MEASURING CLUSTER VOLATILITY BY USING BOX-JENKINS METHODOLOGY: AN EMPIRICAL STUDY AT KOTAK SECURITIES LTD.

A Summer Internship Project report submitted to G.M. University, Sambalpurin partial fulfillment for the award of the degree in MASTER OF BUSINESS ADMINSTRATION2015-2017Submitted By:DEBABRATA NAYAKA Student of GANGADHAR MEHER UNIVERSITY,SAMBALPUR

Internal GuideExternal Guide

Sri Sisir Ranjan Dash Mr.SubharanshuTripathy

Sr. LecturerBRANCH MANAGER

G. M. UNIVERSITY, SambalpurKOTAK SECURITIES LTD. SBP

GANGADHAR MEHER UNIVERSITY, SAMBALPUR-768004ODISHAACKNOWLEDGEMENT

My heartily thanks to Mr.Subharanshu Tripathy Branch Head of Kotak Securities, Sambalpur for giving me opportunity to avail the summer training program at Kotak Securities,Sambalpur.I express my deep sense of gratitude to Mr Satya Prasad Kar, for providing me all the relevant information and guiding me on my project topic. Without his help, support and guidance, the completion of this internship report would not have been possible.I would also remain grateful to Mr. Deepak Kumar Sahoo, for their help and support throughout the summer internship programmed.I am really thankful to Dr.Srinibas Dash, the present H.O.D of Department of professional courses & Mr. Sisir Ranjan Dash Factuly of Department of professional courses, for the freedom he gave me in choosing my report topic and his continuous guidance henceforth. His guidance has been of extreme help to me. I consulted him and he answered with the utmost patience and perseverance. So, his guidelines for the report made it mandatory for me to seek learning in the work environment, which proved to be very gratifying. I am very thankful to my teachers and friends who have helped me a lot in collecting necessary information. Their loving and caring words of praise have really encouraged me.I would also like to thank My Parents for what I am today.

Thanking You (Debabrata Nayak)Signature of the CandidateDECLARATIONI do hereby declare that the work incorporated in this project is original and the project entitled Measuring the cluster volatility by using Box-Jenkins Methodology: An empirical study at Kotak Securities Ltd. submitted by me for the MBA degree is the record of work carried out by me during the period from May to June 2016 under the guidance of Sri Sisir Ranjan Dash, Department of Professional Courses, Gangadhar Meher University, Sambalpur 768004 and has not been formed the basis for the award of any degree in this or any other University .I further declare that the material obtained from other sources has been duly acknowledged in the project.

(Debabrata Nayak)Signature of the Candidate

CERTIFICATE

This is to certify that this individual assignment (Summer Project work) has been prepared by Debabrata Nayak, student, under my guidance during the period 09th May, 2016 to 22nd June, 2016, as Partial fulfilment of MBA Degree. This project work (Measuring the cluster volatility by using Box-Jenkins Methodology: An empirical study at Kotak Securities Ltd.) has been a work of Innovation under my guidance and has not been submitted anywhere in any form.

(Mr.Subharanshu Tripathy)Branch ManagerKotak Securities,Sambalpur

Chapter No.TitlePage No.

1.Introduction

2.Review of literature

3.Company Profile

4.Research Design

5.Data Analysis and findings

6.Conclusion and Suggestion

7.Reference

8.Appendix

C O N T E N T S

CHAPTER 1INTRODUCTION

CHAPTER 1: INTRODUCTION1. INDIAN STOCK MARKET1.1 IntroductionIndian Stock Markets is one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States to Europe was stopped; thus, the 'Share Mania' in India began. The number of brokers increased to about 200 to 250.At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association, which is alternatively known as The Stock Exchange". In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.The Indian stock market has been assigned an important place in financing the Indian corporate sector. The principal functions of the stock markets are: Enabling mobilizing resources for investment directly from the investors Providing liquidity for the investors and monitoring. Disciplining company management.The two major stock exchanges in India are:- National Stock Exchange (NSE) Bombay Stock Exchange (BSE).1.2 National Stock ExchangeWith the liberalization of the Indian economy, it was found inevitable to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee.The National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others.The National Stock Exchange (NSE) is India's leading stock exchange covering various cities and towns across the country. NSE was set up by leading institutions to provide a modern, fully automated screen-based trading system with national reach. The Exchange has brought about unparalleled transparency, speed & efficiency, safety and market integrity. It has set up facilities that serve as a model for the securities industry in terms of systems, practices and procedures.Trading at NSE can be classified under two broad categories: Wholesale debt market Capital market Wholesale debt market operations are similar to money market operations - institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc.Capital market: A market where debt or equity securities are traded.

There are two kinds of players in NSE: Trading members Participants Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility.Trading at NSE takes place through a fully automated screen-based trading mechanism which adopts the principle of an order-driven market. Trading members can stay at their offices and execute the trading, since they are linked through a communication network. The prices at which the buyer and seller are willing to transact will appear on the screen. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member. NSE has several advantages over the traditional trading exchanges. They are as follows: NSE brings an integrated stock market trading network across the nation. Investors can trade at the same price from anywhere in the country since inter-market operations are streamlined coupled with the countrywide access to the securities. Delays in communication, late payments and the malpractices prevailing in the traditional trading mechanism can be done away with greater operational efficiency and informational transparency in the stock market operations, with the support of total computerized network. NSE NiftyS&P CNX Nifty is a well-diversified 50 stock index accounting for 22 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.NSE came to be owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon the index as a core product. IISL have a consulting and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services. CNX stands for CRISIL NSE Indices. CNX ensures common branding of indices, to reflect the identities of both the promoters, i.e. NSE and CRISIL. Thus, 'C' Stands for CRISIL, 'N' stands for NSE and X stands for Exchange or Index. The S&P prefix belongs to the US-based Standard & Poor's Financial Information Services.1.3 Bombay Stock ExchangeThe Bombay Stock Exchange is one of the oldest stock exchanges in Asia. It was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956. The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide.SENSEX The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market.SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well as electronic media.Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time. Small wonder, the SENSEX has over the years become one of the most prominent brands in the country.The SENSEX captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through SENSEX.The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed at five major stock exchanges. The values of all BSE indices are updated every 15 seconds during the market hours and displayed through the BOLT system, BSE website and news wire agencies.All BSE-indices are reviewed periodically by the index committee of the exchange.2. OVERVIEW OF THE REGULATORY FRAMEWORK OF THE CAPITAL MARKET IN INDIAIndia has a financial system that is regulated by independent regulators in the sectors of banking, insurance, capital markets and various service sectors. The Indian Financial system is regulated by two governing agencies under the Ministry of Finance. They are2.1 Reserve Bank of India The RBI was set up in 1935 and is the central bank of India. It regulates the financial and banking system. It formulates monetary policies and prescribes exchange control norms. 2.2 The Securities Exchange Board of India The Government of India constituted SEBI on April 12, 1988, as a non-statutory body to promote orderly and healthy development of the securities market and to provide investor protection.2.3 Department Economic AffairsThe capital markets division of the Department of Economic Affairs regulates capital markets and securities transactions.The capital markets division has been entrusted with the responsibility of assisting the Government in framing suitable policies for the orderly growth and development of the securities markets with the SEBI, RBI and other agencies. It is also responsible for the functioning of the Unit Trust of India (UTI) and Securities and Exchange Board of India (SEBI).The principal aspects that are dealt with the capital market division are: Policy matters relating to the securities market Policy matters relating to the regulation and development and investor protection of the securities market and the debt market. Organizational and operational matters relating to SEBI 2..4 The Capital Market is governed by: Securities Contract (Regulation) Act, 1956 Securities Contract (Regulation) Rules, 1957 SEBI Act, 1992 Companies Act 1956 SEBI (Stock Brokers and Sub Brokers) Rules, 1992 Exchange Bye-Laws Rules & Regulations 2.5 Self-regulating Role of the ExchangeThe exchange functions as a Self Regulatory Organization with the parameters laid down by the SCRA, SEBI Act, SEBI Guidelines and Rules, Bye-laws and Regulations of the Exchange. The Governing Board discharges these functions. The Executive Director has all the powers of the governing board except discharging a member indefinitely or declaring him a defaulter or expelling him. The Executive Director takes decisions in the areas like surveillance, inspection, investigation, etc. in an objective manner as per the parameters laid down by the governing board or the statutory committees like the Disciplinary Action Committee. 3. TRADING WITH STOCK MARKETThis section will introduce us about the process and instruments used to help a customer or a client to trade with arcadia securities. This process is almost similar to any other trading firm but there will be some difference in the cost of brokerage commission.3.1 Trading: It is a process by which a customer is given facility to buy and sell share this buying and selling can only be done through some broker and this is where Arcadia helps its customer. A customer willing to trade with any brokerage house need to have a demat account, trading account and saving account with a brokerage firm. Any one having following document can open all the above mentioned account and can start trading.3.2 Document Required 3 photographs ( signed across) Photo Identification Proof - any of the following - Voter ID/Pan Card/Driving License/Passport. Address Proof any of the following - Voter ID/Driving License/ Passport/ Bank statement or pass book sealed and attestation by bank official/ landline bill. A crossed Cheque favouring KOTAK SECURITIES. Of the required amount. The amount for Account processing fee will be Rs. 750/- the minimum amount being Rs.10000 a cheque can be given for a larger amount. Copy of PAN Card is mandatory. Bank and address proof declaration. These documents may not be consumer friendly but it is to avoid illegal transaction and to prevent black money this ensures that money invested is accounted.3.3 Techniques and Instruments for Trading The various techniques that are available in the hands of a client are:-1. Delivery 1. Intraday 1. Future 1. Forwards 1. Options 1. swaps 3.4 Basic Requirement for doing TradingTrading requires Opening a Demat account. Demat refers to a dematerialized account. You need to open a Demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. We need to approach the Depository Participants (DP, they are like bank branches), to open Demat account. A depository is a place where the stocks of investors are held in electronic form. The depository has agentswho are called depository participants (DPs).Think of it like a bank. The head office where all the technology rests and details of all accounts held is like the depository. And the DPs are the branches that cater to individuals. There are only two depositories in India The National Securities Depository Ltd (NSDL) and the Central Depository Services Ltd (CDSL). 3.5 Capital Market Participants Banks Exchanges Clearing Corporations Brokers Custodians Depositories Investors Merchant Bankers 3.6 Types of Investors Institutional Investors- MFs / FI / FIIs / Banks Retail Investors Arbitrageurs / Speculators Hedgers Day traders/Jobbers3.7 Combination of Futures and OptionHedging means, minimizing the risk, i.e., minimizing the losses. Under index futures and index options investor can minimize his losses. Hedging does not remove losses but removes unwanted exposure, i.e. unnecessary risk. One should not enter into a hedging strategy hoping to make excess profits; all it can do is reduce the risk. 4. PARAMETERS OF INVESTMENTThe nature of investment differs from individual to individual and is unique to each one because it depends on various parameters like future financial goals, the present & the future income model, capacity to bear the risk, the present requirements and lot more. As an investor progresses on his/her life stage and as his/her financial goals change, so does the unique investor profile.Economic development of a country depends upon its investment. The emerging economic environment of competitive markets signifying customers sovereignty has profound implications for their savings and investment. Investment means persons commitments towards his future.4.1 INVESTMENTThe word "investment" can be defined in many ways according to different theories and principles. It is a term that can be used in a number of contexts. However, the different meanings of "investment" are more alike than dissimilar.Generally, investment is the application of money for earning more money. Investment also means savings or savings made through delayed consumption. According to economics, investment is the utilization of resources in order to increase income or production output in the future. An amount deposited into a bank or machinery that is purchased in anticipation of earning income in the long run are both examples of investments. Although there is a general broad definition to the term investment, it carries slightly different meanings to different industrial sectors. According to economists, investment refers to any physical or tangible asset, for example, a building or machinery and equipment.On the other hand, finance professionals define an investment as money utilized for buying financial assets, for example stocks, bonds, bullion, real properties, and precious items.According to finance, the practice of investment refers to the buying of a financial product or any valued item with an anticipation that positive returns will be received in the future. The most important feature of financial investments is that they carry high market liquidity. The method used for evaluating the value of a financial investment is known as valuation. According to business theories, investment is that activity in which a manufacturer buys a physical asset, for example, stock or production equipment, in expectation that this will help the business to prosper in the long run.4.1.1 Characteristics of an investment decision:1. It involves the commitment of funds available with you or that you would be getting in the future.2. The investment leads to acquisition of a plot, house, or shares and debentures.3. The physical or financial assets you have acquired are expected to give certain benefits in the future periods. The benefits may be in the form of regular revenue over a period of time like interest or dividend or sales or appreciation after some point of time as normally happens in the case of investment in land or precious metals.4.1.2 Essentials of InvestmentEssentials of investment refer to why investment, or the need for investment, is required. The investment strategy is a plan, which is created to guide an investor to choose the most appropriate investment portfolio that will help him achieve his financial goals within a particular period of time. An investment strategy usually involves a set of methods, rules, and regulations, and is designed according to the exchange or compromise of the investor's risks and returns. A number of investors like to increase their earnings through high-risk investments, whilst others prefer investing in assets with minimum risk involved. However, the majority of investors choose an investment strategy that lies in the middle. Investment strategies can be broadly categorized into the following types: Active strategies: One of the principal active strategies is market timing (an investor is able to move into the market when it is on the low and sell the stocks when the market is on the high), which is applied for maximizing yields. Passive strategies: Frequently implemented for reducing transaction costs. One of the most popular strategies is the buy and hold, which is basically a long term investment plan. The idea behind this is that stock markets yield a commendable rate of return in spite of stages of fluctuation or downfall. Indexing is a strictly passive variable of the buy and hold strategy and, in this case, an investor purchases a limited number of every share existing in the stock market index, for example the Standard and Poor 500 Index, or more probably in an index fund, which is a form of a mutual fund.

Additionally, as the market timing strategy is not applicable for small-scale investors, it is advisable to apply the buy and hold strategy. In case of real estate investment the retail and small-scale investors apply the buy and hold strategy, because the holding period is normally equal to the total span of the mortgage loan.4.2 PRINCIPLES OF INVESTMENTFive basic principles serve as the foundation for the investment approach. They are as follows: Focus on the long term There is substantive empirical evidence to suggest that equities provide the maximum risk adjusted returns over the long term. In an attempt to take full advantage of this phenomenon, investments would be made with a long term perspective. Investments confer proportionate ownership The approach to valuing a company is similar to making an investment in a business. Therefore, there is a need to have a comprehensive understanding of how the business operates. Maintain a margin of safety The benchmark for determining relative attractiveness of stocks would be the intrinsic value of the business. The Investment Manager would endeavor to purchase stocks that represent a discount to this value, in an effort to preserve capital and generate superior growth.

Maintain a balanced outlook on the market The investment portfolio would be regularly monitored to understand the impact of changes in business and economic trend as well as investor sentiment. While short-term market volatility would affect valuations of the portfolio, this is not expected to influence the decision to own fundamentally strong companies. Disciplined approach to sellingThe decision to sell a holding would be based on either the anticipated price appreciation being achieved or being no longer possible due to a change in fundamental factors affecting the company or the market in which it competes, or due to the availability of an alternative that, in the view of the Investment Manager, offers superior returns. In order to implement the investment approach effectively, it would be important to periodically meet the management face to face. This would provide an understanding of their broad vision and commitment to the long-term business objectives. These meetings would also be useful in assessing key determinants of management quality such as orientation to minority shareholders, ability to cope with adversity and approach to allocating surplus cash flows.

4.3 INVESTMENT PROCESS

Framing of investment policy

Investment AnalysisValuationPortfolio constructionPortfolio evaluationFigure no. 4.3. Investment Process4.4 INVESTMENT TYPESA particular investor normally determines the investment types after having formulated the investment decision, which is termed as capital budgeting in financial lexicon. With the proliferation of financial markets there are more options for investment types. According to the financial terminology investment means the following: Purchasing Securities in Money or Capital Markets Buying Monetary or Paper Financial Assets in Money or Capital Markets Investing in Liquid Assets like Gold, Real Estate and CollectiblesInvestors assume that these forms of investment would furnish them with some revenue by way of positive cash flow.These assets can also affect the particular investor positively or negatively depending on the alterations in their respective values.Investments are often made through the intermediaries who use money taken from individuals to invest. Consequently the individuals are regarded as having claims on the particular intermediary. It is common practice for the particular intermediaries to have separate legal procedures of their own. Following are some intermediaries: Banks Mutual Funds Pension Funds Insurance Companies Collective Investment Schemes Investment Clubs Investment in the domain of personal finance signifies funds employed in the purchasing of shares, investing in collective investment plans or even purchasing an asset with an element of capital risk. In the field of real estate, investments imply buying of property with the sole purpose of generating income.Investment in residential real estate could be made in the form of buying housing property, while investments in commercial real estate is made by owning commercial property for corporate purposes that are geared to generate some amount of revenue. 4.4.1 InvestmentThe money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment.4.4.2 Why should one invest?One needs to invest to: earn return on your idle resources generate a specified sum of money for a specific goal in life make a provision for an uncertain future

4.5 VARIOUS OPTIONS AVAILABLE FOR INVESTMENT One may invest in Physical assets like real estate, gold/jewellery, commodities etc. or Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance/ provident/ Pension fund etc. or securities market related instruments like shares, bonds, debentures etc.4.5.1 Various Short-term financial options available for investment.Broadly speaking, savings bank account, money market/liquid funds and fixed deposits with banks may be considered as short-term financial investment options. Savings Bank Account is often the first banking product people use, which offers low interest (4%-5% p.a.), making them only marginally better than fixed deposits. Fixed Deposits with Banks are also referred to as term deposits and minimum investment period for bank FDs is 30 days. Fixed Deposits with banks are for investors with low risk appetite, and may be considered for 6-12 months investment period as normally interest on less than 6 months bank FDs is likely to be lower than money market fund returns.4.5.2 Various Long-term financial options available for investment.Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any post office. It provides an interest rate of 8% per annum, which is paid monthly. Minimum amount, which can be invested, is Rs. 1,000/- and additional investment in multiples of 1,000/-. Maximum amount is Rs. 3, 00,000/- (if Single) or Rs. 6, 00,000/- (if held jointly) during a year. It has a maturity period of 6 years. A bonus of 10% is paid at the time of maturity. Premature withdrawal is permitted if deposit is more than one year old. A deduction of 5% is levied from the principal amount if withdrawn prematurely; the 10% bonus is also denied.Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per annum compounded annually. A PPF account can be opened through a nationalized bank at anytime during the year and is open all through the year for depositing money. Tax benefits can be availed for the amount invested and interest accrued is tax-free. A withdrawal is permissible every year from the seventh financial year of the date of opening of the account and the amount of withdrawal will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower the amount of loan if any.Company Fixed Deposits: These are short-term (six months) to medium-term (three to five years) borrowings by companies at a fixed rate of interest which is payable monthly, quarterly, semi-annually or annually. They can also be cumulative fixed deposits where the entire principal along with the interest is paid at the end of the loan period. The rate of interest varies between 6-9% per annum for company FDs. The interest received is after deduction of taxesBonds: It is a fixed income (debt) instrument issued for a period of more than one year with the purpose of raising capital. The central or state government, corporations and similar institutions sell bonds. A bond is generally a promise to repay the principal along with a fixed rate of interest on a specified date, called the Maturity Date.Mutual Funds: These are funds operated by an investment company which raises money from the public and invests in a group of assets (shares, debentures etc.), in accordance with a stated set of objectives. It is a substitute for those who are unable to invest directly in equities or debt because of resource, time or knowledge constraints. Benefits include professional money management, buying in small amounts and diversification. Mutual fund units are issued and redeemed by the Fund Management Company based on the fund's net asset value (NAV), which is determined at the end of each trading session. NAV is calculated as the value of all the shares held by the fund, minus expenses, divided by the number of units issued. 4.5.3 Equity Investment :- Equity investment refers to the trading of stocks and bonds in the share market. It is also referred to as the acquisition of equity or ownership participation in the company. An equity investment is typically an ownership investment, where the investor owns an asset of the company. In this kind of investment there is always a risk of the investor not earning a specific amount of money. Equity investment can also be termed as payment to a firm in return for partial ownership of that firm. An equity investor, in some cases, may assume some management control of the firm and may also share in future profits. In order to understand equity investment properly, it is necessary to see the technical and fundamental analysis. The technical analysis of equity investment is primarily the study of price history of the shares and stock market. A fundamental analysis of equity investment involves the study of all available information that is relevant to the share market in order to predict the future trends of the stock market. The annual reports, industry data and study of the economic and financial environment are also included in the fundamental information of equity investment. 4.5.4 Mutual Funds and Segregated FundsMutual funds or other forms of pooled investment measures are equities held by private individuals but managed and governed by prominent management firms. These types of financial holdings allow individual investors to diversify their holdings and avoid potential loss. Segregated funds, on the other hand, are used by large private investors who wish to hold their shares directly rather than in a mutual fund. The prime advantage in investing in a pooled fund is that it gives the individual access to professional advice through the fund manager. The major disadvantages involved are that the investors must pay a fee to the fund managers and that the diversification of the fund may not be appropriate for all investors. In those cases, the investors may over-diversify by holding several funds, thus reducing the risk.Mutual funds are supposed to be the best mode of investment in the capital market since they are very cost beneficial and simple, and do not require an investor to figure out which securities to invest into. A mutual fund could simply be described as a financial medium used by a group of investors to increase their money with a predetermined investment. The responsibility for investing the pooled money into specific investment channels lies with the fund manager of said mutual fund. Therefore investment in a mutual fund means that the investor has bought the shares of the mutual fund and has become a shareholder of that fund. Diversification of investment Investors are able to purchase securities with much lower trading costs by pooling money together in a mutual fund rather than try to do it on their own. However the biggest advantage that mutual funds offer is diversification which allows the investor to spread out his money across a wide spectrum of investments. Therefore when one investment is not doing well, another may be doing taking off, thereby balancing the risk to profit ratio and considerably covering the overall investment. The best form of diversification is to invest in multiple securities rather than in just one security. Mutual funds are set up with the precise objective of investing in multiple securities that can run into hundreds. It could take weeks for an investor to investigate on this kind of scale, but with investment in mutual funds all this could be done in a matter of hours. Types of Mutual Funds (Mode of Investment)

Mutual Fund Types American Mutual Funds BMO Mutual Funds Canadian Mutual Funds Fidelity Mutual Funds Hartford Mutual Funds Investing in Mutual Funds Investment Funds Top Mutual Funds Dynamic Mutual Fund Janus Mutual Funds Vanguard Mutual Funds Mutual Funds Performance

4.5.5 DEBENTURES: - In financial context, Debentures are Debt Instruments issued for a long term by governments and big institutions for rising funds. The Debenture has some resemblances to bonds but the securitization terms and conditions are different for Debentures compared to a bond.A Debenture is commonly considered as insecure because there is no pledge or lien on particular assets. Nevertheless, a Debenture is secured by all the assets which are otherwise not pledged. If there is a bankruptcy, Debenture holders will be counted as general creditors. The benefit that the issuer enjoys from issuing a debenture is that they keep particular assets free of encumbrances so the option is open to issue them for future financing. Usually, Debentures are freely negotiable debt instruments. The Debenture holder works as a lender to the Debenture issuer. In return, the Debenture issuer pays interest to the Debenture holders as it is paid in case of a loan. In practical application, the difference between a Bond and a Debenture is not always kept. In some instances, Debentures are also referred to as Bonds and vice-versa. TYPES OF DEBENTURES Convertible Debenture Non-Convertible Debenture Participative Debenture Non- Participative Debenture Redeemable Debenture Irredeemable Debenture4.5.6 BOND MARKET: - The bond market is a financial market that acts as a platform for the buying and selling of debt securities. The bond market is a part of the capital market serving platform to collect fund for the public sector companies, governments, and corporations. There are a number of bond indices that reflect the performance of a bond market. The bond market can also called the debt market, credit market, or fixed income market. The size of the current international bond market is estimated to be $45 trillion. The major bond market participants are: governments, institutional investors, traders, and individual investors. According to the specifications given by the Bond Market Association, there are five types of bond markets. They are: Corporate Bond Market Municipal Bond Market Government and Agency Bond Market Funding Bond Market Mortgage Backed and Collateralized Debt Obligation Bond Market4.5.7 Share Market Investment Shares are purchased and sold on the primary and secondary share markets. To invest in the share market, investors acquire a call option, which is the right to buy a share, or a put option, which is the right to sell a share. In general, investors buy put options if they expect prices to rise, and call options if they expect prices to fall.. The value of a derivative depends on the value of the underlying asset. The various classifications of derivatives relevant to share market investment are: Swap Futures Contract Forward Contract Option Contract A forward contract is agreements between two parties purchase or sell a product in the future, at a price determined now. This mutual agreement satisfies the profit motive of both the buyer and seller, and the uncertainties and risks of price fluctuations in the future are aborted. A future contract is different from a forward contract in the sense that the former requires the presence of a third party and the commitment for trade is simply notional. Before a share is chosen for investment, a technical analysis of the share is performed. The price and volume of a share over a period of time are tracked and then a business plan is constructed. A fundamental analysis involves a close study of the company associated with the share, and its performance over time. The fundamental analysis is important for the share marketinvestor. The price levels of a traded share are as follows: Opening Price: This is the price at which the market opens. In other words, it is the price of the first transaction. Closing Price: This is the price at the time of closing of the market or the price of the last trade. Intra-Day High: This denotes the maximum price at which the share was traded in the day. Intra-Day Low: This is the minimum price at which the share traded in the day. 4.5.8 Debt Investments : Debt securities (in the form of non-convertible debentures, bonds, secured premium notes, zero interest bonds, deep discount bonds, floating rate bond / notes, securitised debt, pass through certificates, asset backed securities, mortgage backed securities and any other domestic fixed income securities including structured obligations etc.) include, but are not limited to : Debt obligations of the Government of India, State and local Governments, Government Agencies and statutory bodies (which may or may not carry a state / central government guarantee), Securities that have been guaranteed by Government of India and State Governments, Securities issued by Corporate Entities (Public / Private sector undertakings), Securities issued by Public / Private sector banks and development financial institutions.4.6 Money Market Instruments Include Commercial Papers Commercial bills Treasury bills Government securities having an unexpired maturity upto one year Call or notice money Certificate of deposit Usance bills Permitted securities under a repo / reverse repo agreement Any other like instruments as may be permitted by RBI / SEBI from time to time Investments will be made through secondary market purchases, initial public offers, other public offers, placements and right offers (including renunciation) and negotiated deals. The securities could be listed, unlisted, privately placed, secured / unsecured, rated / unrated of any maturity. The AMC retains the flexibility to invest across all the securities / instruments in debt and money market.Investment in debt securities will usually be in instruments which have been assessed as "high investment grade" by at least one credit rating agency authorised to carry out such activity under the applicable regulations. In case a debt instrument is not rated, prior approval of the Board of Directors of Trustee and AMC will be obtained for such an investment. Investment in debt instruments shall generally have a low risk profile and those in money market instruments shall have an even lower risk profile. The maturity profile of debt instruments will be selected in accordance with the AMC's view regarding current market conditions, interest rate outlook.

Pursuant to the SEBI Regulations, the Scheme shall not make any investment in: any unlisted security of an associate or group company of the Sponsor; or any security issued by way of private placement by an associate or group company of the Sponsor; or the listed securities of group companies of the Sponsor which is in excess of 25% of the net assets. The Scheme may invest in other schemes managed by the AMC or in the schemes of any other mutual funds, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing SEBI Regulations. As per the SEBI Regulations, no investment management fees will be charged for such investments and the aggregate inter Scheme investment made by all the schemes of HDFC Mutual Fund or in the schemes of other mutual funds shall not exceed 5% of the net asset value of the HDFC Mutual Fund.

CHAPTER 2REVIEW OF LITERATURE

CHAPTER 2: REVIEW OF LITERATURE2.1 REVIEW OF LITERATUREVarious studies on Investment pattern & Investment behavior of investors had been conducted in foreign countries. However, in Indian context, the number is quite few. Depending on the various issues of investment, the review has been discussed in brief as follows:L.C.Gupta (1992) revealed the findings of his study that there is existence of wild speculation in the Indian stock market. The over speculative character of the Indian stock market is reflected in extremely high concentration of the market activity in a handful of shares to the neglect of the remaining shares and absolutely high trading velocities of the speculative counters. He opined that, short- term speculation, if excessive, could lead to "artificial price". An artificial price is one which is not justified by prospective earnings, dividends, financial strength and assets or which is brought about by speculators through rumours, manipulations, etc. He concluded that such artificial prices are bound to crash sometime or other as history has repeated and proved. Grewal S.S and Navjot Grewall (1984) revealed some basic investment rules and rules for selling shares. They warned the investors not to buy unlisted shares, as Stock Exchanges do not permit trading in unlisted shares. Another rule that they specify is not to buy inactive shares, ie, shares in which transactions take place rarely. The main reason why shares are inactive is because there are no buyers for them. They are mostly shares of companies, which are not doing well. A third rule according to them is not to buy shares in closely-held companies because these shares tend to be less active than those of widely held ones since they have a fewer number of shareholders. They caution not to hold the shares for a long period, expecting a high price, but to sell whenever one earns a reasonable reward.Jack Clark Francis (1986) revealed the importance of the rate of return in investments and reviewed the possibility of default and bankruptcy risk. He opined that in an uncertain world, investors cannot predict exactly what rate of return an investment will yield. However he suggested that the investors can formulate a probability distribution of the possible rates of return. He also opined that an investor who purchases corporate securities must face the possibility of default and bankruptcy by the issuer. Financial analysts can foresee bankruptcy. He disclosed some easily observable warnings of a firm's failure, which could be noticed by the investors to avoid such a risk.Preethi Singh (1986) disclosed the basic rules for selecting the company to invest in. She opined that understanding and measuring return and risk is fundamental to the investment process. According to her, most investors are 'risk averse'. To have a higher return the investor has to face greater risks. She concludes that risk is fundamental to the process of investment. Every investor should have an understanding of the various pitfalls of investments. The investor should carefully analyze the financial statements with special reference to solvency, profitability, EPS, and efficiency of the company.David.L.Scott and William Edward (1990) reviewed the important risks of owning common stocks and the ways to minimize these risks. They commented that the severity of financial risk depends on how heavily a business relies on debt. Financial risk is relatively easy to minimize if an investor sticks to the common stocks of companies that employ small amounts of debt. They suggested that a relatively easy way to ensure some degree of liquidity is to restrict investment in stocks having a history of adequate trading volume. Investors concerned about business risk can reduce it by selecting common stocks of firms that are diversified in several unrelated industries.Lewis Mandells (1992) reviewed the nature of market risk, which according to him is very much 'global'. He revealed that certain risks that are so global that they affect the entire investment market. Even the stocks and bonds of the well-managed companies face market risk. He concluded that market risk is influenced by factors that cannot be predicted accurately like economic conditions, political events, mass psychological factors, etc. Market risk is the systemic risk that affects all securities simultaneously and it cannot be reduced through diversification.Nabhi Kumar Jain (1992) specified certain tips for buying shares for holding and also for selling shares. He advised the investors to buy shares of a growing company of a growing industry. Buy shares by diversifying in a number of growth companies operating in a different but equally fast growing sector of the economy. He suggested selling the shares the moment company has or almost reached the peak of its growth. Also, sell the shares the moment you realize you have made a mistake in the initial selection of the shares. The only option to decide when to buy and sell high priced shares is to identify the individual merit or demerit of each of the shares in the portfolio and arrive at a decision. Carter Randal (1992) offered to investors the underlying principles of winning on the stock market. He emphasized on long-term vision and a plan to reach the goals. He advised the investors that to be successful, they should never be pessimists. He revealed that though there has been a major economic crisis almost every year, it remains true that patient investors have consistently made money in the equities market. He concluded that investing in the stock market should be an un-emotional endeavor and suggested that investors should own a stock if they believe it would perform well.Yasaswy N.J. (1993) disclosed how 'turnaround stocks' offer big profits to bold investors and also the risks involved in investing in such stocks. Turnaround stocks are stocks with extraordinary potential and are relatively under priced at a given point of time. He also revealed that when the economy is in recession and the fundamentals are weak, the stock market, being a barometer of the economy, also tends to be depressed. A depressed stock market is an ideal hunting ground for 'bargain hunters', who are aggressive investors. Sooner or later recovery takes place which may take a very long time. He concluded that the investors' watch work is 'caution' as he may lose if the turnaround strategy does not work out as anticipated. Sunil Damodar'o (1993) evaluated the 'Derivatives' especially the 'futures' as a tool for short-term risk control. He opined that derivatives have become an indispensable tool for finance managers whose prime objective is to manage or reduce the risk inherent in their portfolios. He disclosed that the over-riding feature of 'financial futures' in risk management is that these instruments tend to be most valuable when risk control is needed for a short- term, i.e., for a year or less. They tend to be cheapest and easily available for protecting against or benefiting from short term price. Their low execution costs also make them very suitable for frequent and short term trading to manage risk, more effectively. Yasaswy J.N." (1993) evaluated the quantum of risks involved in different types of stocks. Defensive stocks are low risk stocks and hence the returns are relatively low but steady. Cyclical stocks involve higher risks and hence the rewards are higher when compared to the growth stocks. Growth stocks belong to the medium risk category and they offer medium returns which are much better. than defensive stocks, but less than the cyclical stocks. The market price of growth stocks does fluctuate, sometimes even violently during short periods of boom and bust. He emphasized the financial and organizational strength of growth stocks, which recover soon, though they may hit bad patches once in a way. Donald E Fischer and Ronald J. Jordan (1994) analyzed the relation between risk, investor preferences and investor behavior. The risk return measures on portfolios are the main determinants of an investor's attitude towards them. Most investors seek more return for additional risk assumed. The conservative investor requires large increase in return for assuming small increases in risk. The more aggressive investor will accept smaller increases in return for large increases in risk. They concluded that the psychology of the stock market is based on how investors form judgments about uncertain future events and how they react to these judgments.

CHAPTER 3COMPANY PROFILE

CHAPTER 3: COMPANY PROFILE3.1 INTRODUCTION OF KOTAK MAHINDRA GROUP3.2 WHERE KOTAK SECURITIES STAND IN THE MARKET?

KOTAK SECURITIES is a legendary name in financial services, KOTAK SECURITIESs credit is defined by its mission to succeed, passion for professionalism, excellent work ethics and customer centric values. Today KOTAK SECURITIES is well known as a premier financial services enterprise, offering a broad spectrum of customized services to its clients, both corporate and retail. Services that KOTAK SECURITIES constantly upgrade and improve are because of companys skill in leveraging technology. Being one of the most techno-savvy organizations around helps company to deliver even more cost effective financial solutions in the shortest possible time.What bears ample testimony to KOTAK SECURITIESs success is the faith reposed in company by valued investors and customers, all across the country. Indeed, with KOTAK SECURITIESs wide network touching every corner of the country, even the most remote investor can easily access KOTAK SECURITIES s services and benefit from companys expert advice.

3.3 The Kotak Mahindra Group

Kotak Mahindra is one of India's leading banking and financial services organizations, offering a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporate sector.The grouphas a net worth of over Rs. 100.6 billionand has a distribution network of branches, franchisees, representative offices and satellite offices across cities and towns in India, and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore servicing around 8 million customer accounts.The group specializes in offering top class financial services, catering to every segment of the industry. The various companies include:Kotak Mahindra Bank LtdKotak Mahindra Old Mutual Life Insurance LtdKotak Securities LtdKotak Mahindra Capital Company (KMCC)Kotak Mahindra Prime Ltd (KMPL)Kotak International BusinessKotak Mahindra Asset Management Company Ltd (KMAMC)Kotak Private Equity Group (KPEG)Kotak Realty Fund3.3.1 Kotak Mahindra Bank Ltd- Kotak Mahindra Bank Ltd is a one stop shop for all banking needs. The bank offers personal finance solutions of every kind from savings accounts to credit cards, distribution of mutual funds to life insurance products. Kotak Mahindra Bank offers transaction banking, operates lending verticals, manages IPOs and provides working capital loans. Kotak has one of the largest and most respected Wealth Management teams in India, providing the widest range of solutions to high net worth individuals, entrepreneurs, business families and employed professionals.3.3.2 Kotak Mahindra Old Mutual Life Insurance Ltd- Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. A Company that combines its international strengths and local advantages to offer its customers a wide range of innovative life insurance products, helping them take important financial decisions at every stage in life and stay financially independent. The company covers over 3 million lives and is one of the fastest growing insurance companies in India.3.3.3 Kotak Securities Ltd- Kotak Securities is one of the largest broking houses in India with a wide geographical reach. Kotak Securities operations include stock broking and distribution of various financial products including private and secondary placement of debt, equity and mutual funds.Kotak Securities operate in five main areas of business:Stock Broking (retail and institutional)Depository ServicesPortfolio Management ServicesDistribution of Mutual FundsDistribution of Kotak Mahindra Old Mutual Life Insurance Ltd products3.3.4 Kotak Mahindra Capital Company (KMCC)- Kotak Investment Banking (KMCC) is a full-service investment bank in India offering a wide suite of capital market and advisory solutions to leading domestic and multinational corporations, banks, financial institutions and government companies.Our services encompass Equity & Debt Capital Markets, M&A Advisory, Private Equity Advisory, Restructuring and Recapitalization services, Structured Finance services and Infrastructure Advisory & Fund Mobilization.3.3.5 Kotak Mahindra Prime Ltd (KMPL)- Kotak Mahindra Prime Ltd is among India's largest dedicated passenger vehicle finance companies. KMPL offers loans for the entire range of passenger cars, multi-utility vehicles and pre-owned cars. Also on offer are inventory funding and infrastructure funding to car dealers with strategic arrangements via various car manufacturers in India as their preferred financier.3.3.6 Kotak International Business- Kotak International Business specializes in providing a range of services to overseas customers seeking to invest in India. For institutions and high net worth individuals outside India, Kotak International Business offers asset management through a range of offshore funds with specific advisory and discretionary investment management services.3.3.7 Kotak Mahindra Asset Management Company Ltd (KMAMC)- Kotak Mahindra Asset Management Company offers a complete bouquet of asset management products and services that are designed to suit the diverse risk return profiles of each and every type of investor. KMAMC and Kotak Mahindra Bank are the sponsors of Kotak Mahindra Pension Fund Ltd, which has been appointed as one of six fund managers to manage pension funds under the New Pension Scheme (NPS).3.3.8 Kotak Private Equity Group (KPEG)- Kotak Private Equity Group helps nurture emerging businesses and mid-size enterprises to evolve into tomorrow's industry leaders. With a proven track record of helping build companies, KPEG also offers expertise with a combination of equity capital, strategic support and value added services. What differentiates KPEG is not merely funding companies, but also having a close involvement in their growth as board members, advisors, strategists and fund-raisers.3.3.9 Kotak Realty Fund- Kotak Realty Fund deals with equity investments covering sectors such as hotels, IT parks, residential townships, shopping centers, industrial real estate, health care, retail, education and property management. The investment focus here is on development projects and enterprise level investments, both in real estate intensive businesses.3.4 HISTORY OF KOTAK MAHINDRA GROUPThe Kotak Mahindra group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak and company. Industrialists Harish Mahindra and Mahindra took a stake in 1986, and thats when the company changed its name to Kotak Mahindra Finance Limited.It has been a steady and confident journey leading to growth and success. The milestones of the group growth story are listed below year wise:1986Kotak Mahindra Finance Ltd started the activity of Bill Discounting

1987Kotak Mahindra Finance Ltd entered the Lease and Hire Purchase market

1990The Auto Finance division was started

1991The Investment Banking Division was started. Took over FICOM, one ofIndia's largest financial retail marketing networks

1992Entered the Funds Syndication sector

1995Brokerage and Distribution businesses incorporated into a separate company - Securities. Investment banking division incorporated into a separate company - Kotak Mahindra Capital Company

1996The Auto Finance Business is hived off into a separate company - Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit KotakMahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Group's entry into information distribution.

1998Entered the mutual fund market with the launch of Kotak Mahindra Asset Management Company.

2000Kotak Mahindra tied up with Old Mutual plc. For the Life Insurance business. Kotak Securities launched its on-line broking site. Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund.

2001Matrix sold to Friday Corporation. Launched Insurance Services. Kotak Securities Ltd. was incorporated

2003Kotak Mahindra Finance Ltd. converted into a commercial bank - the first Indian company to do so.

2004Launched India Growth Fund, a private equity fund.

2005Kotak Group realigned joint venture in Ford Credit; their stake in Kotak Mahindra Prime was bought out (formerly known as Kotak Mahindra Primus Ltd) and Kotak groups stake in Ford credit Kotak Mahindra was sold.Launched a real estate fund.

2006Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak Securities.

2007Launched a Pension Fund under the New Pension System.

2009Kotak Mahindra Bank Ltd. opened a representative office in Dubai Entered Ahmadabad Commodity Exchange as anchor investor.

2010 Ahmadabad Derivatives and Commodities Exchange, a Kotak anchored enterprise, became operational as a national commodity exchange.

3.5 INTRODUCTION OF KOTAK SECURITIES LTDOriginally established in 1994, Kotak Securities is a subsidiary of Kotak Mahindra Bank, which services more than 7.4 lakh customers. The firm has a wide network of more than 1400 branches, franchisees representative offices, and satellite offices across 448 cities in India and offices in New York, London, Dubai, Mauritius and Singapore.

We process more than 400000 trades a day which is much higher than some of the renowned international brokers.The company is a corporate member of both The Bombay Stock Exchange (BSE) and The National Stock Exchange of India (NSE). Our operations include stock broking services for trading in stock markets through branches & internet and distribution of various financial products including investments in IPOs, Mutual Funds and Currency Derivatives. Currently, Kotak Securities is one of the largest broking houses in India with substantial geographical reach to Asia Pacific, Europe, Middle East and America.Kotak Securities Limited has Rs. 1,202 crore of Assets Under Management (AUM) as of 31st Dec, 2011.3.6 INNOVATORS:We have been the pioneers in providing many products and services which have now become industry standards for stock broking in India. Some of them include:

Mobile stock trading application to keep track of your investments even on the go

Facility of Margin Finance to the customers for online stock trading

Investing in IPOs and Mutual Funds on the phone

SMS alerts before execution of depository transactions

Auto Invest - A systematic investing plan in Equities and Mutual funds

Provision of margin against securities automatically against shares in your Demat account

3.7 BOARD OF DIRECTORS OF KOTAK SECURITIES LTD:

Chairman: Mr.Uday Kotak.Managing Director: Mr. Narayan S.A.Directors: Mr. C. Jayaram Mrs. Falguni Nayar. Mr. Vikram Sud.Executive Director & Chief operating Officer: Mr. D. Kannan3.8 KOTAK GROUP PRODUCTS AND SERVICES:BankLife InsuranceMutual FundSecuritiesInstitutional EquitiesInvestment BankingKotak Mahindra InternationalKotak Private EquityKotak Realty Fund3.9 AWARDS AND RECOGNITION OF KOTAK SECURITIES LTD. Best Broker in India by Finance Asia for 2010 & 2009 UTI MF - CNBC TV18 Financial Advisor Awards - Best Performing Equity Broker (National) for the year 2009 Best Brokerage Firm in India by Asia money in 2009, 2008, 2007 & 2006 Best Performing Equity Broker in India - CNBC Financial Advisor Awards 2008 Avaya Customer Responsiveness Awards (2007 & 2006) in Financial Services Sector The Leading Equity House in India in Thomson Extel Surveys Awards for the year 2007 Euro money Award (2007 & 2006) - Best Provider of Portfolio Management: Equities Euro money Award (2005)-Best Equities House In India Finance Asia Award (2005)-Best Broker In India Finance Asia Award (2004)- India's best Equity House

CHAPTER-4RESEARCH METHODOLOGY

CHAPTER 4: RESEARCH DESIGH4.1 WHAT IS RESEARCHIn simple words research mean a systematic investigation. In other words we say that research is a systematic process to discover new knowledge. The primary purpose of the research is discovering, interpreting, and the development of methods and system for the progress of human knowledge on a wide variety of scientific matters. Research can use the different scientific method for the use, so we can say that it is an art of scientific investigation.4.2 OBJECTIVE OF RESEARCHThe main objective in every research is that to find out the answer of the question for conducting the research. Every research has their own purpose so that the objective should be different as per the research4.3 TYPES OF RESEARCHThere are different kinds of the research such as1. Descriptive research involves that collection of the data without changing the environment. 2. Analytical research is a specific type of research that involves critical thinking skills and the evaluation of facts and information relative to the research being conducted.3. Applied research is that where the research is find a solution of an immediate problem which are facing by the society, industry etc.4. Basic research is that where the research are done for the improvement of the knowledge. this is done for the human welfare where the main motive of this research is to expand the mans knowledge not for the invent new things.4.4 WHAT IS RESEARCH METHDOLOGYResearch Methodology is way to systematically solve the research problem. It may be understood as a science of studying how researcher is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem.

4.5 PROCESS OF THE RESEARCHThere are several process for the conducting a systematic Research.4.5.1. Formulating the research problem- Formulating the research problem allows us to make clear, about the purpose of the research. Subsequent elaboration of method should be oriented to providing information to address that problem. This step is therefore a very important device for keeping the researcher on track with their research.4.5.2. Literature review- A literature review can be a messenger in the introduction of a research paper, or it can be an entire paper in itself. A literature review is a critical and in depth evaluation of previous research. It is a summary of a particular area of research, allowing anybody reading the paper to establish why the researcher pursuing this particular research program. A good literature review expands upon the reasons behind selecting a particular research question.4.5.3. Developing the hypothesis in simple words we say that Hypothesis defined as the assumption which made on the basis of expected outcomes of the research. Through the hypothesis the researcher are determine the tools and data which are required for the research.4.5.4. Research design-After the hypothesis or research question is developed then the researcher should prepare a research design through this it is helpful to the researcher to give proper framework or structure for conducting the researcher. though a good a research design researcher can collect the required data with minimum expenditure i.e. the time and money. 4.5.5. Determining sample design- All the data are divided into the Universe or population. A complete study of all items in the population is called census study. In this study where all the element are covered no element is left from the study. This kind of study involves huge amount of money, time and energy. In some field this kind of study is not possible. So that we select only few sample from the universe for our study prposes.The items which are selected is called as Sample.The researcher must decide the way of selecting a sample or what is popularly known as the sample design. In other words, a sample design is a definite plan determined before any data are actually collected for obtaining a sample from a given population. Samples can be either probability samples or non-probability samples. With probability samples each element has a known probability of being included in the sample but the non-probability samples do not allow the researcher to determine his probability. Probability samples are those based on simple random sampling, systematic sampling, stratified sampling, cluster/area sampling whereas non-probability samples are those based on convenience sampling, judgment sampling and quota sampling techniques.

Deliberate sampling: This sampling method involves deliberate selection of particular units of the universe for constituting a sample which represents the universe.Simple random sampling: This type of sampling is also known as probability sampling where each and every item in the population has an equal chance of inclusion in the sample and each one of the possible samples, in case of finite universe, has the same probability of being selected.Systematic sampling: In some instances the most practical way of sampling is to select every 20th name on a list and so on. Sampling of this type is known as systematic sampling. An element of randomness is usually introduced into this kind of sampling by using random numbers to pick up the unit with which to start.Stratified sampling: In this technique, the population is stratified into a number of no overlapping subpopulations or strata and sample items are selected from each stratum. If the items selected from each stratum is based on simple random sampling the entire procedure, first stratification and then simple random sampling, is known as stratified random sampling.Quota sampling: In stratified sampling the cost of taking random samples from individual strata is often so expensive that interviewers are simply given quota to be filled from different strata, the actual selection of items for sample being left to the interviewers judgment. This is called quota sampling.Cluster sampling: Cluster sampling involves grouping the population and then selecting the groups or the clusters rather than individual elements for inclusion in the sample.Area sampling: It is quite similar cluster sampling and is often talked about when the total geographical area of interest happens to be big one. Under area sampling we first divide the total area into a number of smaller non-overlapping areas, generally called geographical clusters, then a number of these smaller areas are randomly selected, and all units in these small areas are included in the sample.

4.5.6. Collecting the data-There are two types of data collection namely primary data collection and secondary data collection.Primary Data-The primary data defined as the data, which is collected for the first time, and fresh in nature, and happen to be original in character through field survey.There are many method of collecting primary data which includes:QuestionnaireInterviewFocus group interviewObservationCase studiesDiariesCritical incidentsSecondary Data-The secondary data are those which have already been collected by someone else and have been passed through statistical process. The secondary data for this study are already available in the firms internal record, annual reports, broaches, and company web sites. Common sources of secondary data for social science include censuses, large survey, and organizational records.4.5.7. Analysis of data-After the data has been collected the next step is the classifying and tabulated the data and then after the next step is analysis of data. The initial phase of analysis includes the computetation of percentages and graphical representation of them. After this descriptive and inferential analysis should be done.4.5.8. Hypothesis testing-Here first of all researcher needs to make the choice of one or more type of procedure for testing the hypothesis on the basis of the nature and objectives the study. If he research doesnt have any hypothesis is to be tasted the finding of the study should be used to formulate hypothesis and be tested subsequently researches. Once the type of hypothesis testing to be perform has been selected the actual testing should be done an verification regarding the acceptance or rejection of the hypothesis should be done.

4.5.9. Generalizations and interpretation-Generalization of the result is the necessary for effective decision making in the study. Hence on the basis of results from testing of hypothesis the researcher needs generalize and make concrete statement about the behavior of the population.4.5.10. Preparation of the report or presentation of the results-Finally the researcher make a report of what he is done in the research. The report should consist four stages such as Introduction, Summary of findings, Main report,& Conclusion. The introduction part contains objective and scope of the study as well as the methodology which are used in the study. In the Summary of Findings include statement of findings and recommendations. The Main Report consists main body of the report should be presented in logical sequence and broken-down into readily identifiable sections. And the last stage is Conclusion consists that the main text about the finding of the research.

4.6 FORECASTING WITH REGRESSION4.6.1 FORECASTING WITH SIMPLE REGRESSIONRegression is a statistical measure which are conducting for the determine the strength of the relationship between two variables i.e. X & Y.It is also called as the average relationship between the variables. A dependent variable Y is related to an independent variable X means that for a given value of X, we do not get a unique value of Y, but an average or expected value of Y.

The theory of the regression has widely used in now a days in various branches of science, economics and business studies for the forecasting and decision making. The concept of regression is not confined to the study of two variables or the dependency of one variable on the other. It can also be used to denote the dependency of one variable on asset of other variables which is known as multiple regressions.

The assumption of regression relationship existing between the variables has also known as Theory of Prediction. Having known the regression equation one can predict a value of the dependent variable given a set of values for the independent variables. The independent variables are therefore known as predicting variables and the dependent variables known s predicted variables. So, the main purpose of the regression analysis is to establish the regression relationship between the dependent and the independent variables.

The simplest model for relating a variable Y to a single variable X is a straight line. This is referred to as a linear relationship. Simple linear regression analysis is used as a technique to judge whether a relationship exists between Y and X.

The linear relationship between the two variables Y and X is expressed by the general equation for a straight line as:

Y = a + bX WhereY = value of the dependent variablea = regression constant, or the Y interceptb = regression coefficient, or the slope of the regression lineX = given value of the independent variableWhere a>0 and b