Transcript Ca - Welcome to ICAI Cochin

NATIONAL STOCK EXCHANGE
Investor Awareness
Copyright © 2012 National Stock Exchange of India Ltd.
Who is an Investor

An Investor is a person who allocates capital with the
expectation of a financial return.
Income
=
Expenses
+
Savings
Investment
Savings v/s Investment
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Savings
Investment
Short term
Longer term
Emergency
Planned Outlay
Low returns
Beating the inflation
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Investment & Returns
• Achieve financial goals
Why People
Invest
• Increase current income
• Financial security
• Retirement
• Interest
Investment
Returns
• Dividend
• Rent
• Capital Gain
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NATIONAL STOCK EXCHANGE OF INDIA LTD.
Investment Planning
Start of
Career
Marriage
House
Car
Children’s
Education
Children’s
Marriage
Retirement
Goal Setting
What are the key financial stages in my life?
In how much time will I reach these stages?
How much money would I require at these stages?
Assessment
What is my risk taking ability?
How much return can I expect with the risk taking ability?
How much money do I need to invest each month?
Monitoring
What is the performance of my investments?
Have my needs or risk taking capabilities changed?
Is there any need to adjust my investment portfolio?
NATIONAL STOCK EXCHANGE OF INDIA LTD.
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Investment Avenues
There are many options today to invest your money in

Traditional Avenues
SMALL SAVING
SCHEMES
FD/RD
PPF

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Modern Avenues
REAL ESTATE
GOLD
CORPORATE
DEBT
STOCKS
MUTUAL FUNDS
EXCHANGE
TRADED FUNDS
An investor who owns a stock is known as a shareholder
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Risk-Return Relationship
Equities
High
Risk
Mutual Fund, ETFs
Moderate
Risk
Corporate bonds,
Debt funds
Low
Risk
Bank Fixed
Deposits
Zero
Risk
Govt. Bonds,
Post office, PPF
6%
Expected return
9%
12%
15%
18%
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Why Capital Markets?
Easy Liquidity
One can easily buy and sell shares and gets quick redemption of
investment.
Risk
Diversification
Products available for all classes of investors. Allows investments
customized to personal risk appetite.
Maximum
Returns
Historically outperformed all other asset classes – Compound
Annual Growth Rate (CAGR) of over 18%.
No Income is payable if shares are sold after 1 year of purchase.
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Tax Benefits
Tax Exemption is also available for investing in ELSS and RGESS
schemes.
Price
Transparency
Trading is screen based and information about current prices of
shares are available easily.
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Why NSE
Technology
Innovation
Investor
Protection
Transparency
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We are the pioneers in developing the latest of technologies to
ensure efficiency in markets.
We have a consistent track record of successfully introducing
innovative products in the financial markets. We enable you to
explore opportunities in the markets.
We have the developed a world class surveillance system
that ensures integrity of the markets.
•
All investors, big and small are now on the same platform.
•
No one has advantages over the other.
•
There is an enhanced transparency as you yourself can verify
your trades directly on NSE website.
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Asset Classes at NSE
Equities,
Debt, ETFs,
Mutual Funds
SLBS
Debt
Market
IPO
MFSS
Stock
Futures
Capital
Markets
Other
Markets
Asset
Classes
Equity
Derivatives
Other
Derivatives
Stock
Options
Index
Futures
Index
Options
Currency Futures and Options
Interest Rate Futures
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Our Flagship Index – NIFTY 50

Highly liquid Index

Covering more than 24 sectors

Nifty is calculated using free-float market capitalization method.

Captures the largest market capitalization, represents about 65% of
total free-float market capitalization of NSE.

Nifty linked Derivatives contracts available for trading on Singapore
Exchange, Chicago Mercantile Exchange & Osaka Securities Exchange.

Over 30 International and Domestic ETFs/Index Funds on Nifty.

Structured Products/ Index-linked Debentures issued in domestic and
international market across the Globe.
NATIONAL STOCK EXCHANGE OF INDIA
LTD.
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Mutual Funds
A Mutual Fund is a type of professionally managed collective investment scheme that pools
money from many investors to purchase securities.
Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors
save regularly. Investor commits to invest a fixed amount every month.
Currently there are around 45 Mutual Fund Companies.
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NATIONAL STOCK EXCHANGE OF INDIA LTD.
Introduction to ETFs

An Exchange Traded Fund (ETF) is primarily a mutual fund scheme which is
listed and traded

on a stock exchange. An ETF can invest in:

Equities – replicating the composition and performance of an equity index.

Commodities – tracking the actual price of a commodity like Gold.

Money market instruments like short-term government securities and call money.
INDEX MUTUAL
FUND
– Simplicity
– Transparency
– Lower Expenses
– Diversification
– Open-End Fund
STOCK
+
–
–
–
–
On Exchange
Real time prices
Trading flexibility
Trading strategies
Exchange TRADED
Traded Fund
EXCHANGE
FUND
(ETF)
NATIONAL STOCK EXCHANGE OF INDIA LTD.
What is an ETF?
Exposure to an index or a basket of securities
What is an ETF?
Lists and trades on a stock exchange
Not actively managed
Affordable exposure
Real time prices
What makes it
attractive?
Real time trading
Full transparency
No entry and exit fees

ETFs have been pioneered in India by NSE
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NATIONAL STOCK EXCHANGE OF INDIA LTD.
ETFs: BENEFITS FOR THE RETAIL INVESTOR
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1
Very Simple to Trade: Can be traded on NSE like any stock
2
Quick Diversification: Opens up multiple asset classes are affordable
costs
3
Economical: Lowest expense ratio amongst all equity mutual funds
4
Only brokerage payable in buying or selling on exchange
5
You can track your investment value in real time
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Gold ETF


Typically,
1 ETF unit ≈1g of Gold in spot


ETFs are safe and secure
They hold physical gold
But then why ETFs?
SIMPLE


SAFE
TRUSTED
You can buy just one unit
It is very easy to buy
Buy it unit by unit as you want and
build wealth

You can be assured of quality
Demat holding allows security

Accepted as collateral for loans

GOLD V/s GOLD ETF
Quality risk
No quality risk
Less price
transparency
High level of
transparency
Very high bid-ask
spread
Low bid-ask spread
Not tax efficient
Tax Efficient
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JUST REMEMBER
ETF is an easier and more
secure way to buy gold.
NATIONAL STOCK EXCHANGE OF INDIA LTD.
NIFTY ETF




Instant Diversification
Affordable Diversification
No bias towards sectors or stocks
Minimum expense ratio
STOCKS
Nifty ETF is the simplest
and safest way to enter
into equity markets
NIFTY MUTUAL FUND
NIFTY
ETF
EXPOSURE
Narrow
Broad
Broad
VOLATILITY
High
Low
Low
COST OF
MAINTENANCE
Low
High
Low
CAPITAL REQ
High
Low
Low
PRICE
Market Rates
NAV at EOD
Market Rates
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NATIONAL STOCK EXCHANGE OF INDIA LTD.
CPSE ETF

Central Public Sector Enterprises (CPSE) ETF is a part of the Government of India
initiative to dis-invest some of its stake in selected CPSEs through the ETF route.

The ETF was opened for subscription in March 2014 and the same was listed on
NSE in the first week of April 2014.
KEY BENEFITS OF CPSE ETF
1
2
3
Ability to participate in the long-term development of India.
4
Enables large investment in blue chip Public Sector enterprises without the
constraint of market liquidity on the underlying individual stock.
Instant Diversification: Single scrip to trade in diverse set of PSEs.
Economical: Lowest expense ratio amongst all equity mutual funds.
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Liquid ETF
Liquid ETFs are funds whose unit price is derived from money market securities
comprising of Government bonds, treasury bonds, call money market, etc.”
Benefits of Liquid ETFs:
•
NAV per unit is maintained at Rs.1000/-
•
Daily returns are passed on as dividend
•
The dividend after Dividend Distribution Tax in units
•
No STT
•
Listed and Traded on the NSE with a minimum lot size of 1 unit
Liquid ETFs listed on NSE
Symbol
Underlying Asset
Unit Price
AMC Name
LIQUIDBEES
Government
Securities
Rs.1000
(Face value)
Goldman Sachs Mutual Fund
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NATIONAL STOCK EXCHANGE OF INDIA LTD.
Regulatory/Safety Measures

Unique Client Code, KYC, PAN

Client code at the time of order entry

Price Time Priority

Contract Notes, Quarterly Statement

Stringent Compliance on members in respect of dealings with investors

Trade Verification

Direct information to investors on random basis

SMS Notification to Investors
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NATIONAL STOCK EXCHANGE OF INDIA LTD.
Investor, Information, Awareness

Information dissemination through multiple channels

Key information on Corporate entities, Members,
Complaints on Exchange website

Programs on products, safety aspects

Investor related alerts

Rumor verification
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NATIONAL STOCK EXCHANGE OF INDIA LTD.
Takeaways
• Clear Understanding of various asset classes in terms of risks and returns
• Historically Stock Market provides best return on investment in the long term
• NSE aspires to Educate, Empower and Protect all Investor
• Stock Exchanges are highly regulated and ensure investor protection
• However the decision of Investing is solely of the Investor
• Stock Markets are market driven and are subject to market risks
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NATIONAL STOCK EXCHANGE OF INDIA LTD.
THANK YOU
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NATIONAL STOCK EXCHANGE OF INDIA LTD.