A

ANALYSIS OF

“FOREIGN INSTITUTIONAL INVESTORS AND MUTUAL FUNDS IMPACT ON

INDIAN CAPITAL MARKET”

With reference to
“MIN-MAX INVESTMENT ADVISORS FOUNDATION”

P.VENKATA PRATAPA REDDY

(HT.No. O89-060-108)

Project submitted in partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BY

OSMANIA UNIVERSITY
HYDERABAD
2006-2008
CERTIFICATE

This is to certify that the Project Report title “ FOREIGN INSTITUTIONAL

INVESTORS AND MUTUAL FUNDS IMPACT ON INDIAN CAPITAL MARKET ”
submitted in partial fulfillment for this award of MBA Programme of Department of
Business Management, Osmania Univesrsity, Hyderabad, was carried out by Mr. P.
Venkata Pratapa Reddy under my guidance. This has not been submitted to any other
University or Institution for the award of any degree / Diploma / certificate.

Name and address of Guide Signature of the Guide.

Place:

Date:
DECLARATION

I hereby declare that this Project titled “FOREIGN INSTITUTIONAL INVESTORS

AND MUTUAL FUNDS IMPACT ON INDIAN CAPITAL MARKET” submitted by
me to the VENLANGINI INSTITUTE OF MANAGEMENT, OSMANIA
UNIVERSITY, HYDERABAD. is a bonafide work undertaken by me and it is not
submitted to any other University or Institution for the award of any Degree
Diploma/Certificate or Published any time before.
 Name and Address of the student Signature of the student
P. VENKATA PRATAP REDDY
F.NO: 3
D.NO. 6-1-630/5
KAIRATHABAD
HYDERABAD.
ACKNOWLEDGEMENT

I am grateful to Mr. C.SRINIVASULA REDDY Investment Advisor of MIN- MAX

INVESTMENT ADVISORS FOUNDATION for granting me a permission to do my
project work in their esteemed organization for giving necessary information in the
department.

I would like to convey my heartiest thanks to Mr.SIVA RAM REDDY Faculty of Finance,
VELANGINI INSTITUTE OF MANAGEMENT, for their continuous support in making
my project a successful.

I thank my family and friends for being a source of inspiration and support.

(P.VENKATA PRATAPA REDDY)

TABLE OF CONTENTS
CHAPTER NO. NAME OF THE CONTENTS PAGE NO.
LIST OF TABLE I.

Fii’s Equity Investment 73

 Mutual funds 76
Nifty comparison 79

LIST OF FIGURES II

Fii’s Net 59
CHAPTER 4.1
MF Net 60
4.2
Nifty Net 61
4.3
FII ‘S and MF 62
4.4
Net FII’S and MF 64
4.5
Nifty Closing 65
4.6
Change of FII’S 66
4.7
Change of MF 67
4.8
4.9 Change of Nifty 68
 TABLE OF CONTENTS
Chapter No. NAME OF THE CONTENTS Page No.
LIST OF TABLE I.
LIST OF FIGURES II.
INTRODUCTION
Preface to FII’s and Mutual Funds impact on Indian Capital 1
Markets
1.
Objectives 2
Scope of data 3
Limitations 4
Methodology 5
REVIEW OF LITERATURE
2. Overview of Financial Markets 9
Theory of FII’s and Mutual Fund 18
THE COMPANY
3. Company profile 53

DATA ANALYSIS AND PRESENTATION

4.
Presentation and analysis 56
SUMMARY AND CONCLUSIONS

5. Findings 69
Suggestions 70
Conclusions 71
BIBLIOGRAPHY 72
APPENDICES 73

PREFACE TO FOREIGN INSTITUTIONAL INVESTORS AND MUTUAL FUNDS

FOREIGN INSTITUTIONAL INVESTORS

FII’s have been allowed to invest in the Indian securities market since September 1992
when the Guidelines for Foreign Institutional Investment were issued
by the Government. The SEBI (Foreign Institutional Investors) Regulations were enforced
in November 1995, largely based on these Guidelines. The regulations
require FII’s to register with SEBI and to obtain approval from the Reserve Bank of India
(RBI) under the Foreign Exchange Regulation Act to buy and sell securities, open foreign
currency and rupee bank accounts, and to remit and repatriate funds. Once SEBI registration
has been obtained, an FII’s does not require any further permission to buy or sell securities
or to transfer funds in and out of the country, subject to payment of applicable tax. Foreign
investors, whether registered as FII’s or not, may also invest in Indian securities outside the
country.
MUTUAL FUNDS
A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a
mutual fund as a company that brings together a group of people and invests their money in
stocks, bonds, and other securities. Each investor owns shares, which represent a portion of
the holdings of the fund.
 OBJECTIVES

1. To determine the part of foreign institutional investors and mutual fund.

2.Contribution of FII’s and MF’s in the growth of the Indian capital markets subjected to
benchmark index of Nifty-50 movement.
3.To study in the concept of foreign institutional investors and mutual fund.
4.To study various types of mutual funds.

SCOPE OF DATA

Data is collected related to the foreign institutional investors and mutual fund activities of
Indian capital market from the Security exchange board of India.
(SEBI) monthly report.
As data has been collected for 98 months from the year January 1999 to February 2007.
 Data of Nifty for the comparison is taken form s&p cnx Nifty fro the same period.

LIMITATIONS

1. There may be shift in foreign institutional investor from equity market to

debt market.
2. Mutual fund may replace with another equity instrument which yields a high
return and low risk.
3. Foreign institutional investors & Mutual fund will have a great impact on
macro economy of the country.
4. FII’s&MF’s will reduce the risk because of hedging their position in the
suitable derivative instrument i.e. Futures and Options.
5. Derivatives Investment not considered in the project.
.
 METHODOLOGY

METHODS OF DATA COLLECTION

In this project two types of data is utilized i.e.,

1. Primary Data
2. Secondary Data
PRIMARY DATA: is collected from the live terminal of Min - Max Investment Advisory
Foundations.
SECONDARY DATA: Secondary data has been taken from NSEindia.com and Money
control.com from Internet depending upon required information

FOREIGN INSTITUTIONAL INVESTOR’S

FII’s data has been collected from January 1999 to 2007.
The investment of FII’s taken as Gross Purchases, Gross Sales for the above years in month
wise.
From the Gross Purchases and Gross Sales we derived the Net Investment of FII’s in Indian
Market.
Net Investment = Gross Purchases – Gross Sales
If the gross purchase is higher than gross sales in particular month, it indicates FII’s are
pored money in Indian markets as investment, and vice-versa indicates disinvesting their
portfolio as aggregate.
Cumulative investment has been taken for calculating the rate of change..
% Change = Gross Purchases – Gross Sales x 100
Gross Purchases
Monthly wise FII’s contribution is calculated by taking whole FII’s investment as 100%.
MUTUAL FUNDS
MF’s data has been collected from January 2000 to 2007.
The investment of MF’s taken as Gross Purchases, Gross Sales for the above years in month
wise.
From the Gross Purchases and Gross Sales we derived the Net Investment of MF’s in Indian
Market.
Net Investment = Gross Purchases – Gross Sales
If the gross purchase is higher than gross sales in particular month, it indicates MF’s are
pored money in Indian markets as investment, and vice-versa indicates disinvesting their
portfolio as aggregate.
Cumulative investment has been taken for calculating the rate of change..
% Change = Gross Purchases – Gross Sales x 100
Gross Purchases
Monthly wise MF's contribution is calculated by taking whole MF’s investment as 100%.

NET OF FII’S AND MF’S

Addition of MF and FII investment indicates the net flow of money in the markets during
the same period.
NIFTY
The opening and closing data has been collected for NSE Nifty, from the years 1999 to
2007.
Net change in NIFTY = Nifty closing– Nifty Opening
From the Net has calculated the % Change

% Change = NIFTY Closing – Nifty Opening x100

Nifty Opening
It indicates the nifty movement in that particular month.
In general if the opening is less than the closing of index which gives positive number that
indicates markets are in northward direction and vice versa indicates southward direction.
OVERVIEW OF FINANCIAL MARKETS

Introduction
There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE),
which began formal trading in 1875, making it one of the oldest in Asia. Over the last few
years, there has been a rapid change in the Indian securities market, especially in the
secondary market. Advanced technology and online-based transactions have modernized the
stock exchanges. In terms of the number of companies listed and total market capitalization,
the Indian equity market is considered large relative to the country’s stage of economic
development. The number of listed companies increased from 5,968 in March 1990 to about
10,000 by May 1998 and market capitalization has grown almost 11 times during the same
period.
The debt market, however, is almost nonexistent in India even though there has been a large
volume of Government bonds traded. Banks and financial institutions have been holding a
substantial part of these bonds as statutory liquidity requirement.
The portfolio restrictions on financial institutions’ statutory liquidity requirement are still in
place. A primary auction market for Government securities has been created and a primary
dealer system was introduced in 1995. There are six authorized primary dealers. Currently,
there are 31 mutual funds, out of which 21 are in the private sector. Mutual funds were
opened to the private sector in 1992. Earlier, in 1987, banks were allowed to enter this
business, breaking the monopoly of the Unit Trust of India (UTI), which maintains a
dominant position.
Before 1992, many factors obstructed the expansion of equity trading. Fresh capital issues
were controlled through the Capital Issues Control Act. Trading practices were not
transparent, and there was a large amount of insider trading. Recognizing the importance of
increasing investor protection, several measures were enacted to improve the fairness of the
capital market. The Securities and Exchange Board of India (SEBI) was established in 1988.
Despite the rules it set, problems continued to exist, including those relating to disclosure
criteria, lack of Brokers, capital adequacy, and poor regulation of merchant bankers and
underwriters. There have been significant reforms in the regulation of the securities market
since 1992 in conjunction with overall economic and financial reforms. In 1992, the SEBI
Act was enacted giving SEBI statutory status as an apex regulatory body. And a series of
reforms was introduced to improve investor protection, automation of stock trading,
integration of national markets, and efficiency of market operations. India has seen a
tremendous change in the secondary market for equity. Its equity market will most likely be
comparable with the world’s most advanced secondary markets within a year or two. The
key ingredients that underlie market quality in India’s equity market are:
• Exchanges based on open electronic limit order book
• Nationwide integrated market with a large number of informed traders and
fluency of short or long positions; and
• No counterparty risk.
Among the processes that have already started and are soon to be fully implemented are
electronic settlement trade and exchange-traded derivatives.
Before 1995, markets in India used open outcry, a trading process in which traders shouted
and hand signaled from within a pit. One major policy initiated by SEBI from 1993 involved
the shift of all exchanges to screen-based trading, motivated primarily by the need for
greater transparency. The first exchange to be based on an open electronic limit order book
was the National Stock Exchange (NSE), which started trading debt instruments in June
1994 and equity in November 1994. In March 1995, BSE shifted from open outcry to a limit
order book market. Currently, 17 of India’s stock exchanges have adopted open electronic
limit order. Before 1994, India’s stock markets were dominated by BSE in other parts of the
country.
RECENT DEVELOPMENTS AND POLICY ISSUES.
Financial industry did not have equal access to markets and was unable to participate in
forming prices, compared with market participants in Mumbai (Bombay). As a result, the
prices in markets outside Mumbai were often different from prices in Mumbai. These
pricing errors limited order flow to these markets.
Explicit nationwide connectivity and implicit movement toward one national market has
changed this situation. NSE has established satellite communications which give all trading
members of NSE equal access to the market. Similarly, BSE and the Delhi Stock Exchange
are both expanding the number of trading terminals located all over the country. The
arbitrages are eliminating pricing discrepancies between markets.
The Indian capital market still faces many challenges if it is to promote more efficient
allocation and mobilization of capital in the economy.
Firstly, market infrastructure has to be improved as it hinders the efficient flow of
information and effective corporate governance. Accounting standards will have to adapt to
internationally accept accounting practices. The court system and legal mechanism should
be enhanced to better protect small shareholders’ rights and their capacity to monitor
corporate activities.
Secondly, the trading system has to be made more transparent. Market information is a
crucial public good that should be disclosed or made available to all participants to achieve
market efficiency. SEBI should also monitor more closely cases of insider trading.
Thirdly, India may need further integration of the national capital market through
consolidation of stock exchanges. The trend all over the world is to consolidate and merge
existing stock exchanges. Not all of India’s 22 stock exchanges may be able to justify their
existence. There is a pressing need to develop a uniform settlement cycle and common
clearing system that will bring an end to unnecessary speculation based on arbitrage
opportunities.
Fourthly, the payment system has to be improved to better link the banking and securities
industries. India’s banking system has yet to come up with good electronic funds transfer
(EFT) solutions. EFT is important for problems such as direct payments of dividends
through bank accounts, eliminating counterparty risk, and facilitating foreign institutional
investment. The capital market cannot thrive alone; it has to be integrated with the other
segments of the financial system. The global trend is for the elimination of the traditional
wall between banks and the securities market. Securities market development has to be
supported by overall macroeconomic and financial sector environments. Further
liberalization of interest rates, reduced fiscal deficits, fully market-based issuance of
Government securities and a more competitive banking sector will help in the development
of a sounder and a more efficient capital market in India. Capital Market Reforms and
Developments Reforms in the Capital Market Over the last few years, SEBI has announced
several far-reaching reforms to promote the capital market and protect investor interests.
Reforms in the secondary market have focused on three main areas:
Structure and functioning of stock exchanges, automation of trading and post trade systems,
and the introduction of surveillance and monitoring systems. Computerized online trading of
securities, and setting up of clearing houses or settlement guarantee funds were made
compulsory for stock exchanges. Stock exchanges were permitted to expand their trading to
locations outside their jurisdiction through computer terminals. Thus, major stock exchanges
in India have started locating computer terminals in far-flung areas, while smaller regional
exchanges are planning to consolidate by using centralized trading under a federated
structure.
Online trading systems have been introduced in almost all stock exchanges. Trading is much
more transparent and quicker than in the past. Until the early 1990s, the trading and
settlement infrastructure of the Indian capital market was poor. Trading on all stock
exchanges was through open outcry, settlement systems were paper-based, and market
intermediaries were largely unregulated. The regulatory structure was fragmented and there
was neither comprehensive registration nor an apex body of regulation of the securities
market. Stock exchanges were run as “brokers clubs” as their management was largely
composed of brokers. There was no prohibition on insider trading, or fraudulent and unfair
trade practices. Since 1992, there has been intensified market reform, resulting in a big
improvement in securities trading, especially in the secondary market for equity. Most stock
exchanges have introduced online trading and set up clearing houses/corporations. A
depository has become operational for scrip less trading and the regulatory structure has
been overhauled with most of the powers for regulating the capital market vested with
SEBI. The Indian capital market has experienced a process of structural transformation with
operations conducted to standards equivalent to those in the developed markets. It was
opened up for investment by foreign institutional investors (FII’s) in 1992 and Indian
companies were allowed to raise resources abroad through Global Depository Receipts
(GDRs) and Foreign Currency Convertible Bonds (FCCBs). The primary and secondary
segments of the capital market expanded rapidly, with greater institutionalization and wider
participation of individual investors accompanying this growth. However, many problems,
including lack of confidence in stock investments, institutional overlaps, and other
governance issues, remain as obstacles to the improvement of Indian capital market
efficiency.

PRIMARY MARKET
Since 1991/92, the primary market has grown fast as a result of the removal of investment
restrictions in the overall economy and a repeal of the restrictions imposed by the Capital
Issues Control Act. In 1991/92, Rs62.15 billion was raised in the primary market. This
figure rose to Rs276.21 billion in 1994/95. Since 1995/1996, however, smaller amounts
have been raised due to the overall downtrend in the market and tighter entry barriers
introduced by SEBI for investor protection. SEBI has taken several measures to improve the
integrity of the secondary market. Legislative and regulatory changes have facilitated the
corporatization of stockbrokers. Capital adequacy norms have been prescribed and are being
enforced. A mark-to-market margin and intraday trading limit have also been imposed.
Further, the stock exchanges have put in place circuit breakers, which are applied in times of
excessive volatility. The disclosure of short sales and long purchases is now required at the
end of the day to reduce price volatility and further enhance the integrity of the secondary
market.
MARK-TO-MARKET MARGIN AND INTRADAY LIMIT
Under the current clearing and settlement system, if an Indian investor buys and
subsequently sells the same number of shares of stock during a settlement period, or sells
and subsequently buys, it is not necessary to take or deliver the shares. The difference
between the selling and buying prices can be paid or received. In other words, the squaring-
off of the trading position during the same settlement period results in non-delivery of the
shares that the investor traded.
Thus, possible at a relatively low cost. FII’s and domestic institutional investors are,
however, not permitted to trade without delivery, since no delivery transactions are limited
only to individual investors. One of SEBI’s primary concerns is the risk of settlement chaos
that may be caused by an increasing number of non-delivery transactions as the stock
market becomes excessively speculative.
Accordingly, SEBI has introduced a daily mark-to-market margin and intraday trading
limit. The daily mark-to-market margin is a margin on a broker’s daily position. The
intraday trading limit is the limit to a broker’s intraday trading volume. Every broker is
subject to these requirements.
Each stock exchange may take any other measures to ensure the safety of the market. BSE
and NSE impose on members a more stringent daily margin, including one based on
concentration of business. A daily mark-to-market margin is 100 percent of the notional loss
of the stockbroker for every stock, calculated as the difference between buying or selling
price and the closing price of that stock at the end of that day. However, there is a threshold
limit of 25 percent of the base minimum capital plus additional capital kept with the stock
exchange or Rs1 million, whichever is lower. Until the notional loss exceeds the threshold
limit, the margin is not payable.
This margin is payable by a stockbroker to the stock exchange in cash or as a bank
guarantee from a scheduled commercial bank, on a net basis. It will be released on the pay-
in day for the settlement period. The margin money is held by the exchange for 6-12 days.
This cost the broker about 0.4-1.2 percent of the notional loss, assuming that the broker’s
funding cost is about 24-36 percent.
Thus, speculative trading without the delivery of shares is no longer cost-free. Each broker’s
trading volume during a day is not allowed to exceed the intraday trading limit. This limit is
33.3 times the base minimum capital deposited with the exchange on a gross basis, i.e.,
purchase plus sale. In the event of brokers wishing to exceed this limit, they have to deposit
additional capital with the exchange and this cannot be withdrawn for six months.
 THEORY OF FII’S AND MF’S

FOREIGN INSTITUTIONAL INVESTORS

INTRODUCTION
FII’s have been allowed to invest in the Indian securities market since September 1992
when the Government issued the Guidelines for Foreign Institutional Investment. The SEBI
(Foreign Institutional Investors) Regulations were enforced in November 1995, largely
based on these Guidelines. The regulations require FII’s to register with SEBI and to obtain
approval from the Reserve Bank of India (RBI) under the Foreign Exchange Regulation Act
to buy and sell securities, open foreign currency and rupee bank accounts, and to remit and
repatriate funds. Once SEBI registration has been obtained, an FII’s does not require any
further permission to buy or sell securities or to transfer funds in and out of the country,
subject to payment of applicable tax. Foreign investors, whether registered as FII’s or not,
may also invest in Indian securities outside the country.
Every year since FII’s were allowed to participate in the Indian market, FII’s net inflows
into India have been positive, except for 1998-99. This reflects the strong economic
fundamentals of the country, as well as the confidence of the foreign investors in the growth
with stability of the Indian market. The year 2003 marked a watershed in FII’s investment in
India. FII’s started the year 2003 in a big way by investing Rs. 985 crs in January itself.
Meanwhile, corporate India continued to report good operational results. This, along with
good macroeconomic fundamentals, growing industrial and service sectors led FII’s to
perceive great.
RBI data generally shows that investment by FII’s has been smaller, when compared with
SEBI data. This discrepancy in the statistical system needs to be corrected. One possible
explanation may involve differences in the treatment of reinvestment of profit earned.
Potential for investment in the Indian economy. In April 2003, prices of commodities like
steel and aluminum went up, propelling FII investment in May 2003 to Rs. 3,060 crore.
Around the same time, Morgan Stanley Capital International (MSCI) in its MSCI Emerging
Markets Index gave a weight of 4.3 per cent to India among the emerging markets of the
world Calendar year 2004 ended with net FII inflows of US$9.2 billion, an all-time high
since the liberalization.
Apart from the cash market, the FII’s have been permitted by the SEBI and the RBI to trade
also in the derivatives markets. For the purpose of risk management, the FII’s are treated as
trading members in derivatives and are subjected to the same risk management measures as
any other trading member. For index options and index futures, per exchange, there is a
position limit for FII’s at the maximum of 15 per cent of the open interest of the respective
derivative contracts on a particular underlying index or Rs. 250 crore (Annex II). In
addition, they are allowed to invest more, if it is for hedging backed by securities. In case of
stocks, the FII’s position limit is the maximum of 20 per cent of the market-wide limit (if
the market-wide position limit is less than or equal to Rs. 250 crore) or Rs 50 crore (for
stocks in which the market-wide position limit is greater than Rs. 250 crore).
The most popular derivative product in India is single stock futures which account for
almost 67 per cent of the derivative contracts, followed by index futures accounting for
nearly 30 per cent, and stock options and index options accounting for the rest. The retail
investors and proprietary trading account for very high proportion of trading in derivatives
market. The FII’s, on an average, account for 5.1 per cent of the monthly turnover in the
derivatives market. However, the FII’s account for around 25percent of the cumulative open
positions in single stock futures. FII’s seem to have been following a hedging strategy with
simultaneous investments in cash and derivatives market.
The diversity of FII’s has been increasing with the number of registered FII’s in India
steadily rising over the years. In 2004-05, with 145 new FII’s registering with Securities and
Exchange Board of India (SEBI), as on March 31, 2005, there was 685 FII’s registered in
India. The names of some prominent FII’s registered during 2004-05 are: California Public
Employees’ Retirement System (CALPERS), United Nations for and on behalf of the
United Nations Joint Staff Pension Fund, Public School Retirement System of Missouri,
Commonwealth of Massachusetts Pension Reserves Investment Trust, Treasurer of the State
North Carolina Equity Investment Fund Pooled Trust, the Growth Fund of America, and
AIM Funds Management Inc.
In terms of country of origin, the USA topped the list with a share of 40 per cent of the
number of FII’s registered in India, followed by UK’s 17 per cent. Other countries of
significance in terms of origin of FII’s investing in India are Luxemburg, Hong Kong, and
Singapore. In terms of net cumulative investments by FII’s, US-based FII’s dominate with
29 per cent of the net cumulative FII investments in India, followed by UK at 17 per cent. In
recent months, European and Japanese FII’s have started to evince an increasing interest in
India, and of the FII’s that registered with SEBI in October 2004, a significant number
belonged to Europe and Japan. These developments have helped improve the diversity of
the set of FII’s operating in India.
After the launch of the reforms in the early 1990s, there was a gradual shift towards capital
account convertibility. From September 14, 1992, with suitable restrictions, FII’s and
Overseas Corporate Bodies (OCBs) were permitted to invest in financial instruments. The
policy framework for permitting FII investment was provided under the Government of
India guidelines vide Press Note dated September 14, 1992, which enjoined upon FII’s to
obtain an initial registration with SEBI and also RBI’s general permission under FERA.
Both SEBI’s registration and RBI’s general permissions under FERA were to hold good for
five years and were to be renewed after that period. RBI’s general permission under FERA
could enable the registered FII to buy, sell and realize capital gains on investments made
through initial corpus remitted to India, to invest on all recognized stock exchanges through
a designated bank branch, and to appoint domestic custodians for custody of investments
held. The Government guidelines of 1992 also provided for eligibility conditions for
registration, such as track record, professional competence, financial soundness and other
relevant criteria, including registration with a regulatory organization in the home country.
The guidelines were suitably incorporated under the SEBI (FII’s) Regulations, 1995. These
regulations continue to maintain the link with the government guidelines by inserting a
clause to indicate that the investment by FII’s shall also An OCB is a company, partnership
firm, society and other corporate body owned directly or indirectly to the extent of at least
sixty per cent by NRIs and includes overseas trust in which not less than sixty per cent
beneficial interest is held by NRIs directly or indirectly but irrevocably. Be subject to
Government guidelines. This linkage has allowed the Government to indicate various
investment limits including in specific sectors.
Currently, entities eligible to invest under FII route are as follows:
(i) AS FII’S:
Overseas pension funds, mutual funds, investment trust, asset management company,
nominee company, bank, institutional portfolio manager, university funds, endowments,
foundations, charitable trusts, charitable societies, a trustee or power of attorney holder
incorporated or established outside India proposing to make proprietary investments or
investments on behalf of a broad-based fund (i.e., fund having more than 20 investors with
no single investor holding more than 10 per cent of the shares or units of the fund).
(ii) AS SUB-ACCOUNTS:
The sub account is generally the underlying fund on whose behalf the FII invests. The
following entities are eligible to be registered as sub-accounts, viz. partnership firms, private
company, public company, pension fund, investment trust, and individuals.

(iii) DOMESTIC ENTITY:

A domestic portfolio manager or a domestic asset management company shall also be
eligible to be registered as FII to manage the funds of sub-accounts.
FII’s registered with SEBI fall under the following categories:
(a) Regular FII’s – Those who are required to invest not less than 70 per cent of their
investment in equity -related instruments and up to 30 per cent in non-equity instruments.
(b) 100 per cent debt-fund FII’s – those who are permitted to invest only in debt
instruments.
The Government guidelines for FII of 1992 allowed, inter-alia, entities such as asset
management companies, nominee companies and incorporated/institutional portfolio
managers or their power of attorney holders (providing discretionary and non-discretionary
portfolio management services) to be registered as FII’s. While the guidelines did not have a
specific provision regarding clients, in the application form the details of clients on whose
behalf investments were being made were sought. While granting registration to the FII,
permission was also granted for making investments in the names of such clients. Asset
management companies/portfolio managers are basically in the business of managing funds
and investing them on behalf of their funds/clients. Hence, the intention of the guidelines
was to allow these categories of investors to invest funds in India on behalf of their ‘clients’.
These ‘clients' later came to be Known as sub-accounts. The broad strategy consisted of
having a wide variety of clients, including individuals, intermediated through institutional
investors, who would be registered as FII’s in India. A Working Group for Streamlining of
the Procedures relating to FII’s, constituted in April, 2003, inter alias, recommended
streamlining of SEBI registration procedure, and suggested that dual approval process of
SEBI and RBI be changed to a single approval process of SEBI. This Recommendation was
implemented in December 2003.
PARTICIPATORY NOTES (PNS)
Participatory notes (PNs) are instruments used by foreign funds, not registered in the
country, for trading in the domestic market. They are a derivative instrument issued against
an underlying security, which permits the holder to share in the capital appreciation/income
from the underlying security. PNs are like contract notes and are issued by FII’s, registered
in the country, to their overseas clients who may not be eligible to invest in the Indian stock
markets. PNs are used as an alternative to sub-accounts by ultimate investors generally
based on considerations related to transactions costs and recordkeeping overheads.
FII’s invest funds on behalf of such investors, who prefer to avoid making disclosures
required by various regulators. The associates of these FII’S generally issue these notes
overseas.
The investors, who buy these notes, deposit their funds in the US or European operations of
the FII, which also operates in India. The FII then buys stocks in the domestic market on
behalf of these investors on their proprietary account. In this case, the FII or the broker acts
like an exchange: it executes the trade and uses its internal accounts to settle the trade. This
helps keeping the investor's name anonymous. Other such instruments include equity
-linked notes, capped return note, participatory return notes and investment notes.
FII’s were initially allowed to only invest in listed securities of companies. Gradually, they
were allowed to invest in unlisted securities, rated government securities, commercial paper
and derivatives traded on a recognised stock exchange. From November 1996, any
registered FII willing to make 100 per cent investment in debt securities were permitted to
do so subject to specific approval from SEBI as a separate category of FII’s or sub-accounts
as 100 per cent debt funds. The overall cap on investments in Government securities, both
through the normal route and the 100 per cent debt fund route, was revised from US$1
billion to US$1.75 billion in November, 2004. Moreover, investments were allowed only in
debt securities of companies listed or to be listed in stock exchanges. Investments were free
from maturity limitations. From April 1998, FII investments were also allowed in dated
Government securities. Treasury bills, being money market instruments, were originally
outside the ambit of such investments, but were included subsequently from May 1998.
Initially, FII’s were permitted to hedge their investments in debt instruments in India only
with respect to currency risk. On June 11, 1998, forward cover to FII’s on their investment
in equity was also allowed subject to the maximum of the difference in dollar terms between
the market value of investment on June 11, 1998 converted at RBI reference rate and the
market value of investment at the time of providing cover, or fresh inflows since June 11,
1998. Subsequently, in November 2002, forward cover up to a maximum of 15 per cent of
the outstanding position as on March 31, 1999 plus the increase in market value after March
31, 1999 was also permitted. With this 15 per cent limit liberalized to 100 per cent of
portfolio value, FII’s have had unrestricted access to currency hedging from January 8, 2003
onwards. In June 1998, the proposed legal basis for trading in equity derivatives coincided
with permission for FII’s to invest in equity derivatives. With the advent of trading in equity
derivatives in June 2000, and permission – albeit limited in the beginning – to FII’s to
participate in this market opened up further avenues for FII’s to hedge their positions in the
spot market.
Linkages with Exchange Rate, Interest Rate and Balance of Payments Exchange rate
FII’s are attracted by returns calculated in foreign currency, say for example, in US dollars.
Thus, what is relevant is the return on their investment in rupee terms and the movement of
the exchange rate of the rupee. A high rupee return on equities can be neutralized, at least in
part, by a depreciation of the rupee. For example, a 15 per cent rupee return on equities with
a 7 per cent depreciation of the rupee results in an effective dollar rate of return of about 8
per cent only. Similarly, a relatively unattractive low rupee rate of return on equities can
become attractive in dollar terms if the rupee appreciates vise -avis the dollar. Given
everything else, FII flows go up (down) when there are expectations of domestic currency
appreciation (depreciation).
INTEREST RATE
FII’s investment in debt instruments depends on the relativity of the domestic interest rate
vis-à-vis the world rate, adjusted for the exchange rate movement. Many developing
countries, Bose and Condo (2004), Including India, have high nominal interest rates
compared to developed countries. For example, in India, the rate of interest on 10-year
Central Government bonds was 7.15 per cent on October 3, 2005, when the corresponding
rate on 10-year gilts in the US and Japan was 4.39per cent and 1.57 per cent, respectively.
The relevant differential, however, is not the difference between the nominal rates of
interest, but the exchange rate adjusted differential or uncovered interest rate parity
condition. For example, an investor can invest US$1 in the US and obtain T(1+ rUS ) with
zero risk in T years, where US r is the annual yield from the US zero coupon yield curve for
T years. Alternatively, the investor can convert US$1 into Rs. E at the going exchange rate
of Rs. E per US$, invest the proceeds in India, and obtain TIN E(1+ r ) in rupees with zero
risk in T years, where IN r is the annual yield from the Indian zero coupon yield curve for
Tyears, convert it back into US$ at the expected future exchange rate. If the expected future
exchange rate indicates a higher (lower) return on investment in India, inflows (outflows) of
debt capital can be expected to reduce (increase) IN r until both investments yield the same
rate of return. While there are quantitative restrictions on FII investments in debt
instruments, the equity derivative market provides an alternative route for the FII’s to
benefit from the interest rate differential.

BALANCE OF PAYMENTS
India’s balance of payments has strengthened almost continuously since the crisis of 1990-
91, mainly because of a limited current account deficit more than compensated by a buoyant
capital account. The external sector responded well to the liberalization of trade and current
account, removal of quantitative restrictions and a steady reduction in customs duty rates
from a peak rate of over 300 per cent in 1990-91 to 20 per cent in 2004-05. The current
account deficit as a proportion of GDP, after a high of 3.1 per cent in 1990-91, remained
contained Below 1.8 per cent of GDP until 2000-01, and actually turned into a surplus from
2001-02. The strength of the capital account, on the other hand, reflected the success of a
cautious approach to liberalization with an opening up of the economy to FDI and FII’s, and
restricting debt flows. FII’s flows have made an important contribution to the balance of
payments.
FII inflows contributed US$ 40.33 billion between 1992-93 and September, 2005 to the
balance of payments. This corresponds to 28.3 per cent of the foreign exchange reserves of
US$ 143.1 billion at end-September 2005. In cumulative terms, between 1992 and
December 2004,
 FII investment has been 1.06 times FDI inflows of US$ 34.5 billion. In 2004-05, gross
portfolio flows amounted to as much as 1.48 per cent of GDP and was 1.85 times gross FDI
inflows of US$ 5.54 billion.

FII VERSUS FDI

According to the International Monetary Fund’s Balance of Payments Manual 5, FDI is that
category of international investment that reflects the objective of obtaining a lasting interest
by a resident entity in one economy in an enterprise resident in another economy. The
lasting interest implies the existence of a long-term relationship between the direct investor
and the enterprise and a significant degree of influence by the investor in the management of
the enterprise. According to EU law, foreign investment is labeled direct investment when
the investor buys more than 10 per cent of the investment target, and portfolio investment
when the acquired stake is less than 10 per cent. Institutional investors on the other hand are
specialized financial intermediaries managing savings collectively on behalf of investors,
especially small investors, towards specific objectives in terms of risk, returns, and maturity
of claims.
While permitting foreign firms/high net worth individuals in February, 2000 to invest
through SEBI registered FII/domestic fund managers, it was noted that there was a clear
distinction between portfolio investment and FDI. The basic presumption is that FII’s are
not interested in management control. To allay fears of management control being exercised
by portfolio investors, it was noted that adequate safety nets were in force, for example,
(i) transaction of business in securities on the stock exchanges are only through
stock brokers who have been granted a certificate by SEBI,
(ii) every transaction is settled through a custodian who is under obligation to
report to SEBI and RBI for all transactions on a daily basis,
(iii) Provisions of SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997.
(iv) Monitoring of sectoral caps by RBI on a daily basis.
VOLATILITY THROUGH OUTFLOWS
After the Asian crisis of 1997, the problem of volatility has been a matter of much
Discussion. In fact, Malaysia imposed severe capital controls on October 1, 1998 to that the
perceived destabilizing actions of foreign speculators. FII inflows are popularly described as
“hot money”, because of the herding behavior and potential for large capital outflows.
Herding behavior, with all the FII’s trying to either only buy or only sell at the same time,
particularly at times of market stress, can be rational. With performance-related fees for
fund managers, and performance judged on the basis of how other funds are doing, there is
great incentive to suffer the consequences of being wrong when everyone is wrong, rather
than taking the risk of being wrong when some others are right. The incentive structure
highlights the danger of a contraries bet going wrong and makes it much more severe than
performing badly along with most others in the market. It not only leads to reliance on the
same information as others but also reduces the planning horizon to a relatively short one.
Value at Risk models followed by FII’s may destabilize markets by leading to simultaneous
sale by various FII’s, as observed in Russia and Long Term Capital Management 1998
(LTCM) crisis. Extrapolative expectations or trend chasing rather than focusing on
fundamentals can lead to destabilization portfolios.
VOLATILITY THROUGH INFLOWS
Traditionally, developing countries plagued by problems of financing the deficits in the
balance of payments have been wary of FII’s because of the potential for large capital
outflows generated by their herding behavior. However, of late, some developing countries
like China and India have also had a problem of sizeable surpluses on the balance of
payments leading to upward pressure on the exchange rate or on domestic prices through
excessive liquidity creation.
FOREIGNERS CAPTURING MARKETS
The fear of foreigners capturing the securities markets has genuine content only if such
foreigners act as in cahoots to destabilize the economy. Otherwise, fear of foreigners per
reargues in favor of banning not only FII’s but FDIs and imports of merchandise as well.
DAY TRADING
Section 43(5) of the Income Tax Act defines ‘speculative transaction’ to mean a
Transaction in which a contract for the purchase or sale of any commodity, including stocks
and shares, is periodically or ultimately settled or otherwise than by actual delivery or
transfer of the commodity or scrip’s. Day -trading, wherein purchases made earlier in the
day are sold for a profit or loss within the day itself, without taking delivery, is ‘speculative’
according to the Income Tax Act, 1961. By the criterion of classifying investment as long-
term or speculative on the bas is of time horizons, day -trading qualifies as a speculative
investment. It may be noted that the FII’s being required to transact on the basis of giving
and taking deliveries, are prohibited from day trading. Hence, FII’s are barred from this
extreme form of speculative activity.
ROLE OF SPECULATION
Bekaert and Harvey (2000): “Throughout history and in many market economies, the
speculator has been characterized as both a villain and a savior. Indeed, the reputation of the
speculator generally depends on the country where he does business. In well-functioning
advanced capital markets, such as the United States, the speculator is viewed as an integral
part of the free-market system. In developing capital markets, the speculator, and in
particular the international speculator, is looked upon with many reservations.”
HEDGE FUNDS
In the last three years, there has been considerable interest in the regulatory questions
associated with the participation by foreign hedge funds in the Indian equity market.
What are Hedge funds?
Hedge funds, which are private investment vehicles for wealthy individuals or institutional
investors, have been in existence for over half a century. They, however have little to do
with hedging or eliminating risks arising from an underlying portfolio position. Hedge funds
constitute an alternative to mutual funds in terms of being a vehicle for fund management.
Regulation of mutual funds, motivated by the need to protect small investors, induces
significant costs of regulation. Hedge funds are prevented from accessing small investors,
and are free from this regulation. They are able to engage in a wider array of trading
strategies, and contractual structures, as compared with mutual funds. They are the preserve
of sophisticated investors who are able to take care of their own interests, and not rely on an
intrusive regulatory framework designed at protecting small investors. If the costs of
regulation of mutual funds are substantial, hedge funds would yield superior returns.

POLICY OPTIONS
Benefits and costs of FII investments
 The terms of reference asking the Expert Group to consider how FII inflows can be
encouraged and examine the adequacy of the existing regulatory.
Frameworks to adequately address the concern for reducing vulnerability to the flow of
speculative capital do not include an examination of the desirability of encouraging FII
inflows. Yet, for motivating the consideration of the policy options, it is useful to briefly
summarize the benefits and costs for India of having FII investment. Given the Group’s
mandate of encouraging FII flows, the available arguments that mitigate the costs have also
been included under the relevant points.

BENEFITS
Reduced cost of equity capital
FII inflows augment the sources of funds in the Indian capital markets. In a common sense
way, the impact of FII’s upon the cost of equity capital may be visualized by asking what
stock prices would be if there were no FII’s operating in India. FII investment reduces the
required rate of return for equity, enhances stock prices, and fosters investment by Indian
firms in the country.
Imparting stability to India's Balance of Payments
For promoting growth in a developing country such as India, there is need to augment
domestic investment, over and beyond domestic saving, through capital flows. The excess
of domestic investment over domestic savings result in a current account deficit and this
deficit is financed by capital flows in the balance of payments. Prior to 1991, debt flows and
official development assistance dominated these capital flows. This mechanism of funding
the current account deficit is widely believed to have played a role in the emergence of
balance of payments difficulties in 1981 and 1991. Portfolio flows in the equity markets,
and FDI, as opposed to debt-creating flows, are important as safer and more sustainable
mechanisms for funding the current account deficit.
Knowledge flows
The activities of international institutional investors help strengthen Indian finance. FII’s
advocate modern ideas in market design, promote innovation, development of sophisticated
products such as financial derivatives, enhance competition in financial intermediation, and
lead to spillovers of human capital by exposing Indian participants to modern financial
techniques, and international best practices and systems.
Strengthening corporate governance
Domestic institutional and individual investors, used as they are to the ongoing practices of
Indian corporate , often accept such practices, even when these do not measure up to the
international benchmarks of best practices. FII’s with their vast experience with modern
corporate governance practices are less tolerant of malpractice by corporate managers and
owners (dominant shareholder). FII participation in domestic capital markets often lead to
vigorous advocacy of sound corporate governance practices, improved efficiency and better
shareholder value.

Improvements to market efficiency

A significant presence of FII’s in India can improve market efficiency through two
Channels. First, when adverse macroeconomic news, such as a bad monsoon, unsettles
many domestic investors, it may be easier for a globally diversified portfolio manager to be
more dispassionate about India's prospects, and engage in stabilizing trades. Second, at the
level of individual stocks and industries, FII’s may act as a channel through which
knowledge and ideas about valuation of a firm or an industry can more rapidly propagate
into India. For example, foreign investors were rapidly able to assess the potential of firms
like Infosys, which are Primarily export-oriented, applying valuation principles that
prevailed outside India for software services companies.
Costs
Herding and positive feedback trading
 MUTUAL FUNDS
INTRODUCTION
Indian investors have been able to invest through mutual funds since 1964, when UTI was
established. Indian mutual funds have been organized through the Indian Trust Acts, under
which they have enjoyed certain tax benefits. Between 1987 and 1992, public sector banks
and insurance companies set up mutual funds. Since 1993, private sector mutual funds have
been allowed, which brought competition to the mutual fund industry. This has resulted in
the introduction of new products and improvement of services. The notification of the SEBI
(Mutual Fund) Regulations of 1993 brought about a restructuring of the mutual fund
industry. An arm’s length relationship is required between the fund sponsor, trustees,
custodian, and Asset Management Company. This is in contrast to the previous practice
where all three functions, namely trusteeship, custodianship, and asset management, were
often performed by one body, usually the fund sponsor or its subsidiary. The regulations
prescribed disclosure and advertisement norms for mutual funds, and, for the first time,
permitted the entry of private sector mutual funds. FII’s registered with SEBI may invest in
domestic mutual funds, whether listed or unlisted. The 1993 Regulations have been revised
on the basis of the recommendations of the Mutual Funds 2000 Report prepared by SEBI.
The revised regulations strongly emphasize the governance of mutual funds and increase the
responsibility of the trustees in overseeing the functions of the asset management company.
 Mutual funds are now required to obtain the consent of investors for any change in the
“fundamental attributes” of a scheme, on the basis of which unit holders have invested. The
revised regulations require disclosures in terms of portfolio composition, transactions by
schemes of mutual funds with sponsors or affiliates of sponsors, with the Asset Management
Company and trustees, and also with respect to personal transactions of key personnel of
asset management companies and of trustees.
Mutual Funds have become extremely popular over the last 20 years. What was once just
another obscure financial instrument is now a part of our daily lives. More than 80 million
people, or one half of the households in America, invest in mutual funds. That means that, in
the United States alone, trillions of dollars are invested in Mutual Fund. In fact, too many
people, investing means buying mutual funds. After all, its common knowledge that
investing in mutual funds is better than simply letting your cash waste away in a savings
account, but, for most people, that's where the understanding of funds ends. It doesn't help
that mutual fund salespeople speak a strange language that is interspersed with jargon that
many investors don't understand.
DEFINITION
A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a
mutual fund as a company that brings together a group of people and invests their money in
stocks, bonds, and other securities. Each investor owns shares, which represent a portion of
the holdings of the fund.
You can make money from a mutual fund in three ways:
1. Income is earned from Dividends on stocks and Interest on bonds. A fund
pays out nearly all of the income it receives over the year to fund owners in the form of a
distribution.
2. If the fund sells securities that have increased in price, the fund has a Capital
Gain. Most funds also pass on these gains to investors in a distribution.
3. If fund holdings increase in price but are not sold by the fund manager, the
fund's shares increase in price. You can then sell your mutual fund shares for a profit.
Funds will also usually give you a choice either to receive a check for distributions or to
reinvest the earnings and get more shares.
ADVANTAGES OF MUTUAL FUNDS
Professional Management - The primary advantage of funds (at least theoretically) is the
professional management of your money. Investors purchase funds because they do not
have the time or the expertise to manage their own portfolios. A mutual fund is a relatively
inexpensive way for a small investor to get a full-time manager to make and monitor
investments.
Diversification -: By owning shares in a mutual fund instead of owning individual stocks
or bonds, your risk is spread out. The idea behind diversification is to invest in a large
number of assets so that a loss in any particular investment is minimized by gains in others.
In other words, the more stocks and bonds you own, the less any one of them can hurt you
(think about Enron). Large mutual funds typically own hundreds of different stocks in many
different industries. It wouldn't be possible for an investor to build this kind of a portfolio
with a small amount of money.
Economies of Scale -: Because a mutual fund buys and sells large amounts of securities at a
time, its transaction costs are lower than what an individual would pay for securities
transactions.
Liquidity: - Is like an individual stock, a mutual fund allows you to request that your shares
be converted into cash at any time.
Simplicity - Buying a mutual fund is easy! Pretty well any bank has its own line of mutual
funds, and the minimum investment is small. Most companies also have automatic purchase
plans whereby as little as $100 can be invested on a monthly basis.
DISADVANTAGES OF MUTUAL FUNDS:
Professional Management - Did you notice how we qualified the advantage of professional
management with the word "theoretically"? Many investors debate whether or not the so-
called professionals are any better than you or I at picking stocks. Management is by no
means infallible, and, even if the fund loses money, the manager still takes his/her cut. We'll
talk about this in detail in a later section.
Costs - Mutual funds don't exist solely to make your life easier - all funds are in it for a
profit. The mutual fund industry is masterful at burying costs under layers of jargon. These
costs are so complicated that in this tutorial we have devoted an entire section to the subject.
Dilution - It's possible to have too much diversification. Because funds have small holdings
in so many different companies, high returns from a few investments often don't make much
difference on the overall return. Dilution is also the result of a successful fund getting too
 big. When money pours into funds that have had strong success, the manager often has
trouble finding a good investment for all the new money.
Taxes - When making decisions about your money, fund managers don't consider your
personal tax situation. For example, when a fund manager sells a security, a capital-gains
tax is triggered, which affects how profitable the individual is from the sale. It might have
been more advantageous for the individual to defer the capital gains liability.
DIFFERENT TYPES OF MUTUAL FUNDS
No matter what type of investor you are, there is bound to be a mutual fund that fits your
style. According to the last count there are more than 10,000 mutual funds in North
America! That means there are more mutual funds than stocks.
It's important to understand that each mutual fund has different risks and rewards. In
general, the higher the potential return, the higher the risk of loss. Although some funds are
less risky than others, all funds have some level of risk - it's never possible to diversify away
all risk. This is a fact for all investments.
Each fund has a predetermined investment objective that tailors the fund's assets, regions of
investments and investment strategies. At the fundamental level, there are three varieties of
mutual funds:
1) Equity funds (stocks)
2) Fixed Income funds (bonds)
3) Money- Market funds
All mutual funds are variations of these three asset classes. For example, while equity funds
that invest in fast-growing companies are known as growth funds, equity funds that invest
only in companies of the same sector or region are known as specialty funds.
Let's go over the many different flavors of funds. We'll start with the safest and then work
through to the more risky.

Money Market Funds

The money market consists of short-term debt instruments, mostly Treasury Bill. This is a
safe place to park your money. You won't get great returns, but you won't have to worry
about losing your principal. A typical return is twice the amount you would earn in a regular
checking/savings account and a little less than the average certificate of deposit (CD).
Bond/Income Funds
Income funds are named appropriately: their purpose is to provide current income on a
steady basis. When referring to mutual funds, the terms "fixed-income," "bond," and
"income" are synonymous. These terms denote funds that invest primarily in government
and corporate debt. While fund holdings may appreciate in value, the primary objective of
these funds is to provide a steady cash flow to investors. As such, the audience for these
funds consists of conservative investors and retirees.
Bond funds are likely to pay higher returns than certificates of deposit and money market
investments, but bond funds aren't without risk. Because there are many different types of
bonds, bond funds can vary dramatically depending on where they invest. For example, a
fund specializing in high-yield Junk Bonds is much more risky than a fund that invests in
government securities. Furthermore, nearly all bond funds are subject to interest rate risk,
which means that if rates go up the value of the fund goes down.

Balanced Funds
The objective of these funds is to provide a balanced mixture of safety, income and capital
appreciation. The strategy of balanced funds is to invest in a combination of fixed income
and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed
income. The weighting might also be restricted to a specified maximum or minimum for
each asset class.
A similar type of fund is known as an asset allocation fund. Objectives are similar to those
of a balanced fund, but these kinds of funds typically do not have to hold a specified
percentage of any asset class. The portfolio manager is therefore given freedom to switch
the ratio of asset classes as the economy moves through the Business cycle.

Equity Funds
Funds that invest in stocks represent the largest category of mutual funds. Generally, the
investment objective of this class of funds is long-term capital growth with some income.
There are, however, many different types of equity funds because there are many different
types of equities. A great way to understand the universe of equity funds is to use a style
box, an example of which is below.
The idea is to classify funds based on both the size of the companies invested in and the
investment style of the manager. The term value refers to a style of investing that looks for
high quality companies that are out of favor with the market. These companies are
characterized by low P/e and price – to book ratios and high dividend yields. The opposite
of value is growth, which refers to companies that have had (and are expected to continue to
have) strong growth in earnings, sales and cash flow. A compromise between value and
growth is blend, which simply refers to companies that are neither value nor growth stocks
and are classified as being somewhere in the middle.

Global/International Funds
An international fund (or foreign fund) invests only outside your home country. Global
funds invest anywhere around the world, including your home country.
It's tough to classify these funds as either riskier or safer than domestic investments. They
do tend to be more volatile and have unique Country and/or political risks. But, on the flip
side, they can, as part of a well-balanced portfolio, actually reduce risk by increasing
diversification. Although the world's economies are becoming more inter-related, it is likely
that another economy somewhere is outperforming the economy of your home country.

Specialty Funds
This classification of mutual funds is more of an all-encompassing category that consists of
funds that have proved to be popular but don't necessarily belong to the categories we've
described so far. This type of mutual fund forgoes broad diversification to concentrate on a
certain segment of the economy.
Sector funds are targeted at specific sectors of the economy such as financial, technology,
health, etc. Sector funds are extremely volatile. There is a greater possibility of big gains,
but you have to accept that your sector may tank.
Regional funds make it easier to focus on a specific area of the world. This may mean
focusing on a region (say Latin America) or an individual country (for example, only
Brazil). An advantage of these funds is that they make it easier to buy stock in foreign
countries, which is otherwise difficult and expensive. Just like for sector funds, you have to
accept the high risk of loss, which occurs if the region goes into a bad recession.
Socially Responsible funds (or ethical funds) invest only in companies that meet the
criteria of certain guidelines or beliefs. Most socially responsible funds don't invest in
industries such as tobacco, alcoholic beverages, weapons or nuclear power. The idea is to
get a competitive performance while still maintaining a healthy conscience.
Index Funds
The last but certainly not the least important are index funds. This type of mutual fund
replicates the performance of a broad market index such as the S& P 500 or Dow Jones
Industrial Average (DJIA). An investor in an index fund figures that most managers can't
beat the market. An index fund merely replicates the market return and benefits investors in
the form of low fees.

The important step is to define your financial goals and, determine the level of risk you are
comfortable with and the investment time frame. Generally, the higher the potential return,
the higher the risk of loss.

Mutual fund classification

Mutual funds can be classified on the basis of structure, investment objective, and payout
plans.

Structure wise, there are three basic types of mutual funds: open ended, close ended
and interval funds.

Structure
An open-ended fund is available for subscription and repurchase on a continuous basis.
Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices,
which are declared on a daily basis. Open-ended schemes do not have a fixed duration. The
key feature of open-end schemes is liquidity.

A close-ended fund does not provide the facility of subscription throughout the year; it is
open for a subscription for a fixed duration as specified in the prospectus of the fund. The
investor can apply for the units of the fund only during the initial offer period following
which units can be bought and sold only at the stock exchange, where the fund is listed, at
the market price.

An Interval funds combine the features of open-ended and close-ended schemes. They may
be traded on the stock exchange or may be open for sale or redemption during pre-
determined intervals at NAV linked prices.

Investment objective

Besides, the structure, each fund has a different investment objective.

Equity funds: Their objective is the growth of capital over the long term. Equity funds also
known as growth funds as these funds invest in equities and liquid money market securities.
They have a high risk attached as the returns from them are also spectacular. They are
suitable for investors who have a long-term investment objective and have surplus funds
after investing in basic and safe investment avenues.

Balanced funds: Balanced funds hold a combination of equity and debt investments and
cash equivalent. They have the objective of providing both regular income and moderate
growth while minimizing risk.

Sector funds: These are the funds, which invest in the securities of only those sectors or
industries as specified in the offer documents, e.g., pharmaceuticals, software, FMCG, etc.
The returns in these funds are dependent on the performance of the respective
sectors/industries. While these funds may give returns higher than even the plain or vanilla
growth schemes, which have investments spread over different sectors, they are also more
risky

Tax saving funds: Just like insurance policies of PPF, these schemes offer tax rebates to the
investors under specific provisions of the Income Tax Act, 1961. These schemes are growth
oriented and invest pre-dominantly in equities. Thus you get the dual benefit of tax rebate on
the amount invested as well as a growth in your capital. But these schemes come with the
risks associated with equity schemes.

Index funds: They replicate the portfolio of an index such as the BSE Sensitive Index, S&P
NSE 50 index (Nifty), etc these schemes invest in securities in the same weight age as
comprising in their chosen index. NAVs of such schemes would rise or fall in accordance
with the rise or fall in the index, though not exactly by the same percentage due to "tracking
error".

Exchange traded funds: They combine the best features of open ended and close-ended
funds. They track an index and can be traded like a single stock on the stock exchange. It is
priced continually and can be bought or sold throughout the trading day.

Money market funds: These funds invest in treasury bills, call money and certificates of
deposit. The objective of these funds is to maximum protection of capital. Hence, they
provide relatively low returns. This kind of fund is appropriate for investors who want to
park funds for a short duration. These schemes are popular with institutional investors and
high net worth individuals with short-term surplus funds.

Income funds: These funds invest in corporate bonds, commercial paper, certificate of
deposit and government securities. The objectives are regular income and capital
preservation. They are moderately low-risk and are suitable for investors who need a regular
source of income.

Gilt funds: Gilt funds predominantly invest in government securities and money market
instruments. As the investments are in government paper these funds have little risk of
default and hence offer better protection of principal. The prices of government securities
are influenced by the movement in interest rates in the financial system.
However, one must recognize the potential changes in values of debt securities held by the
funds that are caused by changes in the market price of these securities. Generally when
interest rates rise, prices of government securities fall and when interest rates drop the prices
increase.

Payout plans

Besides structure and investment objective, mutual funds can be further divided into two on
the basis of their payout plan. They are two plans available: the growth option and the
dividend option. Dividend is payable only to investors who opt for the dividend option.
After the declaration of the dividend, the NAV of the unit comes down to the extent of the
dividend declared. Investors under the growth option do not receive any dividends. Instead
dividends are reinvested, and hence the NAV shows a higher appreciation.

Performance measures for mutual funds

Risk and investing go hand in hand. To know your funds performance, apart from
comparing the performance vi-a-vis the benchmarks, an investor should also make use of
certain statistical measures that make evaluation of a mutual fund even more precise.
Among the most commonly used ratios, there are six ratios, which we come across very
often but fail to understand their utility. They are Standard Deviation, Beta, Sharpe, Alpha,
Treynor and R-Squared.

Standard deviation: Standard deviation is a statistical measure of the range of a fund's

performance, and is reported as an annual number. When a fund has a high standard
deviation, its range of performance has been very wide, indicating that there is a greater
potential for volatility.

Beta: Another way to assess the Fund’s up and down movement is its Beta measure. Beta
measures the volatility of a fund relative to a particular market benchmark i.e. how sensitive
the fund is to market movements.

A Beta greater than 1 means that the fund is more volatile than the benchmark. A Beta less
than 1 means that the fund is less volatile than the benchmark. For example, a Beta of 1.1
would indicate that if the market goes up 10%, the fund might rise 11% and vice versa in a
down market.

Sharpe: The most common measure that combines both risk and reward into a single
indicator is the Sharpe Ratio. A Sharpe Ratio is computed by dividing a fund’s return in
excess of a risk-free return (usually a 90-day Treasury bill or SBI fixed deposit rate) by its
standard deviation. This measures the amount of return over and above a risk-free rate
against the amount of risk taken to achieve the return. So if a fund produced a 20% return
while the SBI fixed deposit rate returned 6.5% and its standard deviation is 10%, its Sharpe
Ratio would be (20 – 6.5) / 10 = 1.35.

Generally, there is no right or wrong Sharpe Ratio. The measure is best used to compare one
fund’s ratio with another, or to its peer group average. For similar funds the higher the
Sharpe Ratio, the better a fund’s historical risk-adjusted performance.

Sharpe ratio = (Fund Average Return - Risk Free Return) / Standard Deviation of the fund.

R-Squared (R2): The R-Squared measure reveals what percentage of a fund’s movements
can be related to movements in its benchmark index. An R-Squared of 100 would mean that
all of the fund’s movements are perfectly explained by its benchmark; Index funds normally
achieve this ideal. A high R-squared means the beta on a fund is actually a useful
measurement. A low R-squared means ignore the beta.

Alpha: The Alpha measure is less about risk than it is about "value added." Alpha
represents the difference between the performance you would expect from a fund, given its
Beta, and the actual returns it generates. A high alpha (more than 1) means that the fund has
performed well. A negative alpha means the fund under performed.

Mathematically, Alpha= fund return - [Risk free rate + Beta of fund (Benchmark return -
Risk free return)]

Treynor: the Treynor ratio is similar to the Sharpe ratio. Instead of comparing the fund’s
risk adjusted performance to the risk free return, it compares the fund’s risk adjusted
performance of the relative index.
 COMPANY PROFILE

Min-Max Investment Advisors Foundation, a professionally managed Investment

advisory services company, developed in the year 2000 by three young entrepreneurs with
an intension to Minimization of Risk and Maximization of Return in the field of Indian
Capital markets by extensive research work.

As a sub member of NSE BSE MCX NCDEX NSDL and CDSL, which are pioneers in the
respective operations, Min-Max is having more than 500 client base with two operation
units at Hyderabad and Rajampet, Kadapa Dist.,

 NSE: National Stock Exchange

 BSE: Bombay Stock Exchange
 MCX: Multi Commodity Exchange
 NCDEX: National Commodities and Derivatives Exchange
 NSDL: National Securities Depository Ltd
 CDSL: Central Depository Services Ltd

Min-Max, an aggressive player in Investment Advisory, is on-par with the investor

expectations in providing professional services, namely_
 Online Trading in Equity, Commodities and F&O
 Framing of Derivative strategies
 Depository Services (D-MAT)
 Initial Public Offers (IPO) and Book Buildings
 Distribution of Mutual Funds
 Portfolio Management Service (PMS) etc., through its member
 Corporate training for executives on NCFM (National Stock Exchange
Certificate inn Financial Markets)

Min-Max is in market because of:

 Investor care is of paramount importance at Min-Max.

 Min-Max offers large avenues of investment solutions for all classes of investors under one
roof.

 Min-Max experience is one of prized possession. Min-Max has an experience of more than
7 years wherein grown phenomenally.

 One of the most competitive brokerage structure.

 Hassle free trading experience.

 Timely advice along with research support to the clients through SMS and E-MAILS on
EQUITIES, DERIVATIVES, COMMODITIES, IPOs and Mutual Funds.

Min-Max approach:

UN BIASED INVESTMENT ADVISORY

VALUE FOR INVESTOR'S TRUST

INTEGRITY AND HONESTY

PERSONALIZED ATTENTION

RESEARCH BASED ADVISORY SERVICES

VISION:

To Become Successful Investment Advisors by developing the strategies which are

implement able and leads to provide better returns than Bench mark portfolios.
 ANALYSIS

CONTRIBUTED AMOUNT OF FOREIGN INSTITUTIONAL INVESTORS AND

MUTUAL FUNDS IN ONE UNIT
Net change in NIFTY from 1 January 1999 to 28 February 2007
Net amount of FII’s Investment is 181778.26crs
For each point change in NIFTY the amount to be contributed by FII’s is
NET FII’s
NET NIFTY

1, 81,778.26 crs
2,858.55crs

=Rs.63.59 crs

Net amount of mutual fund Investment from January 2000 to February 2007 is 19840.83crs
For every point change of NIFTY the amount to be contributed by mutual fund is as
calculated
Mutual fund net
Net of nifty

19,840.83crs
2,858.55crs

= Rs 6.94crs
The total amount of FII’s&MF to be contributed to the market is
= Rs194889.39crs
For every point change in nifty the amount to be contributed by FII’s&MF is
NET of FII’s&MF
NET of NIFTY
 1, 94,889.39crs
2,858.55crs

Rs. 68.17crs
FOR ONE POINT OF CHANGE IN NIFTY THE AMOUNT TO BE CONTRIBUTED
BY FII’S AND MF’s ARE AS FOLLOWS
S.No Particulars

1 Total Investment till 28th February

181778.26 cr. 19840.83 cr.
2 Monthly average 1.02
3 Money contributed for 1 point change
63.59 cr. 6.94 cr.
in nifty

For net investment of FII’S&MF the investment contributed is Rs. 68.17 crs.

INVESTMENT OF FII’S&MF IN 10 POINTS

For 10 point of change the amount to be contributed for FII’s is

= amount invested by FII’s on one point x 10 points = Rs. 63.59 crs x10 = Rs. 635.9 crs.
For 10 point of change the amount to be contributed for Mutual fund is
=amount invested by Mutual Funds on one point x 10 points = Rs. 6.94 crs x10= Rs. 69.4crs
Net investment of FII’s & MF money for every 10 points
= Rs. 68.17 crs x10 = Rs. 681.7crs.
The money to be contributed by FII’s & MF for every 10 points is
FII’s is Rs. 635.9 crs
MF is Rs.69.4 crs
Total Net contribution of both FII’s and MF is Rs. 681.7 crs.

A SERIES OF CHANGES IN FII’s AND MF’s ACTIIVITIES IN INDIAN MARKET

The data has taken from January 1999 to February 2007. The FII’s Contributed to the capital
market one of the highest amount is 9465.20 cr in December, 2005.
The lowest contribution in the May 2006 is -8247.20.
In MF’s from January 2000 to February 2007 is the highest amount contributed is 7573.04
in May 2006, the lowest amount is -1976.94 in June 2006.
The Net change in NIFTY during these months is as follows:
March 2006 327.85
May 2006 -486.55
June 2006 57.15
December 2005 184.30
May 2004 -312.50
Net amount of FII’s and MF’s is the highest amount is contributed is 11,015.24 in March,
2006 and the lowest amount is -2,246.36 in May 2004

GRAPHICAL DESIGN:
The derived data has been plotted on various charts/graphs, which clearly indicates the
following:
1. Net FII’s.

FIIs net
10000

5000

0
Nov-05

Nov-03

Nov-01

Nov-99
Jul-06

Jul-04

Jul-02

Jul-00
Mar-05

Mar-03

Mar-01

Mar-99

-5000

-10000

4.1 FII’S NET

FII’s are constantly increasing from the years January 1999 to February 2007.
 The major investment of FII’s in the above years are in the month of March2004 are
Rs.8769cr. And another major contribution is in the months of December 2005 is Rs.
9465.20cr.
FII’s major disinvestment is in the months of May 2004 Rs.-3250.5cr. And another
disinvestment is in the months of May 2006 of Rs. -8247cr.
Net change of Nifty during these months are March 2004 is Rs. -28.40,May 2005 is Rs.-
312.50, December 2005 is Rs. 184.30,May 2006 is Rs. - 486.55.

2. Net Mutual Funds.

MFs net

10000
8000
6000
4000
2000
0
Nov-04

May-
Jan-06
Jun-05

Dec-01

Oct-00
Mar-00
Aug-06

Apr-04
Sep-03
Feb-03
Jul-02

-2000
-4000

4.2 MF’S NET

Mutual funds are increasing constantly from January2000 to February2007.
 The major contributions of mutual funds to the market is constantly increasing in the months
of December 2004 is Rs. 2724.65cr, September 2005 is
Rs.3233.63cr,March 2006 is Rs. 4482.94cr, May 2006 is Rs.7573.04 cr.
The disinvestment of mutual funds is in months of June 2006 is Rs. -1976.94 cr.
Net change of Nifty is in these months are as September 2005 is Rs. 216.75, December 2004
is Rs.121.70, March 2006 is Rs.327.85, May 2006 is Rs.
-486.55.

3. Net of NIFTY.

nifty net change

400.00
300.00
200.00
100.00
0.00
-100.00 0
-0 -01 -02 -03 -04 -05 -06 -07
-200.00
eb eb eb eb eb eb eb eb
F
-300.00 F F F F F F F
-400.00
-500.00
-600.00

4.3 NIFTY NET

As the market is growing constantly in this period.
The major growth of the Nifty is as December 2003 is Rs. 264.50, November 2005 is
Rs.281.30, and March 2006 is Rs. 327.85.
The major decline in Nifty is in the months of May 2004 Rs. -312.50, May 2006 Rs.
-486.55, February 2007 is Rs. -337.40.
4. FII’s & MF’s.

FIIs&MFs

10000
8000
6000
4000
2000
0
6 6 6 5 5 5 4 4 4 3 3 3 2 2 2 1 1 1 0 0 0
-0 l-0 r-0 v-0 l-0 r-0 v-0 l-0 r-0 v-0 l-0 r-0 v-0 l-0 r-0 v-0 l-0 r-0 v-0 l-0 r-0
-2000 N
ov Ju Ma
N
o Ju Ma No Ju Ma No Ju Ma No Ju Ma No Ju Ma No Ju Ma

-4000
-6000
-8000
-10000

4.4 FII’S & MF’S

FII’s are constantly increasing from the years January 1999 to February 2007.
The major investment of FII’s in the above years are in the months of March 2004 is
Rs.8769cr. And another major contribution is in the months of December 2005 is
Rs.9465.20cr.
FII’s major disinvestment is in the months of May 2004 Rs.-3250.5cr. And another
disinvestment is in the months of May 2006 of Rs. -8247cr.
Net change of Nifty during these months are March2004 is -28.40,May2005 is -312.50,
December2005 is 184.30,May2006 is -486.55
Mutual funds are increasing constantly from January2000 to February2007.
The major contributions of mutual funds to the market is constantly increasing in the months
of December 2004 is Rs. 2724.65cr, September 2005 is Rs. 3233.63cr, March
2006 is Rs. 4482.94cr, May 2006 is Rs. 7573.04cr.
The disinvestment of mutual funds is in months of June 2006 is Rs.-1976.94cr.
Net change of Nifty is in these months are as September 2005 is Rs. 216.75, December 2004
is Rs.121.70, March 2006 is Rs.327.85, May 2006 is Rs. -486.55.
5. Net of FII’s & MF’s.

Net (FII&MF)

15000

10000

5000

0
1 7 13 19 25 31 37 43 49 55 61 67 73 79 85
-5000

4.5 NET FII’S & MF

Net amount of FII’s and MF’s is the highest amount is contributed is Rs.11, 015.24cr in
March, 2006 and the lowest amount is Rs. -2,246.36cr in May 2004.
6. Closing trade of Nifty.

NIFTYclosing data
4500

4000

3500

3000

2500

2000

1500

1000

500
2/1/1999
6/1/1999

10/1/1999

2/1/2000
6/1/2000

6/1/2002

10/1/2002

2/1/2003

2/1/2005
6/1/2005

10/1/2005
10/1/2000
2/1/2001

6/1/2001
10/1/2001

2/1/2002

6/1/2003
10/1/2003

2/1/2004
6/1/2004

10/1/2004

2/1/2006

6/1/2006
10/1/2006

2/1/2007
4.6 NIFTY CLOSING
From the years 1999 to 2007 the Nifty is constantly growing, the Nifty have been grown to a
point of 4224 in 27 February\2007.This is because of the aggression of bullishness FII’s
and MF’s investment and sale in the Indian market.

7. % Change FII’s.
 % Change of FIIs

89
67
45
23
1
-40.00 -20.00 0.00 20.00 40.00 60.00

4.7 % CHANGE OF FII’S

The major growth in %return is 51.22% in the year of January 2001.and an negative return
is in the year September 1999 is -27.12% compared to the previous months investment.
8. % Change of MF’s.

%Change of MF
77
58
39
20
1
-100.00 -50.00 0.00 50.00 100.00

4.8 % CHANGE OF MF
The investor has been invested more in mutual fund market in month of December 2004
which gives a major return of 56.82%.
Major disinvestment made by the mutual fund investors are in the month of July 2001 which
yield a negative return of -95.65% compared to previous months investment.

9. % Change of NIFTY
 % Change of Nifty

20
10
0
-10
-20
1 9 17 25 33 41 49 57 65 73 81 89 97

4.9 % CHANGE OF NIFTY

Major impact of FII’s and MF investment on the market is of 16.38% in December
2003.And with a negative return of -17.40% in the month of May 2004 compared to
previous months.
 FINDINGS

1. Foreign institutional investors and mutual fund investment is constantly

growing in Indian capital market.
2. FII’s are invested from January 1999 to February 2007 an amount of
Rs.181778.26cr and MF’s are invested from January 2000 to February 2007 an amount of
Rs.19840.43.
3. Foreign institutional investor has been invested to an extent of 51.22%in
month of January 2001.and disinvestment of -27.12% in the month September 1999.
4. Mutual fund investors have been invested to an extent of 56.82% in month of
December 2004.And disinvestment of -95.65% in the month of July 2001.
5. A net investment of both foreign institutional investors and mutual fund
investment in Indian capital market is Rs.11, 015.24crs in the month of March 2006, and
Rs.6 532.33crs in November 2006 and Rs.5790.95crs in February 2007.
6. Because of FII’S and Mutual fund investments Indian Capital markets surged
to 4224 (in February 2007) level (Nifty) from the level of 931.2 in the month of 2-
February-1999.

7. If FII’S start disinvest because of any reasons there will be high pressure on
currency conversion and the Indices value.

SUGGESTIONS

1. SEBI must ensure market safety and safeguards of interest of investors

2. slowly being in convertibility of rupee so that smooth and seanless of
incoming and outgoing investments.
3. Decrease volatility with better regulation and prompt action thus assuring
The domestic investor and preparing them to make more long-term in the market.
4. Indian stock market has more influenced by the global markets, so we
Must observe the way of global market .
 CONCLUSIONS

1. There may be shift in foreign institutional investor from equity market to

debt market.
2. Mutual fund may replace with another equity instrument which yields a high
return and low risk.
3. Foreign institutional investors & Mutual fund will have a great impact on
macro economy of the country.
4. FII’s&MF’s will reduce the risk because of hedging their position in the
suitable derivative instrument i.e. Futures and Options.
5. Derivatives Investment not considered in the project.

BIBLIOGRAPHY

S.NO AUTHOR’S TITLE OF THE PUBLISHERS PAGE

 NAME BOOK & EDITION NO

1. MEIR KOHN FINANCIAL 1999 TATA 121

INSTITUTIONS MC GRAW-HILL 336
& MARKETS PUBLISHING
COMPANY LTD

2. DR M.L. VARMA FOREIGN TRADE 1999 VIKAS

242
MANAGEMENT IN PUBLISHING 294
INDIA HOUSE PVT LTD

3. JOON J ECHO INDIAN CAPITAL MARKET

(RECENT DEVELOPMENTS & POLOCY ISSUES)

WEB-SITE

S.NO URL ADDRESS DATE OF CITED

1. www.investopedia.com 25-March-2007

2. www.moneycontrol.com 28-March-2007

3. www.nseindia.com 28-March-2007

4. www.sebigov.in 2-April-2007
 APPENDICES

FII’S AND MUTUAL FUNDS IMPACT ON INDIAN CAPITAL MARKET

FII’S EQUITY INVESTMENT IN (CRORES)

  Gross Gross   Monthly

Month Purchase Sales Net Cummulative% ChangeAverage
Feb-07 51,568.90 45,503.90 6,065.00 181,778.26 11.76 3.34
Jan-07 47,506.77 47,412.32 94.45 175,713.26 0.20 0.05
Dec-06 37,419.50 40,830.40 -3,410.90 175,618.81 -9.12 -1.88
Nov-06 31,146.96 24,572.22 6,574.74 179,029.71 21.11 3.62
Oct-06 27,591.94 23,013.30 4,578.54 172,454.97 16.59 2.52
Sep-06 33,014.20 26,782.50 6,231.70 167,876.43 18.88 3.43
Aug-06 28,104.60 23,330.60 4,774.00 161,644.73 16.99 2.63
Jul-06 24,983.10 23,535.20 1,447.90 156,870.73 5.80 0.80
Jun-06 39,845.60 38,427.40 1,418.20 155,422.83 3.56 0.78
May-06 49,338.20 57,585.50 -8,247.20 154,004.63 -16.72 -4.54
Apr-06 40,415.60 39,826.40 589.2 162,251.83 1.46 0.32
Mar-06 53,578.70 47,046.40 6,532.30 161,662.63 12.19 3.59
Feb-06 35,603.10 28,031.20 7,571.90 155,130.33 21.27 4.17
Jan-06 34,762.80 31,542.10 3,220.70 147,558.43 9.26 1.77
Dec-05 31,563.40 22,098.20 9,465.20 144,337.73 29.99 5.21
Nov – 05 23,739.10 19,290.50 4,448.60 134,872.53 18.74 2.45
Oct-05 25,817.50 29,623.10 -3,805.60 130,423.93 -14.74 -2.09
Sep-05 24,160.70 20,056.10 4,122.60 134,229.53 17.06 2.27
Aug-05 26,455.10 22,042.50 4,412.60 130,106.93 16.68 2.43
Jul-05 25,589.30 17,377.10 8,212.20 125,694.33 32.09 4.52
Jun-05 27,693.10 21,931.00 5,762.10 117,482.13 20.81 3.17
May-05 15,522.60 16,330.20 -807.6 111,720.03 -5.20 -0.44
Apr-05 15,261.70 16,308.80 -1,047.10 112,527.63 -6.86 -0.58
Mar-05 26,701.20 19,051.90 7,649.30 113,574.73 28.65 4.21
Feb-05 20,898.00 13,203.00 7,695.00 105,925.43 36.82 4.23
Jan-05 14,784.40 15,066.10 -281.7 98,230.43 -1.91 -0.15
Dec-04 19,009.90 13,203.20 5,806.70 98,512.13 30.55 3.19
Nov-04 18,219.10 11,796.70 6,412.40 92,705.43 35.20 3.53
Oct-04 16,560.20 12,517.80 4,042.40 86,293.03 24.41 2.22
Sep-04 12,974.10 10,189.80 2,784.30 82,250.63 21.46 1.53
Aug-04 12,471.00 9,659.80 2,811.20 79,466.33 22.54 1.55
Jul-04 10,967.30 9,784.00 1,183.30 76,655.13 10.79 0.65
Jun-04 10,525.20 10,214.60 310.6 75,471.83 2.95 0.17
May-04 15,726.10 18,976.60 -3,250.50 75,161.23 -20.67 -1.79
Apr-04 16,304.60 12,131.60 4,173.00 78,411.73 25.59 2.30
Mar-04 20,383.50 11,614.60 8,769.00 74,238.73 43.02 4.82
Feb-04 14,378.10 11,106.30 3,271.90 65,469.73 22.76 1.80
Jan-04 16,364.60 13,990.50 2,374.10 62,197.83 14.51 1.31
Dec-03 14,038.10 7,788.20 5,411.00 59,823.73 38.55 2.98
Nov-03 9,759.10 6,563.80 3,195.30 54,412.73 32.74 1.76
Oct-03 14,475.20 7,612.60 6,862.60 51,217.43 47.41 3.78
Sep-03 11,500.90 7,564.80 3,936.10 44,354.83 34.22 2.17
Aug-03 7,654.20 5,627.60 2,026.60 40,418.73 26.48 1.11
Jul-03 8,472.50 6,044.30 2,428.20 38,392.13 28.66 1.34
Jun-03 6,489.20 3,877.50 2,611.70 35,963.93 40.25 1.44
May-03 5,461.00 4,252.60 1,208.40 33,352.23 22.13 0.66
Apr-03 5,196.20 4,646.30 549.9 32,143.83 10.58 0.30
Mar-03 3,151.00 2,898.40 252.7 31,593.93 8.02 0.14
Feb-03 3,275.90 2,870.40 405.2 31,341.23 12.37 0.22
Jan-03 5,343.20 4,277.60 1,065.50 30,936.03 19.94 0.59
Dec-02 4,013.00 3,572.70 440.3 29,870.53 10.97 0.24
Nov-02 3,840.60 3,371.20 469.4 29,430.23 12.22 0.26
Oct-02 2,929.00 3,528.60 -599.6 28,960.83 -20.47 -0.33
Sep-02 3,722.70 3,354.50 368.2 29,560.43 9.89 0.20
Aug-02 2,629.20 2,408.00 221.2 29,192.23 8.41 0.12
Jul-02 3,380.30 3,024.20 356.1 28,971.03 10.53 0.20
Jun-02 3,279.00 3,451.00 -172 28,614.93 -5.25 -0.09
May-02 3,786.91 3,958.44 -171.54 28,786.93 -4.53 -0.09
Apr-02 4,358.10 4,459.60 -101.51 28,958.47 -2.33 -0.06
Mar-02 3,872.10 3,398.60 454.07 29,059.98 11.73 0.25
Feb-02 5,453.80 3,448.30 2,005.46 28,605.91 36.77 1.10
Jan-02 5,055.60 4,698.40 357.15 26,600.45 7.06 0.20
Dec-01 3,459.20 3,143.50 315.7 26,243.30 9.13 0.17
Nov-01 3,509.00 3,358.40 150.6 25,927.60 4.29 0.08
Oct-01 3,608.80 2,893.10 715.7 25,777.00 19.83 0.39
Sep-01 2,936.80 3,352.40 -415.6 25,061.30 -14.15 -0.23
Aug-01 3,020.20 2,582.80 437.4 25,476.90 14.48 0.24
Jul-01 3,069.50 2,347.10 722.5 25,039.50 23.54 0.40
Jun-01 3,462.80 2,747.50 715.3 24,317.00 20.66 0.39
May-01 3,734.10 2,688.60 1,045.60 23,601.70 28.00 0.58
Apr-01 4,599.00 2,829.20 1,770.00 22,556.10 38.49 0.97
Mar-01 6,577.60 4,604.50 1,972.90 20,786.10 29.99 1.09
Feb-01 6,057.90 4,239.00 1,819.10 18,813.20 30.03 1.00
Jan-01 7,831.70 3,786.70 4,045.50 16,994.10 51.66 2.23
 Dec-00 4,300.60 4,877.40 -576.9 12,948.60 -13.41 -0.32
Nov-00 4,428.10 3,496.00 932.8 13,525.50 21.07 0.51
Oct-00 4,219.20 4,491.00 -271.7 12,592.70 -6.44 -0.15
Sep-00 6,978.60 6,836.20 142.5 12,864.40 2.04 0.08
Aug-00 5,134.20 3,788.00 1,346.00 12,721.90 26.22 0.74
Jul-00 5,689.50 7,107.30 -1,418.00 11,375.90 -24.92 -0.78
Jun-00 5,243.90 6,203.20 -959.3 12,793.90 -18.29 -0.53
May-00 5,985.90 5,501.80 484.2 13,753.20 8.09 0.27
Apr-00 8,034.90 5,344.30 2,690.50 13,269.00 33.49 1.48
Mar-00 9,516.30 8,451.80 1,064.40 10,578.50 11.19 0.59
Feb-00 9,265.50 6,481.00 2,784.80 9,514.10 30.06 1.53
Jan-00 5,994.80 5,843.60 151.2 6,729.30 2.52 0.08
Dec-99 4,484.30 2,907.80 1,576.30 6,578.10 35.15 0.87
Nov-99 3,878.00 2,674.50 1,203.70 5,001.80 31.04 0.66
Oct-99 3,427.80 4,141.50 -713.9 3,798.10 -20.83 -0.39
Sep-99 2,725.90 3,465.30 -739.3 4,512.00 -27.12 -0.41
Aug-99 2,683.60 2,799.20 -115.4 5,251.30 -4.30 -0.06
Jul-99 4,305.70 2,753.30 1,552.50 5,366.70 36.06 0.85
Jun-99 2,664.80 2,316.40 348.5 3,814.20 13.08 0.19
May-99 4,041.00 2,367.80 1,673.00 3,465.70 41.40 0.92
Apr-99 2,380.10 1,496.10 884 1,792.70 37.14 0.49
Mar-99 2,520.80 2,397.30 123.3 908.70 4.89 0.07
Feb-99 1,647.90 1,308.50 339.2 785.40 20.58 0.19
Jan-99 1,635.60 1,189.40 446.2 446.20 27.28 0.25
AVERAGE       14.66 1.02
TOTAL     181,778.26      
 MUTUAL FUND

Gross Gross Monthly

Purchase Sales Net Cummulative %Change Average
12,697.09 12,971.14 -274.05 19,840.43 -2.16 -1.38127
11,452.73 12,790.89 -1,338.16 20,114.48 -11.68 -6.74461
13,181.43 11,554.37 1,627.06 21,452.64 12.34 8.20073
7,455.01 7,497.42 -42.41 19,825.58 -0.57 -0.21376
8,070.91 8,605.60 -534.69 19,867.99 -6.62 -2.69495
10,345.23 9,005.44 1,339.79 20,402.68 12.95 6.752827
8,851.58 8,425.14 426.44 19,062.89 4.82 2.149349
7,552.18 7,633.39 -81.21 18,636.45 -1.08 -0.40932
7,843.52 9,820.46 -1,976.94 18,717.66 -25.20 -9.9642
17,755.83 10,182.79 7,573.04 20,694.60 42.65 38.16974
12,618.48 9,530.06 3,088.42 13,121.56 24.48 15.5663
15,770.43 11,287.49 4,482.94 10,033.14 28.43 22.59497
9,157.76 9,403.32 -245.56 5,550.20 -2.68 -1.23767
9,857.25 11,029.54 -1,172.29 5,795.76 -11.89 -5.90859
8,368.24 9,744.97 -1,376.73 6,968.05 -16.45 -6.93901
6,575.97 5,995.73 580.24 8,344.78 8.82 2.924533
9,225.12 6,243.46 2,981.66 7,764.54 32.32 15.0282
10,262.71 7,029.08 3,233.63 4,782.88 31.51 16.29819
9,281.52 6,988.90 2,292.62 1,549.25 24.70 11.55529
5,813.08 5,420.42 392.66 -743.37 6.75 1.97909
4,567.84 6,384.63 -1,816.79 -1,136.03 -39.77 -9.15701
7,000.72 3,655.73 3,344.99 680.76 47.78 16.85946
4,347.95 2,883.04 1,464.91 -2,664.23 33.69 7.383459
6,492.58 4,949.79 1,542.79 -4,129.14 23.76 7.775991
3,844.95 3,742.12 102.83 -5,671.93 2.67 0.518285
3,757.60 3,205.25 552.35 -5,774.76 14.70 2.783962
4,795.15 5,148.41 2,724.65 -6,327.11 56.82 13.73282
3,589.34 4,284.71 -695.37 -9,051.76 -19.37 -3.50481
2,861.36 3,283.24 -421.88 -8,356.39 -14.74 -2.12637
3,530.42 3,756.04 -225.62 -7,934.51 -6.39 -1.13717
2,822.05 2,919.88 -97.83 -7,708.89 -3.47 -0.49308
2,678.86 3,149.27 -470.41 -7,611.06 -17.56 -2.37097
2,130.11 2,389.90 -259.79 -7,140.65 -12.20 -1.3094
4,857.15 3,853.01 1,004.14 -6,880.86 20.67 5.06108
3,675.30 3,894.63 -219.33 -7,885.00 -5.97 -1.10547
3,879.92 3,712.05 167.87 -7,665.67 4.33 0.846101
2,606.21 3,139.92 -533.7 -7,833.54 -20.48 -2.68996
5,098.29 4,160.29 938 -7,299.84 18.40 4.72772
4,647.40 3,795.35 852.06 -8,237.84 18.33 4.294564
2,917.30 2,726.78 190.52 -9,089.90 6.53 0.960261
3,362.30 3,557.14 -194.84 -9,280.42 -5.79 -0.98204
2,812.55 3,102.66 -290.11 -9,085.58 -10.31 -1.46222
3,147.28 2,739.58 407.7 -8,795.47 12.95 2.054895
2,642.21 2,571.09 71.12 -9,203.17 2.69 0.35846
1,997.50 2,193.05 -195.55 -9,274.29 -9.79 -0.98561
2,110.68 2,042.35 68.33 -9,078.74 3.24 0.344398
1,332.78 1,509.97 -177.19 -9,147.07 -13.29 -0.89308
1,015.74 953.6 62.14 -8,969.88 6.12 0.313199
1,077.74 1,046.64 31.1 -9,032.02 2.89 0.156751
1,534.19 1,937.23 -403.04 -9,063.12 -26.27 -2.03141
1,412.36 1,409.93 2.43 -8,660.08 0.17 0.012248
1,059.44 1,394.94 -335.5 -8,662.51 -31.67 -1.69099
1,247.63 1,292.04 -44.41 -8,327.01 -3.56 -0.22384
959.51 931.37 28.14 -8,282.60 2.93 0.141832
1,020.20 1,222.89 -202.69 -8,310.74 -19.87 -1.0216
1,444.61 1,732.39 -287.78 -8,108.05 -19.92 -1.45047
1,083.19 1,477.73 -394.54 -7,820.27 -36.42 -1.98857
1,366.20 1,506.21 -140.01 -7,425.73 -10.25 -0.70568
1,299.38 1,685.71 -332.67 -7,285.72 -25.60 -1.67673
1,177.70 1,649.97 -472.22 -6,953.05 -40.10 -2.38009
1,703.28 2,057.76 -354.47 -6,480.83 -20.81 -1.7866
1,720.01 2,152.92 -432.94 -6,126.36 -25.17 -2.18211
1,326.83 1,262.91 63.92 -5,693.42 4.82 0.32217
1,002.69 1,345.90 -343.16 -5,757.34 -34.22 -1.7296
742.38 1,419.48 -677.1 -5,414.18 -91.21 -3.41273
875.63 766.94 108.69 -4,737.08 12.41 0.547821
643.34 1,016.56 -373.22 -4,845.77 -58.01 -1.88111
466.58 912.85 -446.27 -4,472.55 -95.65 -2.2493
574.13 682.95 -108.82 -4,026.28 -18.95 -0.54848
991.26 1,466.89 -475.63 -3,917.46 -47.98 -2.39728
737.11 1,033.85 -296.74 -3,441.83 -40.26 -1.49563
1,405.19 1,770.37 -357.18 -3,145.09 -25.42 -1.80026
1,719.45 2,900.56 -1,181.11 -2,787.91 -68.69 -5.95305
1,578.18 2,564.20 -924.68 -1,606.80 -58.59 -4.66058
1,764.88 1,753.67 11.23 -682.12 0.64 0.056602
927.65 1,359.14 -431.49 -693.35 -46.51 -2.1748
1,021.44 841.54 179.9 -261.86 17.61 0.906734
1,470.84 1,422.56 243.32 -441.76 16.54 1.226385
1,251.42 1,231.77 19.65 -685.08 1.57 0.09904
 933.24 1,181.31 -248.07 -704.73 -26.58 -1.25033
1,491.33 1,931.09 -439.36 -456.66 -29.46 -2.21447
1,489.20 1,103.45 385.85 -17.30 25.91 1.944766
1,375.47 1,283.98 91.49 -403.15 6.65 0.461129
2,773.63 2,604.93 168.66 -494.64 6.08 0.850082
2,967.11 3,630.41 -663.3 -663.3 -22.36 -3.34317
  -6.83 1.17
    19,840.43      
 NIFTY COMPARISION

 
N et FII's & MF
Opening Closing Net change% Change
5,790.95 4,082.70 3,745.30 -337.40
-1,243.71 3,966.40 4,082.70 116.30 2.93
-1,783.84 3954.5 3966.4 11.90 0.30
6,532.33 3744 3954.5 210.50 5.62
4,043.85 3588.4 3744 155.60 4.34
7,571.49 3413.9 3588.4 174.50 5.11
5,200.44 3143.2 3413.9 270.70 8.61
1,366.69 3128.2 3143.2 15.00 0.48
-558.74 3071.05 3128.2 57.15 1.86
-674.16 3557.6 3071.05 -486.55 -13.68
3,677.62 3402.55 3557.6 155.05 4.56
11,015.24 3074.7 3402.55 327.85 10.66
7,326.34 3001.1 3074.7 73.60 2.45
2,048.41 2836.55 3001.1 164.55 5.80
8,088.47 2652.25 2836.55 184.30 6.95
5,028.84 2370.95 2652.25 281.30 11.86
-823.94 2601.4 2370.95 -230.45 -8.86
7,356.23 2384.65 2601.4 216.75 9.09
6,705.22 2312.3 2384.65 72.35 3.13
8,604.86 2220.6 2312.3 91.70 4.13
3,945.31 2087.55 2220.6 133.05 6.37
2,537.39 1902.5 2087.55 185.05 9.73
417.81 2035.65 1902.5 -133.15 -6.54
9,192.09 2103.25 2035.65 -67.60 -3.21
7,797.83 2,057.60 2,103.25 45.65 2.22
270.65 2080.5 2057.6 -22.90 -1.10
8,531.35 1,958.80 2,080.50 121.70 6.21
5,717.03 1,786.90 1,958.80 171.90 9.62
3,620.52 1745.5 1786.9 41.40 2.37
2,558.68 1631.75 1745.5 113.75 6.97
2,713.37 1632.3 1631.75 -0.55 -0.03
712.89 1505.6 1632.3 126.70 8.42
50.81 1483.6 1505.6 22.00 1.48
-2,246.36 1796.1 1483.6 -312.50 -17.40
3,953.67 1771.9 1796.1 24.20 1.37
8,936.87 1,800.30 1,771.90 -28.40 -1.58
2,738.20 1809.75 1800.3 -9.45 -0.52
3,312.10 1879.75 1809.75 -70.00 -3.72
6,263.06 1615.25 1879.75 264.50 16.38
3,385.82 1555.9 1615.25 59.35 3.81
6,667.76 1417.1 1555.9 138.80 9.79
3,645.99 1356.55 1417.1 60.55 4.46
2,434.30 1185.85 1356.55 170.70 14.39
2,499.32 1134.15 1185.85 51.70 4.56
2,416.15 1006.8 1134.15 127.35 12.65
1,276.73 934.05 1006.8 72.75 7.79
372.71 978.2 934.05 -44.15 -4.51
314.84 1063 978.2 -84.80 -7.98
436.30 1041.85 1063 21.15 2.03
662.46 1093.5 1041.85 -51.65 -4.72
442.73 1050 1093.5 43.50 4.14
133.90 951.4 1050 98.60 10.36
-644.01 963.15 951.4 -11.75 -1.22
396.34 1010.6 963.15 -47.45 -4.70
18.51 958.9 1010.6 51.70 5.39
68.32 1057.8 958.9 -98.90 -9.35
-566.54 1028.8 1057.8 29.00 2.82
-311.55 1084.5 1028.8 -55.70 -5.14
-434.18 1129.55 1084.5 -45.05 -3.99
-18.15 1142.05 1129.55 -12.50 -1.09
1,650.99 1075.4 1142.05 66.65 6.20
-75.79 1059.05 1075.4 16.35 1.54
379.62 1067.15 1059.05 -8.10 -0.76
-192.56 971.9 1067.15 95.25 9.80
38.60 913.85 971.9 58.05 6.35
-306.91 1053.75 913.85 -139.90 -13.28
64.18 1072.85 1053.75 -19.10 -1.78
276.23 1107.9 1072.85 -35.05 -3.16
606.48 1167.9 1107.9 -60.00 -5.14
569.97 1125.25 1167.9 42.65 3.79
1,473.26 1148.2 1125.25 -22.95 -2.00
1,615.72 1351.4 1148.2 -203.20 -15.04
637.99 1371.7 1351.4 -20.30 -1.48
3,120.82 1263.55 1371.7 108.15 8.56
-565.67 1268.1 1263.55 -4.55 -0.36
501.31 1172.75 1268.1 95.35 8.13
-91.80 1271.65 1172.75 -98.90 -7.78
385.82 1394.1 1271.65 -122.45 -8.78
1,365.65 1332.85 1394.1 61.25 4.60
 -1,666.07 1471.45 1332.85 -138.60 -9.42
-1,398.66 1380.45 1471.45 91.00 6.59
870.05 1406.55 1380.45 -26.10 -1.86
2,781.99 1528.45 1406.55 -121.90 -7.98
1,233.06 1654.8 1528.45 -126.35 -7.64
2,121.50 1546.2 1654.8 108.60 7.02
1480.45 1546.2 65.75 4.44
1376.15 1480.45 104.30 7.58
1325.45 1376.15 50.70 3.83
1413.1 1325.45 -87.65 -6.20
1412 1413.1 1.10 0.08
1310.15 1412 101.85 7.77
1187.7 1310.15 122.45 10.31
1132.3 1187.7 55.40 4.89
978.2 1132.3 154.10 15.75
1078.05 978.2 -99.85 -9.26
981.3 1078.05 96.75 9.86
966.2 981.3 15.10 1.56
886.75 966.2 79.45 8.96
1.83
194,889.39 2,858.55