1.

1 INTRODUCTION Meaning of Financial Services

Financial services comprise of various functions and services that are provided by financial institutions in a financial system. Financial services can be defined as the products and services offered by institutions like banks of various kinds for the facilitation of various kinds of financial transactions and other related activities in the world of finance like loans, insurance, credit cards, investment opportunities and money management as well as providing information on the stock market and other issues like market trends.

Scope of Financial Services

Market players: host of institutions and agencies, like banks, financial institutions, mutual funds, stock brokers, consultants, underwriters, etc. Financial instruments: equity, debt and hybrid of equity and debt. Specialized institutions : factors, depositories, credit rating agencies, venture capital consultants Regulatory bodies: RBI, SEBI etc.

Need and Importance of Financial Services

It helps not only in raising the required funds but also in ensuring efficient distribution. It helps in deployment of funds raised, assist in decision making with regard to financial mix etc.

1.2INDUSTRY PROFILE History and Evolution of Financial Services

Merchant banking era ( 1960 onwards) Financial services like insurance and lease services began to grow Investment companies era ( 1970 onwards) It includes establishment of variety of investment institutions and banks like: UTI,LIC, Nationalization of major commercial banks. Modern services era ( 1980 onwards ) Launch of various varieties of products and services like Mutual fund, factoring, venture capital and credit rating. Depository era ( 1990 onwards) Depositories were set up, promoting paperless trading through dematerialization of securities. Legislative era (1995 onwards) FERA replaced by FEMA, Amendments in Companies Act 1956.

A Brief Description of Insurance Sector

Insurance has been known to exist in some form or other since 3000 B.C. The Chinese traders traveling treacherous river rapid would distribute their goods amongst several vessels so that the loss from any one vessel being lost, would be partial and shared and total. The Babylons traders would agree to pay additional sum to lenders, as the price for the writing off the loans in case of shipment being stolen.

The inhabitance of Rhodes adopted the principle of general average whereby if goods are shipped together, the owner would bear the losses of proportion, if occurs due to jettisoning during distress.

The origin of insurance business is in vogue at present, is traced to Lloyds Coffee house in London. Traders who used to gather in the Lloyds Coffee House in London agreed to share the losses to their goods while being carried in ships. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ship.

In India, Insurance began in 1818 with life insurance being transacted by an English company, The Oriental Life Insurance Company Ltd. The first Indian insurance was Bombay Mutual Assurance Society Limited, formed in 1870 in Mumbai. This was followed by the Bharat Insurance Company Limited in 1896 in Delhi, the Empire of India in 1897 in Mumbai, the United India in Chennai, the National Indian and Hindustan Cooperative in Kolkata.

Later, where established the Cooperative Assurance in Lahore, the Bombay Life ( originally called the Swadeshi Life), the Indian Mercantile, the New India and the Jupiter in Mumbai and the Lakshmi in New Delhi. These were all Indian companies started as a result of Swadeshi movement in the early 1900s.

By the year 1956, where the insurance business was nationalized and the Life Insurance Corporation of India was formed on 1st September 1956, there were 170 companies and 70 provident funds societies transacting life insurance business in India. After the amendments of the relevant laws in 1999, the LIC did not have the exclusive privilege of doing life insurance business in India. By 31st August 2007, 16 new life insurances had been registered and were transacting life insurance being in India.

A Brief Description of Mutual Fund Sector

Mutual Funds have been a significant source of investment in both government and corporate securities. It has been for decades, the monopoly of the state with UTI being the key player with invested funds exceeding rupees 300 billion.

The state owned insurance companies also hold a portfolio of stocks. Presently, numerous Mutual Funds exist including private and foreign company. Banks mainly state owned too have established mutual funds. Foreign participation in mutual funds and asset management companies is permitted in a case by case basis.

UTI, the largest mutual fund in the country was set up by the government in 1946, to encourage small investors in the equity market. UTI has an extensive marketing network of over 35000 agents split over the country. The UTI scripts have performed relatively well in the market as compared to the SENSEX trend. However, the same cannot be said of all mutual funds.

All Mutual Funds are allowed to apply in public issues. SEBI (Securities and Exchange Board of India) regulates the functioning of Mutual Funds and it requires that all Mutual Funds should be established as trust under the Indian Trust Act. The actual fund management activity shall be conducted from a separate Asset Management Company (AMC). The minimum net worth of Asset Management Company or its affiliates must be Rs. 50 million to act as a manager in any other fund. Mutual Funds can be penalized for default including non registration and failure to observe rules set by their Asset Management Companies. Mutual Funds dealing exclusively with money market instrument have to be registered with RBI. All other schemes floated by Mutual Funds are required to be registered with SEBI.

In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Funds (MMMFs). They can invest in treasury bills, Call and Notice Money, Commercial Paper, Commercial Bills, accepted / co accepted by banks, Certificate of Deposit and dated government securities having unexpired maturity up to one year.

A Brief Description of Stock Broking Sector

While regulation and reforms have made major improvements in the quality of the equity markets in India, its rapid growth and development are largely due to strong and efficient market intermediation. The robustness of the Indian markets today is attributable to a healthy blend of the quality of market structure and efficient intermediation. Even as several countries are instituting procedures to commence equity derivative markets, India ranks amongst the top five countries globally in this segment, in less than five years of its introduction. This is an example of the proactive and progressive nature of the Indian brokerage industry. In the last decade, the Indian brokerage industry has undergone a dramatic transformation. From being made of close groups, the broking industry today is one of the most transparent and compliance oriented businesses. Long settlement cycles and large scale bad deliveries are a thing of the past with the advent of T+2 settlement cycle and dematerialization. Large and fixed commissions have been replaced by wafer thin margins, with competition driving down the brokerage fee, in some cases, to a few basis points. There have also been major changes in the way business is conducted. Technology has emerged as the key driver of business and investment advice has become research based. At the same time, adherence to regulation and compliance has vastly increased. The scope of services have enhanced from being equity products to a wide range of 5

financial services. Investor protection has assumed significance, and so has providing them with education and awareness. Greater need for capitalization has induced several firms to access the capital market; foreign firms are showing increasing interest in taking equity stakes in domestic broking firms.

Profile of Financial Services

Work force issues: Among the challenges facing the financial services industries, is the lack of worker pipeline. Currently industry employees often recruit workers from competing employees, failing the new worker into the industry. Additionally, the industry is faced with a lack of diversity among available workers. A diverse group of workers is especially important in service oriented profession including: - Retail, Banking and Insurance where consumers of a prefer employees which they can relate.

Retention: Stemming from intense competition and high turn over rates, the financial services industries has a low retention rate among workers. A lack of industry wide competency model makes it difficult for new workers to enter and navigate the carrier in the industry.

Technical talent development The financial service industry is heavily dependent on continuous skill development because worker must keep up with the rapidly changing array of products and services offered to customer. This reality requires employees to think more creativity about how to deliver on demand training that can be assessed 24/7 and refreshed with new information as needed. 6

 Skill sets: Office and administrative occupation in insurance typically require a high school education. Financial services sales usually need a college degree, a major course of finance, accounting, economics, marketing and related fields serves as excellent preparation.

1.3COMPANY PROFILE
BACKGROUND AND INCEPTION OF THE COMPANY eLakshya is an incubator for developing highly skilled managers for the financial services industries. It thus enables the people goals of the financial services industry through rigorous training and on field sales exposure for its sales personnel.

eLakshyas business is primarily as wealth advisory distribution unit for financial products, mainly life and non life insurance, health insurance and most of the mutual funds. Post 1 year, sales stint at eLakshya, many personnels in the sales team move over a large MNC Banks/ Insurance Companies service requirements as and when required. In any case, a core team is permanently available for customer queries/ servicing matters, and this backed by a huge back office armed with equipped with the latest technologies, MIS tools, etc.

Since elakshya provides rigorous training in all spheres in the financial services space, including all certifications etc, the team is necessarily up to date with the latest developments, techniques and process in the financial service industry. eLakshya has devised patented sales and customer interaction processes which are unique in nature offering a holistic solution for the financial goals of the customer.

Incorporated in June 2007, eLakshya Knowledge Process Private Limited, has been founded by Mr. N Sathish (B.Tech, MBA from IIM-A) and Mr. Venkatesh Ananthnarayanan (C.A). The former was the head Of the Bancaassurance Business Development and NRI operations at Birla Sun Life Insurance, Mumbai. The latter was the CFO of corporate such as Sun Microsystems India and Adobe India, among other assignments. eLakshya has a current team of 22 executives (mainly MBAs and Engineers) across 3 offices in South India (2 in Bangalore and 1 in Chennai).

eLakshyas pioneers status as a financial services incubator is already being talked about in relevant circles. There are clear plans for rapid expansion during the forthcoming years across the rest of South India.

e indicates technology, implying that eLakshya has invested substantially in state of art infrastructure across its offices, which are also video connected. Lakshya indicates enabling the goals of customer and employees alike.

eLakshya also has an interesting division called Road Journeys and gateways where they have unique packages with brand new SUV vehicles and tie ups over 30 resorts across South India.

NATURE OF BUSINESS CARRIED eLakshya is mainly concentrating in three things: Recruitment in financial industries 8

 Retailing of financial products Road journeys and gateways

1. Recruitment in financial industries

eLakshya is a Bangalore based start up primarily a Recruitment and On Boarding Process Provider for Financial Services Organizations (mainly Insurance companies, Mutual Funds and Security broking houses). They recruit uncut diamonds and convert them, over a 9 month time period, into professional wealth managers distributing sophisticated financial products, also equipping them with the necessary certifications, rigorous training, field experience and sales successes along the way. These polished diamonds are then directly absorbed by the principle organizations themselves, taking their career path into the next level.

2. Retailing of financial products

This company also does the work of sales and marketing of financial products. They are selling a number of financial products like Life Insurance, Mutual Funds, Health Insurance, Motor Insurance, DeMat A/Cs and Trading A/c for various companies.

3. Road journeys and gateways

This company also offers luxury vacation by road with brand new luxury SUVs (Scorpio DX 2007 model, Toyota Innova G-4 seven seater 2007 model). Road Journeys packages is a combination of vehicles booking as well as hotel/resorts booking, so that the customer can avail of a stress free and safe vacation or business travel. They have obtained very special rates from the resorts, having formally ties up with over 30 resorts across South India (hill stations, jungles, and beach and backwater resorts.) The vehicles are fully loaded with advanced music players, safety front guards, travel rags, etc. They also have experienced drivers cum guides who are very familiar with road routes in the entire region. 9

Rate card: Local trips: Rs. 1850 for 8 hours 80 kms / Rs. 950 for 4 hours 40 kms. and Rs. 250/ extra hour with driver bata Outstation trips: Rs. 9 per km subject to min 250 kms per day Rs.250/ day are Driving executives allowance. They promise a professional, timely cost effective and above all a safe service in luxury travels.

VISION, MISSION AND QUALITY POLICY

Vision
To enable the people goals of the financial services organization by providing recruitment process solutions. To enable the goals of people resources for financial services industry by providing recruitment consultancy solutions.

Mission
To survive the start up sales to recruitment for financial services. Retailing for financial services. Road Journeys and Gateways. To implement the ideas in the chosen space to provide unique value to the organization and the individual. 10

Quality policy
Quality management system to direct the operation towards exceeding customer expectation. The employee of the company worked to the quality management system applicable in financial services. The employee undertakes all actions required to maintain a close cooperation with internal and external customers. Promoting employee satisfaction and quality awareness are major managerial functions for the entire company. Quality shall be an integrated element of daily businesses for everyone

Area of Operation
Table 1.1 Area of operation of e-Lakshya

Sl. No 1

Location Type Registered Office

Address # 26, Karnan Street, angarajapuram, Kodambakkam, Chennai 600024 Ph. +91 44 28417457

Branch Office

No. 149, 27th Cross, Jayanagar, 6th Block, Bangalore 560082 Ph. +91 80 41697474

Branch office

Flat No. 101, 2nd Floor, Om Sai SV Crown, 6th G Cross, Kaggadasapura, Bangalore 560093 Ph. +91 80 41707474

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Ownership Pattern

eLakshya, a financial service company was incorporated in June 2007, under Mr. N. Sathish (B.Tech, MBA from IIM-A) and Mr. Venkatesh Ananthnarayanan (C.A)

Competitors

Since this company is new and they have a variety of operations like:- Recruiting, Retailing and Road Journeys. They face stiff competition from other financial companies, especially IFBI (Institute of Finance and Banking Insurance), but still they are giving results in the financial sector and keep customers promises.

Infrastructural Facilities

The company has 3 offices; the main office is located in Chennai, Tamil Nadu

The other two branches are located in Bangalore, One in Jayanagar and the other in C.V. Raman Nagar

The company eLakshya functions in state of the art infrastructure buildings which boast of various modern facilities like high speed internet connection, video conferencing facilities, mobile transactions, telephone lines, etc.

The Jayanagar Branch is located in the heart of the city which is well connected to the road network as well as to the airport. 12

Achievements /Awards

In spite of the company being relatively new, they have achieved their goal of training various individuals in the financial services sector, so that they can contribute towards booming Indian economy and help in the development of the nation.

Their employees are new, but skills are unmatched, thereby helping the company reach their goals well before stipulated time. The company is working towards attaining business excellence.

Work Flow Model

The Work Flow Model of eLakshya Services Private Limited is given below. The various components are joined and they feed their need to each other. 13

 Selling of Life and Non Life Insurance Mutual Funds which comes under Wealth Management.

Recruitment Management.

process

outsourcing

which

comes

under

On

Boarding

Road Journeys and Gateways which comes under Leisure Management.

The various other components which is directly connected to these three working models are trainees, consultants ,organizations ( financial services), colleges and institutions, travel agents, hotel and resorts, contracts, apartments and other corporate.

The main focus is given to the customers and extra attention to permanent employees and stake holders.

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Work Flow Model of eLakshya:

Training Institute

Fig 1.1 Work flow Model of eLakshya

Apartments

Recruitme nt Contracts HR consultant Process Outsourcin Future Growth and Prospects g Financial Acquisitions (Web, Services Phone, Database, On Boarding Organizations, Outdoor Management MFs, Financial services industries are a booming industry and this company is directly Advertisement) Insurance, Distribution related to financial services, so the chances of growth are very high. Travel Agent RPO Joiners One of the future business goals of this company is to be associated with various private College & as Institutions run companies, so that the company can contribute the economic well as state Hotel & Resorts development of the nation. Customers

This company ids also working as a placement firm which has the work of recruiting MBA graduates for their company as well as other financial services company. Life & Non Life MFs Permanent Employees, Vendors, Stake Holders Road Journeys & Gateways 15 Leisure Management

Other Corporate Wealth Management

One of the most attractive company profile point is Road Journeys and Gateways which has a good future growth and this exercise will lead to other companies also following it, since it is a booming market.

McKinseys 7 S Model

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The Mckinseys 7 S Model is a widely discussed framework for viewing the inter relation ship of strategy formulation and implementation. It helps to focus managers attention on the importance of linking the chosen strategy to a variety of activities that can affect the implementation of that strategy. Originally developed as a way of thinking more broadly about the problems of organizing effectively, the 7S framework provides a tool for judging the availability of strategies.

According to one of the developer Robert H. waterman Jr., The framework suggests that it is not enough, think about strategy implementation as a matter only of strategy and structure has

been the traditional view. The conventional wisdom used to be, that if you first get the strategy right organization follows. And when most people in western culture think about organization, they think structure.

The 7S Model can be used in a wide variety of situations where an alignment perspective is useful. For Example, the 7S model helps to:

Improve the performance of the company.

Examine the likely effect of future changes within a company.

Align departments and processes during a merger or acquisition.

Determines how best to implement a proposed strategy.

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The McKinseys 7S Model involves seven interdependent factors which are categorized as either hard or soft elements.

Table 1.2 Seven interdependent factors in McKinseys 7S model

Hard Elements
Strategy Structure System

Soft Elements
Shared Value Skills Style Staff

Hard Elements are easier to define or identify and management can directly influence them. These are strategy statement, organization charts and reporting lines as well as formal process and IT system.

Soft Elements on the other hand can be more difficult to describe and are less tangible and more influenced by culture. However, these soft elements are more important as the hard element if the organization is going to be successful.

Strategy: The plan devised to maintain and build competitive advantage over

the competition.

Structure: The way the organization is structured and who reports to whom.

Systems: The daily activities and procedures that staff members engage in to

get the job done. 18

 Shared Values: called super ordinate goals when the model was first

developed these are the core values of the company that are evidenced in the corporate culture and the general work ethic.

Style: The style of leadership adopted.

Staff: The employees and their general capabilities.

Skills: The actual skills and competencies of the employees working for the

company.

To think comprehensively about a new strategy and the problem with carrying it out, a manager must think of his company as a unique culture and must think about the company to get anything really fundamental accomplished as a matter of moving the whole culture.

The way the model is presented in figure below depicts the interdependency of the elements and indicates how a change in one affects all the other.

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20

Fig 1.2: McKinseys 7 S Model

OTHER DETAILS ABOUT eLAKSHYA

Skill

The distinctive competencies hold the company does best, of expanding or shifting competencies. A manager is normally viewed as a skilled person, who has the ability to

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manage the people, to hire the customer and can do the right job and get the work done effectively

The minimum wastage and maximum utilization of available resources is the key organizational behavior and culture is taught to the fellow employees and potential employees are suitably nurtured.

Time to time the feedback is conducted by the company for the employees and they are assigning grades for this. Those employees who achieve less grades, the company tries to train them in all spheres.

They give a variety of training, for example: For product Knowledge, the company conducts presentations for employees. These employees can go with seniors for call, to understand the market situation and convincing style of the customer. Furthermore, the employees have good skills in various fields so they can multi task easily.

From the last year, this year, the company has progressed because of the high skills of the employees. They work under extreme conditions, even in unfavorable conditions. They have a cordial nature and they interact with the customers in a friendly manner, so the customer has faith in them and they keep coming back.

Style
The organization follows mainly two types of styles: Organization culture

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The dominant value, beliefs and norms which develop over time and become relatively enduring features of organizational life. It helps in giving organized work, which required in the company.

Management style

More a matter of what managers do, than what they say, how does a companys manager spend time, what are they focusing attention on. The creation and maintenance of meaning is fundamental responsibility of manager.

Managers motivate the staff to do good work and accomplish the organizational goals. Manager must appreciate employees who give outstanding results (Performance Appraisal) and give perks and incentives.

eLakshya Services Private Limited is a very systematic way of decision making, where participation is from both the employer and employees. All of them sit together and discuss the matter and comes out with suggestions and solutions of new ideas.

The company is following the social type of leadership in which all level of manager interact with each other for achievement towards the goal and report to the Business Head, who work together as a team to solve todays and tomorrow problems in a significant manner.

Whenever important decisions are to be made, the whole staff is allowed to participate in the decision making whereby, suggestions are sought and if found appropriate are accepted and implemented.

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Strategy

eLakshya Services Private Ltd. cannot afford to work without objectives and overall group objectives are already set and all employees are driven towards the eLakshya believes that no individual is as big as organization itself.

They are fully believed in working hard and working smart. Their life is never reinvests the wheel, never leave anything undocumented, their moods capacitize every aspect fully: People, Space, Money and Goals.

The companys Work Mantra is:-

Transparency Passion Speed

Competition is the key to survival and for giving diversification for the given product as such competition is always good.

eLakshya updates itself of the surrounding competition which is always good and brings out the service and related products to beat the competition.

The Strategy brings about the success for this company. The strategy for success is as follows:24

Number of Calls = Success x

Conversion Ratio x

Product Sold x

Revenue/ Product

Where:-

Number of Calls:

Work Longer and harder Scale Up: Meet two or more people in some organization. Capacitize, Example:- PowerPoint Point Presentation with projector Better telephone appointment success Marketing Effort i.e. Making people walk in

Conversion Ratio:

Product Knowledge Unique Sales Process i.e. ENABLE Relationship management with customer

Product Sold:

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 Interaction with our principles Know details of each variety of products Pitch every product possible to customer

Revenue per product:

Try to pitch higher revenue product ( Life Insurance) Negotiate with principles for better rates/commissions

Revenue:

Success

System

There are two types of system, Formal and Informal procedure that supports strategy and structure of the organization.

The organization follows strict rules and regulations for the employees. It follows the specific entry and exit timing for all of its employees. The entry timing is 10:30 am and exit time is 07:00 pm. Every employee strictly follows this rule. Each employee follows a specific dress code, i.e. formal dress from Monday to Friday and on Saturday the staff can come in casuals. 26

The organization follows strict rules and regulations for the employees. It follows the specific entry and exit timing for all of its employees. The entry timing is 10:30 am and exit time is 07:00 pm. Every employee strictly follows this rule. Each employee follows a specific dress code, i.e. formal dress from Monday to Friday and on Saturday the staff can come in casuals.

Daily attendance registers which is duly processed at the end of each month. Excluding national and Sunday holidays, an employee is liable to 20 days paid leave. The company follows the particular training and development system. The main objectives of this system are:

Upgrading knowledge of people Making the employees ready for any kind o job. To understand the skill required to facilitate changes process. To develop an understanding of the organizational culture and their effect on individual and organization performance. To make the employees to improve their communication skills. To develop self confidence and to face new challenges of the corporate world. To develop interpersonal relationship.

Staff

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The management processes used to develop manager, socialization processes and ways of shaping basic values of management cadre, ways of introducing young recruits to the company, ways to the company, and ways of helping to manage the career of employees.

Employees are the functional unit of an organization. Staff deals with the selection, training and placement, induction, everything is important for the organization. Staff deals with the process by which employees are recruited, deployed and developed in their current position, further up gradation, etc. How people are recruited an trained, socialized and integrated and how either career are managed includes these points. The company currently has a team of 22 executives, mainly MBAs and Engineers across all the three offices. Each incumbent have a specific academic qualification to match the position, he/she is going to held and also necessary skills to execute the assignment.

Marketing and Sales people should possess management degree (MBA), Good Communication Skills and Flair for sales. He/she should also have two wheelers for commuting purpose. All the Back End Employees have at least Graduation Degrees with necessary skills.

For Fresh Employees, 3 months training is given and then they are put into jobs. The potential will be monitored on a regular basis and will be given guidance from time to time.

The emphasis is more for Service Segment, where recruitment of employees shall be given to other companies as well. Marketing and Sales Staff is trained on the Product Knowledge and Selling Skills are also taught. Different Staff has different responsibilities towards the company.

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Shared value

Shared values are what engender trust. Values are the identity by which a company is known throughout the business area. These values must explicitly state as both corporate objectives and individual objectives or attributes promoted by the organization to motivate the behavior of the member of the organization.

Shared Value mainly refers to the set of values and aspirations that organizations believe in. These values have a great meaning because they focus attention and provide a broader sense of purpose. They also give the strong basis of stability to an organization in a rapid changing environment providing a basic meaning to people working in the organization.

Some of the Company Shared Values are:

Good Customer Relationship Management. Trust and Faith. Flexibility in Operation. Concern for Individuals

For these things, the company is successfully meeting the rural and social sectors, as an opportunity and not just an obligation.

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1.4 PRODUCT /SERVICES PROFILE

The company sells a variety of financial services products like Life Insurance, Mutual Funds, Health Insurance and Motor Insurance

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Table 1.3 Product/Services Profile of eLakshya

Life insurance Mutual funds

Fidelity,

Met Life

Principal, Birla Sun Life, Reliance, SBI, HDFC, HSBC, Mirae Asset, Kotak, Optimax, DSPML, UTI, Lotus, DBS Cholamanadalam, TATA, ICICI Prudential.

Health insurance Motor insurance DeMat Account and Trading Account

Star Health, Apollo DKV, Reliance Health Insurance

TATA AIG, HDFC ERGO, Reliance Motor insurance

Indiainfoline, Ventura, Angel Broking

These are the products that are being sold by this particular company. They have tie ups with different financial services companies, they hire the products, and sell it.

MEANING OF ORGANIZATION STRUCTURE

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An organization structure is the location of decision making responsibilities in the firm, the formal division of the organization in to sub-units, and the establishment of integrating mechanisms to co ordinate the activities of sub units. An organizational structure is a mostly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim.

DIFFERENT TYPES OF ORGANIZATION STRUCTURE

1. TRADITIONAL STRUCTURES Traditional organizational structures focus on the functions, or departments, within an organization, closely following the organizations customs and bureaucratic procedures. These structures have clearly defined lines of authority for all levels of management. Two traditional structures are line and line-and-staff. a. Line structure The line structure is defined by its clear chain of command, with final approval on decision affecting the operations of the company still coming from the top down. Because the line structure is most often used in small organizations such as small accounting offices and law firms, hair salons, the president or CEO can easily provide information and direction to subordinates, thus allowing decisions to be made quickly. Line structure by nature is fairly informal and involves few departments, making the organization highly decentralized. b. Line and staff structure The line and staff structure helps to identify a set of guidelines for the people directly involved in completing the organizations work. This type of structure combines the flow of information from the line structure with the staff departments that service advice and support them. Line department involved in making decisions regarding the operation of the organization, while staff areas provide the specialised support. The line and staff structure is necessary to provide specialised, functional assistance to all managers to ensure adequate checks and balances and to maintain accountability for end results. 2. MATRIX STRUCTURE 32

The matrix design blends two different types of designs, namely project and functional organizational designs. Since the project type of organizational design is not considered stable, the matrix design attempt to provide permanent management structure by combining project and functional structures. The main advantage of this combination is that the matrix design balances both technical and project goals and allocates specific responsibilities to both. Technical goal refers to how well work is done, while project goals relates to issues such as type of work to be done and its costs.

ORGANIZATION STRUCTURE OF ELAKSHYA:

The company follows a traditional Line and Staff organization structure where there is a hierarchy of commands from the higher level to the lower level. The office structure is moderate, connected with various basic facilities like High Speed Internet Connection, Video Conferencing, Mobile Connections, Telephone lines etc.

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The Organization Structure of the company is as follows:

BUSINESS HEAD

SENIOR MANAGER

HUMAN RESOURCE MANAGER

MARKETING MANAGER

FINANCE MANAGER

Recruitment Head

Training Head

MANAGER:
Department of Retailing of Financial Services

MANAGER:
Roadways and Gateways Department

Internal Recruitment Cell

External Recruitment Cell

Training Staff

Staff 1: Brokers

Staff 2: Insurance and Mutual Fund Agents

Executive Staff: Insurance

Executive Staff: Mutual Funds

Executive Staff: DeMat & Trading A/C 34

Fig 2.1 Organization structure of e-Lakshya

Table 2.1 Designation and name of Top managers of e-Lakshya SERIAL NO. 1. 2. DESIGNATION Business Head Senior Manager NAME N. Sathish Vishal Setia

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FUNCTIONING OF DIFFERENT DEPARTMENT

INRODUCTION:

eLakshya has the following departments:

The Business Head is doing all the management level work and takes various types of decisions for the company.

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 The Senior Manager handles as well as manages all the work in the company regarding Marketing, Sales and Recruitment of employees in the company and finally reports to his senior.

The Work force is divided as follows:

50% to 60 % on customer interaction

20% to 30 % on training/back office and

20% to 30 % on customer acquisition activity

BUSINESS HEAD:

The main functions of the business head are as follows:

To take overall administrative decisions. To take decisions regarding financing of the company. To coordinate with the Senior Manager with respect to functioning of the middle level and lower level Staff.

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SENIOR MANAGER:

The Senior Manager has the authority and responsibility to:

Ensure that all requirements of the Quality System are established. To recruit top level managers. Coordinate with external parties. To report to the Business Head for his function as Management Representative.

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HUMAN RESOURCE MANAGER:

The Human Resource Management is responsible mainly for recruitment and training.

Recruitment:

The recruitment is done with respect to two spheres: 1. Internal recruitment 2. External recruitment

1. Internal recruitment is done in order to generate internal work force for

the company.
2. External recruitment is done for the others organizations (Insurance,

Mutual fund, Broking houses) with which the company has tie-ups under the business Recruitment to financial industries. 39

Training: The training department is managed by the training head, who is responsible for training the recruited candidates with the help of an experienced training staff over a 9 month time period, into professional wealth managers distributing sophisticated financial products, also equipping them with the necessary certifications, rigorous training, field experience and sales successes along the way.

MARKETING MANAGER:

The marketing manager is responsible for the marketing and selling of various products and services such as Insurances, Mutual Funds and DeMat and Trading accounts. He also manages the Roadways and Gateways department. He has the following functions:

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 Sales Promotion covering all products in line with Business Plan. To receive all contractual obligations relating to documentation and legal formalities with the customer. To maintain a strong customer relationship management

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FINANCE MANAGER:

Importance of a finance department cannot be over-emphasized. It is, indeed, the key to successful business operations. Without proper administration of finance, no business enterprise can reach its full potentials for growth and success. The finance department looks after overall financial activities in the organization. Maintaining accounts, preparing budgets, finding new avenues of raising capital and investing opportunities, and ensuring proper financial health of the organization, are some of the responsibilities of this department.

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SWOT ANALYSIS

A scan of the internal and external environment is an important part of the Strategic Planning Process. Environmental factors internal to the firm usually can be classified as Strength, Weakness, and those external to the firm can be classified as, Opportunity and Threats. Such an analysis of the strategic environment is referred to as SWOT Analysis.

A SWOT analysis provides information that is helpful in matching the firms, resources and capabilities to the competitive environment in which it operate. As such, it is instrumental in strategy formulation and selection. The following diagram shows how a SWOT analysis fits into an environmental scan.

STRENGTHS:
43

 A good number of customers are available. The company has Tie ups with different financial service sector companies like Birla Sun Life Insurance, HDFC, ICICI Prudential, so these companys staff are visiting eLakshya and giving training to fresh employees. eLakshya has a recruitment process whereby they recruit people for tie up companies and send them for job.

The companys business is spread to various sectors such as Insurance, Mutual Fund, Broking and Tour Management, therefore the risk is diversified.

The company has shared values among employees which make them more

committed towards the organization.

The organization structure is a line and staff structure but the company follows a

very friendly culture where the subordinates are free to express their opinion and grievances to their superiors.

WEAKNESSES:

High attrition in the initial month due to excess work in the corporate sector.

Low productivity of newly recruited employees in the initial months due to lack

of experience

Excessive training requirement for the newly recruited candidates

44

 Lack of aggressive sales force

OPPORTUNITIES:

The Rural Sector opens new avenues for expansion of business

The Mutual fund and Broking is an emerging Industry, so there is vast

opportunity for this company

The rapid growth of Indian economy

THREATS:

New aggressive players entering this business segment can lead to greater competition.

Debt and Equity Market volatility

45

 The companys major business is concentrated in recruiting candidates for the financial industry, but due to the global recession each and every industry is concentrating on downsizing its employees.

As the company is linked with the capital market, a change in the government policy relating to it may affect the functioning of the company.

46

5.1 INTRODUCTION
AN OVERVIEW OF INDIAN CAPITAL MARKETS The capital market is the market for securities, where companies and governments can raise long term funds. Selling stock and selling bonds are two ways to generate capital and long term funds. Thus bond markets and stock markets are considered capital markets. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded. The Indian Equity Markets and the Indian Debt markets together form the Indian Capital markets The Indian Equity Market depends mainly on monsoons, global funds flowing into equities and the performance of various companies. The Indian Equity Market is almost wholly dominated by two major stock exchanges -National Stock Exchange of India Ltd. (NSE) and The Bombay Stock Exchange (BSE). The benchmark indices of the two exchanges - Nifty of NSE and Sensex of BSE are closely followed. The two exchanges also have an F&O (Futures and options) segment for trading in equity derivatives including the indices. The major players in the Indian Equity Market are Mutual Funds, Financial Institutions and FIIs representing mainly Venture Capital Funds and Private Equity Funds.

Indian Equity Market at present is a lucrative field for investors. Indian stocks are 47

profitable not only for long and medium-term investors but also the position traders, short-term swing traders and also very short term intra-day traders. In India as on December 30 2007, market capitalization (BSE 500) at US$ 1638 billion was 150 per cent of GDP, matching well with other emerging economies and selected matured markets. For a developing economy like India, debt markets are crucial sources of capital funds. The debt market in India is amongst the largest in Asia. It includes government securities, public sector undertakings, other government bodies, financial institutions, banks and companies SECURITIES A security means a certificate or document indicating either ownership interest (share) or creditorship interest (debenture). Securities may include 1. Company securities shares, stocks, bonds, debentures. 2. Government securities. SECURITIES MARKET Securities market refers to both the place and the persons who deal with securities. It includes buyers and sellers of securities and agencies/institutions which help in the buying and selling of securities of companies and government. Securities market may be classified into two categories. 1. Primary market. 2. Secondary market. PRIMARY MARKET (New issues market) Primary market denotes the market for new issues. It has no physical existence. It is concerned with the floatation and issue of new shares and debentures by new or existing companies. The shares are offered to the public. The primary market establishes a linkage between the companies raising finance and the investing public. To make new issues, companies are assisted by brokers, underwriters or commercial 48

banks, in general. The public, who are interested in subscribing for the shares of the company must submit an application form. The forms will be available with the brokers, underwriters, etc. The investing public invests their saving in securities for varied reasons. They should be able to dispose the securities, in case of need. Sale of securities is a specialized activity. Hence, the companies issuing the securities, should make use of the services of agencies/institutions who are specialists in issue of securities.

SECONDARY MARKET The secondary market is often termed as the stock market. It is the market where the existing securities are traded.

STOCK MARKET OF INDIA Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces. Let us take an example for a better understanding of how market forces determine stock prices. ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an upward movement in its stock price. More and more people would want to buy this stock (i.e. high demand) and very few people will want to sell this stock at current market price (i.e. less supply). Therefore, buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of ABC Co. Ltd. On the contrary, if there are more sellers than buyers (i.e. high supply and low demand) for the stock of ABC Co. Ltd. in the market, its price will fall down. In earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of IT, most of the operations are done electronically and the stock markets have become almost paperless. Now investors dont have to gather at the Exchanges, and can trade freely from their home or office over the phone or through Internet. 49

THE BOMBAY STOCK EXCHANGE BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks started in 01 of jan, 1986. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around one-fifth of the market capitalization of the BSE. The base value of the sensex is 100 on April 1, 1979, and the base year of BSE-SENSEX is 1978-79. BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. It migrated from the open outcry system to an online screen-based order driven trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised and demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualization, BSE has two of world's best exchanges, Deutsche Brse and Singapore Exchange, as its strategic partners.

SENSEX Calculation Methodology SENSEX is calculated using the "Free-float Market Capitalization" methodology, wherein, the level of index at any point of time reflects the free-float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization. The base period of SENSEX is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of SENSEX involves 50

dividing the free-float market capitalization of 30 companies in the Index by a number called the Index Divisor. The Divisor is the only link to the original base period value of the SENSEX. It keeps the Index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate SENSEX on a continuous basis. COMPANIES IN THE SENSEX List of BSE Sensex companies provides the full list of companies that have been part of the BSE Sensex since its inception in 1986 (baselined to 1979). (as of January 12, 2009) Table 5.1 Companies in the SENSEX Code 500410 500103 532454 532868 500300 500010 500180 500440 500696 532174 500209 500875 532532 500510 500520 532500 532555 500312 500359 532712 500325 500390 500112 500900 524715 532540 Name ACC BHEL Bharti Airtel DLF Universal Limited Grasim Industries HDFC HDFC Bank Hindalco Industries Hindustan Lever Limited ICICI Bank Infosys ITC Limited Jaiprakash Associates Larsen & Toubro Mahindra & Mahindra Limited Maruti Udyog NTPC ONGC Ranbaxy Laboratories Reliance Communications Reliance Industries Reliance Infrastructure State Bank of India Sterlite Industries Sun Pharmaceutical Industries Tata Consultancy Services Sector Housing Related Capital Goods Telecom Housing related Diversified Finance Finance Metal, Metal Products & Mining FMCG Finance Information Technology FMCG Housing Related Capital Goods Transport Equipments Transport Equipments Power Oil & Gas Healthcare Telecom Oil & Gas Power Finance Metal, Metal Products, and Mining Healthcare Information Technology 51

500570 500400 500470 507685

Tata Motors Tata Power Tata Steel Wipro

Transport Equipments Power Metal, Metal Products & Mining Information Technology

DLF replaced Dr. Reddy's Lab on November 19, 2007. Sterlite Industries replaced Ambuja Cements on July 28, 2008. Tata Power Company replaced Cipla Ltd. on July 28, 2008. Sun Pharmaceutical Industries replaced Satyam Computer Services on January 8, 2009

5.2 RESEARCH METHODOLOGY

52

Introduction

The growth of the equity market in India has been phenomenal in the present decade. Right from early nineties, the stock market witnessed heightened activity in terms of various bull and bear runs. In the late nineties, the Indian market witnessed a huge frenzy in the 'TMT' sectors. More recently, real estate caught the fancy of the investors. SENSEX has captured all these happenings in the most judicious manner. One can identify the booms and busts of the Indian equity market through SENSEX. As the oldest index in the country, it provides the time series data over a fairly long period of time (from 1979 onwards). Small wonder, the SENSEX has become one of the most prominent brands in the country.

The Title of the Study

The title of the study is A Study on the Volatility of SENSEX from the Year 2005 to 2009.

Statement of the Problem

The stock market is considered as the most volatile of all markets. It is difficult to predict the future of stock markets and the nature of its movements. It get gets affected by the simplest of factors and is very responsive to market sentiments. A grapevine or a rumor also has its impact on stock market. The market factors that affect stock market can be traced as social, economical, technological, international and political, which proves to be the most important of all, because of the instability of the Central Government. This study is an attempt made towards understanding the different factors or related events that has affected the movements of the SENSEX in the recent years. A single factor cannot be held responsible for all the fluctuations in the stock market or SENSEX. Different sentiments at different point of time played a dominating role in determining the SENSEX. 53

The share prices are highly volatile mainly due to the sensitivity of the stock market sentiments. An effort is made to identify the various factors that have affected the Indian stock market in recent years and the measures to be taken by the investors to hedge the risk against market sentiments.

Scope of the Study:

The scope of the study is vast. The study can be extended to offer the following benefits: The study would enable us to know the functioning of stock market in the recent era. To know the different market sentiments that played a major role in the stock market at different points if time, that resulted in fluctuations of SENSEX. To make us know the functioning of Indian stock market.

Objectives of Study:
To have a birds eye view of Indian stock market for the past recent years To study the functioning of stock market with special reference to BSE SENSEX to market sentiments. To compare and contrast different factors that resulted in high volatility of BSE SENSEX To draw conclusion and offer suggestions to reduce volatility of the SENSEX.

Tools for data collection:

The accuracy of collection data is a greater significance for drawing correct and valid conclusion for the investigation. The sources can be classified into two: 54

 Primary data Secondary data Primary Data The primary data had been collected by interviewing the traders in various trading houses like, Indiainfoline, Ventura etc. Secondary Data Major sources of secondary data that are collected from various journals, magazines, websites, BSE records etc.

Tools of analysis
After collecting the data its variable having defined character, were tabulated and analyzed with the help of line graphs in Microsoft Excel. Into the end generalizing these findings were arrived and based on that the recommendations were made.

Limitation of study
1. Time Constraint: In a period of only 40 days it is very difficult to understand the whole market scenario. 2. Views of people varied to large extent which made it difficult to consider one single reason for SENSEX Fluctuation. 3. The data for the period prior to the year 2007 was not easily available.

55

5.3 ANALYSIS AND INTERPRETATION

Table5.2. High, Low, Average and Closing Values of SENSEX of the Year 2005
56

Month

High

Low

Average

Closing (Month End) 6555.94 6713.86 6492.82 6154.44 6715.11 7193.85 7635.42 7805.43 8634.48 7892.32 8788.81 9397.9

Jan 05 Feb 05 Mar 05 April 05 May 05 June 05 July 05 Aug 05 Sep 05 Oct 05 Nov 05 Dec 05

6679.2 6713.86 6915.09 6606.41 6715.11 7193.85 7635.42 7859.53 8650.17 8799.96 8994.94 9397.93

6102.74 6530.06 6367.86 6134.86 6195.15 6655.56 7145.13 7595.57 7876.15 7685.64 7944.1 8815.53

6306.99 6595.05 6679.18 6379.29 6482.66 6925.86 7336.7 7726.03 8272.32 8220.45 8552.09 9162.07

Figure5.1. High, Low, Average and Closing Values of SENSEX of the Year 2005

57

Important Dates:
June 20, 2005 58

On June 20, 2005, the news of the settlement between the Ambani brothers boosted investor sentiments and the scrips of RIL, Reliance Energy , Reliance Capital and IPCL made huge gains. This helped the Sensex crossed 7,000 points for the first time. September 8, 2005 On September 8, 2005, the Bombay Stock Exchange's benchmark 30-share index -- the Sensex -- crossed the 8000 level following brisk buying by foreign and domestic funds in early trading. November 28, 2005 The Sensex on November 28, 2005 crossed the magical figure of 9000 to touch 9000.32 points during mid-session at the Bombay Stock Exchange on the back of frantic buying spree by foreign institutional investors and well supported by local operators as well as retail investors.

Other Events:
In April - November 2005 -06 overall industrial productions achieved a growth rate of 8.3 % Growth in the capital goods sector was up by 3 percentage points to 15.9% in April- November 2005-06.
Textile and Edible oil became cheaper; price of Edible oil was reduced by 7.5 %

and Textile by 3.8%. Exports increased at a higher rate of 16.19% in December 2005-06 where as Imports grew at 8.44% Index of six core infrastructure industries grew at a slower pace of 4.4% in April- November period Highest ever addition to telephone network of 28.37 million was made at the end of December 2005-06

59

 Total Foreign Investment in the April - October 2005-06 went up, October 2005-06 figures show a drop in Total Foreign Investment inflow

Interpretation:
The above analysis shows that in the year 2005, the SENSEX follows an increasing trend. The table shows that the SENSEX had suffered a fall in the month of March and April but the overall trend was an increasing one. The market sentiments that affected the SENSEX were the corporate settlements, international trade and FIIs.

60

Table5.3. High, Low, Average and Closing Values of SENSEX of the Year 2006

Month

High

Low

Average

Closing (Month End) 9919.89 10370.24 11279.96 12042.56 10398.61 10609.25 10743.88 11699.05 12454.42 12961.9 13696.31 13786.91

Jan 06 Feb 06 Mar 06 April 06 May 06 June 06 July 06 Aug 06 Sep 06 Oct 06 Nov 06 Dec 06

9919.89 10370.24 11307.04 12042.56 12612.38 10609.25 10930.09 11723.92 12454.42 13024.26 13773.59 13972.03

9237.53 9742.58 10508.85 11237.23 10398.61 8929.44 10007.34 10751.66 11550.69 12204.01 13072.51 12995.02

9539.67 10090.08 10857.03 11741.74 11599.16 9934.75 10557.15 11305.04 12035.69 12637.25 13434.02 13628.3

Figure5.2. High, Low, Average and Closing Values of SENSEX of the Year 2006

61

Important Dates:

February 6, 2006 62

The Sensex on February 6, 2006 touched 10,003 points during mid-session. The Sensex finally closed above the 10K-mark on February 7, 2006. March 22, 2006 On May 22, 2006, the Sensex plunged by 1100 points during intra-day trading, leading to the suspension of trading for the first time since May 17, 2004. The volatility of the Sensex had caused investors to lose Rs 6 lakh crore ($131 billion) within seven trading sessions. The Finance Minister of India, P. Chidambaram, made an unscheduled press statement when trading was suspended to assure investors that nothing was wrong with the fundamentals of the economy, and advised retail investors to stay invested. When trading resumed after the reassurances of the Reserve Bank of India and the Securities and Exchange Board of India (SEBI), the Sensex managed to move up 700 points, still 450 points in the red. April 20, 2006 The Sensex on April 20, 2006 crossed the 12,000-mark and closed at a peak of 12,040 points for the first time. October 16, 2006 The Sensex closed at an all-time high of 12,928.18 with an intra-day high of 12,953.76. This was a result of increased confidence in the economy and reports that India's manufacturing sector grew by 11.1% in August 2006. October 30, 2006 The Sensex on October 30, 2006 crossed the magical figure of 13,000 and closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the Sensex to move from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000. December 5, 2006 The Sensex on December 5, 2006 crossed the 14,000-mark to touch 14,028 points. It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.

63

Other Events:
The real GDP growth in the country is calculated in the range of 7.5-8.0 per cent during the year

The global economy suffers from the problem of record level of international crude oil prices, overall inflationary pressures and rising international interest rates

Merchandise export growth of 24 per cent per annum

The six core infrastructure industries grew at a high of 8.6% as compared to the 6.2% increase a year before

Interpretation:
The above analysis shows that in the year 2006, the SENSEX had a downfall in the month of May, June and July, but in all the other months the SENSEX went up when compared to the previous months closing. The market factors that hit SENSEX were rumors regarding fundamentals of the economy and the growth of manufacturing sector by 11% in the month of August as is mentioned above.

Table5.4. High, Low, Average and Closing Values of SENSEX of the Year 2007

64

Month

High

Low

Average

Closing (Month End) 14090.92 12938.09 13072.1 13872.37 14544.46 14650.51 15550.99 15318.6 17291.1 19837.99 19363.19 20286.99

Jan 07 Feb 07 Mar 07 April 07 May 07 June 07 July 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07

14282.72 14652.09 13308.03 14228.88 14544.46 14650.51 15794.92 15318.6 17291.1 19977.67 19976.23 20375.87

13362.16 12938.09 12415.04 12455.37 13765.46 14003.03 14664.26 13989.11 15422.05 17328.62 18526.32 19079.64

13984 14142.7 12857.74 13477.79 14156.47 14334.3 15253.42 14779.05 16046.02 18500.31 19259.55 19827.28

Figure5.3. High, Low, Average and Closing Values of SENSEX of the Year 2007

65

Important Dates:

66

September 19, 2007- The Sensex on September 19, 2007 crossed the 16,000 mark and reached a historic peak of 16322 while closing. The bull hits because of the rate cut of 50 bit/s in the discount rate by the Fed chief Ben Bernanke in US. September 26, 2007- The Sensex on September 26, 2007 crossed the 17,000 mark for the first time, creating a record for the second fastest 1000 point gain in just 5 trading sessions. It failed however to sustain the momentum and closed below 17000. The Sensex closed above 17000 for the first time on the following day. Reliance group has been the main contributor in this Bull Run, contributing 256 points. This also helped Mukesh Ambani's net worth to grow to over $50 billion or Rs.2 trillion. It was also during this record bull run that the Sensex for the first time zoomed ahead of the Nikkei of Japan. October 9, 2007- The Sensex crossed the 18k mark for the first time on October 9, 2007. The journey from 17k to 18k took just 8 trading sessions which is the third fastest 1000 point rise in the history of the sensex. The sensex closed at 18,280 at the end of day. This 788 point gain on October 9 was the second biggest single day absolute gains. October 15, 2007- The Sensex crossed the 19k mark for the first time on October 15, 2007. It took just 4 days to reach from 18k to 19k. This is the fastest 1000 points rally ever and also the 640 point rally was the second highest single day rally in absolute terms. This made it a record 3000 point rally in 17 trading sessions overall. 20,000, October 29, 2007 - The Sensex on October 29, 2007 crossed the 20,000 mark for the first time.

Other Events:
Indian economy achieved a growth of 11.3%

The attempt of the central banks monetary tightening measures, hike in the CRR and the lending rates to curb inflation rose concerns among the investor community. The fall in both the indices BSE and NSE seen in the middle of March through April 2007 was in response to the growing concern over the expensive funds 67

 For the current fiscal (2007-08) RBI has kept the target inflation rate around

4.5% inflation was found to average below the set range of 5-5.5% for 2006-07.

Bank credit to the government rose substantially during the year-end 2007 compared to the same period of last year

Gross tax revenue collections grew at a rate much higher in 2007 than the previous year

Interpretation:
The above analysis shows that in the year 2006 the SENSEX moved up every month excepting for the months, February and August. The major market sentiments that impacted the SENSEX were the International affairs, the contribution of corporate giants and global financial indications in US and other countries.

Table5.5. High, Low, Average and Closing Values of SENSEX of the Year 2008
68

Month

High

Low

Average

Closing (Month End) 17648.71 17578.72 15644.44 17287.31 16415.57 13461.6 14355.75 14564.53 12860.43 9788.06 9092.72 9647.31

Jan 08 Feb 08 Mar 08 April 08 May 08 June 08 July 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08

20873.33 18663.16 16677.88 17378.46 17600.12 16063.18 14942.28 15503.92 15049.86 13055.67 10631.12 10099.91

16729.94 16608.01 14809.49 15343.12 16275.59 13461.6 12575.8 14048.34 12595.75 8509.56 8451.01 8739.24

19325.65 17727.54 15838.38 16290.99 16945.65 14997.28 13716.18 14722.13 13942.81 10549.65 9453.96 9513.58

Figure5.4. High, Low, Average and Closing Values of SENSEX of the Year 2008

69

Important Dates:

70

January 2008 In the third week of January 2008, the Sensex experienced huge falls along with other markets around the world. On January 21, 2008, the Sensex saw its highest ever loss of 1,408 points at the end of the session. The Sensex recovered to close at 17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of a recession in the US. The next day, the BSE Sensex index went into a free fall. The index hit the lower circuit breaker in barely a minute after the markets opened at 10 AM. Trading was suspended for an hour. On reopening at 10.55 AM IST, the market saw its biggest intra-day fall when it hit a low of 15,332, down 2,273 points. However, after reassurance from the Finance Minister of India, the market bounced back to close at 16,730 with a loss of 875 points. Over the course of two days, the BSE Sensex in India dropped from 19,013 on Monday morning to 16,730 by Tuesday evening or a two day fall of 13.9%. October 17, 2008 - Sensex crashes below the psychological 5 figure mark of 10K, following extremely negative global financial indications in US and other countries. Exactly one year back in October 2007, Sensex had gone past the 20K mark. October 24, 2008- SENSEX lost 10.96% of its value on the intraday trade, the 3rd highest loss for a one day period in its history

Other Events:
Since October 2008, the RBI has cut the cash reserve ratio (CRR) and the repo rate by 400 basis points each. Also, the reverse repo rate has been lowered by 200 basis points.

Interpretation:
71

The above analysis shows that in the year 2008, the SENSEX follows a downward trend. It started with an average of 19325.65 points in the beginning of the year and ended at an average of 9513.58 at the end of the year, almost losing 10000 point during the year. The major reason for the downfall was the global recession

Table5.6. High, Low, Average and Closing Values of SENSEX of the Year 2009
72

Month

High

Low

Average

Closing (Month End) 9424.24 8891.61 9708.5 11403.25 14625.25 14493.84 15670.31

Jan 09 Feb 09 Mar 09 April 09 May 09 June 09 July 09

10335.93 9647.47 10048.49 11403.25 14625.25 15466.81 15670.31

8674.35 8822.06 8160.4 9901.99 11682.99 14265.53 13400.32

9350.42 9188.03 8995.45 10911.2 13046.14 14782.47 14635.19

Figure5.5. High, Low, Average and Closing Values of SENSEX of the Year 2009

73

Important Dates:

74

May 2009 On May 18, 2009, the SENSEX surged 2110.79 points from the previous closing of 12174.42 this leading to the suspension of trade for the whole day. This event created history in Dalal Street, by being the first ever time that trade had been suspended for an increase in value. This rally is primarily due to the victory of the UPA (United Progressive Alliance) in the 15th General elections July 2009: The declaration of Union Budget in the month of July, pulled the SENSEX almost 900 points down in the intraday trading. The withdrawal of commodity transaction tax had spurned up certain sectors but overall the budget proved is a non-market friendly budget.

Other Events:
Till April 7, 2009, the CRR had been lowered by 50 basis points, while the repo

and reverse repo rates have been lowered by 150 basis points each.

Exports from special economic zones (SEZs) rose 33 per cent during the year to end-March 2009

FIIs have made investments of around US$ 2 billion as of May 14, 2009, including a record single day net purchase of US$ 824.72 million on May 13, 2009, according to the Securities and Exchange Board of India (SEBI).

75

Interpretation:
The above analysis shows that in the year 2009, the SENSEX follows a rising trend. The SENSEX was affected mainly by political affairs in the country and the union budget.

76

Table5.7. Consolidation of the Average SENSEX Values of Recent Years Month Jan Feb March April May Jun July Aug Sep Oct Nov Dec 2005 6306.99 6595.05 6679.18 6379.29 6482.66 6925.86 7336.7 7726.03 8272.32 8220.45 8552.09 9162.07 2006 9539.67 10090.08 10857.03 11741.74 11599.16 9934.75 10557.15 11305.04 12035.69 12637.25 13434.02 13628.3 2007 13984 14142.7 12857.74 13477.79 14156.47 14334.3 15253.42 14779.05 16046.02 18500.31 19259.55 19827.28 2008 19325.65 17727.54 15838.38 16290.99 16945.65 14997.28 13716.18 14722.13 13942.81 10549.65 9453.96 9513.58 2009 9350.42 9188.03 8995.45 10911.2 13046.14 14782.47 14635.19

Figure5.6. Consolidation of the Average SENSEX Values of Recent Years

77

Interpretation:
The above analysis shows that the years 2005 and 2006 have had comparatively less fluctuations when compared to the years 2007 and 2008. The major reason for this difference could be traced as the global recession. The year 2009 seems to recover as the linear trend line of 2009 shows that there is a upward trend expected under favorable conditions, but as nothing is predictable in the stock market every depends upon the market movements

6.1SUMMARY OF FINDINGS FINDINGS FROM THE ORGANISATION STUDY:

78

1.

 The company follows a traditional line and staff organization structure with Mr.N.Satish as the business head. The companys major strengths are its shared values, Friendly, organization culture, risk diversification and link up with various companies. The companys major weaknesses comprise of initial extensive training requirements, adverse effect of global recession and lack of aggressive sales force. The company has opportunities with respect to emerging Mutual Fund and Broking industry, volatility of the capital market which facilitates the need of efficient Mutual Fund and stock broking executives. The major threats of the company are entry of new players in the market, change in the governments policy.

2.

FINDINGS FROM THE SPECIAL TASK:

79

 The SENSEX showed an increasing trend in the years where the countrys

economy experienced a growth.

In the year 2005, the SENSEX was affected by the corporate settlements, international trade and FIIs.

In the year 2006, the market factors that hit SENSEX were rumors regarding

fundamentals of the economy and the growth of manufacturing sector

In the year 2007, The major market sentiments that impacted the SENSEX were the International affairs, the contribution of corporate giants and global financial indications in US and other countries

In the year 2008, the SENSEX was affected mainly by the global recession

In the year 2009, the SENSEX was affected mainly by political affairs in the country and the union budget.

The other factors that had an impact on SENSEX were exports, growth of

infrastructure industry, RBI norms and Inflation rate in the country.

The linear trend line of 2009 shows that there is a upward trend expected under favorable conditions.

6.2 SUGGESTIONS

80

1. SUGGESTIONS WITH RESPECT TO ORGANISATION STUDY:

The study explains that the company is following a traditional line and staff organization structure, where each subordinate has a superior to report, the organization structure could be made a functional one where the subordinates has a functional supervisor to report and a project head which would make the system more efficient and transparent. As one of the major weaknesses of the company is the requirement of extensive training in the initial stage for the employees, the company can appoint corporate trainers in order to train the employees in a better manner. The companys internal environment scanning reveals the fact that the company lacks with respect to the efficient sales force, the company may recruit marketing personnel with good qualifications say for example, MBA with specialization in Marketing.

2. SUGGESTIONS WITH RESPECT TO SPECIAL TASK

81

To earn good returns it is always better that the investors follow a systematic investment process and also consider fundamentals of the companies before taking an investment decision. It is also important that the investors should not be affected by short term market sentiments.

The SENSEX is highly sensitive to market factors, therefore new investors and traders must take proper guidance from experts say for example, Stock brokers, technical experts and Mutual fund agents who have a clear idea of the functioning of stock market

In order to minimize the risk, it is recommended to invest in a diversified portfolio. A well diversified portfolio will minimize the risk and maximize the returns. Hence it is suggested that the investors should diversify their portfolio into debt/equity diversification, industry diversification and the company diversification.

6.3. CONCLUSION
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The equity and debt market in India is expanding at a rapid pace, leading to expansion of the broking and mutual fund industry. Creation of new markets and products has become the norm of the day. The objective of the report Organization Study at eLakshya Services Pvt. Ltd. With Special Reference to A Study on the Volatility of SENSEX from the Year 2005 to 2009 was to understand the working of an organization. The aim was to bring out a model that explains how a firm operates and functions. The processes followed by each functional department have helped us to understand the working of an organization. The study also aimed at portraying a clear picture about the various market factors that have an impact on the SENSEX, in order to make a sound and more defensive investment decision The project covered various aspects of an organization like the following:

General Hierarchy of an organization Functioning of various departments in an organization SWOT analysis particular the organization under study

This project has provided a learning of the organizational structure right from the topmost level of hierarchy to the lowest level of hierarchy. Along with this, it has given us an insight on the functioning of the all the departments. This helps us to analyze the flow of work in a firm. The special task gave a clear idea about the factors that affect the SENSEX which will be helpful in making any kind of investment decisions in future. The findings from the study revealed interesting facts about the market sentiments with respect to SENSEX and the suggestions provided are highly relevant in order to make a better investment decision and get a higher return. Thus, it has been a thorough learning experience.

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