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A
PROJECT REPORT
ON
INVESTDIRECT (INDIA) LTD
CHANDIGARH
On The Topic
“Analyzing the financial products of HSBC Invest direct (India) Ltd”
SUBMITTED TO
LOVELY PROFESIONAL UNIVERSITY
In Partial Fulfillment of the Requirements for the Award of Degree Of
MASTER OF BUSINESS ADMINISTRATION
SUBMITTED BY:
Baljit Kaur
MBA
Reg.No. - 11000066
DEPARTMENT OF MANAGEMENT
LOVELY PROFESSIONAL UNIVERSITY
JALANDHAR NEW DELHI GT ROAD
PHAGWARA, PUNJAB
Page | 2
ACKNOWLEDGEMENT
It is often said that journey of a thousand miles begins with the first, uncertain if we may add,
step. My journey was not too different. It involved the help, support and contribution of
several people.
It is difficult to ascertain the starting point for such thanks giving, and yet one usually starts
with the most significant contributor. In my case let us begin with the people who strictly
confined themselves to behind the scenes before I move on to the persons who directly
affected the course and scope of events.
I would like to extend our sincerest gratitude to PROF. DEEPIKA DHALL for her
unrelenting support and an uncanny habit of pointing out the flaws in the scheme of things at
the most crucial juncture, hence causing several opportunities for learning. I do not think it
would be just to end such thanks giving without thanking our respondents for co operating
with us.
I also express my sincere gratitude towards Ms. SAKSHI VATS my guide. My increased
spectrum of knowledge in the mutual funds and ULIPs and other product is the result of her
constant supervision and direction that has helped me absorbs relevant and high quality
information.
Beside the mixed experience that I had during the course of my study and analysis; also
helped me to learn a lot regarding the actual working of a company. It also taught me how to
take every experience in right spirit and earn from each ones.
Finally I also extend my heartiest thanks to all my friends and well wishers for being with me
and extending encouragement throughout the project.
BALJIT KAUR
Page | 3
CERTIFICATE
This is to certify that MS BALJIT KAUR of Lovely Institute of Management, Phagwara has
successfully completed the project work titled “ANALYZING THE FINANCIAL
PRODUCTS OF HSBC”in partial fulfillment of requirement for the award of POST
GRADUATION DEGREE IN BUSINESS MANAGEMENT prescribed by the Lovely
Professional University. This project is the record of authentic work carried out during the
academic year (2010 – 2012).
Page | 4
To Whom It May Concern
It is to certify that Baljit Kaur, Registration No. 11000066 has satisfactorily completed the
project work, analyzing the financial products of HSBC Invest direct (India) Ltd for the
partial fulfillment of the award of the degree of “Master of Business Administration” by
Lovely Professional University.
Sign of Academic Head
( )
Page | 5
TABLE OF CONTENTS
S.NO PARTICULARS PAGE.NO
1. EXECUTIVE SUMMERY
CHAPTER 1
INTRODUTION
1.1 Industrial Profile
1.2 Company Profile
1.3 The HSBC Group In India
1.4 Division Of The Company
1.5 Key Executives
1.6 The Competitors
7
8 – 14
2. Chapter 2
Objective, Scope of study
16
3. Chapter 3
Review of Literature & Methodology
3.1 Review of literature
3.2 Research Methodology
3.3 Data sources:
- Primary data
-Secondary data
3.4 Type OF RESEARCH
3.5 Sampling Technique
3.6 Sampling Unit
3.7 Sample Size
3.8 Statistical tools used
3.9 Instrumentation Technique
18 – 22
4. Chapter 4 24 – 33
Page | 6
Analysis of products and services of HSBC
5. Chapter 5
Data Analysis and Interpretation
35- 49
6. Chapter 6
Limitations Suggestions & Conclusion
51- 53
7. Chapter 7
References, Bibliography
55 -56
8. Questionnaires 58 -60
Page | 7
Executive Summary
In today's complex financial environment, investors have unique needs which are derived
from their risk appetite and financial goals. But regardless of this, every investor seeks to
maximize his returns on investments without capital erosion.
The art and science of making decisions about investment mix and policy, matching
investments to objectives, asset allocation for individuals and institutions, and balancing risk
against performance. These are the basic activities done by the broking firms.
HSB (India) Limited, a financial services company, provides customized financial
management solutions to individual and corporate customers in India. The company offers
various retail broking service offerings comprising equities, derivatives, mutual funds, and
insurance products, as well as NRI, online trading, and branch trading services. It also
provides wealth management products and services, including investments; IPO advisory and
distribution services; various risk management solutions for corporate and individual
customers; and portfolio management services..
These options depend on the financial requirements of the investors and constructed
according to that only, but with time these requirements changes, so all products need some
up gradations. This project will also concentrate on this area.
Project will also compare and analyze products of major competitors of HIDL.
It will help in making financial products of HSBC Invest Direct Limited more superior and
beneficial to customers.
Page | 8
Chapter 1
Introduction
Page | 9
Industry Profile
Finance and Investment Industry is a fairly broad ranging group of institutions that provide
various financial services. Examples of such institutions include commercial banks, merchant
(or investment) banks, insurance companies, brokerage firms, asset managers, and an
assortment of other institutions. Services provided range from money management for private
individuals, to debt and equity underwriting for corporations to issuance of insurance
policies, and many other services. In today’s global markets, this industry is the engine of the
global economy, enabling corporations and the government to grow and expand.
In 2009-10, the Indian economy is estimated to have grown by 7.2 per cent. According to the
latest Central Statistical Organization (CSO) data, financial services and real estate sector
rose by 7.8 per cent in the third quarter of 2009-10. The sectors including banking and
insurance and mutual funds are beginning to reap the benefits of a good closure of 2009-
2010.
Financial services organizations are striving to achieve increasingly ambitious profit and
growth targets against a background of heightened risk, regulation and market pressures.
Customer needs and expectations are evolving in the face of increasing personal wealth, more
private funding of pensions and health care and the desire for ever more accessible and
personalized financial products and services. In turn, intense competition has squeezed
industry margins and forced organizations to cut costs while still seeking to enhance the
quality of client choice and service. The battle for talent is also heating up as companies seek
to enhance innovation, customer loyalty and investment returns
The corollary of this market evolution is increasing risk as products become more complex,
organizations more diffuse and the business environment ever more uncertain. Regulation is
also tightening in the wake of public and government pressure for improved governance and
Page | 10
transparency.
In this environment, the winners will be companies that can turn the challenges into
opportunities to build stronger and more enduring customer relationships; sharpen process
efficiency; unlock talent and creativity; use improved risk management processes to deliver
more sustainable returns; and use new regulatory demands as a catalyst for strengthening the
business and enhancing market confidence.
The government has taken a number of steps to revive the economy, including slashing
interest rates, lowering factory levies and more than doubling the limit on foreign investment
in corporate bonds. The financial services space is a rapidly growing one in India. The
country received US$ 45 billion in foreign currency remittances from non-resident Indians in
2008, the highest in the world.
Page | 11
COMPANY PROFILE:-
HSBC
Company History:
The HSBC Group is named after its founding member, The
Hongkong and Shanghai Banking Corporation Limited,
which was established in 1865 to finance the growing trade
between Europe, India and China.
The inspiration behind the founding of the bank was
Thomas Sutherland, a Scot who was then working for the
Peninsular and Oriental Steam Navigation Company. He
realized that there was considerable demand for local
banking facilities in Hong Kong and on the China coast and he helped to establish the bank,
which opened in Hong Kong in March 1865 and in Shanghai a month later.
Soon after its formation the bank opened agencies and branches around the world. Although
that network reached as far as Europe and North America, the emphasis was on building up
representation in China and the rest of the Asia-Pacific region. HSBC was a pioneer of
modern banking practices in a number of countries. In Japan, where a branch was established
in 1866, the bank acted as adviser to the government on banking and currency. In 1888, it
was the first bank to be established in Thailand, where it printed the country’s first banknotes.
From the outset trade finance was a strong feature of the local and international business of
the bank, an expertise that has been recognized throughout its history. Bullion, exchange,
merchant banking and note issuing also played an important part. By the 1880s, the bank was
acting as banker to the Hong Kong government and also participated in the management of
British government accounts in China, Japan, Penang and Singapore. In 1874 the bank
handled China’s first public loan and thereafter issued most of China’s public loans.
Page | 12
What is HSBC?
We are the world’s local bank.
Headquarters in London, HSBC is one of the largest banking & financial services
organization in the world. HSBC’s international network comprises over 9500 offices in 76
countries & territories in Europe, the Asia-Pacific region, the Americas, the Middle East &
Africa.
With listings on the London, Hongkong, New York, Paris & Bermuda stock exchange shares
in HSBC holdings places are held by nearly 200,000 shareholders in some 100 countries &
territories. The shares are traded on the New York stock exchange in the form of American
Depository Receipts.
Through an international network linked by advertisement techniques, including a rapidly
growing e-commerce capability, HSBC provides a comprehensive range of financial services
like-
Personal financial services
Commercial Banking
Corporate Banking
Investment Banking
THE HSBC GROUP IN INDIA
Year of commencement of operations in India
The Mercantile Bank of India, China & London : 1853
The Hongkong & Shanghai Banking Corporation Limited (HBAP) : 1867
HSBC Securities & Capital Markets (India) Private Limited (HBAP) : 1995
HSBC Private Equity Management (Mauritius) Limited
Page | 13
(India liaison Office) (PEIN) : 1995
HSBC Electronic Data Processing India Private Limited (HDPI) : 2000
HSBC Primary Dealership (India) Private Limited (HCPD) : 2001
HSBC Professional Services (India) Private Limited (HPSI) : 2001
HSBC Software Development (India) Private Limited (HSDI) : 2002
HSBC Asset Management (India) Private Limited (ISIN) : 2002
HSBC Insurance Brokers (India) Private Limited (ININ) : 2003
HSBC Operations & processing enterprise(India) Pvt. Ltd. (HOPE) : 2003
Canara HSBC Oriental bank of commerce Life insurance co. Ltd. : 2008
HSBC Invest Direct (India) Limited, a financial services company, provides
customized financial management solutions to individual and corporate customers in India.
The company offers various retail broking service offerings comprising equities, derivatives,
mutual funds, and insurance products, as well as NRI, online trading, and branch trading
services. It also provides wealth management products and services, including investments;
IPO advisory and distribution services; various risk management solutions for corporate and
individual customers; and portfolio management services. In addition, the company offers
various institutional offerings, such as investment banking services for equity related
products and instruments; and institutional equity broking services. Further, HSBC
InvestDirect (India) Limited provides various advisory services and investment tools. It was
formerly known as IL&FS Investsmart Limited and changed its name to HSBC InvestDirect
(India) Limited in August 2009. The company was founded in 1997 and is based in Mumbai,
India. HSBC InvestDirect (India) Limited is a subsidiary of HSBC Securities & Capital
Markets (India) Private Limited. It is listed in both exchanges, NSE and BSE.
DIVISIONS OF THE COMPANY
The following are the divisions of HIDL Limited:
The Investment Advisory and Broking Division
Merchant Banking Division
The Project Syndication Division
Page | 14
Institutional Equity Broking Division
Institutional Debt Broking division
Key Executives
Chairman
Hardeep Singh
Director
Ajay Dua
Managing Director & CEO
Manasije Mishra
Director
TarunKataria
Sonal Dave
Additional Director
Naina Lal Kidwai
Company Secretary
Kashmira Mathew
THE COMPETITOR
The existing major players in the stock broking industry besides HSBC invest direct are.
1. ICICIDirect
2. HDFC Securities
3. Standard Chartered -STCI
4. IDBI Paisa Builder
5. AXIS Bank
Page | 15
Chapter 2
Objective and Scope of study
Page | 16
OBJECTIVE OF THE STUDY
The main objective of this study is to understand the rationale behind an individual’s
investment decision or financial planning, considering whether or not factors like age, no. of
dependents, income level, risk appetite, etc. influence his/her investment/financial planning
decision. This will help in creating the financial products which are framed according to the
investor’s risk appetite and rationale behind investment.
Other objective for the study is analyzing the product and services offered by major
competitor of HSBC Invest direct.
Scope of study:-
The scope of Financial Product is highly vast and with private sector banks mushrooming,
there is a large number of Financial Product in the market to choose from. Thus, the project
would cover
To compare and analyze the products of major competitors of HSBC Invest Direct
(India) Limited (HIDL).
It will help in making financial products of HSBC Invest Direct Limited more
superior and beneficial to customers.
Risk appetite of investors will be measured by doing the survey through the
questionnaire. This will help in preparing and offering the suitable options to the
customers.
This Study will also help to understand the customer’s satisfaction and perception
about HSBC’s services and products.
Page | 17
Chapter 3
Review of Literature&
Methodology
Page | 18
REVIEW OF LITRATURE
Bruce A. Huhmann et.al (2005) Examine that the consumers require information about the
risk-return trade-off credibility information to relieve principal-agent conflict concerns, and
transaction cost information – for investment decisions. This paper aims to investigate
whether or not such information is present in advertisements for one investment vehicle –
mutual funds. Mutual fund advertisements are not providing the information necessary for
optimal investment decisions. Mutual funds use techniques known to increase the likelihood
that their advertisements are noticed, but they also use techniques known to decrease the
readership of their advertisements.
David E. Allen (2006) analyzed that mutual fund investors' response to mergers of
Australian mutual fund companies. The mergers are not accompanied by increased money
flows. Instead investors withdraw from the target funds prior to and after the merger. Funds
belonging to specialist mutual fund companies record more gains in assets under management
than declines following mergers, and that money inflow gains at competing funds induce
reductions of management expense ratios at target funds.
Kerstin Drachter et.al (2007) Examine the performance of actively managed mutual funds
is largely dependent upon the investment decisions of the fund managers. The purpose of this
study is to examine the decision processes in German fund companies and their impact on
fund performance. it is possible to conduct a high quality survey study even though
managers know that their answers will be linked to their performance and secondly, that the
behavior of managers depends heavily on the characteristics of the funds and the
characteristics of the fund company
Timo Korkeamaki et.al (2007) examine the effect of advertising on mutual fund cash flows
in the Finnish fund market and his findings shows that the past year's performance nor
advertising alone is sufficient to produce increased cash flows. However, advertising together
with past performance is found to significantly affect cash flows. The positive effect of
advertising is limited to the use of non-perishable advertising media. Additionally, it is found
that fund families spending proportionately more on advertising receive higher asset flows.
Page | 19
Cheng-Ru Wu et.al (2008) it is found that how investors evaluate mutual fund performance,
not only based on both quantitative but also qualitative criteria and his findings shows that
most important criteria of mutual fund performance should be “mutual fund style,” following
is “market investment environment.” This result indicates investors' focus when they evaluate
the mutual fund performance.
Rob Jans, et.al (2008) examine the tournament hypothesis in the UK mutual fund market.
Based on a previous US study, fund managers were expected to alter risk-taking behavior in
response to their performance relative to competing fund managers and his findings show that
the entire 1989-2003 sample period no consistent evidence for tournament behavior is found.
This is robust to the effects of survivorship bias and window dressing. Second, splitting the
sample period into two sub-periods reveals an interesting pattern. During the first part of the
sample period, 1989-1996, significant evidence for tournament behavior is found. During the
second part of the sample period, 1997-2003, significant support for strategic behavior, as
described theoretically by Taylor has been documented.
Laurens Swinkels (2009) The purpose of this paper is to empirically assess the investment
performance of mutual fund managers who operate in the Polish market. For each of the three
categories, equity, balanced, and bond funds, the paper positive, but insignificant selectivity
skill of the mutual fund managers. No evidence is found of bond or equity market timing
skills in the sample.
Yurij Lukashin (2009) describe development of Russian mutual fund (MF) market, to
suggest and apply methodology of statistical analysis of management quality, to evaluate
profitability and risks of the market and his findings shows that the Russian mutual market is
growing both in number and in aggregate value of net assets. Profitability and risks of the
market are high.
Tajudeen Olalekan Yusuf, (2010) Examine how insurance brokers control opportunism at
the postcontractual stage of insurance contract in the Nigerian insurance market. The
involvement of the insurance brokers from the claim notification stage, claim auditing to
actual settlement and dispute mediation are instances of control over customers' opportunistic
tendencies. Also, it is found that fear of reputation damage and brokers' professional way of
handling clients' over-exaggeration and suspicious claiming might considerably control
insurance opportunism.
Page | 20
Dag Einar Sommervoll, et.al (2011) study to what extent an insurance based on a house
price index provides equity protection for homeowners and It is found that the payout
efficiency is surprisingly stable (around 50 percent) for all temporal spatial aggregations. A
neighborhood index outperforms the metropolitan index with respect to target efficiency (the
probability of payout given a loss). The introduction of maturity times, say legitimate claim
five years after purchase, does improve efficiency somewhat. However, the idiosyncratic
component of housing market transactions remains high, and the insurance probably
unattractive from a homeowner perspective.
Page | 21
RESEARCH METHODOLOGY
The Research Methodology will be used by me for the purpose of this project is as follows:-
TYPE OF RESEARCH
The research design comprise of the plan and structure of investigation conceived so as to
arrive at the responses to the research queries. The research design will be used here for this
project is a descriptive research designs.
DATA SOURCE:-
Primary Data:
The primary data are which are collected afresh and for the first time, and thus happen to be
original in character. A primary survey was conducted at Chandigarh city. The survey was
carried out at various levels & the target group was retail investors, business men,
industrialists, exporters, etc. Questionnaires were used as an instrument to collect the primary
data.
Secondary Data:
Secondary data is collect about various researches done earlier on this topic. Data are
collected from various sites about the investment patterns.
SAMPLING TECHNIQUE
The sampling technique adopted for the study is Random sampling technique according to
the convenience of the researcher.
SAMPLE SIZE
Sample size is 50 respondents.
SAMPLE UNIT
Chandigarh
Page | 22
STATISTICAL TOOLS USED
Statistical tools like Tabulation, Factor analysis, Bar Graph Representations, and percentage
analysis are used in the compilation and computation of data.
Page | 23
Chapter 4
Analysis of product and
services of HSBC
Page | 24
Analysis of product and services of HSBC
PRODUCTS AND SERVICES:-
Personal financial services
Commercial Banking
Corporate Banking
Investment Banking
1) Fixed Deposits
2) Mutual funds
3) SIP
4) Insurance
5) Ulip
PERSONAL FINANCIAL SERVICES (PFS)
HSBC India offers a wide range of competitively priced services & products to over 1.75
million individual resident Indians as well a Non-resident Indian customers across India,
USA, UK, Middle East & South East Asia. HSBC’s 150 year presence in India allows it to
enjoy the advantage of deep rooted knowledge of local markets & customs. This has lead to
development of products & services, which are attuned to the financial needs of Indians in the
cities where HSBC operatives. The HSBC brand is associated with core values such as
transparency, trust & honesty. These factors enable HSBC India to remain highly competitive
& at the leading edge of the retail & commercial banking market in the country.
The distribution network in India consists of 47 branches in 26 cities supported by 170 ATMs
at 142 locations. In addition, self service banking channels, such as Internet Banking & a 24
hour centralized all India Call Centre provide a strong backbone to the distribution
capabilities. A second load balancing Call Centre became operational in January 2005 at
HSBC Operations & Processing Enterprise (India) Private Limited, Chennai. Customers can
apply for all products & services online at www.hsbc.co.in
The bank offers a complete suite of products & services including HSBC Premier
International, HSBC Premier, Power Vantage, Savings & Current Accounts, International
Page | 25
Debit Cards & Term Deposits in addition to consumer loan products like International Credit
Cards, Mortgage, Personal Loans, Educational loans & Overdrafts. HSBC is the 6th
largest
Credit Card issuer in India with over 1.3 million cards in force.
Premier & mid market customers have access to comprehensive Financial Planning & HSBC
is a market leader in the provision of Wealth Management services. In 2005,HSBC was the
largest distributor of Retail Mutual Funds in India, & the biggest sales channel for Banc
assurance partner TATA AIG.
Non-Resident Indians (NRI’s) constitute 56% of the Bank’s deposit base. The banking a
needs of NRIs are fulfilled from branches in India & 11 NRI centres abroad. We have over
84,000 NRI Customers, & have started referring customers to Financial Planning Managers
& the Private Bank in the host countries, to address their needs for investment products. A
free remittance service is offered between accounts held by NRIs with HSBC
overseas & onshore. In 2006, an International Banking Centre was established facilitate
cross border business referrals.
COMMERCIAL BANKING
HSBC is a leading provider of financial services to small, medium-sized and middle-market
enterprises. The Group has over 43,000 such customers in India, including sole proprietors,
clubs and associations, incorporated businesses and publicly quoted companies. Commercial
Banking provides a full range of banking services to these customers including multi-
currency business accounts, payment and cash management, trade services, factoring and a
range of borrowing solutions.
In India, Commercial Banking has a presence in 47 branches covering 26 key cities and for
the convenience of our customers, a multi channel service including Internet and Phone
banking. For SME customers, HSBC offers the complete range of transaction baking services
as well as unsecured loans and loans for and against property. The services are supported by a
large Sales and Relationship Management team in key locations across the country. India is
the first country in the HSBC Group where Commercial Banking lends to Microfinance
Institutions, thus providing indirect funding to hundreds of small business owned and run by
Page | 26
members of underprivileged sections of society. A dedicated unit has been formed to focus
on Microfinance and other Priority Sector institutions, with a view to further reach out to the
marginalized and under banked.
CORPORATE AND INSTITUTIONAL BANKING
Corporate Banking (CB) is an integral part of the Global Banking structure, which focuses on
offering a full range of service to multinationals, large domestic corporate and institutional
clients.
Provides a wide range of banking and financial services provided to domestic and
international operations of large local corporate and local operations of multinationals
corporations. Services include access to commercial banking products, including working
capital facilities such as domestic and international trade operations and funding,
channel/distributor financing, and overdrafts, as well as domestic and international
collections and payments, INR and Foreign currency term loans (external commercial
borrowing in foreign currency), letters of guarantee etc.
Institutional Banking drives the Group’s relationship with banks, financial institutions,
securities houses, insurance companies, and asset management companies and other non-
banking companies, non-government and development organizations operating in India.
Market leadership position based on strong relationships with major financial institutions.
Investment Banking and Markets brings together the advisory and financing, equity
Securities, equity linked transactions, asset management, treasury and capital markets, and
private equity activities of the Groups to complete the Global Banking structure and provide a
complete range of financial products to our clients.
Clients are serviced by sector based client service teams that combine relationship managers,
product specialists and industry specialists to develop customized financial solutions. These
Page | 27
form the relationship team along with the Investment Banking structure and provide a
complete range of financial products to our clients.
INVESTMENT BANKING
1) HSBC FIXED DEPOSITS
When it comes to assured returns, choosing the right type of savings scheme makes all the
difference. HSBC Fixed Deposits let you make the most of value-added benefits as you
create wealth at low risk.
Features & Benefits
The superior Fixed Deposit to invest in, for a secure future
You can now open a Fixed Deposit with Rs. 10,000 only
Enjoy high rate of returns on your HSBC Fixed Deposits
Choose from a wide range of tenors as per your
convenience
Avail of our special rates for select tenors
Interest Rates
Fixed Deposit Period
Citizen’s Interest
Interest Rate
(% p.a.)
Senior
Rate**
(% p.a.)
7 days 3.00 3.25
8 to 14 days 3.00 3.25
15 to 29 days 3.50 3.75
30 to 59 days 4.25 4.50
60 to 89 days 5.25 5.50
90 to 179 days 5.25 5.50
180 to 269 days 5.50 5.75
270 to 12 months 8.00 8.25
366 to 399 days 8.00 8.25
400 days 8.75 9.00
401 to less than 18 months 7.25 7.50
18 months to 730 days 7.50 7.75
731 days 7.50 7.75
732 to less than 36 months 7.50 7.75
Page | 28
Certificate of Deposit
Earn interest for funds invested from 15 days to one year, with HSBC’s Certificate of
Deposit (CDs). CDs can be availed by individuals (other than minors), corporations,
banks, companies, trusts, funds, associations etc. Non-Resident Indians (NRIs) may also
subscribe to CDs on a non-repairable basis only.
2 ) Mutual Fund
It is a type of investment where a number of investors money is pooled together & used
by the fund manager(referred to as the Asset Management Company or AMC) to invest in
underline securities inline with the objectives of the scheme.
By this method you can achieve a much wider spread of investments than if you were
investing directly in the underlying investments. It is generally accepted that by spreading
your investment you are spreading your risk, therefore investing in mutual funds is
considered to be lower risk than direct investment.
When you invest in mutual funds you do not own the underlying investments but have a
claim to a number of units in the fund representing the size of your investment. The value
of each unit of the mutual fund scheme, calculated based on the market value of the
underlying investments after deducting expenses and liabilities, is referred to as the ’Net
Asset Value’ or NAV.
The first time a mutual fund scheme is available for purchase is referred to as a New Fund
Offering or NFO.
Page | 29
1- A mutual fund actually belongs to the investors who have pooled their funds
is in the hands of the investors.
2- Investment professionals and other service providers, who earn a free for their
services, from the fund, manage a mutual fund.
3- The pool of funds invested in a portfolio of marketable investments. The value
of the portfolio is updated every day.
4- The investor’s share in the fund is denominated by “units”. The value of the
units changes in the portfolio’s value, every day. The value of one unit of
investment is called as the net asset value of NAV.
5- The investment portfolio of the mutual fund is created according to the stated
investment objectives of the fund.
Page | 30
3. SYSTEMATIC INVESTMENT PLAN (SIP)
What is SIP?
An SIP is a regular investment plan for purchasing units of a mutual fund scheme. Offered by
mutual funds to help you save regularly.When investing in mutual funds, you would normally
identify a scheme & invest a predetermined amount in it at its prevailing net asset value
(NAV). If you invest a sum of Rs.10,000 at an NAV of Rs.10, you will receive 1,000 units.
The timings of your investment in such a case may turn out to be favourable or unfavourable.
Under SIP, however, your investment is staggered over a period. Instead of investing
Rs.10,000 at one go, you might consider investing specified amounts in a scheme at pr-
specified intervals. For instance, you could spread out the Rs.10,000 investment over 10
months, with Rs.1,000 being invested each month. The number of units that accrue to you on
each periodic investment would depend on the NAV of the scheme prevailing at the time of
your purchase. By doing this, you would have done away with the need to time the market.
SIP’s also in calculate some much needed discipline into your investing habits. .
It is just like a recurring deposit with the post office or bank where you put in every month.
The difference here is that the amount is invested in a mutual fund.
The minimum amount to be invested can be as small as Rs.500 & the frequent investment is
usually monthly or quarterly.
How an SIP works?
An SIP allows you to take part in the stock market without trying to second guess
movements. An SIP means you to commit yourself to investing a fixed amount every month.
Let Rs.1000 When the NAV is high, you will get fewer units. When it drops, you will get
more
Date
NAV
Approx number of units you will get
at Rs.1000
Page | 31
Jan 1 10 100
Feb 1 10.5 95.23
Mar 1 11 90.90
Apr 1 9.5 105.26
May 1 9 111.11
Jun 1 11.5 86.95
Within six months, you would have 5,894 units by investing just Rs.1000 every month.
4. INSURANCE
Insurance, in law and economies, is a form of risk management primarily used to hedge
against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk
of a potential loss, from one entity to another, in exchange for a premium. Insurer, in
economics, is the company that sells the insurance. Insurance rate is a factor used to
determine the amount, called the Premium, to be charged for a certain amount of insurance
coverage. Risk management, the practice of appraising and controlling risk, has evolved as a
discrete field of study and practice.
5) ULIPS
A unit linked insurance policy is one in which the customer is provided with a life insurance
cover and the premium paid is invested in either debt or equity products or a combination of
the two. In other words, it enables the buyer to secure some protection for his family in the
event of his untimely death and at the same time provides him an opportunity to earn a return
on his premium paid. In the event of the insured person's untimely death, his nominees would
normally receive an amount that is the higher of the sum assured (insurance cover) or the
value of the units (investments).However, there are some schemes in which the policyholder
receives the sum assured plus the value of the investments.
Page | 32
Every insurance company has four to five ULIPs with varying investment options, charges
and conditions for withdrawals and surrender. Moreover, schemes have been tailored to suit
different customer profiles and, in that sense, offer a great deal of choice.
The advantage of ULIP is that since the investments are made for long periods, the chances
of earning a decent return are high.
Just as in the case of mutual funds, buyers who are risk averse can buy into debt schemes
while those who have an appetite for risk can opt for balanced or equity schemes. However,
the charges paid in these schemes in terms of the entry load, administrative fees, underwriting
fees, buying and selling charges and asset management charges are fairly high and vary from
insurer to insurer in the quantum as also in the manner in which they are charged.
Tax benefits
The premiums paid for ULIPs are eligible for tax rebates under section 80 which allows a a
maximum of Rs. 1,00,000 premiums paid for taxable income below Rs 8,50,000 and
Proceeds from ULIPs are tax-free under section 10(10D) unlike those from a mutual fund
which attract short term capital gains tax.
Key features
Premiums paid can be single, regular or variable. The payment period too can be regular or
variable. The risk cover (insurance cover) can be increased or decreased.As in all insurance
policies, the risk charge (mortality rate) varies with age. However, for an individual the risk
charge is always based on the age of the policyholder in the year of commencement of the
policy. These charges are normally deducted on a monthly basis from the unit value. For
instance, if there is an increase in the value of units due to market conditions, the sum at risk
(sum assured less the value of investments) reduces and so the risk charges are lower. The
maturity benefit is not typically a fixed amount and the maturity period can be advanced
(early withdrawal) or extended.
Investments can be made in gilt funds (government securities), balanced funds (part debt, part
equity), money-market funds; growth funds (equities) or bonds (corporate bonds).
Page | 33
The policyholder can switch between schemes (for instance, balanced to debt or gilt to
equity). The investment risk is transferred to the policyholder.The maturity benefit is the net
asset value of the units. The value would be high or low depending on the market conditions
during the period of the policy and the performance of the fund manager.
Thus there is no capital protection on maturity unless the scheme specially provides for it.
There could be policies that allow the policyholder to remain invested beyond the maturity
period in the event of the maturity value not being satisfactory.
Page | 34
Chapter 5
Data Analysis &
Interpretation
Page | 35
TABLE 4.1
Gender:
Frequency Percent Valid Percent
Cumulative
Percent
Valid Male 30 60.0 60.0 60.0
Female 20 40.0 40.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
This bar graph shows that out of 50 respondents, 60% of the respondents are male and rest
40% of the respondents are female who are invest their money into the market.
Page | 36
TABLE 4.2
Age:
Frequency Percent Valid Percent
Cumulative
Percent
Valid 20-30 13 26.0 26.0 26.0
30-50 26 52.0 52.0 78.0
above 50 11 22.0 22.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
This bar chart shows that majority of the sample respondents were in the age group of 30-50
year i.e 52%, 26%of the respondents were in the age group of 20-30 year and 22% of them
were 20-30 year.
Page | 37
TABLE 4.3
Profession
Frequency Percent Valid Percent
Cumulative
Percent
Valid Entrepreneur 2 4.0 4.0 4.0
Private Job 20 40.0 40.0 44.0
Government Job 16 32.0 32.0 76.0
Student 10 20.0 20.0 96.0
Industrialist 2 4.0 4.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
This bar chart shows that majority of the respondents were doing private job i.e. 40%. 30% of
the respondents were doing 32% and 20% of the respondents were students.
Page | 38
TABLE 4.4
Income Level:
Frequency Percent Valid Percent
Cumulative
Percent
Valid 60,000 – 1, 00,000 4 8.0 8.0 8.0
1, 00,000 – 2, 00,000 14 28.0 28.0 36.0
2, 00,000 – 3, 00,000 18 36.0 36.0 72.0
above 3,00,000 14 28.0 28.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
This bar chart shows that 36% of the respondents get salary 2-3 lakh,28% of the respondents
are get a salary 1-2 lakh, again 28% of the respondents get a salary above 3 lakh and 8% of
them get less than 1 lakh.
Page | 39
TABLE 4.5
Have you ever invested in the market?
Frequency Percent Valid Percent
Cumulative
Percent
Valid Yes 28 56.0 56.0 56.0
No 22 44.0 44.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
This graph shows that 56% of the respondents are invested in the market and rest of 44% are
never invest their money into the market.
Page | 40
TABLE 4.6
Are you aware of various HSBC’s investment schemes?
Frequency Percent Valid Percent
Cumulative
Percent
Valid Nil 16 32.0 32.0 32.0
average 26 52.0 52.0 84.0
Fully 8 16.0 16.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
This bar graph chart shows that, out of the 50 respondents 52% investors are average aware
about the investment schemes, 32% respondent are not aware and rest 16% are fully aware of
the various investment schemes of hsbc.
Page | 41
TABLE4. 7
Have you ever invested in HSBC?
Frequency Percent Valid Percent
Cumulative
Percent
Valid Yes 32 64.0 64.0 64.0
No 18 36.0 36.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
This graph shows that 64% of the respondents are ever invested in the hsbc and 36% are
those respondents who never invested in the hsbc.
Page | 42
TABLE 4.8
How long you are investing in market?
Frequency Percent Valid Percent
Cumulative
Percent
Valid 1-5 years 23 46.0 46.0 46.0
5-10 years 19 38.0 38.0 84.0
Above 10 years 8 16.0 16.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
From the sample of 50 respondents, 46% of the respondent invest in the market from the
period of 1-5 year, 36% respondents are invest from 5-10 year and remaining 16%
respondents are invest in the market from above 10 year.
Page | 43
TABLE 4.9
You made invested through:
Frequency Percent Valid Percent
Cumulative
Percent
Valid Your own 14 28.0 28.0 28.0
Through Distribution house 16 32.0 32.0 60.0
Through broker 15 30.0 30.0 90.0
Others 5 10.0 10.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
This bar chart shows that 32% of the respondent are invested through the distribution house,
30% are invested through the broker, 28% are invested own and remaining 10% are invested
through others.
Page | 44
TABLE 4.10
What would you take into account while investing?
Frequency Percent Valid Percent
Cumulative
Percent
Valid Safety principle 16 32.0 32.0 32.0
Earning high returns 29 58.0 58.0 90.0
Earning return above
inflation rate 5 10.0 10.0 100.0
Total 50 100.0 100.0
INTERPRETATION:-
From the sample of 50 respondents, 32 % of the respondent invest their money for safety,
58% of the respondents are invest their money to get a high return and 10% respondents are
Invest due to earning return above inflation rate.
Page | 45
TABLE 4.11
INTERPRETATION:-
The KMO measures the sampling adequacy which should be greater than 0.5 for a
satisfactory factor analysis to proceed. We have applied KMO and Bartlett’s test to check the
adequacy of data and defined KMO measure is.608 which is more than standard value of
KMO 0.5 hence data is adequate for my research.
TABLE 4.12
Communalities
Initial Extraction
Investments are made in financial products because of
capital growth 1.000 .558
Investments are made in financial products because of
investment for excess money 1.000 .714
Investments are made in financial products because of
global brand name 1.000 .732
Investments are made in financial products because of
high returns 1.000 .802
Investments are made in financial products because of
tax benefits 1.000 .768
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy. .608
Bartlett's Test of
Sphericity
Approx. Chi-Square 131.103
Df 28
Sig. .000
Page | 46
Investments are made in financial products because of
awareness 1.000 .544
Investments are made in financial products because of
growth rate 1.000 .602
Investments are made in financial products because of
safety 1.000 .681
Extraction Method: Principal Component Analysis.
INTERPRETATION:-
As we have looked the communalities table which is showing 8 factors from which all factors
are very strong because all factors lies between0.5 to 1.but there is no any factors which is
less than 0.5 all factors are playing very important role in my research.
TABLE4.13
Total Variance Explained
Com
pon
ent
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulati
ve % Total
% of
Variance
Cumulative
% Total
% of
Variance
Cumulative
%
1 2.024 25.294 25.294 2.024 25.294 25.294 1.683 21.041 21.041
2 1.336 16.699 41.994 1.336 16.699 41.994 1.599 19.992 41.033
3 1.029 12.865 54.858 1.029 12.865 54.858 1.066 13.324 54.357
4 1.013 12.665 67.523 1.013 12.665 67.523 1.053 13.166 67.523
5 .954 11.923 79.446
6 .756 9.444 88.890
7 .636 7.947 96.838
8 .253 3.162 100.000
.
INTERPRETATION:-
Page | 47
In during my research I have taken 50 respondents or sample size and analyzed the data
according to sample size analyzed the data. The 67.52% data is accurate in my research from
100%, but 33% data is lost. It is good sign because it is above from standardizing value
which is 55%.
TABLE 14
INTERPRETATION:-
This is Scree plot. It plots the eigenvalues on a bicoordinate plane. It derives its name from
the scree that is deposited at the base of a landside. The scree plot is sometimes used to select
how many factors to rotate to a final solution. The traditional construct for interpretation is
that the scree should be ignored and that only factor on the steep portion of the graph should
be selected and rotated. The SPSS default is to select and rotate any factor with an Eigen
value greater then 1.0.sience the on this case four factor are selected for rotation based on the
scree.
Page | 48
TABLE 4.15.
Rotated Component Matrixa
Component
1 2 3 4
Investments are made in financial products because of
capital growth -.082 .735 -.096 .038
Investments are made in financial products because of
investment for excess money -.052 .324 .050 .777
Investments are made in financial products because of
global brand name .201 -.135 .797 .196
Investments are made in financial products because of
high returns .804 -.385 .073 .034
Investments are made in financial products because of
tax benefits .871 .013 .084 -.052
Investments are made in financial products because of
awareness .439 .409 -.124 -.411
Investments are made in financial products because of
growth rate -.108 .743 .120 .156
Investments are made in financial products because of
safety .155 -.262 -.614 .460
INTERPRETATION:-
In case of rotate component matrix have chose the 4 component,
In First component there are three variable which value is greater than 0.50 these
variable is suitable for my research. These are:
1. Investments are made in financial products because of high returns.
2. Investments are made in financial products because of tax benefits.
3. Investments are made in financial products because of safety.
In Second component there are two variable which value is greater than 0.50 these
variable is suitable for my research. These are:
1. Investments are made in financial products because of capital growth.
Page | 49
2. Investments are made in financial products because of growth rate.
In Third component there are two variable which value is greater than 0.50 these
variable is suitable for my research. These are:
1. Investments are made in financial products because of high returns.
2. Investments are made in financial products because of tax benefits.
Name of variables:-
The first component (ads were high returns, tax benefits ansd safety) and I have give a name
for these variables is the money pay services. Second component ( capital growth and growth
rate) is denoted security for future.
Page | 50
Chapter 6
Limitations, Suggestions &
Conclusion
Page | 51
LIMITATIONS
UNCERTAINITY OF MARKET:-
HSBC’s securities investments are subject to market risks and there is no assurance or
guarantee that the objectives of the Scheme will be achieved.
As with any investment in securities, the NAV of the units issued under the Scheme can go
up or down depending on the factors and forces affecting the capital markets.
LACK OF PUBLIC AWARENESS:-
In chandigarh, HSBC has just completed 3 years & is in infantry stage so people are unaware
of it. So people are afraid to invest & they only trust of some govt. funds like UTI, SBI, Govt.
securities. Which give assured returns?
HIGH COMPETITION:-
Due to the existence of large number of AMC’s & banks the competition is high. Investors
are confused that where they have to invest and where not. Other banks also offers the same
type of product/schemes which diversified the investors.
RIGID AND TRADITIONAL STRUCTURE:-
The people believe investing in Bank FD’s and Post Office saving and are reluctant to invest
in Mutual Fund. People like to secure money in terms of lending to the people on high
interest they meant their amount is safe, or further to invest in their own business which will
give them high return obviously.
Page | 52
RECOMMENDATIONS
1. The investors above the age of 50 years must be taken into consideration as they are
having great potential regarding investment.
2. HSBC must lay down some sound strategies to trap more customers by giving them
more commission in comparison to other investment centers.
3. HSBC must use marketing tools like point of purchase, advertisement through Mass
Media like loading Newspapers, Magazines, Television, Exhibition, Fairs, SMS on
Mobiles, advertisement on the internet.
4. The organization is lacking on the parameters of motivation. It is recommended that
the organization must adopt the concept of motivation.
5. HSBC should organize programs for customer awareness in developing areas and
establish a confidence and belief among the customers residing there.
Page | 53
CONCLUSION
From the study I got to know that the investment pattern of an individual is largely influenced
by its risk taking ability.
It is also determined that income of an individual does not have a significant impact on a
person’s investment decision, as the outcome of the study pointed to the fact that college
going student, who do not have any income source except from their parents and investment
income, tend to invest in the same kind off investment instruments as a high earning
individual. But the liability to be written of each year has much impact on an individual’s
investment decision. Investment objectives also have some impact on investment pattern of
individual.
From the above analysis we are now aware of the investment pattern of investors which is
highly influenced by his age. This research will help in developing financial products
according to the choice and need of investors. This Questionnaire Research gives the
investment behavior information of the investors of chandigarh which can help to gain
competitive edge over its competitors.
Page | 54
Chapter - 7
References and Bibliography
Page | 55
REFERENCES
1. Bruce A. Huhmann, Nalinaksha Bhattacharyya, (2005) "Does mutual fund advertising
provide necessary investment information?", International Journal of Bank Marketing,
Vol. (23) Iss: 4, pp.296 – 316
2. David E. Allen, Jerry T. Parwada, (2006) "Investors' response to mutual fund
company mergers", International Journal of Managerial Finance, Vol. (2) Iss: 2,
pp.121 - 135
3. Kerstin Drachter, Alexander Kempf, Michael Wagner, (2007) "Decision processes in
German mutual fund companies: evidence from a telephone survey", International
Journal of Managerial Finance, Vol. (3) Iss: 1, pp.49 – 69
4. Timo Korkeamaki, Vesa Puttonen, Tom Smythe, (2007) "Advertising and mutual
fund asset flows", International Journal of Bank Marketing, Vol. (25) Iss: 7, pp.434 –
451
5. Cheng-Ru Wu, Hsin-Yuan Chang, Li-Syuan Wu, (2008) "A framework of assessable
mutual fund performance", Journal of Modelling in Management, Vol. (3) Iss: 2,
pp.125 – 139
6. Rob Jans, Rogér Otten, (2008) "Tournaments in the UK mutual fund industry",
Managerial Finance, Vol. (34) Iss: 11, pp.786 – 798
7. Laurens Swinkels, Pawel Rzezniczak, (2009) "Performance evaluation of Polish
mutual fund managers", International Journal of Emerging Markets, Vol. (4) Iss: 1,
pp.26 – 42
8. Yurij Lukashin, Ivan Lukashin, (2009) "The development of mutual fund market in
Russia", Management Research News, Vol. 32 Iss: 2, pp.132 – 144
9. Tajudeen Olalekan Yusuf, (2010) "Brokers and the control of postcontractual
opportunism in the Nigerian insurance market", Journal of Financial Crime, Vol. 17
Iss: 2, pp.223 – 239
Page | 56
10. Dag Einar Sommervoll, Gavin Wood, (2011) "Home equity insurance", Journal of
Financial Economic Policy, Vol. 3 Iss: 1, pp.66 – 85
Bibliography
WED LINK
• http://www.hsbc.com/1/2/investor-relations
• http://www.hsbc.com/1/2/corporate-and-institutional
• www.hsbc.co.in/1/2/personal/financial-planning/product-
• www.sjgrand.cn/hsbc-launches-rmb-products
• www.hsbc.com/1/2/personal-banking
• http://capitalmind.in/2006/10/ulip-nav-comparison-table/
• http://en.wikipedia.org/wiki/The_Hongkong_and_Shanghai_Banking_Corporation
• http://www.hsbc.com/1/PA_1_1_S5/content/assets/about_hsbc/100601_brief_history.pdf
BOOKS
• QFINANCE: The Ultimate Financial Resource (2nd
edition)
• An Introduction to Trading in the Financial Markets
by WILLIAMS
• Journal of International Financial Management & Accounting
Published in association with New York University's Stern School of Business,
Salomon Center
• Financial Management by Kotl
Page | 57
Chapter 8
QUESTIONNAIRE
Page | 58
QUESTIONNAIRE
1) Gender: a) Male b) Female
2) Age:
a) 20-30 b) 30-50 c) above 50
3) Profession
a) Entrepreneur b) Private Job c) Government Job
d) Student e) industrialist
4) Income Level:
a) 60,000 – 1, 00,000 b) 1, 00,000 – 2, 00,000
c) 2, 00,000 – 3, 00,000 d) above 3, 00,000
5) Have you ever invested in the market?
a) Yes b) No
If Yes, What is your Portfolio?
a) Mutual Fund
b) Insurance
c) Shares
6) Are you aware of various HSBC’s investment schemes?
a) Nil b) Average c) Fully
7) Have you ever invested in HSBC?
a) Yes b) No
If yes, you’re Diversification (Mention your preferences)
Page | 59
a) Equity:
b) Debt:
c) Cash:
8) How long you are investing in market?
a) 1-5 years b) 5-10 years c) Above 10 years
9) You made invested through:
a) Your own b) Through Distribution house
c) Through broker d) others
10) Rate the following factor on a scale of 1-5 (1strongly agree, 2agree, 3 neutral, 4disagree,
5 strongly disagree).
Factors 1 2 3 4 5
Investments are made in financial products because of capital
growth
Investments are made in financial products because of investment
for excess money
Investments are made in financial products because of global
brand name
Investments are made in financial products because of high
returns
Investments are made in financial products because of tax benefit
Investments are made in financial products because of awareness
Investments are made in financial products because of variety of
products
Investments are made in financial products because of safety
Page | 60
11) What would you take into account while investing?
a) Safety high returns b) Earning high returns
c) Earning return above inflation rate