TASK – 2: EMPTY YOUR TEA CUP

SWOT ANALYSIS
• Equity shares

STRENGTH WEAKNESS
1. Good liquidity position 1. Risky investment
2. Capital appreciation 2. Low market value
3. Higher dividend 3. Uncertain return
4. Right shares

SWOT
OPPORTUNITY THREAT
1. Higher return 1. Chance of loss
2. Capital appreciation 2. Fluctuations in market
3. Right in liquidation price

• Mutual funds

STRENGTH WEAKNESS
1. The size of the market is large. 1. Lack of focus
2. Large number of potential customers 2. Under performance
are base.
3. Poor service conditions
3. Offers variety of products to the
investors. 4. Poor participation of retail investors.
4. Volatility of bank interest rate.

SWOT
OPPORTUNITIES THREATS
1. Huge untapped market in semi-urban 1. Increasing competition among the
and rural areas. players.
2. Using online mode of trading 2. Low yields with inflationary risks.
systems. 3. High level of volatility in the stock
3. Growth opportunities in developing market.
markets. 4. Stagnant growth in developed world.
• Fixed-income

STRENGTHS WEAKNESS
1. Distribution and reach. 1. Low current ratio.
2. Low cost structure. 2. Lack of proper financial planing.
3. Strong relationship with its dealers. 3. High employee turnover rates.
4. Strong financial position. 4. Diversification in the workforce.

SWOT
OPPORTUNITIES THREATS
1. Reduction in tax rate. 1. Technological developments by
2. Growth in tourism is beneficial. competitors.
3. Growing population. 2. New entrants.
4. Increase in the number of social media 3. Fluctuating exchange rate.
users worldwide. 4. Bargaining power of suppliers.

• Real estate

STRENGTHS
WEAKNESS
1. Risk is less.
1. Low supply
2. Increase in value over time.
2. Requires a large capital to invest in.
3. Preferred collateral by financial
3. Highly illiquid asset.
institutions.
4. No single market

SWOT
OPPORTUNITIES THREATS
1. Real estate is poised for rapid growth. 1. Seasonal demand may affect prices.
2. Potential to diversity into other sectors. 2. Economic slowdown may affect
3. Global demand for real estate is strong demand.
and high. 3. Competition from other investment
4. New sectors offers great potential. asset classes such as equities and bonds.
• Gold

STRENGTHS WEAKNESS
1. Gold has ready marketability and 1. It is an idle asset with no regular return
liquidity. profile.
2. YTD return on gold investment has 2. Gold prices have been volatile.
more than 20% in 2010.
3. Gold storage has costs.
3. Investors generally buy gold as a hedge
or safe haven.

SWOT
OPPORTUNITIES THREATS
1. Gold demand is growing. 1. Gold prices have been volatile in
2. Fewer economically recoverable gold recent times.
mining sites are being made every year. 2. The price of gold is driven by supply
3. Some gold Miners provide a dividend. and demand as well as speculation.
 PRODUCT NOTE

1. Direct equity
Direct Equity Trading is the purchase or sale of a Company's share or stakes using the
stock exchange. When one buy stocks, he/she becomes part-owners in that company.
This way one becomes eligible to share both profit & loss made by company. Direct
equity investment can be very rewarding. Simultaneously this is also true that risk of
loss in direct equity is high.
2. Non-Convertible Debentures
NCD are fixed-financial instrument that is used by companies to raise long-term capital
and is done through public issue. They benefit investors with their supreme returns,
liquidity, low risk and tax benefit when compared to that of convertible debentures.
NCDs are vulnerable to risk related to handling business and funding.
3. Public Provident Funds (PPF)
PPF is a popular investment scheme among investors courtesy its multiple investor-
friendly features and associated benefits. It is a long-term investment scheme popular
among individuals who want to earn high but are also looking for stable returns. Its
safest investment options since it receives the backing of the central government, and
chances of capital loss are negligible.
4. National Pension Scheme (NPS)
It is a voluntary and long-term investment plan for retirement under the purview of the
Pension Fund Regulatory and Development Authority and Central government. The
employees of the corporate entity, enrolled by the employer having Indian citizenship
between the age of 18-60 years and complying with the KYC norms, are eligible to be
registered as subscribers under NPS. It offers returns that are much higher than other
traditional tax-saving investments like the PPF, there is a cap in the range of 75% to
50% on equity exposure for the National Pension Scheme. This stabilizes the risk-
return equation in the interest of investors, which means the corpus is somewhat safe
from the equity market volatility.
5. Senior Citizen Savings Scheme (SCSS)
It is a government-sponsored savings instrument introduced in 2004 for individuals
above the age of 60. Retired defence personnel can subscribe to the scheme irrespective
of the age limit. Non-resident Indians and Hindu Undivided Families are not eligible to
open SCSS accounts. SCSS is specifically designed for the senior citizen taxpayers and
is a low-risk investment which generally offers high returns.
6. Sukanya Samriddhi Yojana (SSY)
It is a small deposit scheme for the girl child launched in 2015 as a part of the ‘Beti
Bachao Beti Padhao’ campaign. It is currently 8.1 percent and provides income-tax
benefit under section 80 C of the Income Tax Act, 1961. Even the returns are tax free
in this scheme. The account can be opened by the natural or legal guardian in the name
of the girl from her birth till she turns 10. There are no risk factors in the case of SSY.
7. Mutual funds
It is a type of financial vehicle made up of a pool of money collected from many
investors to invest in securities like stocks, bonds, money market instruments, and other
assets. Everyone who has a particular financial goal, be it short-term or long-term,
should consider investing in mutual funds. Investing in mutual funds provides several
 advantages for investors like no lock-in period, low cost, SIP, switch fund option, goal-
based funds, flexibility and diversification. Unlike some other types of investments,
mutual funds are not insured by the Federal Deposit Insurance Corporation. Mutual
fund risks vary depending on the type of fund. Riskier funds are more volatile and
you risk large losses investing in them. The primary reward of a mutual fund is the
potential to earn returns on your investment.
8. Equity based mutual funds
Also known as growth funds, an equity fund is a mutual fund scheme that invests
predominantly in shares or stocks of companies. The equity mutual funds are for
budding investors and for market savvy investors. These funds try generating high
returns by investing in the stocks of companies across all market capitalisations. Equity
mutual funds are the riskiest class of mutual funds, and hence they have the potential
to provide higher returns than debt and hybrid funds.
9. Debt based mutual funds
It is a Mutual Fund scheme that invests in fixed income instruments, such as Corporate
and Government Bonds, corporate debt securities, and money market instruments etc.
that offer capital appreciation. They are also referred to as Fixed Income Funds or
Bond Funds. Debt funds are preferred by individuals who are not willing to invest in a
highly volatile equity market. Debt funds suffer from credit risk and interest rate risk,
which makes them riskier than bank FDs.
10. Hybrid mutual funds
Hybrid mutual funds are types of mutual funds that invest in more than one asset class.
Most often, they are a combination of Equity and Debt assets, and sometimes they also
include Gold or even Real estate. Budding investors who are willing to get exposure to
equity markets may invest in hybrid funds. The presence of equity components in the
portfolio offers the potential to earn higher returns. At the same time, the debt
component of the fund provides a cushion against extreme market fluctuations. In this
way, you receive stable returns instead of a total burnout that may happen in case of
pure equity funds.
11. Exchange traded funds (ETF)
ETF is a basket of securities you buy or sell through a brokerage firm on a stock
exchange. ETFs can offer lower operating costs than traditional open-end funds,
flexible trading, greater transparency, and better tax efficiency in taxable accounts.
ETFs are considered to be low-risk investments because they are low-cost and hold a
basket of stocks or other securities, increasing diversification.
12. Portfolio Management Services (PMS)
PMS is provided by professional money managers to informed investors and can be
tailored to meet specific investment objectives. It is a customised solution for high net-
worth individuals (HNIs), it offers greater flexibility with an investor's money and
higher returns too. Portfolio risk is a chance that the combination of assets or units,
within the investments that you own, fail to meet financial objectives. Each investment
within a portfolio carries its own risk, with higher potential return typically meaning
higher risk. Higher transparency and regular reporting are some plus points of PMS.
13. Systematic Investment Plan (SIP)
SIP, is a facility offered by mutual funds to the investors to invest in a disciplined
manner. SIP facility allows an investor to invest a fixed amount of money at pre-defined
 intervals in the selected mutual fund scheme. Some of the risk associated with the plan
are:
o The risk of SIP getting a negative return or price risk.
o The risk being able to get your money back quickly or liquidity risk.
o The risk of downgrade of a security or credit risk.
o The risk of the company not paying the owners of the bond their due or default
risk.
14. Gold investment
Due to some influencing factors such as high liquidity and inflation-beating capacity,
gold is one of the most preferred investments in India. Gold investment can be done
in many forms like buying jewellery, coins, bars, gold exchange-traded funds, Gold
funds, sovereign gold bond scheme, etc. Gold remains an invaluable long-run
inflation hedge that provides a strong foundation for any risk-intolerant portfolio. The
major risk is that gold has large liquidation spreads.
15. Index funds
An index fund is a portfolio of stocks or bonds designed to mimic the composition and
performance of a financial market index. Index funds have lower expenses and fees
than actively managed funds. Index funds follow a passive investment strategy.
Investing in these funds is suitable for long-term investors who have
an investment horizon of at least 7 years. These funds do carry market and volatility
risks and hence suits only those willing to take some risk.
 BFSI INDUSTRY PROFILE

Banking, Financial Services and Insurance (BFSI) is set to grow exponentially in India
due to the rising per capita income, introduction of new products, innovation in
technology, expanding distribution, networking and increasing customer awareness of
financial products. BFSI Industry has seen bold reforms in the last 15 years and will
continue to be a top priority focus industry for India’s economic development based on
inclusive growth.

India, as a business destination, fosters all the positives for the BFSI sector to flourish
at an appreciable pace. Inter-dependent factors of government policy, active
public/private involvement, robust regulatory measures, and technological evolution
have spurred the BFSI sector to register strong numbers in recent years.

Opportunities and Challenges:

• BFSI industry is set to grow significantly in the coming years due to India’s economic
expansion and growing awareness among the population of these financial products or
services.
• New and wider products will provide immense opportunities to develop niche areas.
• High supervision by regulators will require constant vigilance and need to adopt
measures to mitigate risks based on various control measures including ‘Risk Based
Audits’ (RBA) as provided by:
o The Reserve Bank of India in its RBA guidelines to banks.
o The Insurance Regulatory authority of India (IRDA) to the insurance industry.
o Securities Exchange Board of India (SEBI) for the mutual fund industry.
• The industry has adopted IT as an integral part of business strategy, where RSM is well
positioned to provide various services on such IT platforms.

Meghna B Raj

Junior research analyst

Finance department

Amrita School of Business