and banks, in Indian and global markets.

It have also emerged as a trailblazer in the arena of relationships both at the

customer and trade levels because of its unshakable integrity, seamless serviceand innovative solutions that are turned to meet varied needs. Its team of

committed industry specialists, having extensive experience in capital markets,

further nurtures this relationship. Its financial advice and assistance in

restructuring divestitures acquisitions, demergers, spin-offs, joint ventures,

privatization and takeover defense mechanisms have elevated its relationship

with the client to one based on unshakable trust and confidence.

4.KARVY COMPUTERSHARE PVT. LTD.

It has traversed wide spaces to tie up with the worlds largest transfer agent,

the leading Australian company, Computer Share Limited. The company that

services more than 75 million shareholders across 7000 corporate clients and

makes its presence felt in over 12 countries across 5 continents has entered

into 50-50 joint venture with Karvy.

With its management team completely transferred to this new entity, it will

aim to enrich the financial services industry than before. The future holds new

arenas of client servicing and contemporary and relevant technologies as are

geared to deliver better value and foster bigger investment in the business. The

worldwide network of computer share will hold us in good stead as it expect


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to adopt international standards in addition to leveraging the best of

technologies from around the world.

Excellence has to be the order of the day when two companies with such

similar ideologies of growth, vision and competence, get together.

Mutual Fund Services:-

It has attained a position of immense strengths as a provider of across the

board transfer agency services to AMCs, Distributors and Investors. Nearly

40% of the top notch AMCs including prestigious clients like Deutsche AMC

and UTI swear by the quality and range of services that it offer. Besides

providing the entire back office processing, it provide the link between various

Mutual Funds and the investor, including services to the distributor, the prime

channel in this operation.

Carrying the limitless ideology forward, it have explored new dimensions in

every aspect of Mutual Fund servicing right from volume management, cost

effective pricing, delivery in the least turnaround time, efficient back-office and

front office operations to customized service. It have been with the AMCs

every step of the way, helping them serve their investor better by offering

them a diverse and customized range of services. The first to market

approach that is its anthem has earned us the reputation of an innovative

service provider with a visionary bent of mind.

Its services enhancements such as Karvy Converz, a full fledged call enter, a

top-line websites (www.karvymfs.com), and many more, creating a galaxy of

customer advantages www./karvymfs.com

Issue Registry:-

In its voyage towards becoming the largest transaction processing house in the

Indian Corporate segment, it has mobilized funds for numerous corporate

sectors. With an experience of handling over 700 issues . Karvy today, has the

ability to execute voluminous transaction and hardcore expertise in technology

application has gained us the No. 1 slot in the business. Karvy is the first
http://www.karvymfs.com/http://www./karvymfs.comhttp://www.karvymfs.com/http://www./karvymfs.com


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Registry Company to receive ISO 9002 certification in India that stands

testimony to its stature.

Karvy has the backing of skilled human resources complemented by requisite

technological packages to ensure a faster processing capability. Karvy has the

benefit of a good synergy between depositories and registry that enables faster

resolution to related customer queries. Apart from its unique investor servicing

presence in all the phases of a public Issue, it is actively coordinating with

both the main depositories to develop special models to enable the customer to

access depository (NSDL, CDSL) services during an IPO. It trusts worthy

reputation, competent manpower and high technology and infrastructure are the

solid foundations on which its success is built.

Corporate Shareholder Services:-

Karvy has been a customer centric company since its inception. Karvy offers a

single platform servicing multiple financial instruments in its bid to offer

complete financial solutions to the varying needs of both corporate and retail

investors where an extensive range of services are provided with great volume

management capability.

Today, Karvy is recognized as a company that can exceed customer

expectations which is the reason for the loyalty of customers towards Karvy

for all his financial needs. An opinion poll commissioned by The Merchant

Banker Update and conducted by the reputed market research agency, MARG

revealed that Karvy was considered the Most Admired in the registrar

category among financial services companies.

It has grown from being a pure transaction processing business, to one

complete shareholder solutions.


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5.KARVY GLOBAL SERVICES LTD.

The specialists Business Process Outsourcing unit of the Karvy Group. The

legacy of expertise and experience in financial services of the Karvy Group

serves us well, as we enter the global arena with the confidence of being able

to deliver well.

Here it offers several delivery models on the understanding that business needs

are unique and therefore only a customized service could possibly fit the bill.


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Its service matrix has permutations and combinations that create several options

to choose from.

Be it in re-engineering and managing processes or delivering new efficiencies

its service meets up to the most stringent of international standards. Its

outsourcing models are designed for the global customer and are backed by

sound corporate and operations philosophies operational cost control cost

savings, improved accountability and a whole gamut of other advantages.

It operates in the core market segments that have emerging requirements for

specialized services. Its wide vertical market coverage includes Banking,

Financial and Insurance Services (BFIS), Retail and Merchandising, Leisure and

Entertainment, Energy and utility and healthcare.

Karvys horizontal offerings do justice to its stance as a comprehensive BPO

unit and include a variety of services in Finance and Accounting Outsourcing

Operations, Human Resource Outsourcing Operations, Research and Analytics

Outsource, Research and Analytics Outsourcing Operations and Insurance back

office Outsourcing Operations.

6.KARVY COMMODITIES BROKING PVT. LTD

.

At Karvy Commodities, it is focused on taking commodities trading to new

dimensions of reliability and profitability. Karvy have made commodities


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trading an essentially age old practice into a sophisticated and scientific

investment.

Here it enable trade in all goods and products of agricultural and mineral

origin that include lucrative commodities like gold and silver and popular items

like oil, pulses and cotton through a well systematized trading platform.

Karvys technological and infrastructural strengths and especially its street smart

skills make it an ideal broker.

Its wide national network spanning the length and breadth of India, further

supports these advantages Regular trading workshops and seminars are

conducted to hone trading strategies to perfection. Every move made is a

calculated one, based on reliable research that is converted into valuable

information through daily, weekly and monthly newsletters, calls and intraday

alerts. Further, personalized service is provide here by a dedicated team

committed to giving hassle free service while the brokerage rates offered are

extremely competitive.

Karvy commitment to excel in this sector stems from the immense importance

those commodities broking has to a cross section of investors farmers

exporters, importers, manufacturers and the Government of India itself.

www.karvycommodities.com

7.KARVY INSURANCE BROKING PVT LTD.

At Karvy Insurance broking Pvt ltd, it provide both life and non life

insurance products to retail individuals high net worth clients and corporate,
http://www.karvycommodities.com/http://www.karvycommodities.com/


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with the opening up of the insurance sector and with a large number of

private players in the business, it is in a position to provide tailor made

policies for different segments of customer. In its journey to emerge as a

personal finance advisor it will be better positioned to leverage its relationship

with the product providers and place the requirements of its customers

appropriately with product providers. With Indian markets seeing a sea change,

both in terms of investment pattern and attitude of investors, insurance is no

more seen as only a tax saving product but also as an investment product. By

setting up a separate entity, it would be positioned to provide the best of the

products available in this business to its customers.

Karvy wide national network, spanning the length and breadth of India,

further supports these advantages.


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8.KARVY REALTY AND SERVICES INDIA LIMITED

Karvy Realty (India) Limited (KRIL) is promoted by the Karvy Group, Indias

largest financial services group. The group carries forward its legacy of trust

and excellence in investor and customer services delivered with passion and the

highest level of quality that align with global standards

Karvy Realty (India) Limited is engaged in the business of real estate and

property services offering:

Buying/ selling/ renting of properties

Identifying valuable investments opportunities in the real estate sector

Facilitating financial support for real estate and investments in properties

Real estate portfolio advisory services

KRIL is your personal real estate advisor guiding and hand holding you

through real estate transactions and offering valuable investment opportunities.

Building on the KARVY brand as a leading industry benchmark for world

class customer servicing and quality standards, KRIL brings to investors a

reputation of reliability, dependability and honesty. Our understanding of the

needs and preferences of our clients and our teams of qualified realty

professionals help us to establish fruitful relationships with buyers and sellers

of properties alike.A single stop shop for realty services offering:Transacting

Options: Choose to buy, sell or rent properties (residential and

commercial)Investing Options: Give your investments a good opportunity with

properties marketed by KRIL Financing Options: Get unmatched deals for

financing your investment

Research Options: We undertake valuation and feasibility studies, area analysis

and customized analysis on behalf of clients.


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KRIL has ongoing relations with builders and developers across the country

which will help you place your investments in the most genuine properties for

a good value appreciation at the right place and at the right price.

KRIL is committed to the guiding principles of quality, timely service delivery,

fair pricing, transparency and integrity.


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Organization structure of karvy:

Talking about the organization structure of karvy,it consist of board ofdirectors as the supreme governing body , the chairman being Mr. C.

Parthasarthy, Mr. M Yugandhar as the managing director, Mr M. S.

Ramakrishna and Mr. Prasad V. Potluri as directors.

The board of diretors head the karvy group, karvy computershares limited,

karvy investors services ltd., karvy comtrade, karvy stock broking ltd., and

karvy global services ltd.

Karvy group being the flagship company looks after the functional departments

such as corporate affairs, group human resources, finance & accounting,

training & development, technology services and corporate quality.

Karvy computershare private limited facilitates mutual fund services, share

registry and issue registry whereas merchant banking is looked after by karvy

investor services ltd. Karvy stock broking ltd heads its another branch too ie.

Karvy insurance broking ltd. The services offered by KSBL are: stock broking,

depository, research, distribution, personal client group and institutional desk.

And finally the BPO services are managed by karvy global services ltd.

Summarizing it in a diagram, it can be presented as:


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Spectrum of services offered by karvy:

Karvy being the top registrar and transfer agent, functions as registrar in most

of the issues in the country. Talking about the mutual fund services offered by

karvy, we can get the products of 33 AMCs over here. it deals in both closed

ended funds as well as open ended too. Now one must be thinking why to

get the mutual funds from karvy instead of getting it directly from AMCs???

we have great reasons for it: the first one being ; if we avail the services of

karvy then we can get the information about all the AMCs and their products

at a single place along with expert recommendations whereas at an AMC we

can get information about the products of that specific AMC only. And the

second being wide network of karvy.nowadays we can find karvy offices at

remote areas too.

Along with these, karvy is very well handling the role of depository

participant. Being registered with both the depositories i.e.; NSDL (national

securities depository ltd) and CDSL (central depository services ltd), karvy can

have access to both. Its wide network also facilitates it in distribution of retail

financial products.

Karvy believes in being updated always. So it is always ready to use latest

technologies so that its clients always be in touch with the latest happenings

along with karvy. It offers e-business through internet through its website:

www.karvy.com . Other than it, it also provides its various services through

SMSes.

Karvys services are not limited to its investors only rather its offerings are for

its corporate clients and distributors too. it is very well aware of the fact that

in this era of neck to neck competition, we cant ignore any of the aspects of

our business.so theres a offering for everybodyeveryones welcome at

karvy.
http://www.karvy.com/http://www.karvy.com/


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Why should investors choose for karvy?

Excellence is next to nothing.and here at karvy everybody tries their best to

offer excellent services to its clientele through its offerings maintaining the

karvy culture which includes:

1. Controlled and low cost service culture: karvy is there to serve its client at

the minimum possible cost. it controls cost by its various cost- cutting

techniques and minimization of avoidable costs.2. Large volume processing capability: being the largest financial service

provider in the country, it has the unique distinction of operating its activities

on a large scale which benefits all the parties cordially.

3. Adherence to strict time schedule: karvy knows that time is money and tries

it

best to finish the task within the stipulated time schedule.

4. Expertise in coordinating multi-location responses: karvy has got a wide

network and hence one can find its branches at most of the places in India.

Thus it enjoys its presence everywhere and coordinates among itself in solving

the queries and in responding to any situation.

5.Expertise in managing independent entities such as banks, post-office etc.: the

work culture of karvy and the ethics followed inside karvy makes its

workforce compatible with everybody, so the karvy people establishes good

coordination with independent entities too.

6. Pooling of group resources: karvy group consists of eight subsidiaries, so it

can easily pool up its resources for accomplishment of its goals, whenever

needed. The groups can help each other whenever there are peaks and lows,

and even in the case when they have huge targets just as we saw few years

back, Tata group pooling its resources to acquire Corus.


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How karvy achieved it?

The core competency of karvy lies in the following points due to which it

enjoys a competitive edge over its competitors. The following culture adopted

by karvy makes it all time favorite among its clientele:

1. Professionally managed by qualified and trained manpower.

2. Uniquely structured in-house software and hardware department

3. Query handling within 48 hrs.

4. Strong secretarial, accounting and audit systems.

5. Unique work culture of working 7 days a week in 3 shifts.

6. Unmatched network spreading all over India.

How Achievements sounds synonymous to karvy:

The landmarks achieved by karvy very well define its success story. In the

previous pages, we learnt how a company started by five chartered accountants,

named as karvy and company turned into todays karvy group, the largest

financial intermediary of India. But success didnt came to karvy at a flow,

the hard work and dedication of its workforce made it what it is today

gradually it achieved the following landmarks and now it has became what we

call the karvy group, now it is:

1. largest independent distributor for financial products.

2. Amongst the top 5 stock broker.

3 .Among the top 3 depository participants.

4. largest network of branches & business associates.

5. ISO 9002 certified operations by DNV.

6. Amongst top 10 investment bankers.

7.Adjudged as one of the top 50 IT users in India by MIS south Asia.


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8. full- fledged IT driven operation. \

9. Indias no.1 registrar & securities transfer agent.

Clientele of karvy:

Karvys culture has helped karvy in achieving such a distinct position in the

market where it can boast of its huge client base. Be it a retail investor

investing Rs. 100 in a SIP in Reliance mutual fund or be it the largest

corporate house of the country: Reliance industries- everybody is heading

towards karvy for their wealth maximization, lets have a look at the clientele

of karvy :

According to the datas published in year 2007, karvy stock broking ltd.

Operates through more than 12000 terminals, more than 290000 accounts are

maintained and commands over 3.14% market share of NSE. The distribution

services has access to more than Rs. 40 billion Assets Under Management.

Karvy being a depository participant with both NSDL and CDSL, managesmore than 700000 accounts from more than 380 locations. Talking about the

registry services, it manages over 750 public/ right issues.at the same time, it

is managing over 16 million portfolios as registrar.

If we took a look at some of the top corporate houses availing the services of

karvy then we have: Reliance, IOC, IDBI,LIC, Hindustan Unilever, Principal

Mutual Fund, Duetsche Mutual Fund, Yogokawa, Marico Industries, Patni

Computers, Morgan Stanley, Glenmark, CRISIL, 3M, Kotak Mahindra Bank,

Bharti Televenture, Infosys Technologies, Wipro, Infotech, IPCL,TATA

consultancy services, UTI mutual fund etc. Thus in total karvy serves over 16

million investors and 300 corporates.


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Karvy at Gazipur:

Now if we look at karvys branch offices at Gazipur,karvy has its branch at

near Mahila P.G.C. in Gazipur.

Structure according to the Products offered by Karvy:

REGIONAL

HEADS

PRODUC

T

HEADS

HEA

Mutualfunds

Insurance

broking

commodities

Stock

broking

Depository

participant

Merchant &

inv.banking

PMS

Realty

Debtdivision


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Recruitment:

Karvy has an enviable pool of dynamic employees. Its people power has a

great contribution in making it the No. 1 financial intermediary. All the

employees of karvy dealing in mutual funds have to go through AMFI test.

The recruitment process is at par with the industry standards, it is mostly done

through campus recruitment from reputed B- schools. Other than that, it also

recruits through direct interviews and GDs as per their requirement.

Karvy never compromises with quality thats the reason it is excelling by

providing quality services to all the investors, clients, AMCs etc. associated

with it.


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SWOT ANALYSIS OF KARVY

STRENGTH1. A good location having considerable walk-in of customers.

2. Efficient & qualified employees.

3. Backing of huge infrastructure.

4. No. 1 Tin facilitation centre.

WEAKNESS1. Insufficient promotional activities.

2. Services are not too fast.

OPPORTUNITIES1. Huge market of upper middle and upper income group having good

amount of disposable income.

2. Wide range of market opportunities in Gazipur.

3. Low penetration of the competitors in the market.

THREATS1. Fluctuation of stock market may affect the business adversely. Rigidness

of the customers i.e. their resistance to change.

2. Emergence of many other financial institution e.g. Sharekhan ,Seeta

Portfolio,Angel Broking etc in Gazipur.


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RESEARCH

METHODOLOGY


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SYSTEMATIC INVESTMENT PLAN

METHODOLOGY

Any methodology for researching systematic investment plan can not be

meaningfully evaluated without first articulating exactly what it is one wants it

to accomplish. In a competitive environment, systematic investment plan is

crucial to long-term profitability. Given the opportunity to choose, customers

whose needs or desires are not met will not continue to support the companies

from whom they have been buying. The ideal firm, from the perspective of

both customer and shareholder, is one which allocates its resources to

continually improve those processes and quality aspects that drive systematic

investment plan, and converts increased systematic investment plan into

improved financial performance. The primary goal of any corporation is to

maximize long-term profits. The objective of systematic investment plan

management is to harness systematic investment plan in order to achieve that

larger corporate goal. Methods of measuring and diagnosing systematic

investment plan should be evaluated according to this criterion: How well do

these methods help corporations understand and optimize the economic value of

the customer relationship?


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Given the nature of modern competition, hoping to retain a competitive

advantage is seldom realistic. Competitive advantage is most often achieved by

continually monitoring the customer base, and continually improving aspects of

quality which have high rates of return. The problem is to find out where

improvements in quality will bring a better return-on-investment, and how those

improvements should be achieved.

The traditional approaches to market research, on which many firms

rely, simply ask customers what they consider important. There are more and

less sophisticated ways of asking this, but none of them will gather

information relevant to the objective: increasing systematic investment plan in

ways that will maximize long-term profits. Most firms also make the mistake

of treating satisfaction as a simple binary concept. Simple in the sense that

only one question is used; binary in the sense that customers are categorized

as either satisfied or dissatisfied (a so-called Top Box approach) often in

percentage terms. This approach is crude and rarely provides reliable and valid

information over time.

This is also why many firms fail to find any relationships between quality

and satisfaction and between satisfaction and profit. Perhaps the best way to

get the point across is to compare satisfaction, as a concept, to intelligence.

Both are multidimensional and not directly observable. Any attempt to measure

intelligence by a simple question (Are you dumb or smart?) is not likely to

yield useful information. It is not reasonable to think that one can assess a

persons intelligence by a single question (or by a single survey question).

Likewise, it is not reasonable to assume that one can capture the concept of

satisfaction by a single overall question. Aside from the necessity to use

multiple questions, satisfaction, like intelligence, is a matter of degree. It will

not be possible to relate satisfaction to profits if satisfaction is expressed in

broad categories.


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MODELING SYSTEMATIC INVESTMENT PLAN

THERE ARE FOUR STAGES IN IT:

1) Secondary Research

2) Management Interviews

3) Qualitative Customer Research

4) Quantitative Research

1) SECONDARY RESEARCH :

Some firms might argue against the necessity of this stage, stating that

vast quantities of such research had already been performed, oftentimes

yielding no more information than they had had before. However, one reason

firms often do not benefit from such research is that its focus tends to be

scattered. One study might look at concepts of customer loyalty, while another

looks at current attitudes of store personnel, and still another asks customers to


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focus on aspects of in store shopping. Our purpose in performing secondary

research is to build upon and synthesize prior research thereby gaining the

maximum information available from it.

2) MANAGEMENT INTERVIEWS

Interviewing management personnel across relevant areas of businesses is

also critical to synthesizing useful information which might otherwise remain

isolated. These interviews aid in:

Understanding a heterogeneous customer base

Identifying current business issues viewed as relevant by management

personnel

Developing a substantive knowledge of the competitive environment

Designing the qualitative interview guidelines for in-depth interviews with

customers

Determining how performance measures will be represented in the subsequent

model


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3) QUALITATIVE CUSTOMER RESEARCH

The need to talk with customers to uncover issues salient to them has become increasingly obvious over the past several years. What has not become

obvious, however, are the techniques needed to uncover such issues accurately

and in-depth. CFI Groups system utilizes qualitative one-on-one customer

interviews specifically designed to cover both issues identified as relevant by

management personnel and to allow customers to voice their opinions, concerns

and desires which might otherwise be left unknown to management. While

management would likely be able to predict a large percentage of the

components and issues salient to systematic investment plan, there is still a

reasonable amount of information to be gained from customers which would go

unsaid if customer interview structures were too rigid.

Further, management personnel might also be unaware of the language

that customers tend to use (i.e., voice of the customer) when discussing such

issues or, quite importantly, all the aspects of a particular issue, even if

correctly identified by management, relevant to the customer.


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FOLLOWING TECHNIQUES CAN BE USED

ONE-ON-ONE INTERVIEWS.

While focus groups can be useful in certain cases, typically what

happens in such settings is that one or two strong voices emerge only to be

followed by the rest of the group. The resulting information is highly biased

and skewed toward the more vocal customers in the group. Although

interviewers often try to avoid such biases by requiring focus group attendees

to talk in turn, they may still miss subtle (and not-so subtle) pressures which

come from group meetings. Valuable information may be lost in such settings

where the interview is highly structured.

OPEN ENDED, SEMI-STRUCTURED INTERVIEW

APPROACH.

This approach allows us to ask customers about issues mentioned in

secondary research and management interviews, while still leaving the

opportunity for each customer to discuss top-of-mind issues during the course

of the interview, thereby identifying salient factors which might otherwise go

undetected.

METAPHORS AND NARRATIVE ACCOUNTS.


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By giving customers the opportunity to tell stories and use metaphors to

describe and the various experiences they have had, we also encourage the

identification of new and valuable information. Given innovative social-

psychological research techniques, and a more conversational style interview,

customers can relax and converse as they might with a friend during the

interview. A skilled interviewer can keep a respondent focused on the relevant

topics while still allowing them to recall experiences regarding which could be

very useful to management and other personnel. Similarly, simply asking

someone why they like or dislike some aspect of , will not get at the real

ways in which people think about things and make purchase decisions.

Customer interviews performed must be recorded and transcribed

verbatim ensuring maximum reliability and validity in performing the analysis.

Qualitative research techniques are then applied to the subsequent analysis of

each transcript as well as the transcripts as a group.

4) QUANTITATIVE RESEARCH

Ultimately, the power and precision of the hypothetical model is proven

in the quantitative phase which consists of three distinct points:

Estimating Importance, Utility, and Impact

Estimating Derived Importance

Causal Models: comparing covariance structure analysis

(e.g., LISREL) and partial least squares (e.g., Worlds PLS system), the two

major approaches to causal models


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ISSUES RELATED TO METHODOLOGY AND SURVEY

DESIGN

The quality of the data from a systematic investment plan survey

depends on the quality of the research methodology. In order to collect

meaningful data, the methodology must be tailored to address the specific

research objectives of the study, and rigorous data collection procedures must

be used. Professional assistance is essential to implement an effective customer

survey and to ensure that rigorous data collection procedures are used. Such

assistance may be a professional consultant, university personnel, or in-house

customer feedback specialists. Although such a professional cannot define your

objective or data needs, they can help focus the intent of the survey and

develop a rigorous methodology to efficiently carry it out. Partner with a

survey professional early.

The primary responsibility of the transportation organization is to

establish the objective and information needs of the survey, and define the

characteristics of the population they are trying to reach. A survey consultant

can assist in focusing those activities, however their primary function is to

design and administer a rigorous survey methodology to meet the objective of

the organization.


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BELOW ARE SOME POINTS TO CONSIDER:

DEFINE THE SURVEY OBJECTIVE AND INFORMATION NEEDS

Clearly articulated objectives guide the design of the study as well as

the development of questions that are ultimately included in the survey. Key

questions to address include:

What is the objective of the survey?

What information is needed?

How will the information be used in the organization?

Use professional resources (such as survey consultants or university personnel

versed in survey methods) to develop the survey methodology and the

questionnaire.

These professionals can help in the development of a survey design that

meets the objectives of the study.

DEFINE THE SURVEY POPULATION:

The first step in designing a survey is to characterize the study population,

that is, define who will be surveyed. This will vary, depending on the study


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objectives. For example, if you are measuring systematic investment plan with

traffic signal operations, you may want to survey regular users of the arterial.

CONSIDER THE SAMPLING PROCEDURE CAREFULLY:

Ideally, representative sampling methods should be used, so that it is

possible to generalize the findings to the larger population. In the case of

systematic investment plan with traffic signal operations, respondents might be

randomly sampled by geographic area (i.e. randomly sample residential phone

numbers for census tracts near the study route). Again, the sampling strategy

will vary based on characteristics of the target population, the nature of the

service being evaluated, and the questions being addressed in the study. Do

any specific subgroups require over-sampling?

Finally, consideration needs to be given to the sample size that is

necessary to meet the data requirements of the study. With larger

samples, there is greater confidence that the sample findings are

representative of the general population, and larger samples also allow

for more detailed subgroup analysis. However, costs scale with sample

size.

SELECT THE INTERVIEW METHOD:

The nature of the study population as well as the type of service being

evaluated will guide decisions on the appropriate interview method. An

evaluation of a 511 website, for example, could be completed online by

customers of the website, whereas a survey measuring systematic investment

plan with traffic signal operations might be conducted by phone or mail.

Consider factors in the local context that might affect the design of the study

and the collection of data.


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DESIGN OF SURVEY QUESTIONS:

Pay close attention to the design of the survey questions. The survey

questions must be properly written so they yield meaningful data. When

questions are poorly worded or biased, the responses are likely to be

inaccurate or uninterruptible. In determining the content of the survey, consider

the research objectives and information needs of the overall study, as well as

any features of the service that might be specific to your area. The survey

questions should be designed to address the study objectives and information

needs. For example, if one objective of the study is to assess differences inopinions between peak and non82 peak travelers, then the survey will need

to include a question measuring this concept. Below are additional guidelines

for the types of questions that should be included in the survey:

Frequency of access How often do you drive on a certain roadway?

or How often do you access this website?

Overall satisfaction rating for the service, and for various components of

the service. Satisfaction ratings should be on a balanced rating scale,typically on a 5 to 7 point scale (though 11-point scale may be

appropriate in some cases)

Importance of providing the service

Particularly for information services, determine if the information had an

impact on traveler behavior (example: Did you chose an alternate route

as a result of the information?)

Ask how the service could be improved

Include key socio-demographic variables. Examples include gender, age,

income and education. Other questions that may be of interest,

depending on the nature of the study are: household composition,

number of vehicles in the household, employment status, trip type.

If previous surveys have been conducted, consider reuse of question for

consistency and trend analysis. Make use of available resources:


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USE RIGOROUS DATA COLLECTION PROCEDURES:

This will contribute to higher response rates, increasing confidence that

the sample findings are representative of the general population. Potential

techniques for increasing response rates include (these will vary according to

the survey method): pilot test the survey, advance letter or brochure

introducing the study, reminder calls to complete the survey, and incentives

(among others). Consider an independent survey design review.

REPORTING OF SURVEY RESULTS:

For scaled questions, it is recommended that responses be processed to

provide both the distribution of responses (i.e. standard deviation or

percent answering 5 and above, etc.) as well as the average response.

Survey results should also be analyzed by type of customer and by

relevant trip characteristics, such as travel location and trip type

(commute, school, vacation, freight movement, etc.), among others.

Survey report should contain a full description of the methodology,

response rate, and a copy of the survey itself.

Research problem:

To study consumer trends, behaviour, preferences and level of

satisfaction in Karvy group Ltd. The study was conducted in Gazipur with

sample size of 50 and sample units were suppliers and


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Consumer of mobile connection

Research Objectives:

o To study the consumer trends in investment sector.

o To study consumer decision-making & preferences.

o To study marketing strategies adopted by Karvy group

o To study the level of systematic investment plan in Karvy group

o To study the market potential.

o To study customer purchase decision behaviour.

o To understand the needs of different consumer segments.

Comparative study of different mobile companies


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ResearchMethod/Technique (Use in my own project)

In the project report the researcher used following techniques while conducting

his study:

Analysis of documents

Survey Method: A market survey was done on respondent.

Interview (Personal): Both open and closed ended (unstructured)

questions were asked while taking some information from the users of

the customer at gazipur.

Questionnaire (Structured): A structured designed comprehensive

questionnaire was framed and pretested for data collection from the

customer of Karvy.


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Research Data

Data is the key activity of marketing research. The design of the

data collecting method is backbone of research design.

Data constitute the foundation of statistical analysis and interpretation.

Hence the first step in statistical work is to obtain data.

Data can be obtained from two important sources, namely:

1. Primary Data

2. Secondary Data

Primary Data:

Primary data are gathered for the specific purpose or for a specific research

project, consist of original information for the fulfilment of project objective.


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When the data are required for the particular study can be found neither in the

internal record of the enterprises nor in published sources. In some cases it

may become necessary to collect original data.

Primary data can be collected in four ways:-

1. Observation

2. Survey

Secondary Data:

Secondary data are the data, which already exists somewhere. Secondary data

provide starting point for research and after that the advantage of low cost and

ready availability. Secondary data can be divided into two types:

1. Internal data

2. External data

When researcher uses the data that has already been collected by other data

are called secondary data. Secondary data can be obtained from journals i.e.

internal sources report, government publication and books, professional bodies

etc.


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Internal data are reports and memos generated within an

organisation to facilitate its operations and annual report. External data are

those specially produce for outside consumption.

Sources from which the researcher has taken

the secondary data are as under:

1. Direct observation

2. Karvy website

3. Books for marketing management

4. Surveys and customer data & report

5. KARVY customers care office

6. KARVYs Brouchers


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Overview of Systematic Investment Plans

Its been more than a decade since the winds of liberalization first swept

across Indian shores. Progressively, the Indian economy has opened up, and

become increasingly orientated to the market. One just needs to look around to

get an idea of the magnitude and pace of change on the economic front: more

products, better services, greater competition, and increased efficiency.

Manufacturers and service providers are only as good as the market deems

them to be.

With the governments role in economic matters reducing steadily, the market-

place is where the battles are fought and judgments passed. The market

rewards and punishes entities in the same breath, and at a mere moments

notice. And its fickle. Ask those who have been in the capital market over

the past two years. They will tell one that they have had to jot down a new

word in their investing lexicon: volatility.

The changing face of our markets

During this period, the stock market touched new heights, but also saw some

hard landings. Cut back to the pre-liberalization days: there were fewer


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investment options and limited market risks. This was in part due to the

overbearing government hand, which brought with it some sort of stability

albeit one with artificial overtones. Take the pricing of new shares. Till 1991,

the Controller of Capital Issues (CCI) used to decide the price at which

companies would offer their shares to the public. Inevitably, the issue price

would be at a huge discount to the intrinsic value of the share. This ensured

easy pickings for investors, but violated all established economic principles.

With the government handing over the reins of the stock market to market

forces, such anomalies in the system are getting sorted out. Accompanying the

host of systemic changes are new, complex products. For seasoned market

players, all this offers a mine of opportunity. However, for the average small

investor, the combination of new systems and increased volatility makes the

task of profiting from the stock market probably appear more daunting than

ever before.

The same is the case with the debt market. After years of administered interest

rates, the RBI (Reserve Bank of India) has been gradually ushering in market-

determined interest rates. A few years ago, the central bank freed bank deposit

rates, and let banks decide for themselves the rates they want to offer their

customers. The RBI is now easing restrictions on banks on the lending side

too. The latest move towards complete decontrol of interest rates is an RBI

panels proposal to reduce the interest rates on small savings schemes (like

PPF and NSC) and link them to the returns from government securities. What

this means is a competitive and market-driven debt segment, where interest

rates changes are a lot finer and where security prices factor in every material

change. Interest rate changes wont be as pronounced as before, but the

frequency of such changes will increase. For your investment in a debt fund,

this translates into greater fluctuations in its NAV (net asset value). The degree

of volatility in a debt fund will obviously be far less than in an equity fund,

but nonetheless significant to your investment.

Timing the market.

The bottom line: volatility is here to stay, and one must learn to cope with it.

Or better still, if one can, try and profit from it. But how? The best possible


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way to profit from volatility in the market is to predict the turning points

correctly, and make the appropriate investment decision. In other words, buy at

the bottom and sell at peaks! Do so consistently, and one will mint money.

But thats easier said than done. Even investment experts, with all their

acumen and experience, are unable to catch the turns in the market with any

degree of consistency or certainty. So, what chance does one stand, especially

when one is pulled by sentiment? A falling market (purely on the basis of

valuations, the best time to invest) is inundated with negative news, which

psychologically scares most investors from entering it. Likewise, there is an

abundance of good news in a rising market (the best time to sell), as a result

of which there is a tendency among investors to hold on to their investments

in the expectation of more gains.

In other words, investors usually tend to move with the mood of the market.

As a result, they dont take opportunities to pick bargains in a falling market

and hold on to the best sells in a rising market. In the worst case, they end

up buying near peaks and exiting near bottoms, when they should actually be

doing the opposite. Wouldnt it be nice if one could take the guesswork out

of timing the market, and consistently buy near the bottom? Well, one can,

with systematic investment plans (SIPs), an investment option available on

various mutual fund schemes (equity, debt and balanced). SIPs, also called

automatic investment plans (AIPs), are the most effective in the case of equity

schemes, as equities are, by nature, the most volatile of asset classes. For

simplicitys sake, we have used equity schemes to illustrate the concept of

SIPs.

The Case Of Chinese Bamboo

Let me narrate to one a story.

It's the story of Ganesh, the farmer, who used to live in a small village and

used to earn very little. Once upon a time a very renowned wise man visited

his village. Ganesh thought to visit him and seek some advice from him about


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his meager income. The wise man advised him to cultivate Chinese Bamboo.

He had never heard about it before, but he went on to cultivate it.

He planted a little seed, watered it and fertilized it for a whole year. But,

nothing seemed to happen. The next year he again watered it and fertilized it,

but to his dismay nothing happened again. The third year the same thing

happened and he got very discouraged. He thought that he has been mislead

by that wise man. But, he still watered it for the fifth year. This time to his

amazement, the bamboo tree sprouted and grew NINETY FEETS in 6 weeks.

This way the poor Ganesh became a rich man and all his woes came to an

end.

A Systematic Investment Plan, or SIP, is a simple yet a powerful tool used

by investors worldwide as a method for savings and wealth accumulation. It

works on the principle of Chinese Bamboo. That is, one will reap unbelievable

returns only in the longer run. Investing through SIP facility will empower one

to plan and save for your future by inculcating in one a disciplined habit of

investing that should bring one c

loser to achieving your financial objectives.

Definiotion of SIP

Systematic Investment Plan or SIP is a disciplined way of investing one's

money in order to take advantage of the volatility in the market, and thus

drawing maximum benefit out of our investments over a longer period of time.

In it an investor invests a pre-specified amount in a scheme at pre-specified

intervals at the then prevailing NAV. By investing through this route the

investor actually ends up with more number of units and hence can get more

returns whenever he disposes them off. This happens due to the reduction in


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average cost of each unit of the scheme that is purchased.

Now lets look at how it works.

Working and mechanism of SIP

While investing in mutual funds, usually, one select a scheme and buy into it

at its prevailing net asset value (NAV) or at its face value (in case of a new

scheme). Under SIPs, however, your investment is staggered. Instead of a

lumpsum amount, one invest a pre-specified amount in a scheme at pre-

specified intervals. The number of units that accrue to one on each periodic

investment is a function of the then prevailing net asset value (NAV) of the

scheme one have opted for.

Say one agreed to invest Rs 500 every month in an equity scheme, when its

NAV was Rs 10. In the first month, 50 units are credited to your account.

Assume that on the first day of the following month, the schemes NAV

increases to Rs 20. An additional 25 units are credited to your account that

day. Further, say, on the first day of the next month, the schemes NAV drops

to Rs 5. In that case, 100 units will be credited to your account. Hence,

through an SIP, one purchase more units when a schemes NAV is low and

fewer units when its NAV is high, thus reducing your average cost. As a

result, irrespective of whether a market is rising or falling or fluctuating, in

most cases the average per-unit cost price in an SIP will always be less than

the average per-unit sale price.

Cost averaging. SIPs are based on the concept of rupee cost averagingan

investment strategy common in the stock market. In the short term, share

prices rise and fall in line with the broad market, often driven not by

fundamental factors, but purely by sentiment. When share prices drop on

account of negative sentiment, a bounce back is mostly a question of time.

What this spike does is give one an opportunity to buy more of the same

stock at a lower price, and lower your average cost price.


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Say, one invested Rs 1,000 to buy 100 shares of XYZ Limited at Rs 10 each.

Subsequently, because of a fall in the market, XYZ drops to Rs 5. At this

price, one invest another Rs 1,000 in the stockin other words one buy

another 200 shares. Now, one own 300 shares of XYZ for a total investment

cost of Rs 2,000, at an average per-share cost of Rs 6.66. If XYZ is a

fundamentally strong company, theres a good chance its stock will appreciate.

On 100 shares, your break-even was at Rs 10. After the bout of cost

averaging, your break-even in XYZ has dropped to Rs 6.6 per share. In other

words, because of cost averaging, XYZ needs to appreciate by a smaller

margin than before for one to make money on your investment.

The all-important premise here is that the drop in the share price of XYZ is

because of extraneous reasons, not fundamental factors related to the company.

If the drop in the share price is because the companys fundamentals have

worsened, cost averaging amounts to throwing good money after bad. Hence,

so long as the intrinsic value of the underlying instrument hasnt depreciated,

cost averaging will work to your benefit.

Smoothen the swings. If your funds portfolio consists of fundamentally

sound stocks, each dip in the market (and so, in its portfolio) will give one a

chance to accumulate more units at lower rates. An SIP allows one to do just

that. Further, it restrains one from going overboard in a rising market, by

crediting fewer units to your account at those higher levels.

This disciplined approach to investing helps long-term investors reap good

returns over a period of time. And, in most cases, the average unit cost will

always be less than the average sale price per unit, irrespective of whether the

market is rising or falling. We ran the numbers for an SIP in an equity

scheme whose NAV mirrored the benchmark BSE (Bombay Stock Exchange)

Sensex, in a rising market (January to September 1999) and falling market

(January to September 2001). In both cases, the average unit cost of the SIP

investor is below the average NAV of the scheme during the same period


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Further, only in extreme bearish phases, like in the aftermath of the September

11 terrorist attacks in the US, will an SIP investor make a loss.

SIPs work best over long periods of time. Only then do one capitalise on the

periodic dips in the market and accumulate a greater number of units at lower

levelsand over time, reduce your average unit cost. Further, by staying

invested for a long period of time, one profit from the appreciation the market

tends to show over the long term. A SIP-based strategy would have worked

well in the Indian equities market

Most mutual funds peg the minimum periodic investment amount in their SIPs

at Rs 500, making it a viable investment option for small investors. While

signing up for an SIP, one have to indicate the periodicity of your investment

(at present, mutual funds offer only the monthly or quarterly option) and the

periodic investment amount. One give your fund house post-dated cheques

equivalent to your periodic commitment (generally, six cheques at a time in

the monthly option and four cheques in the quarterly option).

There is no lock-in period, and one receive regular entitlements like dividends,

as and when they are announced by your scheme. If one wish to terminate the

SIP option at any time, all one need to do is to inform your fund house,

which will return your uncashed cheques. No questions asked, no penalities

imposed. Further, one can exit the scheme any time one want. When one exit,

the mutual fund will encash the units accumulated in your account till the date

of exit, at the prevailingNAV.


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Features of Systematic Investment

Plan(SIP)


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Features of SIP:

1. Makes market timing irrelevant

2.Helps one build for the future

3. Compounds returns

4. Light on the wallet

5. Saving for different Investment goals

6. Opportunity Cost saved by the Investor

1.Market Timing Irrelevant:


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Most investors want to buy stocks when the prices are low and sell them

when prices are high. But timing the market is time consuming and risky and

involves lots of element of judgment. A more successful investment strategy is

to adopt the method called Rupee-Cost Averaging. To illustrate this lets

compare investing the identical amount through SIP and in one lump-sum.

2.Concept of Rupee Cost Averaging

Imagine Karan invests Rs.1000 every month in an equity mutual fund scheme,

starting in January. His friend, Arjun, invests Rs. 12000 in one lump sum in

the same scheme. The following tables illustrate how their respective

investments would have performed from Jan to Dec:

Karan's Investment Arjun's Investment

Month NAV Amount Units Amount Units

Jan-01 9.345 1000 107.0091 12000 1284.1091

Feb-01 9.399 1000 106.3943

Mar-01 8.123 1000 123.1072

Apr-01 8.750 1000 114.2857

May-01 8.012 1000 124.8128

Jun-01 8.925 1000 112.0448

Jul-01 9.102 1000 109.8660

Aug-01 8.310 1000 120.3369

Sep-01 7.568 1000 132.1353

Oct-01 6.462 1000 154.7509

Nov-01 6.931 1000 144.2793

Dec-01 7.600 1000 131.5789

Total 12000 1480.6012 12000 1284.1091


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As seen in the table, by investing with a SIP, Karan ends up buying more

units when the price is low and fewer units when the price is high. However,

over a period of time these market fluctuations are generally averaged. Andhence the average cost of the investment is often reduced.

At the end of the 12 months, Karan has more units than Arjun, even though

they invested the same amount. That's because the average cost of Karan's

units is much lower than that of Arjun. Arjun made only one investment and

that too when the per-unit price was high. Karan's average unit price =

12000/1480.6012 = Rs. 8.105 Arjun's average unit price = Rs. 9.345.

3.The Power of Compounding

The only solution to effective saving is regular investment, i.e., saving

consistently over a period of time. Hence, from the power of compounding we

can expect our periodic investments to grow to a considerable amount.

The power of compounding is involves nothing but the concept of Future

value of Annuities. An annuity is a series of equal payments or receipts that

occur at evenly spaced intervals. Leases and rental payments are examples. The

formula for calculating this future value is given by:


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FV = PMT [{(1 + i)n - 1} / i]

Where,

FV = Future Value of an Annuity

PMT = Amount of each payment

i = Interest Rate Per Period

n = Number of Periods

Just to illustrate, consider investing Rs.5000 at the end of every year for the

next 5 years. Let the compounded annualized return be 6%. Thus, we will

accumulate Rs. 28,185.46 at the end of 5 years. The following calculations

show the results.

From the above table we can see, that, when an amount of Rs. 5000 is

deposited at the end of every year. In it the previous years interest is also

added to the accrued amount till that period to get the interest of the next

year, thus giving a compounded return.

4. Light on The Wallet

Depending upon your earning capacity we can invest through SIP route. That

is, for low-end savers the minimum SIP amount is Rs. 1000. Hence, giving

the investors an option to save at a much higher rate of return than the banks

etc. and that too at a low SIP amount.

In the SIP route the AMC's do not charge any entry load, which again allows

the whole investment of an investor to be used. However, there is a CDSC

(Contingent Deferred Sales Charge) of X% on equity schemes redeemed in less

than N years (This CDSC value depends upon the discretion of the AMC).

5. Saving for Different Investment Goals

Life Cycle Of An Individual

The life of an individual can be divided into three phases:


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Phase 1: Birth & Education

Phase 2: Earning Years

Phase 3: Retirement Age

It's the Earning Age that builds the platform for the expenses during these and

after retirement years. A man has to save during these years to achieve his

investment objective.

The following are the major investment objectives: -

Home

Retirement

Children's Marriage

Children's Education

Though people need to start saving early in life, many have inadequate

resources available to them during their young years. Under such

circumstances, a monthly budget for investments would go a long way towards

achieving the objective. Thus, Systematic Investments Plan is best suited to

middle class investors who have low incomes to save. This is due to the

above-mentioned reason that they offer minimum SIP investments of Rs. 1000.

6.Opportunity Cost Saved By The Investor


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Through the SIP route the investor saves upon the opportunity cost of

investing the balance amount into some other investment areas. Consider a

person who wants to invest Rs.12000 in a year through SIP of Rs.1000 paid

monthly.

SIP

Amount

Amount Left to be

Invested

Opportunity Cost @ 5% p.a

Compounded Annually

1000 11000 11000(1+0.05/12)1 = Rs.45.83

1000 10000 Rs.41.67

1000 9000 Rs.37.50

1000 8000 Rs.33.34

1000 7000 Rs.29.17

1000 6000 Rs.25.00

1000 5000 Rs.20.84

1000 4000 Rs.16.67

1000 3000 Rs.12.50

1000 2000 Rs.8.34

1000 1000 Rs.4.17

1000 0 0

Total Rs.275.03

Hence. the investor saves on approximately Rs.275 per year as opportunity

cost. However, if he had invested the whole Rs.12000 in one go then the

above gain would have been lost.

Hence, if we look at the volatility in equity markets and then compare it with

the concept of systematic Investment Plans, we reach this conclusion that in

order to build a steady flow of income in the future its necessary to keep

investing regularly over a period of time, in order to eliminate the effects of

market volatility.


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ADVANTAGE OF SYSTEMATIC

INVESTMENT PLAN (SIP)

The Advantages of SIP:

In addition to reducing your average unit cost, SIPs make your investment go

the extra mile by making you follow some basic fund management principles.

Encourages disciplined investing. Once you have begun, an SIP serves as astrong reminder to invest at the appointed time. An SIP ensures you dont

divert your savings earmarked for investment purposes towards spending.

Convenience. Now enjoy freedom from the cumbersome process of filling an

application form every time you invest. All you have to do is identify the

amount

you wish to invest and the scheme in which you would like to invest. After

that choose from the option like Auto Debit/ECS facility where you have to

give the relevant bank details and your account gets automatically debited on a

date of your choice or give monthly or quarterly post dated cheques for the

amount you desire

Invest.

Lower markets risks through disciplined investing. Investing would be

simple if you could always pick the best time to buy and sell. However,

timing the market consistently can be difficult and you could be hit with a


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loss sooner or later. What you need is an automatic timing mechanism that

eliminates the need to time your investment.

As such, you dont have to worry about where share price or interest are

headed. You simply invest a fixed amount at regular intervals, regardless of

NAV. The idea is that you buy fewer units when NAV is high and more

when it is low automatically. This is in line with our natural desire to buy

low and sell high.

For instance , you could opt for systematic investment plan (SIP) by investing

Rs 1000 every month into an open-ended equity scheme with an NAV of Rs

10. The table above shows us that the average cost per unit under the SIP

will always be less than the average purchase price per unit, regardless of

whether the market is rising or falling or fluctuating.

The table below pits two investors against each other. Both start their

investments in equity at the same time. One of them makes a lump sum

investment of Rs. 60,000 while the other invests the same amount but in

multiples of Rs.10,000 each month for six months.


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This example uses assumed figures and is for illustrative purposes only.

*Fractional units rounded off.

During the course of the six month period, the lump sum investor sees the

unit price of his shares fall far below his cost of acquisition, followed by an

equally spectacular rise. At the end of six months however, his price per unit

happens to be the same as when he invested. His portfolio has effectively

stood still for six months.

On the other hand, the SIP investor has regularly invested, regardless of price

movements. His entire capital is not at risk, since it is being drip-fed into

the market, one bit at a time. That amount buys a different number of shares

each time; fewer shares when the price climbs, and more when it drops. The

net result is that after six months, the price of his shares is at the same level

it was when he started, but he has actually acquired more shares than the

lump sum investor, because he was able to take advantage of the dips in

price! His portfolio has grown, while the lump sum investors portfolio has

remained stagnant.

Easy liquidity. There is no lock- in period when you invest through SIP. If

you wish to terminate the SIP at any time, all you need to do is to inform

fund house

and he shall return your uncashed cheques /cancel your ECS mandate .further

you can exit the scheme any time you want. When you exit, you can redeem

the units accumulated in your account till the date of exit, at the prevailingnav

Affordability. With SIP, you do not need to invest large amounts of money

in one go. It allows you to start with as little as Rs100 per month and still

achieve your long term financial goal.

8/3/2019 VINEET R

vineet rai 2

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