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DO YOU ASPIRE TO BE A SUCCESSFUL INVESTOR IN CAPITAL MARKET?

    NEED FOR INVESTMENT               

(i)To earn return on idle resources

(ii) To generate a specified sum of money for a specific goal in life

(iii) To make a provision for an uncertain future.

INVESTMENT AVENUES IN THE STOCK MARKET

Securities are classified into ownership and debt instruments namely, equity shares and debentures.      

REGULATORY MECHANISM:    

    SEBI   FOCUS AREAS

I – COMPANIES AND OTHER ENTITIES

 

            SEBI is focussed upon creating a:

Disclosures oriented attitude,

Good Corporate Governance,

Ethical practices,

Stakeholders’ orientation, and

Transparency in operations of resource raisers.

 

       Disclosures in Indian Capital Market should be at par with global standards.

 

 

 II – MARKET PLACE

 

            SEBI is focused upon creating an:

 Efficient,

 Effective,

Transparent

 Clean,

Competitive, and

 Customers oriented Market Place.

 

• Indian Market is at par with global standards in almost all operational parameters. Indeed, better than that at some of the dimensions.

 

 

 III – INVESTORS

 

            SEBI is focused on empowering investors through spreading the critical message that: “The most protected investor is the educated one”.

INVESTMENT CRITERIA

Investor should evaluate securities broadly on the following criteria:

     Liquidityaspects

     Safety aspects

     Returns criteria

    Tax savings attribute

 Investor  involvement is required to manage the  investment portfolio

  Minimum amount that investor can invest

RISK FACTORS

• Risks are positively correlated with probability of returns i.e. high returns means high risk too.
• Different securities carry different risk-return profiles

Risks may take place in the form of

• credit risk (the counter party may default payment) 
• return risk (return from investment may depend on several    contingent factors)
• liquidity risk

INVESTMENT DECISION RULES

 Empower investors through information.

 Investing is a serious business.

 Be informed about the risks and rewards of products/mechanisms before investing. This understanding would facilitate prudent decision making at investor end.

 Investor just don’t buy a paper, investor take stake in an organization. Equip investor with the required information before initiating this relationship.

  Seek advice from an expert, if required, before committing any position in the market

 Read documents and understand the implications before entering in to contracts, with various intermediaries in the market and issuers.

 Deal with only the SEBI registered intermediaries. Know investor intermediary, his history, potential to deliver etc. before entering into relationship. Don’t get carried away just by the charges.

Don’t be carried away by the persuasion of the broker/selling agent. Take investor decisions independently and discreetly based on the information. Be doubly sure about the suitability of the product/ products/ contracts to investor before investing.

 Do ask for relevant documents from investor intermediary.    

Maintain the records of all investor communication with various intermediaries and issuers. This would help investor resolve the dispute, which may arise out of investor dealing with them.

INVESTORS PROTECTION

Investors in their own interest must observe certain basic ground rules and investment principles.

ØInvestor should be apparent about the investment objectives and realistically review the risk taking capacity; should do his due diligence and home work before investing/ divesting any particular scrip and choose proper timing. In a moment stated, he should not be spontaneous in buying, emotional in holding and panicky in selling. One should be modest in expectations of gains and patient for their realization.

When the price of scrip is rising sharply and swiftly, without any conceivably concrete reasons, it should set the investor thinking before buying. Similarly, when there has been too much of publicity and hype about a particular entity or scrip, one should exercise caution and ascertain the real influencing factor. He should enquire about the quality of management, and the background of promoters.

These are common sense – based cautions, which should temper the temptations of the sensex – based happiness It is relevant here to remember Mr. Malcolm Forbes’s words of determination: he says: No earnings record, no chart, no prospects can entice him to buy a stock in a company , where he has a poor opinion about management or CEO.

 It is indeed amazing that our ancestors of antiquity in their words of wisdom have given profound advice on matters which concern us even today. Let me put it in our today’s parlance, what an ancient sage observed: He said: one should do deliberations on likely profit and loss and the final gains before embarking into any venture or investment.

1. A wise person will not venture into such a gamble in quest of gain and in the process loses the capital itself. Or, in other words, a wise investor will not buy washout scrip,    assuming it a blue chip, hoping to realize capital gains, and ending up in capital loss.

2.    A small and retail investor may not have adequate time, knowledge or expertise to decide on and to execute a judicious, prudent investment plan. For him, his advice was: find a proper person and entrust the job to him so that he could do the job for you at the appropriate time.

 

Grievances of investors:

Grievance related to

Whom to contact

Issue/ Company

Compliance officer of the issuer company/Lead Manager/Stock Exchange

Trading/Broker/ Sub-broker

Investor Grievance Cell of

concerned Exchange

Mutual Fund

Compliance Office of Mutual Fund

Depository Services

Investor Relation Cell of

Concerned Depository

Corporate Action

Concerned Company/ Exchange

Intermediary

Compliance officer of the intermediary/

Affiliated industry association/SRO

    Office of Investor Assistance and Education takes up grievances against the following:

•  Bankers to Issue
•  Brokers
•  Clearing and settlement organizations
•  Credit Rating Agencies
•  Custodians
•  Debenture Trustees
•  Depositories
•  Depository Participants
•  Derivative Exchanges and related organizations
• Foreign Institutional Investors
•  Foreign Venture Capital Investors
•  Merchant Bankers
•  Mutual Funds
•  Portfolio Managers
•  Registrars and Transfer Agents
•  Securities Exchanges
•  Securities lending intermediaries
•  Sub-brokers
•  Underwriters
•  Venture Capital Funds
• Buy back of securities
•  Collective Investment Schemes
•  Compliance with listing conditions
•  Corporate Governance
•  Corporate Restructuring
•  Debentures
•  Delisting of Securities
•  Issue of securities
•  Non-receipt of Dividend
•  Substantial Acquisition and Takeovers
•  Transfer of securities

FINAL MESSAGE

 View investor as a customer of financial instruments and own the responsible of investor decisions. Use the information and understand the systems before committing investor resources.

    SEBI would facilitate investor path through consistently improving the:

• quality and quantity of disclosures by resource raisers, and
• Creating efficiency, effectiveness and transparency in the operations in the market place.

  By communicating the above message, SEBI does not disown its responsibility.Hence the role of a regulator in relation to investor empowerment is to implement a mandatory system for investor education. The regulator should ensure that the investor is made well aware of his rights to complain, with an easy, quick and non-judicial route for complaint and recompense should there be a problem, as well as the ability to use the courts. The regulator should also ensure that information is made widely and easily available, at a reasonable cost.

 

 

ICICI Venture’s investment co admitted to CDR