Investment Patterns in India

ever-changing Trend of Investment Pattern in India and Emergence of common caudex Industry ABSTRACT This project is slightly how the Investors Behavior is changing and they ar now leaving behind the sacred assigniture options like the touch on deposits, company deposits, gold etc. Investors atomic number 18 now looking towards law linked enthronisation options. Like most developed and developing countries the sh ard descent cult has been catching on in India. There are divers(a) reasons for this. Mutual Fund makes it easy and less costly for investors to conform to their pauperisation for capital harvest, income preservation.And in addition to this a usual inventory brings the benefit of variegation and m bingley management to the mortal investor, providing an opportwholey for pecuniary success that was once available scarcely to a select few. In this project I have given a brief about economy, ostentatiousness, and justness and debt market. Then it is devel oped how to cope with the inflation and how uncouth blood line is one of the best investment options today. A brief about mutual shop industry and the well-nigh knowledge about HDFC Mutual Fund and its various harvest-feasts are given INTRODUCTIONMany individuals find investments to be absorbing because they ass participate in the decision making process and visualize the results of their choices. Not all investments will be profitable, as investor wills not invariably make the correct investment decisions over the period of years however, you should derive a positive afford on a diversified portfolio. In addition, there is a thrill from the major(ip) success, along with the agony associated with the commonplace that dramatically rose after you sold or did not buy. both(prenominal) the big fish you catch and the fish that get away can make wonderful stories. Investing is not a game only when a serious subject that can have a major impact on investors future well being. Virtually everyone makes investments. Even if the individual does not select specific assets such as stock, investments are unagitated make through participation in pension plan, and employee saving political platform or through purchase of life insurance or a home. Each of this investment has common characteristics such as potential return and the danger you must bear.The future is uncertain, and you must determine how much risk you are willing to bear since higher return is associated with accepting much risk. In 1986, Microsoft Corporation stolon offered its stock to the public. Nine years later, the stocks tax had increased over 5,000 percent- a $ 10,000 investment was worth over $ 5,00,000 in the resembling year, worlds of wonder to a fault offered its stocks to the public. Nine years later the company was defunct- a $ 10,000 was worth nothing. These are two examples of emerging firms that could do highly well or fail.Would expend in large, well establish firms spawn more consistent returns? The answer depends, of course, on which firms were invested in. Over the years some investments have gene sited extraordinary gains, while others have produced only mediocre returns, and remedy others have resulted in substantial leavinges. The individual should start by specifying investment goals. Once these goals are established, the individual should be aware of the mechanics of investing and the environment in which investment decisions are made.These include the process by which securities are issued and subsequently bought and sold, the regulations and tax laws that have been enacted by various levels of government, and the sources of information concerning investment that are available to the individual. An understanding if this monetary background leads to threesome master(prenominal) general financial concepts that apply to investing. Toady the field of investment is even more dynamic than it was only a decade ago. existence event rapidly-even ts that alter the values of specific assets the individual has so some(prenominal) assets to choose from, and the amount of information available to the investors is staggering and continually growing. Furthermore, inflation has served to increased awareness of the importance of financial planning and wise investing. In this project I will first talk about economy, inflation, equity markets and debt markets to understand investments behavior. INFLATION Inflation is a situation where there is alike much money chasing too few goods.In such propagation buyers bid up prices of scarce results/services The scarcity could be caused by supply issues or a faster than expected rise in pick out. Irrespective of what causes inflation, the impact is the same. The value of the currency you are holding declines. Lets explain this with the help of an example. enunciate the Indian rupee was freely exchangeable with only one commodity- crude oil. Lets assume the conversion rate is Re 1= 1 bbl of crude (wish it were true ). Now there is tensity in the Gulf region resulting in reduced supply.Due to the subsequent rise in price of crude oil in external markets, we would now have to pay more Rupees for every barrel of oil. Suppose crude prices rise by 10%. The new exchange rate will be Rs. 1. 1 = 1 barrel of declined from 1 barrel of crude per Rupee to only 0. 91 barrel of crude per Rupee this is the erosion in the value of the currency that we are talking about. likewise note that while the Indian Rupee may be appreciating tete-a-tete other currencies, in the real sense there is erosion in value. other important fallout one can expect due to acclivitous inflation is higher touch on rates. The central banks aim to reduce demand in the economy by rising the cost of money. When making newfangled investments or evaluating your existing holdings in potentially inflationary times you need to keep two things in mind The possibility of higher interest rates The erosion in t he value of the currency CONCEPT OF vulgar FUND A mutual memory is a kitty-cat of money, self-possessed from investors, and is invested according to certain investment objectives.A mutual breed is created when investors put together their money tighter. It is therefore a pool of the investors money The most important characteristic of a mutual stemma is that the contributors and the beneficiaries of the caudex are the same class of people, namely the investors. The term mutual means that investors contribute to the pool, and also benefit from the pool. There are no other claimants to the monetary resource. The pool of fund mutually by investors is the mutual fund. A mutual funds business is to invest the funds thus collected, according to the wishes of the investors who created the pool.In many markets these wishes are articulate as investment mandates. Usually, the investors appoint professional investment managers, to manage their product, and offer it for investment to the investor. This product represents a share in the pool, and pre-states investment objectives. For example, a mutual fund, which sells a money market mutual fund , is actually seeking investors willing to invest in a pool that would invest predominantly in money market instruments. IMPORTANT CHARACTERSTICS A Mutual fund belongs to the investors who have pooled their funds.The ownership of the mutual fund in the hands of the investors Investment professional and other service providers, who earn a fee for their services, from the fund, manage the mutual fund. The pool of funds is invested in a portfolio of marketable investments. The value of the portfolio is updated every day. The investors share in the fund is denominated by units. The value of the units changes with change in the portfolios value, every day. The value of one unit of investors is called as the Net Asset Value or NAV.The investment portfolio of the mutual fund is created according to the stated investment object ives of the fund. PHASES IN THE HISTORY OF usual FUND The history of mutual fund in India can be divided into 5 important phases A 1963-1987 The Unit Trust of India was the bushel player in the industry. Created by an Act of Parliament in 1963, UTI launched its first product, the unit scheme 1964, which is even today the single largest mutual fund scheme. UTI created a number products such as monthly income plans, childrens plans, equity-Oriented schemes and offshore funds during this period.UTI managed assets of Rs 6700 crore at the end of this phase. B 1987-1993 In 1987 public sector banks and financial institutions entered the mutual fund industry. SBI mutual fund was the first non-UTI fund to be set up in 1987. Significant shift of investors from deposits to mutual fund industry happened during this period. Most funds were growth oriented closed cease funds. By the end of this period, assets under UTIs management grew to Rs 38247 crore and public sector funds managed Rs 8750 c rore.C 1993-1996 In 1993, the mutual fund industry was open to hush-hush sector players, both Indian and foreign. SEBIs first set of regulations for the industry was theorise in 1993 and, substantially revised in 1996. Significant innovations in servicing, product design and information disclosure happened in the phase, mostly initiated by clannish sector players. D 1996-1999 The implementation of the new SEBI regulation and the restructuring of the mutual fund industry led to rapid asset growth.Bank mutual fund was re-cast according to the SEBI recommended structure, and UTI came under voluntary SEBI supervision. E 1999-2003 very rapid growth in the industry and significant increase in market shares of mystical sector player marked this phase. Assets crossed Rs. 100,0000 crore. The tax break offered to mutual funds in 1999 created arbitrage opportunities for a number of institutional players. seize funds and liquid funds registered the highest growth in this period, accounting for almost 60% of the assets.UTIs share of the industry dropped below 50%. 2. 3 ADVANTAGES OF joint FUND The following are the important advantages of mutual funds to investors Portfolio diversification Professional management Reduction in risk Reduction of movement costs Liquidity Convenience and flexibility DISADVANTAGES OF MUTUAL FUND, The following are important disadvantages of investing through mutual fund No oblige over costs Since investors do not directly monitor the funds operations they cannot control the costs effectively.Regulators therefore usually limit the expenses of mutual funds. No tailor- made portfolio Mutual fund portfolio is created and marketed by AMCs, into which investors invest. They cannot create tailor made portfolios. Managing a portfolio of funds As the number of mutual funds increase, in order to tailor a portfolio for himself, an investors may be holding a portfolio of funds, with the costs Of monitoring them and using them, being incurred by hi m.NEED FOR enthronisation Increasing household expense. Creation of wealth Increasing cost of living. financial needs according to life stages. Regular income Combination of all supra INVESTMENT OPTION AVAILABLE Physical and Financial assets. Equity and Debt Govt. securities and non-govt. securities otherwise option Public provident fund RBI Relief Fund. Mutual Fund Others like Indira Vikas Patra, Kisan Vikas Patra CP FD, and Debenture. FDs FI BONDS Mutual Fund Accessibility measly Low Low Tenor Fixed ( mass medium) Fixed (Long) No lock in period Tax Benefit none Under section 80C None Liquidity Low real Low none Convince mediocre Tedious Very high Transparency None None Very high CONCLUSIONThe unique investment strategy of letting the due date of the debt investment run down with time and targeting equity investments to capture dividends is targeted to take positive returns over medium time frame. The investment strategy of the obstinate income portfolio is desi gned to remove the impact of interest rate movements over the medium term. The strategy of targeting dividends in equities over a period is expected to ameliorate the yield of the fund. The above investment strategy expects to minimize capital loss in adverse market condition and deliver moderate returns in stable/positive market conditions. So, if you are looking for an investment product that offers you low risk of capital loss and the potential to earn sensitive returns in the uncertain environment of today, HDFC Multiple Yield Fund big businessman be the right fund for you.