Equity trading in india

EQUITY TRADING IN INDIA & THE FUTURE OF ONLINE TRADING & DEMAT ACCOUNTS SUMMER TRAINING PROJECT REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF MASTER OF BUSINESS ADMINISTRATION [2010-2012] Submitted by:- SMRITI DUBEI PGDM UNDER THE GUIDANCE OF Mr. sACHIN KUMAR (Assistant manager) SHAREKHAN LTD. NOIDA. ACCURATE BUSINESS SCHOOL GREATER NOIDA (2010-2012) Acknowledgement The project has been prepared as a part of an internship required during the completion of PGDM from ACCURATE BUSINESS SCHOOL I was actively involved with SHAREKHAN LTD. in Noida sector18 branch for a period of 45 days and I came across a lot of people who put in their time and effort towards acclimatizing me to the working of their organization. I first of all would like to extend my profound sense of gratitude to Mr. NARESH GUPTA (territory manager) sharekhan ltd. For providing me the opportunity to work as a summer trainee in the esteemed organization. I am indebted to my project supervisor Mr. SACHIN KUMAR (assistant manager) sharekhan ltd. who took keen interest in my study and helped me a lot conduct this study through his erudition and eminent guidance whenever I was needed his calm demeanor and willingness to teach is, has not only been a great help in successfully completing my project but also a doorway to immeasurable learning and great experience. I would like to thank to all the management of share khan ltd. for giving me a opportunity to be part of the esteem organization and enhance my knowledge by granting permission to do my summer training project under their guidance. Thanking all the people with whom I have interacted during the course of my training. I shall be falling my duty if I do not express my sincere thanks to all the teachers and colleagues of the accurate family for there affection, encouragement, cooperation and guidance. I would like express my deep sense of respect and sincere gratitude to Dr. Devendra Pathak director of Accurate business School. I also appreciate and thank Prof. (DR.) Devendra Singh (mentor), faculty of Accurate Business School, as without his continuous guidance and enthusiasm the project would have never been materialized in the present form. I am deeply beholden to my parents for their loving and caring attitude and generous support at every step of my life. I also would like thank to my friends for their support in completion of this project. SMRITI DUBEICandidate’s declaration I hereby declare that the work presented by me under this project is an authentic record of my own work carried during the period of 2ND JUNE to 15TH July under the supervision of Mr. SACHIN KUMAR (assistant manager) SMRITI DUBEY (PGDM) ACCURATE BUSINESS SCHOOL GREATER NOIDA CONTENTS Page no. Certificate 0 Title page 1 Acknowledgement 2-3 Candidate’s declaration 4 Preface 7 Executive summary 8 Chapter no. 1 Company profile- 9-47 Sharekhan ltd. Products and Services Founders and promoters Historical background Vision and mission Chapter no.3 58-68 Online trading E broking Internet trading in India Future of online trading Chapter no. 4 69-75 Research methodology Findings limitations Chapter no. 5 75-80 Learning and Findings Suggestions and Recommendations Bibliography 81 Annexure PREFACE The stock market in India has been a kind of mysterious place for many people who think that the persons investing their money in the market are sort of gambling on their money. There is usual misconception in the minds of the common man that because of the volatility of the market, their hard earned money is not safe in the stock market. However, this fear can be checked by proper research on a share someone is interested to invest on. The market doesn’t behave in an arbitrate manner but certain trends are repeated over the time again and again. It is quite responsive towards the economic activities taking place in India as well as around the whole world. The broad objective of the project is to understand the behavioral pattern of Equity trading in India & The future of online Trading& Demat Account in India. The project will provide a tool in the hands of the investors to take the decisions regarding their investment in Equities. It will also give them the answer that whether it is right time to invest in this share or not. EXECUTIVE SUMMARY In few years Equities has emerged as a tool for ensuring one’s financial well being. Equities have not only contributed to the India growth story but have also helped families tap into the success of Indian Industry. As information and awareness is rising more and more people are enjoying the benefits of investing in equities. The main reason the number of retail equities investors remains small is that nine in ten people with incomes in India do not know that equities exist. But once people are aware of equities investment opportunities, the number who decide to invest in equities increases to as many as one in five people. The trick for converting a person with no knowledge of equities to a new Equities customer is to understand which of the potential investors are more likely to buy equities and to use the right arguments in the sales process that customers will accept as important and relevant to their decision. This Project gave me a great learning experience and at the same time it gave me enough scope to implement my analytical ability. The analysis and advice presented in this Project Report is based on market research on the saving and investment practices of the investors and preferences of the investors for investment in Equities. This Report will help to know about the investors’ Preferences in Equities means Are they prefer any particular Asset Management Company (AMC), Which type of Product they prefer, Which Option (Growth or Dividend) they prefer or Which Investment Strategy they follow (Systematic Investment Plan or One time Plan). This Project as a whole can be divided into two parts. The project gives an insight about the Company Profile of sharekhan ltd. broker company, organization structure and product of the company and Equities and its various aspects, Objectives of the study, Research Methodology. One can have a brief knowledge about Equities and its basics through the Project. SHAREKHAN- ONE OF THE FASTEST GROWING FINANCIAL SERVICES COMPANY IN INDIA Company profile introduction Sharekhan is one of the top retail brokerage houses in India with a strong online trading platform. The company provides equity based products (research, equities, derivatives, depository, margin funding, etc.). It has one of the largest networks in the country with 1288 share shops in 325 cities and India’s premier online trading portal www.sharekhan.com. With their research expertise, customer commitment and superior technology, they provide investors with end-to-end solutions in investments. They provide trade execution services through multiple channels - an Internet platform, telephone and retail outlets. It is the retail broking arm of the Mumbai-based SSKI [SHANTILAL SHEWANTILAL KANTILAL ISWARNATH LIMITED] Group. .Sharekhan is online stock trading company of SSKI Group, provider of India-based investment banking and corporate finance service. Sharekhan is one of the largest stock broking houses in the country. Shri Shantilal Shewantilala Kantilal Ishwarlal Securities Limited (SSKI) has been among India’s leading broking houses for more than a century. It has a client base of 1.5 Corers. Launched on 8th February, 2000 as an online trading portal, Sharekhan offers its clients trade execution facilities for cash as well as derivatives, on BSE and NSE, depository services, equities, initial public offerings (IPOs), and commodities trading facilities on MCX and NCDEX. Besides high quality investment advice from an experienced research team Sharekhan provides market related news, stock quotes fundamental and statistical information across equity, equities, IPOs and much more. Sharekhan is also about focus. Sharekhan does not claim expertise in too many things. Sharekhan’s expertise lies in stocks and that's what he talks about with authority. To sum up, Sharekhan brings to you a user- friendly online trading facility, coupled with a wealth of content that will help you stalk the right shares. History of sharekhan Sharekhan is online stock trading company of SSKI Group, provider of India-based investment banking and corporate finance service. Sharekhan is one of the largest stock broking houses in the country. Shri Shantilal Shewantilal Kantilal Ishwarlal Securities Limited (SSKI) has been among India’s leading broking houses for more than a century. SSKI which is established in 1930 is the parent company of Sharekhan ltd. With a legacy of more than 80 years in the stock markets, the SSKI group ventured into institutional broking and corporate finance over a decade ago. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. Sharekhan offers its customers a wide range of equity related services including trade execution on BSE, NSE, and Derivatives. Depository services, online trading, Investment advice, Commodities, etc. Sharekhan Ltd is India's leading online retail broking house with its presence through 1288'Share Shops' in 398 cities. It has a client base of 1.5 Corers. Sharekhan Ltd. is a brokerage firm which is established on 8th February 2000 and now it is having all the rights of SSKI. The Company's online trading and investment site - www.Sharekhan.com - was also launched on Feb 8, 2000. This site gives access to superior content and transaction facility to retail customers across the country. Known for its jargon-free, investor friendly language and high quality research, the content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. Launched on 8th February, 2000 as an online trading portal, Sharekhan offers its clients trade execution facilities for cash commodities as well as derivatives, on BSE and NSE, depository services, equitiess, initial public offerings (IPOs), and commodities trading facilities on MCX and NCDEX. On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application that emulates the broker terminals along with host of other information relevant to the Day Traders. This was for the first time that a net based trading station of this caliber was offered to the traders. In the last six months Speed Trade has become a de facto standard for the Day Trading community over the net. The company was awarded the 2005 Most Preferred Stock Broking Brand by Awwaz Consumer Vote. It is first brokerage Company to go online. Sharekhan’s ground network includes over 331 centers in 137 cities in India which provide a host of trading related services. Sharekhan's management team is one of the strongest in the sector and has positioned Sharekhan to take advantage of the growing consumer demand for financial services products in India through investments in research, pan-Indian branch network and an outstanding technology platform. Further, Sharekhan's lineage and relationship with SSKI Group provide it a unique position to understand and leverage the growth of the financial services sector. We look forward to providing strategic counsel to Sharekhan's management as they continue their expansion for the benefit of all shareholders.quot;
 Sharekhan has always believed in investing in technology to build its business. The company has used some of the best-known names in the IT industry, like Sun Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial Technologies India Ltd, Spider Software Pvt Ltd. To build its trading engine and content. The Morakhiya family holds a majority stake in the company. HSBC, Intel & Carlyle are the other investors. With a legacy of more than 80 years in the stock markets, the SSKI group ventured into institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. SSKI holds a sizeable portion of the market in each of these segments. SSKI’s institutional broking arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK and US. Foreign Institutional Investors generate about 65% of the organization’s revenue, with a daily turnover of over US$ 2 million. The Corporate Finance section has a list of very prestigious clients and has many ‘firsts’ to its credit, in terms of the size of deal, sector tapped etc. The group has placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular Holding, Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shopper’s Stop. Share khan has one of the best states of art web portal providing fundamental and statistical information across equity, equities and IPOs. One can surf across 5,500 companies for in-depth information, details about more than 1,500 equities schemes and IPO data. One can also access other market related details such as board meetings, result announcements, FII transactions, buying/selling by equities and much more. SSKI Corporate Finance Private Limited (SSKI) is a leading India-based investment bank with strong research-driven focus. Their team members are widely respected for their commitment to transactions and their specialized knowledge in their areas of strength. The team has completed over US$5 billion worth of deals in the last 5 years - making it among the most significant players raising equity in the Indian market. SSKI, a veteran equities solutions company has over 8 decades of experience in the Indian stock markets. quot;
Sharekhan has always believed in collaborating with like-minded Corporate into forming strategic associations for mutual benefit relationshipsquot;
says Jaideep Arora, Director - Sharekhan Limited. Sharekhan is also about focus. Sharekhan does not claim expertise in too many things. Sharekhan's expertise lies in stocks and that's what he talks about with authority. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse, it is something that is spoken with years of focused learning and experience in the’ stock markets. And these beliefs are reflected in everything Sharekhan does for us! Sharekhan is a part of the SSKI group, an Indian financial services power house, with strong presence in Retail equities Institutional equities Investment banking. TOP MANAGEMENT Mr.Tarun.ShahCEO,SharekhanA Science graduate from St. Xavier’s College, Mumbai, Tarun Shah started his professional life in sales and marketing in a chemicals company. His hands-on approach and rich experience in sales led him to higher challenges that the capital markets provided. In 1987, Mr Shah joined SSKI, a brokerage firm with over five decades of legendary service to its credit. The capital market at that time was undergoing a sea change in terms of character and SSKI under the vision and guidance of Shripal Morakhia and the commitment and hard work of Mr Shah was able to change and adopt the new business practices to achieve a significant growth in a competitive environment. Since then SSKI has achieved growth in each of its businesses: Institutional broking, retail broking and corporate Finance. Starting with the retail broking business of SSKI in Bombay and developing a sub-broker network across the country, Mr Shah was also instrumental in successfully setting up the Institutional Trading Desk of SSKI. Accepting new challenges is a way of life for Mr Shah. To ensure that SSKI’s foray into retail stock broking business through Sharekhan is as successful as every other venture of SSKI, Mr Shah moved in to spearhead this new effort as the CEO of Sharekhan, the retail broking arm of SSKI. Mr.Jaideep.AroraDirector,Product.DevelopmentJaideep Arora, completed his B.Tech from IIT (Kanpur) and his PGDM from IIM, Kolkata.He worked with ICICI for 8 years where his work spanned a gamut of functions, which included project finance, equity sales and brokerage, investments etc. During his tenure there he set up and headed the Institutional Equity Brokerage Desk at ICICI Securities & Finance Co. Ltd. Mr Arora joined Sharekhan in June 2000 as the head of the Product development division. A year later he took over the reins of the online business of Sharekhan. At present Mr Arora’s responsibilities include spearheading Sharekhan’s online foray as well as its overall customer acquisition effort. Mr.Shanker.Vailaya Director, Operations, Finance and Legal FunctionsA graduate in Commerce from the University of Mangalore and an Associate of The Member of the Institute of Chartered Accountants of India, Shankar Vailaya heads the operations, finance and legal functions of Sharekhan. He is responsible for settlements, depository operations, risk and compliance, regulatory and other legal commitments, and treasury. Mr Vailaya has managed Sharekhan’s broking operations through the most turbulent times in the aftermath of the securities scam in 1992 and successfully steered the company clear of a flurry of bad papers that hit the market during 1994-95. Pathik Gandotra : Head of Research 5. Rishi kohili : Vice President of Equity Derivatives 6. Nikhil Vora : Vice President of Research The different types of products and services offered by Sharekhan Ltd. are as follows: 32397701898651878965189865-62230189865 3217333285143218586452851150190502851150-7175512369803228340123698018662651236980 1. Experience SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money broker's poll held recently, SSKI won the 'India's best broking house for 2004' award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has been providing institutional-level research and broking services to individual investors. 2. Technology With their online trading account one can buy and sell shares in an instant from any PC with an internet connection. Customers get access to the powerful online trading tools that will help them to take complete control over their investment in shares. 3. Accessibility Sharekhan provides services for investors. These services are accessible through many centers across the country (Over 650 locations in 150 cities), over the Internet (through the website www.sharekhan.com) as well as over the Voice Tool. 4 .Knowledge In a business where the right information at the right time can translate into direct profits, investors get access to a wide range of information on the content-rich portal, www.sharekhan.com. Investors will also get a useful set of knowledge-based tools that will empower them to take informed decisions. 5. Convenience One can call Sharekhan’s Dial-N-Trade number to get investment advice and execute his/her transactions. They have a dedicated call-center to provide this service via a Toll Free Number 1800-22-7500 & 39707500 from anywhere in India. Customer Service Its customer service team assist their customer for any help that they need relating to transactions, billing, dmat and other queries. Their customer service can be contacted via a toll- free number, email or live chat on www.sharekhan.com. Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical research. Their analysts constantly track the pulse of the market and provide timely investment advice to customer in the form of daily research emails, online chat, printed reports etc PRODUCT & SERVICES A Sharekhan outlet offers the following services: • Online BSE and NSE executions (through BOLT & NEAT terminals) • Free access to investment advice from Sharekhan’s Research Convenience One can call Sharekhan’s Dial-N-Trade number to get investment advice and execute his/her transactions. They have a dedicated call-center to provide this service via a Toll Free Number 1800-22-7500 & 39707500 from anywhere in India. 6. Customer Service Its customer service team assists their customer for any help that they need relating to transactions, billing, demat and other queries. Their customer service can be contacted via a toll- free number, email or live chat on www.sharekhan.com. 7. Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical research. Their analysts constantly track the pulse of the market and provide timely investment advice to customer in the form of daily research emails, online chat, printed reports etc. PROFILE OF THE COMPANY Name of the company : Sharekhan ltd. Year of Establishment : 1922 Headquarter : ShareKhan SSKI A-206 Phoenx House, Phenoix mills Compound lower parel Mumbai Maharashtra , INDIA- 400013 Nature of Business : Service Provider Services : : Depository services Online Services and . Technical Research Number of Employees : Over 3500 Website : www.sharekhan.com Slogan : Your Guide to financial jungle. SHAREKHAN LIMITED’S MANAGEMENT TEAM WORK STRUCTURE OF SHAREKHAN Sharekhan has always believed in investing in technology to build its business. The company has used some of the best-known names in the IT industry, like SunMicro systems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette,Verisign Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading engine and content. The Citi Venture holds a majority stake in the company. HSBC, Intel & Carlyle are the other investors. On April 17, 2002 Sharekhan launched Speed Trade and Trade Tiger, are net-based executable application that emulates the broker terminals along with host of other information relevant to the Day Traders. This was for the first time that a net-based trading station of this caliber was offered to the traders. In the last six month’s Speed Trade has become a de facto standard for the Day Trading community over the net. Sharekhan’s ground network includes over 1288+ Share shops in 325+ cities in India. The firm’s online trading and investment site - www.sharekhan.com - was launched on Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers across the country. Known for its jargon-free, investor friendly language and high quality research, the site has a registered base of over 3 Lacs customers. The number of trading members currently stands at over 8 Lacs. While online trading currently accounts for just over 5 per cent of the daily trading in stocks in India, Sharekhan alone accounts for 27 per cent of the volumes traded online. The Corporate Finance section has a list of very prestigious clients and has many first to its credit, in terms of the size of deal, sector tapped etc. The group has placed over US$ 5 billion in private equity deals. Some of the clients include BPL Cellular Holding, Gujarat Pipavav, Essar, Hutchison, Planet asia, and Shopper’s Stop. Finally, Sharekhan shifted hands and Citi venture get holds on it. ACHIEVEMENTS OF SHAREKHAN A rated among the top 20 wired companies along with Reliance, HUJl, Infosys, etc by ‘Business Today’, January 2004 edition. Awarded ‘Top Domestic Brokerage House’ four times by Euro money and Asia money. Pioneers of online trading in India amongst the top 3 online trading websites from India. Most preferred financial destination amongst online broking customers. Winners of “Best Financial Website” award. India’s most preferred brokers within 5 years. “Awaaz customers Award 2005”. Future Plans 2,00,000 plus retail customers being serviced through centralized call centers/ web solutions. Branches / Semi branches servicing affluent / aggressive traders through high skill financial advisor. 250 independent investment managers/ franchisee servicing 50,000 highly valued clients. New initiative Portfolio management Services and commodities trading. Vision: To be the best retail brokering brand in the retail business of stock marketing. Mission: To educated and empower the individual investor to make better investment better decision through the quality advise and superior services. Sharekhan is infact: 1. Among the top three branded retail service provider. 2. No.1 player in the on line trading business. 3. Largest network of branded broking outlet in the country service more then 700000 client. Get anything you need at a sharekhan outlet. All you have to do is walk into any of our 640 share shops across 280 cities in india to get a host of trading related serviced – our friendly customer service staff will also help you with any account related queries you may. A sharekhan outlet offer the following services . Online BSE and NSE execution (through blot and neat terminal). Free access to the investment advice from share khan’s research team. Sharekhan value line ( a monthly population with review of recommendation, stock to watch out for etc.) Daily research reports and market review (High Noon & Eagle Eye) Pre-market Report (Morning Cuppa) Daily trading calls based on Technical Analysis Cool trading products (Daring Derivatives and Market Strategy) Personalized Advice Live Market Information Depository Services: Demat & Remat Transactions Derivatives Trading (Futures and Options) Commodities Trading IPOs & Equities Distribution Internet-based Online Trading: SpeedTrade FINANCIAL CAPABILITY Taking in to consideration all its assets and liabilities company is valued at around Rs. 750-850 crores. HIERARCHY IN SHAREKHAN HIERARCHY IN SHAREKHAN There are 13 main hierarchical levels in Sharekhan: Trainees Super trainees Sales executives/dealer Senior sales executives Assistant sales manager/HNI Sales Asst.Manager/Relationship Manager/Equity advisor. Territory manger Area sales manager regional sales manager(Branch manager) Country head Assistant vice president manager Vice president Directors CEO SWOT ANALYSIS Strengths It is a pioneer in online trading with a turnover of Rs.400crores and more than 800 peoples working in the organization. SSKI the parent company of Share Khan has more than eight decades of trust and credibility in the Indian stock market. In the Asian Money Broker’s poll SSKI won the “India’s best broking house for 2004” award. Share Khan provides multi-channel access to all its customers through a strong online presence with www.sharekhan.com, 250 share shops in 130 cities and a call-center based Dial-n-Trade facility. Share Khan has dedicated research teams for fundamental and technical research. Which constantly track the pulse of the market and provide timely investment advice free of cost to its clients which has a strike rate of 70-80%. Employees are highly empowered. And strong communication network. Management philosophy and commitment to maximize shareholders return and upgraded product design and development facilities to develop new products and aid diversification. Ongoing activities to support up gradation of operational performance and rise in productivity and Team of talented and committed professionals available to improve company’s performance weakness. Good co-operation between employees. Number 1 registrar and transfer agent and dealer of investment products in India Weakness Localized presence due to insufficient investments for country wide expansion. Lack of awareness among customers because of non-aggressive promotional strategies (print media, newspapers, etc). High brokerage charges but now they have overcome this by a new prepaid scheme in which brokerage is reduced to half. Focuses more on HNIs than retail investors which results in meager market-share as compared to close competitors. High employee turnover Opportunities With the booming capital market it can successfully launch new services and raise its client’s base. It can easily tap the retail investors with small saving through o promotional channels like print media, electronic media, etc. As interest on fixed deposits with post office and banks are all time low, more and more small investors are entering into stock market. Abolition of long term capital gain tax on shares and reduction in short term capital gain is making stock market as hot destination for investment among small investors. Increasing usage of internet through broadband connectivity may boost a whole new breed of investors for trading in securities. Growth rate of equities industry is 40 to 50% during last year and it expected that this rate will be maintained in future also. Marketing at rural and semi-urban areas. Threats Aggressive promotional strategies by close competitors may hamper Share Khan’s acceptance by new clients. Lack of sufficient branch-offices for speedy delivery of services. Other players are providing margin funds to investors on easy terms where as there is no such facility in share khan. More and more players are venturing into this domain which can further reduce the earnings of Share Khan. Increasing number of Competitors. Constant pressure to be cost competitive to meet customer’s expectations. Relentless pressure to maintain profitability due to rising input/raw material prices. Sharekhan Demat Account Services: Sharekhan – Transacting and investing simplified. Get ready to change the way you transact and invest in financial products and services. Whether you wish to transact in equity, equity & commodity derivatives, IPO’s offshore investments or prefer to invest in equities, life & general insurance products or avail money transfer and money changing services, you can do it all through Angel. Simply open a Angel account and enjoy the convenience of handling all your key financial transactions through this one window. Benefits of having an Sharekhan account: • It’s cost effective You pay comparatively lower transaction fees. As an Introductory offer, we invite you to pay a flat fee of just Rs. 750/- and transact through Sharekhan • Its offers single – Through Sharekhan’s associates, you can transact in equity, equity and commodities derivatives, offshore investments equities, IPO’s life insurance, general insurance, money transfer, money changing and credit cards, among others. • Its convenient You can access Sharekhan’s services through •The internet •Transaction kiosks •The phone (call & transact) •Our all – India network of associates on an assisted trade. Its Safe your account is safeguarded with a unique security number that changes every 32 seconds. This number works as a dynamics password to keep your account extra safe. It provide you value- added services at www.sharekhan.com , you get • Reliable research, including views of external experts with an enviable track record • Live news updates from Reuters and Dow Jones • CEO’s / expert views on the economy and financial markets • Tools that help you plan your investments, tax, retirement, etc. in the persona finance section • Risk Analyzer for analysis of your risk profile • Asset allocators to build an appropriate investment portfolio • Innovative use of technology for facilitating. SHAREKHAN LIMITED TYPES OF ACCOUNT SOFTWARE Sharekhan offers four types of trading account for its clients: ➢ Classic account software. New Fast trade account software fast trade account software Trade Tiger Account software CLASSIC ACCOUNT: This is a User Friendly Product which allows the client to trade through website www.sharekhan.com and is suitable for the retail investor who is risk-averse and hence prefers to invest in stocks or who does not trade too frequently. This account allow investors to buy and sell stocks online along with the following features like multiple watch lists, Integrated Banking, Demat and digital contracts, Real-time portfolio tracking with price alerts and Instant credit & transfer. This account comes with the following features: Online trading account for investing in Equity and Derivatives via www.sharekhan.com Live Terminal and Single terminal for NSE Cash, NSE F&O & BSE. Integration of On-line trading, Saving Bank and Demat Account. Instant cash transfer facility against purchase & sale of shares. Competitive transaction charges. Instant order and trade confirmation by E-mail. Streaming Quotes (Cash & Derivatives). Personalized market watch. Single screen interface for Cash and derivatives and more. Provision to enter price trigger and view the same online in market watch. Fast trade account: This online trading platform is an applet based application that provide lives streaming quotes from BSE and NSE .get live market prices and market statistics like the best bid prices ,quantity ,best offer price and quantity etc. for chosen stocks customize the screen with your own choice of securities. This account comes with the following features: Streaming quotes. Personalized market watch. Single screen interface for cash, derivatives and more. Provision to enter price trigger and view the same online in market watch New fast trade will support all browser in the market. New fast trade is independent of existing website and can work even if content website is down. New fast trade is platform independent will support by all operating system. Silent feature Faster Download of Flash plug-in ( Most people have it by default) No requirement of Microsoft / Sun JVM Excellent UI Compression and Security Working on all browser Applet works only with I.E ( Applet doesn’t work on I.E. 7 and above) Dynamic Feed & Order Placement on the Browser Market / Exchange News TRADE TIGER ACCOUNT: This is an internet-based software application, application, which enables one to buy and sell in an instant. It is ideal for active traders and jobbers who transact frequently during day’s session to capitalize on intra-day price movement. This account comes with the following features: A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX, NCDEX, Equities, IPOs Multiple Market Watch available on a Single Screen Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with various Studies Graph Studies include Average, Band-Bollinger, Know Sure Thing, MACD etc Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines User can save his own defined screen as well as graph template, that is, saving the layout for future use. User-defined alert settings on an input Stock Price trigger Tools available to gauge market such as Tick Query, Ticker, Market Summary, Action Watch, Option Premium Calculator, Span Calculator Shortcut key for FAST access to order placements & reports Online fund transfer activated with 12 Banks, DIAL-N-TRADE Along with enabling access for trade online, the CLASSIC and SPEEDTRADE ACCOUNT also gives Dial-n-trade services. With this service, one can dial Share khan’s dedicated phone lines 1-800-22-7500, 3970-7500. Beside this, Relationship Managers are always available on Office Phone and Mobile to resolve customer queries. All you have to do is dial any one of our two dedicated numbers (1-800-22-7050 or 30307600), enter your TPIN number (which is provided at the time of opening your account) and on authentication you'll be directed to a telebroker who will buy and sell shares for you Features of Dial-n-Trade: TWO dedicated numbers for placing your orders with your cellphone or landline. Toll free number: 1-800-22-7050. For people with difficulty in accessing the toll-free number, we also have a Reliance number (Your Local STD Code) 30307600 which is charged at as a local call. Simple and Secure Interactive Voice Response based system for authentication No waiting time. Enter your TPIN to be transferred to our telebrokers You also get the trusted, professional advice of our telebrokers After hours order placement facility between 8.30 am and 9.00 am Reliable service, wherever you are ShareMobile Sharekhan had introduced ShareMobile, mobile based software where one can watch Stock Prices, Intra Day Charts, Research & Advice and Trading Calls live on the Mobile. Sharekhan’s brokerage charges NORMAL PLAN MARGIN MONEY (Rs.)INTRA DAY CHARGES (%)DELIVERY CHARGES (%)5,0000.050.2510,0000.050.2520,000 – 25,0000.050.2550,000 – 1,00,0000.040.205,00,0000.030.15 NOTE: In margin money of Rs. 5,000 , there is no account opening charge. Charges of intraday & delivery are negotiable , depending upon the amount of margin money. Trade tiger software is free on the margin money above Rs.2,00,000. PREPAID PLAN PRE PAID AMOUNT (Rs.)INTRA DAY CHARGES (%)DELIVERY CHARGES (%)7500.0500.502,0000.0350.406,0000.0250.2518,0000.0200.20 NOTE: In 750 plan, Rs.750 is expired after six months. In other plan, amount is expired after twelve months. Trade tiger software is free in 6,000 and above plan. Charges of intraday & delivery are negotiable as per the investment amount. TIED UP WITH THE BANKS: HDFC BANK CITI BANK UNION BANK OF INDIA ORIENTAL BANK OF COMMERCE AXIS BANK IDBI INDUSLAND BANK BANK OF INDIA ICICI BANK YES BANK DEUTSCHE BANK FEDERAL BANK BANKS LOGO Sharekhan provides 4 in 1 account Demat and trading account. Equities Portfolio Management System Commodities Out of these we have to mostly sell demat accounts and Equities. Demat and trading account DEMAT ACCOUNT: iNtroduction The term Demat, in India, refers to a dematerialized account. For individual Indian citizens to trade in listed stocks or debentures the Securities Exchange Board of India (SEBI) requires the investor to maintain a Demat account. In a demat account shares and securities are held in electronic form instead of taking actual possession of certificates. A Demat Account is opened by the investor while registering with an investment broker (or sub broker). The Demat account number which is quoted for all transactions to enable electronic settlements of trades to take place. Access to the demat account requires an internet password and a transaction password as well as initiating and confirming transfers or purchases of securities. Purchases and sales of securities on the Demat account are automatically made once transactions are executed and completed. Sharekhan is a depository participant. This means that we can keep the shares in dematerialized form in Sharekhan. But for this one has to the demat account in Sharekhan. Dematerialization is the process by which a client can get physical certificates converted into electronic balances maintained in his account with the DP. Demat account allows you to buy, sell and transact shares without the endless paperwork and delays. It is also safe, secure and convenient. In India, a demat account, the abbreviation for dematerialized account, is a type of banking account which dematerializes paper-based physical stock shares. The dematerialized account is used to avoid holding physical shares: the shares are bought and sold through a stock broker. This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a demat account for share trading above 500 shares. As of April 2006, it became mandatory that any person holding a demat account should possess a Permanent Account Number (PAN), and the deadline for submission of PAN details to the depository lapsed on January 2007. Is a demat account a must? Now a day, practically all trades have to be settled in dematerialized form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of up to 500 shares to be settled in physical form, nobody wants physical shares any more. So a demat account is a must for trading and investing. Why demat? The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments. It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses. DEMAT Benefits A safe and convenient way to hold securities. Immediate transfer of securities. No stamp duty on transfer of securities (0.5 % on physical shares). Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, theft etc. Reduction in paper work. Reduction in transaction cost. No odd lot problem, even one share can be sold. Meaning of Trading Account 1. An account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer. 2. An account held at a financial institution and administered by an investment dealer that the account holder uses to employ a trading strategy rather than a buy-and-hold investment strategy. TYPES OF TRADING At the end of this section, you will be familiar with terms like Cash market, Margin trading, Futures & Options and Commodity trading.Cash Segment Cash market trading is meant for the people who wish to buy shares with an intention of taking delivery of shares. They need to allocate full amount towards the purchase of the shares at the time of placing order. That means the trading account must have sufficient funds to take care of the total cost of the purchase of the shares, brokerage and other charges. The shares get delivered to the investor's DP account after the settlement process. The investor may the sell the shares on the next trading day, provided the shares are not trade to trade segment (T2T). In such cases, the shares can be sold only after the receipt of the same.Margin Trading In margin trading, the broker allows the investor to buy shares worth up to 4 times the available balance in his trading account. But, not all the shares can be traded in the margin segment. The investor has to square off the trades within the same day. That means, if an investor buys 500 shares of xyz company at a total cost of Rs.50,00000, he has to sell it before the stipulated time on the same day. If the market moves against the investor's position then he has to take delivery of the shares. If the shares have to be taken for delivery, brokerage will be charged more and the investor should settle the balance amount as per the agreement with the broker. If investor has done a short sell, he has to buy the shares. Short sell can not be carried forward to the next day. If it is not squared off, then he will be forced to pay penalty charges. Margin trading is also referred as Day trading or Intra day trading by some people. Stop loss trigger may be used to minimize the loss if the market moves contrary to the expectation of the investor. Assuming that after buying the share prices goes down, the investor can minimize the loss by putting the stop loss trigger price and a limit price. When the stock price hits the stop loss trigger price, the system starts selling the shares, it is sold till the limit price of the sell order. In general the limit price is set 5% lower than the stop loss price for selling. Futures and Options Future represents a contract between a buyer and seller on a specific quantity of financial instrument like currency, stock market index or stocks, or even a commodity, at a specified price with a defined delivery or settlement period. Futures are traded in “lots” of underlying assets like stocks. Buying a contract is known as long position and selling a contract is called as short position. Future contracts have two types of settlements, one is a physical delivery and the other one is settling in cash. Physical delivery part may be exercised in a commodity future contract. Last Thursday of the month is the due date for delivery or settlement of all F&O contracts. However there is no need to wait till the last day of the settlement of the future contract. The contract can be squared off even before the expiry date. In F&O segment, both the buyer and seller face equal risks. So, we can say that the risk factor is symmetrical. The operators or investors of Future & Options segment can be classified as Hedgers - who have positions in long and short in F&O segments, so that any market fluctuation will not affect them. Speculators - Risk savvy people, who speculate and take their positions in F&O and the leave the rest to the market. The speculators get in to highest degree of exposure to risks. Same time speculators make big profits, if the market condition is in favor to them. Third category is known as Arbitrageurs operate in various markets simultaneously to protect their interests, they may take a short position in F&O and long position in cash segment. Futures & Options trading is also known as derivative trading. The major difference between equity trading and derivative trading is, in case of futures, the short positions can be carried forward until the expiry of the contract, where as in cash segment, the short positions have to be squared off on the same day, failing which the investor has to pay the penalty charges. F & O segment is actively traded by the Foreign Institutional Investors and the turnover is 4 times higher than cash segment. COMPETITIORS TERMS OF STOCK EXCHANGE BOMBAY STOCK EXCHANGE Greater liquidity and lesser risk of intermediary charges due to widely spread trading mechanism across IndiaThe screen-based scrip less trading ensures transparency and accuracy of pricesFaster settlement and transfer process as compared to other exchangesShorter allotment procedure (in case of a new issue) than other exchangesSensex and niftyThe Sensex is an quot;
indexquot;
.An index is basically an indicator. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The Sensex is an indicator of all the major companies of the BSE. If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down. The BSE is the Bombay Stock Exchange and the NSE is the National Stock Exchange. The BSE is situated at Bombay and the NSE is situated at Delhi. These are the major stock exchanges in the country. There are other stock exchanges like the Calcutta Stock Exchange etc. but they are not as popular as the BSE and the NSE.Most of the stock trading in the country is done though the BSE & the NSE. Besides Sensex and the Nifty there are many other indexes. There is an index that gives you an idea about whether the mid-cap stocks go up and down. This is called the “BSE Mid-cap Index”. There are many other types of indexes.There is an index for the metal stocks. There is an index for the FMCG stocks. There is an index for the automobile stocks etc.how the SENSEX is calculated?The Sensex has a very important function. The Sensex is supposed to be an indicator of the stocks in the BSE. It is supposed to show whether the stocks are generally going up, or generally going down. To show this accurately, the Sensex is calculated taking into consideration stock prices of 30 different BSE listed companies. It is calculated using the “free-float market capitalization” method. This is a worldwide accepted method as one of the best methods for calculating a stock market index. note: The method used for calculating the Sensex and the 30 companies that are taken into consideration are changed from time to time. This is done to make the Sensex an accurate index and so that it represents the BSE stocks properly. To really understand how the Sensex is calculated, we simply need to understand what the term “free-float market capitalization” means. But, before we understand what “free-float market capitalization” means, we first need to understand what “market capitalization” means.Market cap or market capitalization is simply the worth of a company in terms of it’s shares. if we were to buy all the shares of a particular company, what is the amount you would have to pay? That amount is called the “market capitalization”! To calculate the market cap of a particular company, simply multiply the “current share price” by the “number of shares issued by the company”! for example- ONGC, has a market cap of “Rs.170,705.21 Cr.concept of “free-float market capMany different types of investors hold the shares of a company! The Govt. may hold some of the shares. Some of the shares may be held by the “founders” or “directors” of the company. Some of the shares may be held by the FDI’s etc. Now, only the “open market” shares that are free for trading by anyone, are called the “free-float” shares. When we are calculating the Sensex, we are interested in these “free-float” shares!A particular company, may have certain shares in the open market and certain shares that are not available for trading in the open market. According the BSE, any shares that DO NOT fall under the following criteria, can be considered to be open market shares:Holdings by founders/directors/ acquirers which has control elementHoldings by persons/ bodies with quot;
controlling interestquot;
Government holding as promoter/acquirerHoldings through the FDI RouteStrategic stakes by private corporate bodies/ individualsEquity held by associate/group companies (cross-holdings)Equity held by employee welfare trustsLocked-in shares and shares which would not be sold in the open market in normal course.A company has to submit a complete report about “who has how many of the company’s shares” to the BSE. On the basis of this, the BSE will decide the “free-float factor” of the company. The “free-float factor” is a very valuable number! If you multiply the quot;
free-float factorquot;
with the “market cap” of that company, you will get the “free-float market cap” which is the value of the shares of the company in the open market!A simple way to understand the “free-float market cap” would be, the total cost of buying all the shares in the open market! So, having understood what the “free float market cap” is, now what? How do you find out the value of the Sensex at a particular point? Well, it’s pretty simple….First: Find out the “free-float market cap” of all the 30 companies that make up the Sensex!Second: Add all the “free-float market cap’s” of all the 30 companies!Third: Make all this relative to the Sensex base. The value you get is the Sensex value! In “third” step, you will need to understand “ratios and proportions” from 5th standard mathematics. Think of it this way:Suppose, for a “free-float market cap” of Rs.100,000 Cr... the Sensex value is 4000…Then, for a “free-float market cap” of Rs.150,000 Cr... the Sensex value will be..So, the Sensex value will be 6000 if the “free-float market cap” comes to Rs.150,000 Cr!Please Note: Every time one of the 30 companies has a “stock split” or a quot;
bonusquot;
etc. appropriate changes are made in the “market cap” calculations.Let’s take an example....Suppose the Index consists of only 2 stocks: Stock A and Stock B.Suppose company A has 1,000 shares in total, of which 200 are held by the promoters, so that only 800 shares are available for trading to the general public. These 800 shares are the so-called 'free-floating' shares.Similarly, company B has 2,000 shares in total, of which 1,000 are held by the promoters and the rest 1,000 are free-floating.Now suppose the current market price of stock A is Rs 120. Thus, the 'total' market capitalization of company A is Rs 120,000 (1,000 x 120), but its free-float market capitalization is Rs 96,000 (800 x 120).Similarly, suppose the current market price of stock B is Rs 200. The total market capitalization of company B will thus be Rs 400,000 (2,000 x 200), but its free-float market cap is only Rs 200,000 (1,000 x 200).So as of today the market capitalization of the index (i.e. stocks A and B) is Rs 520,000 (Rs 120,000 + Rs 400,000); while the free-float market capitalization of the index is Rs 296,000. (Rs 96,000 + Rs 200,000).The year 1978-79 is considered the base year of the index with a value set to 100. What this means is that suppose at that time the market capitalization of the stocks that comprised the index then was, say, 60,000 (remember at that time there may have been some other stocks in the index, not A and B, but that does not matter), then we assume that an index market cap of 60,000 is equal to an index-value of 100.The formula for calculating the SENSEX = (Sum of free flow market cap of 30 biggest stocks of BSE)*Index Value in 1978-79/Market Cap Value in 1978-79.Note: The base value (index value) of the Sensex is 100 on April 1, 1979, and thebase year of BSE-SENSEX is 178-79.Apply the formula…………….the sensex is = 296,000 x 100/60,000 = 493.33This is how the Sensex is calculated.Now, there is only one question left to be answered, which 30 companies, why those 30 companies, why no other companies? The 30 companies that make up the Sensex are selected and reviewed from time to time by an “index committee”. This “index committee” is made up of academicians, equities managers, finance journalists, independent governing board members and other participants in the financial markets.BSE SensexBSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. The Sensex is regarded as the pulse of the domestic stock markets in India. 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 fifty per cent 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.At regular intervals, the Bombay Stock Exchange (BSE) authorities review and modify its composition to be sure it reflects current market conditions. The index is calculated based on a free-float capitalization method; a variation of the market cap method. Instead of using a company's outstanding shares it uses its float, or shares that are readily available for trading. The free-float method, therefore, does not include restricted stocks, such as those held by promoters, government and strategic investorsThe exchange, while providing an efficient and transparent market for trading securities, upholds the interests of the investors and ensures redressed of their grievances, whether against the companies or its own member brokers. It also strives to educate and enlighten the investors by making available necessary informative inputs and conducting investor education programmes. A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an executive director is the apex body, which decides the policies and regulates the affairs of the exchange.The Executive director as the chief executive officer is responsible for the day today administration of the exchange. The average daily turnover of the exchange during the year 2000-01(April-March) was Rs 3984.19 crores and average number of daily trades 5.69Lakhs.However the average daily turn over of the exchange during the year 2001-02 has declined to Rs. 1244.10 crores and number of average daily trades during the period to 5.17Lakhs.The average daily turn over of the exchange during the year 2002-03 has declined and number of average daily trades during the period is also decreased.The Ban on all deferral products like BLESS AND ALBM in the Indian capital markets by SEBI with effect from July 2,2001, abolition of account period settlements, introduction of compulsory rolling settlements in all scripts traded on the exchanges with effect from Dec 31,2001, etc., have adversely impacted the liquidity and consequently there is a considerable decline in the daily turn over at the exchange. The average daily turn over of the exchange present scenario is 110363(laces) and number of average daily trades 1057(laces).BSE INDICES:In order to enable the market participants, analysts etc., to track the various ups and downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock index called BSE-SENSEX that subsequently became the barometer of the moments of the share prices in the Indian Stock market. It is a “Market capitalization weighted” index of 30 component stocks representing a sample of large, well-established and leading companies. The base year of Sensex is 1978-79. The Sensex is widely reported in both domestic and international markets through print as well as electronic media.Sensex is calculated using a market capitalization weighted method.As per this methodology, the level of the index reflects the total market value of all 30-component stocks from different industries related to particular base period. The total market value of a company is determined by multiplying the price of its stock by the number of shares outstanding. Statisticians call an index of a set of combined variables (such as price and number of shares) a composite Index. An Indexed number is used to represent the results of this calculation in order to make the value easier to work with and track over a time. It is much easier to graph a chart based on Indexed values than one based on actual values world over majority of the well-known Indices are constructed using ”Market capitalization weighted method”. In practice, the daily calculation of SENSEX is done by dividing the aggregate market value of the 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. The Divisor keeps the Index comparable over a period or time and if the reference point for the entire Index maintenance adjustments. SENSEX is widely used to describe the mood in the Indian Stock markets. Base year average is changed as per the formula new base year average = old base year average*(new market value/old market value. National Stock Exchange nifty The Nifty is an indicator of all the major companies of the NSE. Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE. “Nifty” means National Index for Fifty Stocks. The NSE-50 comprises 50 companies that represent 20 broad Industry groups with an aggregate market capitalization of around Rs. 1,70,000 crs. All companies included in the Index have a market capitalization in excess of Rs 500 crs each and should have traded for 85% of trading days at an impact cost of less than 1.5%.The base period for the index is the close of prices on Nov 3, 1995, which makes one year of completion of operation of NSE’s capital market segment. The base value of the Index has been set at 1000. NSE-MIDCAP INDEX: The NSE midcap Index or the Junior Nifty comprises 50 stocks that represents 21 aboard Industry groups and will provide proper representation of the midcap segment of the Indian capital Market. All stocks in the index should have market capitalization of greater than Rs.200 crores and should have traded 85% of the trading days at an impact cost of less2.5%. The base period for the index is Nov 4, 1996, which signifies two years for completion of operations of the capital market segment of the operations. The base value of the Index has been set at 1000.Average daily turn over of the present scenario 258212 (Laces) and number of averages daily trades 2160(Laces). TRANSACTION CYCLE A person holding assets (Securities/Funds), either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets, decides to buy or sell the securities. He selects a broker and instructs him to place buy/sell order on an exchange. The order is converted to a trade as soon as it finds a matching sell/buy order. At the end of the trade cycle, the trades are netted to determine the obligations of the trading member’s securities/funds as per settlement cycle. Buyer/seller delivers funds/ securities and receives securities/funds and acquires ownership of the securities. A securities transaction cycle is presented above. Just because of this Transaction cycle, the whole business of Securities and Stock Broking has emerged. And as an extension of stock broking, the business of Online Stock broking/ Online Trading/E-Broking has emerged. At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the quot;
Native Share and Stock Brokers' Associationquot;
(which is alternatively known as “The Stock Exchange quot;
). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. HISTORY OF ONLINE TRADING Online stock trading is very old concept for big institutions who trade through private networks owned by Reuter's quot;
Instinetquot;
and a system called quot;
Positquot;
since 1969. But it becomes internet based for lay men only in late 90s. Funny, that actually idea was first time used by a company making Beer called quot;
WIT beerquot;
to help its shareholders trade its shares. That’s how quot;
WIT Capitalquot;
was born which is considered pioneer of this concept. It was made mainstream and household name by a offshoot of Charles Schwab & Co called was made mainstream and household name by a offshoot of Charles Schwab & Co called eSchwab which is used by millions of people in USA. Lot of NRI's I know play in US stock market even when they come to India for holidays via website of eSchwab. There are other serious players like E*trade, DATEK online etc. All this companies ask you to start account with US $5000 and you can buy and sell stock using these funds. They also issue you a check book which you can use to make payments from this account. Or use their ATM card to withdraw cash from your stock trading account. Today practically every big name brokerage firm offers online stock trading as it reduces their costs. Earlier they had army of brokers on phone with clients executing trade, which is done by computers accepting orders from clients directly. This firm now offers human access to high net worth accounts, and now to rest at charge per trade. E- Broking - A small beginning: You have some money to dabble with. Trading shares on BSE/NSE has always been your dream. When will you ever find the time? And besides, the hassle of finding a broker is not easy. Realizing there is untapped market of investors who want to be able to execute their own trades when it suits them, brokers have taken their trading rooms to the Internet. Known as online brokers, they allow you to buy and sell shares via Internet. There are 2 types of online trading service: discount brokers and full service online broker. Discount online brokers allow you to trade via Internet at reduced rates. Some provide quality research, other don’t. Full service online brokerage is linked to existing brokerages. These brokers allow their clients to place online orders with the option of talking/ chatting to brokers if advice is needed. Brokerage rates here are higher. 5Paisa.com, ICICIDirect.com, IndiaBulls.com, Sharekhan.com, Geojit securities.com, HDFCsec.com, Tatatdw.com, Kotakstreet.com, indiainfoline.com are some of the online broking sites in India. With Net trading in securities and rapid consolidation between multiple stock exchanges, the international securities marketplace is fast becoming a quot;
global villagequot;
through the creation of a universal virtual equity market. Compared to the Western countries, online trading is still in its infancy in India. With trading turnover at around Rs. 10 crores per day from online trading compared to a combined gross turnover of around Rs. 9000-10,000 crores handled by the BSE and NSE together, online trading has a long way to go. INTERNET TRADING IN INDIA: In the past, investors had no option but to contact their broker to get real time access to market data. The Net brings data to the investor on line and net broking enables him to trade on a click. Now information has become easily accessible to both retail as well as big investors. The development of broking in India can be categorized in 3 phases: 1. Stock brokers offering on their sites features such as live portfolio manager, live quotes, market research and news to attract more investors. 2. Brokers offering on line broking and relationship management by providing and offering analysis and information to investors during broking and non-broking hours based on their profile and needs, that is, customized services. 3. Brokers (now e-brokers) will offer value management or services such as initial public offerings on line, asset allocation, portfolio management, financial planning, tax planning, insurance services and enable the investors to take better and well-considered decisions. In the US, 82 per cent of the deals are done on line. The European on line broking market is expected to be of $8 billions and is likely to raise fivefold by 2002. In India, presently Internet trading can take place through the order routing system, which will route client orders to exchanges trading systems for execution of trades on stock exchanges (NSE and BSE). This will also require interface with banks to facilitate instant cash debit or credit and the depository system for debit or credit of securities. OBJECTIVES OF INTERNET TRADING • Increase transparency in the markets. • Enhance market quality through improved liquidity, by increasing quote continuity and market depth. • Reduce settlement risks due to open trades, by elimination of mismatches. • Provide management information system (MIS). • Introduce flexibility in system, to handle growing volumes easily and to support nationwide expansion of market activity. • Besides, through Internet trading three fundamental objectives of securities regulation can be easily achieved, these are: Investor protection, creation of a fair and efficient market and, reduction of the systematic risks. Other leading cities in stock market operations: Ahmadabad gained importance next to Bombay with respect to cotton textile industry. After 1880, many mills originated from Ahmadabad and rapidly forged ahead. As new mills were floated, the need for a Stock Exchange at Ahmadabad was realized and in 1894 the brokers formed quot;
The Ahmadabad Share and Stock Brokers' Association”. What the cotton textile industry was to Bombay and Ahmadabad, the jute industry was to Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta. After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares, which was followed by a boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and 1908. On June 1908, some leading brokers formed quot;
The Calcutta Stock Exchange Associationquot;
. In the beginning of the twentieth century, the industrial revolution was on the way in India with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company Limited in 1907, an important stage in industrial advancement under Indian enterprise was reached. Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies generally enjoyed phenomenal prosperity, due to the First World War. In 1920, the demure city of Madras had the maiden thrill of a stock exchange functioning in its midst, under the name and style of quot;
The Madras Stock Exchangequot;
with 100 members. However, when boom faded, the number of members stood reduced from 100 to 3, by 1923, and so it went out of existence. In 1935, the stock market activity improved, especially in South India where there was a rapid increase in the number of textile mills and many plantation companies were floated. In 1937, a stock exchange was once again organized in Madras - Madras Stock Exchange Association (Pvt.) Limited. (In 1957 the name was changed to Madras Stock Exchange Limited). Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with the Punjab Stock Exchange Limited, which was incorporated in 1936. Indian Stock Exchanges - An Umbrella Growth: The Second World War broke out in 1939. It gave a sharp boom, which was followed by a slump. But, in 1943, the situation changed radically, when India was fully mobilized as a supply base. On account of the restrictive controls on cotton, bullion, seeds and other commodities, those dealing in them found in the stock market as the only outlet for their activities. They were anxious to join the trade and numerous others swelled their number. Many new associations were constituted for the purpose and Stock Exchanges in all parts of the country were floated. The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited (1940) and Hyderabad Stock Exchange Limited (1944) were incorporated. In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and the Delhi Stocks and Shares Exchange Limited - were floated and later in June 1947, amalgamated into the Delhi Stock Exchange Association Limited. RANGE OF PRODUCT AND SERVICES: Market Size: Growth of Online Brokerage market: In five years of its existence in India, online broking has grown to account for a tenth of the total trading volumes. If the numbers are considered for only the retail segments, the growth is starker. Almost half of the Rs 5,000 crore-6,000 crore daily market volumes on the NSE are accounted for by non-retail entities such as foreign institutional investors, domestic institutions, mutual funds and arbitrage traders. Institutions aren't online customers anyway. Of the rest of the retail segment, current estimates suggest that online broking's reach is close to 30 per cent. As of September this year, there were 11.7 lakhs Internet trading accounts registered with the NSE, of which roughly 9.5 lakhs are unique users. It's still a small proportion of the estimated 3 crore Internet users in the country. As more surfers take to trading online, analysts expect their number to keep doubling every year until 30-40 per cent of India's overall trades are done online, as is the case in some mature Internet markets like South Korea's. The Internet's effect here has more to do with the bandwidth it has created for both brokers and clients. Banga, director of India bulls offers an example. quot;
Traders from Ajmer use our online platform. It would otherwise have been prohibitively loss-making to open a branch there.quot;
Thanks to the new channel, volumes are growing faster in the non-metros, where transparency is low in offline trading. quot;
These customers were made to pay higher charges by small brokers, since they weren't aware of the market rates,quot;
says Vikash Shankar of Sharekhan.com. That is one of the reasons why more than 60 per cent of Sharekhan’s online trading turnover comes from non-metros. Formation of the National Stock Exchange (NSE): With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high-powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit, and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others. Trading at NSE can be classified under two broad categories (a) Wholesale debt market and (b) Capital market. Wholesale debt market operations are similar to money market operations - institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc.There are two kinds of players in NSE: (a) Trading members and (b) Participants. Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility. Trading at NSE takes place through a fully automated screen-based trading mechanism, which adopts the principle of an order-driven market. Trading members can stay at their offices and execute the trading, since they are linked through a communication network. The prices at which the buyer and seller are willing to transact will appear on the screen. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member. NSE has several advantages over the traditional trading exchanges. They are as follows: • NSE brings an integrated stock market trading network across the nation. • Investors can trade at the same price from anywhere in the country since inter-market operations are streamlined coupled with the countrywide access to the securities. • Delays in communication, late payments and the malpractices prevailing in the traditional trading mechanism can be done away with greater operational efficiency and informational transparency in the stock market operations, with the support of total computerized network. Unless stock markets provide professionalized service, small investors and foreign investors will not be interested in capital market operations. And capital market being one of the major sources of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market system. Why people trust NSE? Unbiased: The National Stock Exchange of India (NSEIL) has been trusted by the securities markets for its unbiased independence and professionalism. The function of forecasting has become more meaningful as the information comes from a source, which is not only reliable but has no vested interest of its own in the market movements.Market Representation: NSE-MIBID/MIBOR is based on rates polled by NSE from a representative panel of 31 banks/institutions/primary dealers. Transparent: The reference rate is released to all the market participants simultaneously through various media, making it transparent with the aspiration of the market. Ensuing transparency helps the market participants to judge the market mood and the probable rate one is likely to encounter in the market. This information is useful not only to the banks but also to the issuers and investors. Reliable: The high level of co-relation between actual deals and the reference rate gives an indication of its reliability. The bootstrapping technique guards against the possibility of cartelization and of extreme observations influencing the mean Scientifically Computed: The methodology of quot;
Pollingquot;
with quot;
Bootstrappingquot;
is scientific and the values are generated through a system that has been extensively tested. The technique involves generating multiple data sets based on the rates polled with a dynamically determined number of iterations, identification of outliers, trimming the data set of its extreme values and computation of the mean and its standard deviation. Elimination of Noise: The trimming procedure is vulnerable to market manipulation of the rates due to the amount of sampling noise. Excessive trimming may lead to loss of information whereas no trimming may lead to excessive influence of the extreme values. To derive a true representative benchmark for the market NSE ensures that trimming at any point does not exclude more than 20% of the observation for the bid and for the ask rates. Consistency: The Exchange ensures that everyday the NSE-MIBID/MIBOR along with the respective standard deviations are disseminated to the market at 0955 (IST) for overnight rate and at 1215 (IST) for 14 day, 1 month and 3 month rates. Usage . DATA ANALYSIS AND INTERPRETATION Q1. In which of these Financial Instruments do you invest into? Financial Instrument Percentage of respondent Mutual Fund 75% Bond 16% Online trading 7% Derivative 2% interpretation This shows that although the mutual funds market is on the rise yet, the most favored investment continues to be in the Share Market. So, with a more transparent system, investment in the Stock Market can definitely be increased. Q2. Are you aware of online Share trading? Aware of online share trading Percentage of respondent Yes 72% No 28% interpretation With the increase in cyber education, the awareness towards online share trading has increased by leaps and bounds. This awareness is expected to increase further with the increase in Internet education. Q3. Heard about Sharekhan ltd.? Awareness of Sharekhan ltd. Percentage of respondent Yes 70% No 30% interpretation The pie chart showz that the brand image should be leveraged by the company to increase its market share over its competitor Q4. Do you know about the facilities provided by sharekhan ltd. Responses Percentage of respondent Yes 55% No 45% interpretation Although there is sufficiently high brand equity among the target audience yet, it is to be noted that the customers are not aware of the facilities provided by the company meaning thereby, that, the company should concentrate more towards promotional tools and increase its focus on product awareness rather than brand awareness. Q.5 Which company provide a less BROKARAGE rate ? Company Name Percentage of respondent Sharekhan ltd 44 HDFC 22 ICICI 34 INTERPRTETATION: 44% have respondent of Sharekhan ltd., 22% have respondent of HDFC, 34% have respondent of ICICI. Q. 6 Which company provide you a large number of product and services? Company Name Percentage of respondent Sharekhan ltd. 44% HDFC 22% ICICI 36% Q7 are u satisfied with the current level of brokerage Ans. Yes.62% No. 38% interpretation The pie chart accentuates the fact that strategic marketing has gone beyond meeting targets and generating profit volume it shows that all the competitor is striving hard not only to woo yhe customer but also to Make them brand loyal by generating customer satisfaction. Q8.How many of u do trading DAILY 32% WEEKLY 27% MONTHLY 23% YEARLY 18% Interpretation: In spite of the huge returns that the share market promises, we see that there is still a dearth of active traders and investors. This is because of the non – transparent structure of the Indian share market and the skepticism of the target audience that is generated by the volatility of the stock market. It requires efficient bureaucratic intervention on the part of the Government. Q.9. According to your perspective which investment gives you maximum return? (1) Share market 20% (2) Mutual funds 35% (3) Purchasing insurance policy 45% Interpretation As of today people believe in secured investment with no risk & high return. So insurance policy are the best option for them as they give good return after a period of time .Share market has also come up in a big way though the risk factor is a bit too high despite good return. Represent a pie chart Q.10 USER OF DEMAT ACCOUNT SHAREKHAN 41% HDFC 28% ICICI 31% Interpretation As compare to other companies dealing in stock sharekhan has 41% of user account while hdfc has 28% and icici has 31% SUGGESTIONS 1. MORE BRANCHES – Need to open more branches to be a topper in market Because it has allow distribution network .2. LESS TIME – They should try to make some arrangements to reduce account opening time by verifying documents at branch it selves. 3. LINK-BANK A/Cs – Linked as many accounts as client wants to its online account. 4. NEW BANKS IN THE KITTY – Need to tie up with major banks like SBI, Allahabad Bank, Bank of Baroda etc. 5.CUSTOMER SATISFACTION – The company should focus on the customer satisfaction not on just taking money from their pocket. 7.CONTROLLED BRANCHES – The company would have to make some arrangements to control the branches and make standardized procedures for all of them for their better control and performance appraisal.  Commitment should be equalized for every person.  Provide the facility of free demonstrations for all.  Improvement in the opening of De-mat & contract notice procedure is required.  There should be a limited number of clients under the relationship manger. So that he can handle new as well as old customer properly.  Some promotional activities are required for the awareness of the customer.  People at young age should be encouraged to invest in stock market.  Seminars should be held for providing information to prospective and present CUSTOMER LIMITATIONS • Lack of awareness of capital market: Since the area is not known before it takes lot of time in convincing people to start investing in shares primarily in IPO’s. • Some people are comfortable with traditional system: As people are doing trading from there respective brokers, they are quite comfortable to trade via physical form of paper. • Lack of Techno Savvy people and poor internet penetration: Since most of the people are quite experienced and also they are not techno savvy. Also Internet penetration is poor in India. • Some respondents are unwilling to talk: Some respondents either do not have time or willing does not respond, as they are quite annoyed with the phone call. • Inaccurate Leads: Sometimes leads are provided which had error in it, which varies from only 5-digit phone number to wrong phone number • Misleading concepts: Some people think that as all the shares are in electronic form and they don’t have any physical proof. Sometimes this leads to a great misconception of the entire process. • The time constraint was one of the major problems. • The study is limited to the different schemes available under the Demat account selected. • The lack of information sources for the analysis part. • Geographical locations. • Extreme variability in MARKET. CONCLUSION On the basis of the study it is found that Sharekhan Ltd is better services provider than the other stockbrokers because of their timely research and personalized advice on what stocks to buy and sell. Sharekhan Ltd. provide the facility of Trade tiger as well as relationship manager facility for encouragement and protect the interest of the investors. It also provides the information through the internet and mobile alerts that what IPO’s are coming in the market and it also provides its research on the future prospect of the IPO. Study also concludes that people are not much aware of commodity market and while it’s going to be biggest market in India. The company should also organize seminars and similar activities to enhance the knowledge of prospective and existing customers, so that they feel more comfortable while investing in the stock market. BIBLIOGRAPHY Websites: 1. www.Google.com 2. www.bseindia.com 3. www.nseindia.com 4. www.moneycontrol.com 5. www.sharekhan.com 6. www.icicidirect.com 7. www.5paisa.com 8. www.Indiabulls.com 9. www.hdfcsecurities.com 10. WWW.KARVY.COM NEWSPAPERS: 1. ECONOMIC TIMES 2. TIMES OF INDIA 3. FINANCIAL EXPRESS

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