Summer Training Project Report ON Introduction and Product & Services of Share khan Ltd.

Submitted in Partial fulfillment of requirement of award of MBA degree of GGSIPU, New Delhi

Submitted By NamePraveen Dubey Enrolment No- 11515603911 Semester/Batch- MBA (2011-13)

Northern India Engineering College (Affiliated to GGSIPU) FC-26, Shastri Park, Delhi-110053

Certificate

Acknowledgement
Expression of feelings by word makes them less significant when it comes to make statement of gratitude. With regard to my Project with Share Khan, New Delhi, I would like to thank each and everyone who offered help, guidelines and support whenever required. I am extremely grateful to my college guide, Mr. D.K. Gupta (H.O.D) a n d a l l th e f a c u l t y me mb e r o f my c o l l e g e f o r t h e i r v a l u a b l e s u g g e s t io n s a n d guidance. I express my deep sense of gratitude to my company mentors, Mr. Jaipal Singh (Assistant Manger) wi t h o u t w h o s e s up p o r t a n d c o o p e r a t i o n t h i s p r o j e c t c o u ld n o t have been completed successfully. L a s t , b u t n o t t he l e a s t my h e a r t f e l t l o v e f o r my p a r e n t s a n d m y f r i e n d s , wh os e constant support and blessings kept me enthusiastic throughout this project.

Praveen Dubey

S.no. Topic 1. 2. 3. Introduction of Sharekhan Ltd Introduction to stock market Company profile a) Work structure 4. 5. Product & services Research methodology a) Findings b) Suggestions c) Limitations d) Conclusion 6. Analysis Data collection method 7. 8. 9. Findings & conclusion References/ Bibliography Annexure

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CHAPTER:- 1
Introduction
The money we earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment. One may invest in: Physical assets like real estate, gold/ jewellery, commodities etc. and/or Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance/provident/pension fund etc. or securities market related instruments like shares, bonds, debentures etc. Securities market has essentially three categories of participants, namely the issuer of securities investors in securities and the intermediaries, and two categories of products, namely the services of the intermediaries, the securities including derivatives. The securities market has two interdependent and inseparable segments, the new issues (primary market) and the stock (secondary market). The primary market provides the channel for sale of new securities while the secondary market deals in securities previously issued. An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers Association at Bombay in 1875, the precursor of the present day Bombay Stock Exchange. This was followed by the formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. Sharekhan is one of the leading retail brokerage of SSKI Group which was running successfully since 1922 in the country. It is the retail broking arm of the Mumbaibased SSKI Group, whichhas over eight decades of experience in the stock broking business. Sharekhan offers its customers a wide range of equity related services including trade execution on BSE, NSE, Derivatives, depository services, online trading, investment advice etc.

CHAPTER:- 2 INTRODUCTION TO STOCK MARKET

The emergence of stock market can be traced back to 1830. In Bombay, business passed in the shares of banks like the commercial bank, the chartered mercantile bank, the chartered bank, t h e o r i e n t a l b a n k and the old bank of Bombay and shares of cotton p r e s s e s . I n C a l c u t t a , Englishman reported the quotations of 4%, 5%, and 6% loans of East India Company as well as the shares of the bank of Bengal in 1836. This list was a further broadened in 1839 when the Calcutta newspaper printed the quotations of banks like union b a n k a n d A g r a b a n k . I t a l s o quoted the prices of business ventures like the Bengal bonded warehouse, the Docking Company and the storm tug company. B e t w e e n 1 8 4 0 a n d 1 8 5 0 , o n l y h a l f a d o z e n b r o k e r s e x i s t e d f o r t h e l i m i t e d b u s i n e s s . B u t during the share mania of 186065, the number of brokers increased considerably. By 1860, the number of brokers was about 60 and during the exciting period of the American Civil war, their number increased to about 200 to 2 50. The end of American Civil war brought disillusionment and many Failures and the brokers decreased in number and prosperity. It was in those trouble 7

sometimes between 1868 and 1875 that brokers organized an informal association and finally as recited in the Indenture constituting the Articles of Association of the Exchange. On or about 9th day of July,1875, a few native brokers doing brokerage business in shares and stocks resolved upon forming in Bombay an association for protecting the character, status and interest of native share and stock brokers and providing a hall or building for the use of the Members of such association. As a meeting held in the broker Hall on the 5th day of February, 1887, it was resolved to e x e c u t e a f o r m a l d e a l o f association and to constitute the first managing committee a n d t o appoint the first trustees. Accordingly, the Articles of Association of the Exchange and the Stock Exchange was formally established in Bombay on 3rd day of December, 1887. The Associations now known as The Stock Exchange. The entrance fee for new member was Re.1 and there were 318 members on the list, when t h e e x c h a n g e w a s c o n s t i t u t e d . T h e n u m b e r s o f m e m b e r s i n c r e a s e d t o 3 3 3 i n 1 8 9 6 , 3 6 2 i n 1916and 478 in 1920 and the entrance fee was raised to Rs.5 in 1877, Rs.1000 in 1896, Rs.2500 i n 1 9 1 6 a n d R s . 4 8 , 0 0 0 i n 1 9 2 0 . A t p r e s e n t t h e r e a r e 23 Recognized stock exchanges with about 6000 stock Brokers. Organization structure of stock exchange varies.14 stock exchanges are organized as public limited companies, 6 as companies limited by guarantee and 3 are non-profit voluntary organization. Of the total of 23, only 9 stock exchanges have been permanent recognition. Others have to seek recognition on annual basis. These exchange do not work of its own, rather, these are run by some persons and with the help of some persons and institution. All these are down as functionaries on stock exchange.

These are: i. Stock ii. Sub-broker iii. Market makersi v . iv.Portfolio consultants etc. 1. Stockbrokers: Stock brokers are the members of stock exchanges. These are the persons who buy, sell or deal in securities. A certificate of registration from SEBI is mandatory 8

to act as a broker. SEBI can impose certain conditions while granting the certificate of registrations. It is obligatory for the person to abide by the rules, regulations and the buy-law. Stock brokers are commission broker, floor broker, arbitrageur etc. I n 1 9 1 6 a n d R s . 4 8 0 0 0 i n 1 9 2 0 . A t p r e s e n t t h e r e a r e 23 recognized stock exchanges with about 6000 stock brokers. 2. Sub-Broker A sub-broker acts as agent of stock broker. He is not a member of a stock exchange. He assists the investors in buying, selling or dealing in securities through stockbroker. The broker and sub-broker should enter into an agreement in which obligations of both should be specified. Sub-broker must be registered SEBI for a dealing in securities. For getting registered with SEBI, he must fulfill certain rules and regulation. 3. Market Makers: Market maker is a designate specialist in the specified securities. They make both bid and offer at the same time. A market maker has to abide by bye-law, rules regulation of the concerned stock exchange. He is exempt from the margin requirements. As per the listing requirement, a company has the paid-up capital is Rs.3 crore but not more than Rs. 5 Crore and having a commercial operation for less than 2 years should appoint a market maker at the time of issue of securities. 4. Portfolio consultants: A combination of securities such as stock, bonds and money market instruments is collectively called as portfolio. Whereas the portfolio consultants are the persons, firms or companies who advise, direct or undertake the management or administration of securities of funds on behalf of their clients. Traditionally stock trading is done through stock brokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone line, miss communication etc start growing in stock broker offices. Information technology helps stock brokers in solving these problems Online Stock Trading.

There are two different types of trading environments available for online equity trading.

1. Installable software based Stock Trading Terminals This trading environment requires software to be installed on investors computer. This software is provided by stock broker. A) Trade Tiger B) Fast Trade C) New Fast Trade 2. Web based trading application This type of trading environment doesnt require any additional software installation. They are like other internet websites which investor can access from around the world through normal internet connection. A) www.nowonline.in

Advantages of Stock Trading: Better returns

Actively trading stocks can produce better overall returns than simply buying and holding. Huge choice There are thousands of stocks listed on markets around the world. There is always a stock whose price is moving. Its just a matter of finding them. Familiarity The most traded stock are in the largest companies that most of us have heard of and understand- Microsoft, IBM, and Cisco etc.

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Disadvantages of Stock Trading: Leverage With a margined account the maximum amount of leverage available for stock trading is usually 4:1. Meaning a Rs. 25,000 could be trade up to Rs. 1, 00,000 of stock. This is pretty low compared to Forex trading or futures trading. Pattern Day Trader Rules It requires at least Rs. 25,000 to be held in a trading account if the trader completes more than 4 trades in a d 5 day period. No such rule applies to Forex trading or future trading. Need to Borrow Stock to Short Stocks are physical commodities and if a trader wishes to go short then the broker must have arrangements in place to borrow that stock from a shareholder until the trader close their position. This limits the opportunities available for short selling. Uptick Rule on Short Selling A trader must wait until a stock price tocks up before they can short sell it. Again there are no such rules in Forex trading or futures trading where going short are as easy as going long. Costs Online trading costs for stock trading are low they still add considerably to the costs of day trading.

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CHAPTER:- 3 Company Profile

Share khan is one of the leading retail brokerage of Citi Venture which is running successfully since 1922 in the country. Earlier it was the retail broking arm of the Mumbai-basedSSKI Group, which has over eight decades of experience in the stock broking business. Share khan offers its customers a wide range of equity related services including trade execution on BSE, NSE, Derivatives, depository services, online trading, investment advice etc.Earlier 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. 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. SSKIs 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 organizations revenue, with a daily turnover of over US$ 2million. 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. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks.

Mission:To educate and empower the individual investor to make better investment decisions through QUALITY ADVICE INNOVATIVE PRODUCTS and SUPERIOR SERVICE.

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WORK STRUCUTRE OF SHAREKHAN

Share khan 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 IndiaLtd, Spider Software Pvt. Ltd. to build its trading engine and content. The Citi Venture holds majority stake in the company. HSBC, Intel & Carlyle are the other investors. On April 17, 2002 Share khan 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 netbased 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.

Sharekhans ground network includes over 700+ Share shops in 130+ cities in India. The firms 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 jargonfree, 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 7 Lacs. While online trading currently accounts for just over 5 per cent of the daily trading in stocks in India, Share khan 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 firsts 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 Shoppers Stop. Finally, Share khan shifted hands and Citi venture get holds on it.

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CHAPTER:- 4 Product & Services

Equity/Cash Market Trading Trading is done according to the availability of the fund. Derivative Future Option IPO 4.Mutual Fund Currency NSEL (National Spot Exchange Limited) PMS (Portfolio Management System) Commodity MCX (Multi Commodity Exchange), and NCDX (National Commodity & Derivative Exchange)

Benefits: Free depository A/c Instant cash transfer Multiple bank option Dial-N-Trade Automated portfolio 24x7 Voice tool access to your trading account Live chat facility 15

Online customer service Buy/sell even single share Anytime ordering

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Sharekhan offers the following Services:1) 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 investors who is risk-averse and hence prefers to invest in stocks or who does not trade too frequently.

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.

2) SPEED TRADE
SPEED TRADE is an internet-based software application that enables you to buy and sell inan instant. It is ideal for active traders and jobbers who transact frequently during days session to capitalize on intra-day price movement.

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Features

Instant order Execution and Confirmation. Single screen trading terminal for NSE Cash, NSE F&O & BSE. Technical Studies. Multiple Charting. Real-time streaming quotes, tic-by-tic charts. Market summary (Cost traded scrip, highest clue etc. Hot keys similar to brokers terminal. Alerts and reminders. Back-up facility to place trades on Direct Phone lines. Live market debts.

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3) 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 Sharekhans dedicated phone lines 1800-22-7500, 3970-7500. Beside this, Relationship Managers are always available on Office Phone and Mobile to resolve customer queries. 4) SHARE MOBILE Share khan had introduced Share Mobile, mobile based software where one can watch Stock Prices, Intra Day Charts, Research & Advice and Trading Calls live on the Mobile. (As per SEBI regulations, buying-selling shares through a mobile phone are not yet permitted.) 5) PREPAID ACCOUNT Customers pay Advance Brokerage on trading Account and enjoy uninterrupted trading in their Account. Beside this, great discount are also available (up to 50%) on brokerage. Prepaid Classic Account: - Rs. 2000Prepaid Speed trade Account: - Rs. 6000 6) IPO ON-LINE Customers can apply to all the forthcoming IPOs online. This is quite hassle-free, paperless and time saving. Simply allocate fund to IPO Account, Apply for the IPO and Sit Back & Relax . 7) Mutual Fund Online Investors can apply to Mutual Funds of Reliance, Franklin Templeton Investments, ICICI Prudential, SBI, Birla, Sundaram, HDFC, DSP Merrill Lynch, PRINCIPAL and TATA with Share khan .

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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 team Sharekhan Value Line (a monthly publication with reviews of recommendations, stocks towatch 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 & Mutual Funds Distribution

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CHAPTER:- 5 RESEARCH METHODOLOGY

To fulfill these objectives i.e. to find out, Investors Behaviour towards Shares provided by Sharekhan Ltd, the researcher interacted with the Businessman, Bank Employees, Army Personnel who were investing in various financial products and services at that time. I visited almost 100 investors. Data collection method To achieve the primary data of 'Investors Behaviour towards Shares provided by Sharekhan Ltd. Investor's survey was conducted through a questionnaire. This questionnaire contains questions with 2 to 5 options.1. A pilot survey was conducted before finalizing the questionnaire.2. Data collection was also done with help of Personal Interviews. Interviews of investors with Sharekhan Ltd..3. After completion of survey, the data was analysed & conclusions were drawn.4. At the end of all the information was compiled in the form of a Project Report. SAMPLE AREA : Rohini SAMPLE SIZE : 100

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Data Analysis Question.1. Do you invest money ?

Invest Number of respondants 100 0

Yes No

Question.2.Where you have invest? Investment options Bank Govt. Securities Bonds Gold Insurance Property Shares IPO Mutual Funds Analysis: The above diagram shows that 6% respondents deposit their money in Bank, 8%respondents invest their money in Govt. Securities, 3% respondents invests in Bonds, 12%respondents invest in Gold, 15% respondents invests in Insurance, 26% invest in Property, 16% invests in Shares, 8% invest in IPOs and 6% invests in Mutual Funds respectively Question.3. Do you have D-mat A/c ? D-mat A/c No. of respondents Yes 95 No 5 Analysis: The above diagram shows that 95% respondents has d-mat accounts in differentcompanies and 5% respondents has not d-mat accounts with any company but they are willing toopen the d-mat accounts. 25 No. of Respondents 6 8 3 12 15 26 16 8 6

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Question.4. What is the source of your investment information ? Source No. of respondents Consultants 22 Friends 38 Family 12 Any other 28

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Analysis: This diagram depicts that 22% respondents said that they got information from consultants, 38%respondents said that they got information from their Friends, 12% respondents got informationfrom their family members and 28% respondents got information from other sources. Question.7. How much you interesting to invest in shares?
Capacity No. of respondents

Rs. 5000-50000 33 Rs. 50000-1 lac 37 Rs. 1 lac-2 lac Above 2 lacs 18 12

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Analysis: 33% respondents said that they can invest upto Rs.50000, 37% respondents said that theycan investing capacity above Rs.50000 but less than Rs.1lac, 18% respondents said that they caninvest above Rs.1 lac to Rs.2 lacs and 12% respondents has the investing capacity above Rs.2lacs.

Q.8 What is the duration of your investment ?

Duration 0-6 months No. of respondents 48

6 months- 1yr 22 1yr- 2 yrs Above 2 yrs 19 11

Analysis: This diagram shows that 48% respondents invest maximum for 6 months, 22%respondents investment period has 6months to 1 year, 19% respondents has investing capacity above 1 year but maximum for 2 years and 11% respondents has investing capacity more than 2years.

Q.9 In which you deal with your broker?

Trading No. of respondents Off-line On-line 12 88

Analysis: This diagram shows that 88% respondents deals in On-line trading and 12% respondentsdeals in off-line trading with Investment companies.

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Q.10 What type of investor you are?

Type Regular No. of respondents 55

Once in time 18 Sometimes 27

Analysis: The above diagram shows that 55% respondents has regular investor in share market,18% respondents said that they has invest Once in Time and 27% respondents said that they has invest sometime in share market.

Q.11. How much risk involved in share market? Risk No. of respondents High 67 Moderate 19 Low 14 Analysis: This diagram shows that 67% respondents said that there is high risk in market, 19%respondents said that there is risk factor is medium and 14% respondents said that there is low risk factor in the market. Q.12. Why you have your d-mat account with anyone?

Reasons Better service Easy available

No. of respondents 39 18

Near to operate 15 Any other 28

Analysis: 30

The above diagram shows that 39% respondents said that they have their d-mat account with their present company because they provide better services, 18% respondents said for easy.

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CHAPTER:FINDINGS After studying the data obtained from the respondents and other sources I am able to say following thing or various findings of my study are as follows. Sharekhan has a very good reputation in the minds of the investors as integral serviceprovider and offering a large variety of the services. Sharekhan is known by majority of thepublic for its services.. Its highly competitive manpower, latest technology, comprehensive infrastructure, and totalcustomer focus has positioned it to as emerging giant. All these factors have made it possibleto diversify its services to such a large extant and attracting a huge database of the investors. As far as Shares investor services and distribution of Shares is concerned, the response of investors towards share market is not so satisfactory. For an average investor the concept of Shares is like an irritating riddle, this is because sagas of US-64 and Morgan Stanley mayhave rendered a bad name to the Shares industry. Many of people dont know about various Shares provided by Sharekhan as a distributionhouse or Shares investing servicing. Those who know are not having adequate knowledge of various schemes and plans. Investors like to invest in the equity schemes and short term plans because they have risk taking ability and want quick returns on their investment. Investors want proper, fair and timely guidance for various investments because it is theirhard earned money and safety of the investment is the major issue.

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SUGGESTIONS 1) FOR COMPANY Besides focusing on the weakness, companies should try to remove these shortcomings.Although Sharekhan is a leader at this point of time but with the entrance of so many groups inIndia, its supremacy can be challenged by any new entrant at any times so many challenge beforethe companies is to continuously innovate, keep the old ones happy because the cost of acquiringa new customer is much higher than the cost of retaining the old one (nearly 5 times).Customer services during before and after the transaction should be of world class andcompanies should embrace the latest technology to serve the customers because it reduces thecost. SEGMENT THE CUSTOMERS:Understanding the different needs of different customersand serving each customer individually i.e. mass customization should be the approach of thecompany. POSITION THE SERVICE IN THE MARKET PLACE :Customer should be aware of thecost and benefits of different services. This is the strategy on which different cos. Complete like value for money, convenience etc. it should serve like a competitive advantage for the company. CREATING A COMPETITIVE POSITION :Company should know its strengths as well asits weakness and accordingly try to take a position at which it can sustain. ANTICIPATING COMPETITIVE RESPONSE :Before embarking on a specific plan of action, management should consider the possibility that one or more of the competitors mightpursue the same market position, or any exiting competitors may feel threatened by the newstrategy and take steps to reposition its own service so as to complete more effectively.

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CHANGING PERCEPTION THOUGH ADVERTISING :Improving product features andcorrecting weakness may be expensive. Sometimes, however weaknesses are perceptual ratherthan and real and hence can be changed through advertising.Creating and maintaining valued relationship with customers : Realizing the full profit potential of a customer relationship. Rewarding frequent users of the services. Rewarding value of use, not just frequency. UNDERSTANDING THE DEMAND PATTERN :According to the changes in demand of the product, following strategies may be followed : Product variations Modifying the timings and location of the delivery Pricing strategies Communications efforts CUSTOMER LOYALTY :If you currently retain 70 percent of your customers and you start a program to improve that to 80 percent, youll add an additional 10 percent to your growth rate. Particularly because of the high cost of landing new customers versus the highprofitability of a loyal customer base, you might want to reflect upon your current businessstrategy. USE COMPLAINTS TO BUILD BUSINESS :-

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When customers are not happy with your business they usually wont complain to you instead, theyll probably complain to just everyone else they know and take their business to your competition next time. Thats why an increasing number of businesses are making follow-up calls or mailing satisfaction questionnaires after the sale is made. They find that if they promptly follow up and resolve a customers complaint, the customer might be even more likely to do business then the average customer who didnt have a complaint. In many business situations, the customer will have many more interactions after the sale with technical, services, or customer support people than they did with the sales people. So if youre serious about retaining customers or getting referrals, these interactions are the ones that arereally going to matter. They really should be handled with the same attention and focus that salescalls get because in a way they are sales calls for repeat business.Building customers loyalty will be a lot easier if you have a loyal workforce- not at all agiven these days. It is especially important for you to retain those employees who interact withcustomers such as sales people, technical support, and customer-services people. Manycompanies give a lot of attention to retaining sales people but little to support people. I have beenfortunate to have the same great people in customers services for years and the compliments from customers make it clear that they really appreciate specific people in our service function. The increasing trend today is to send customer-service and technique- support calls intoqueue for the next available person. This builds no personal ;loyalty and probably lass loyalty for the firm. Before you go this route, be sure this is what your customers prefer. Otherwise Id assign a specific support person to every customer. One last thing dont tell your customers your800 line phone number is for orders only. 2) FOR INVESTORS Moses gave to his followers 10 commandments that were to be followed till eternity. Theworld of investments too has several ground rules meant for investors who are novices in theirown right and wish to enter the myriad world of investments. These come in handy for there isevery possibility of losing what one has if due care is not taken. ASSESS YOURSELF: Self assessment of ones needs; expectations and risk profile is of prime

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importance failing which, one will make more mistakes in putting money in right places thanotherwise. One should identify the degree of risk bearing capacity one has and also clearly statethe expectations from the investments. Irrational expectations will only bring pain.Try to understand where the money is going: It is important to identify the nature of investmentand to know if one is compatible with the investment. One can lose substantially if one picks thewrong kind of Shares. In order to avoid any confusion it is better to go through the literature suchas offer document and fact sheets that Shares companies provide on their funds.Don't rush in picking funds, think first: one first has to decide what he wants the money for and itis this investment goal that should be the guiding light for all investments done. It is thus important to know the risks associated with the fund and align it with the quantum of risk one iswilling to take. One should take a look at the portfolio of the funds for the purpose. Excessiveexposure to any specific sector should be avoided, as it will only add to the risk of the entireportfolio. Shares invest with a certain ideology such as the "Value Principle" or "GrowthPhilosophy". Both have their share of critics but both philosophies work for investors of differentkinds. Identifying the proposed investment philosophy of the fund will give an insight into thekind of risks that it shall be taking in future. INVEST, DONT SPECULATE: A common investor is limited in the degree of risk that he iswilling to take. It is thus of key importance that there is thought given to the process of investment and to the time horizon of the intended investment. One should abstain fromspeculating which in other words would mean getting out of one fund and investing in anotherwith the intention of making quick money. One would do well to remember that nobody canperfectly time the market so staying invested is the best option unless there are compellingreasons to exit. Dont put all the eggs in one basket: This old age adage is of utmost importance. No matter what the risk profile of a person is, it is always advisable to diversify the risks associated. So putting ones money in different asset classes is generally the best option as it averages the risks in each category. Thus, even investors of equity should be judicious and invest some portion of theinvestment in debt. Diversification even in any particular asset class (such as equity, debt) isgood. Not all fund managers have the same acumen of fund management and with identificationof the best man being a tough task, it is good to place money in the hands of several fundmanagers. This might reduce the maximum return possible, but will also reduce the risks. 36

BE REGULAR: Investing should be a habit and not an exercise undertaken at ones wishes, if one has to really benefit from them. As we said earlier, since it is extremely difficult to knowwhen to enter or exit the market, it is important to beat the market by being systematic. The basicphilosophy of Rupee cost averaging would suggest that if one invests regularly through the upsand downs of the market, he would stand a better chance of generating more returns than themarket for the entire duration. The SIPs (Systematic Investment Plans) offered by all funds helpsin being systematic. All that one needs to do is to give post-dated cheques to the fund andthereafter one will not be harried later. The Automatic investment Plans offered by some fundsgoes a step further, as the amount can be directly/electronically transferred from the account of the investor. DO YOUR HOMEWOK: It is important for all investors to research the avenues available tothem irrespective of the investor category they belong to. This is important because an informedinvestor is in a better decision to make right decisions. Having identified the risks associated withthe investment is important and so one should try to know all aspects associated with it. Askingthe intermediaries is one of the ways to take care of the problem. FIND THE RIGHT FUNDS: Finding funds that do not charge many fees is of importance, asthe fee charged ultimately goes from the pocket of the investor. This is even more important fordebt funds as the returns from these funds are not much. Funds that charge more will reduce theyield to the investor. Finding the right funds is important and one should also use these funds fortax efficiency. Investors of equity should keep in mind that all dividends are currently tax-free inIndia and so their tax liabilities can be reduced if the dividend payout option is used. Investors of debt will be charged a tax on dividend distribution and so can easily avoid the payout options. KEEP TRACK OF YOUR INVESTMENTS: Finding the right fund is important but evenmore important is to keep track of the way they are performing in the market. If the market isbeginning to enter a bearish phase, then investors of equity too will benefit by switching to debtfunds 37

as the losses can be minimized. One can always switch back to equity if the equity marketstarts to show some buoyancy. LIMITATIONS Though special care was taken to find out realistic picture of the present scenario for what theresearch was conducted still the study may suffer from some drawbacks. These drawbacks maybe due to following reasons : The questionnaire was exclusively close ended, so respondents might not be able to giveexact facts what they wanted because they were having only limited choice. Some respondents may have distorted the figures / facts or may have not disclosed the trueinformation because of the hesitation to tell the right data. No tool for the cross-checking of the facts / figures was employed. As most of the times respondents were busy and were unable to spend a considerable amount of time. So they may not have been able to give the exact figures / facts. Despite a great care was taken to choose sample size and sample unit, it might not be accurate to my desire or perception.

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CONCLUSION The basic objective of Shares is to provide a diversified portfolio so as to reduce the risk in investments at a lower cost. The Shares industry worldwide is based on this premise. Investors who take up Shares route for investments believe that their risk is minimized at lower costs, and they get an optimum portfolio of securities that match their risk appetite. It is unfortunate that the fund managers are not taking due care for minimizing the risk and are in a race to post higher and higher returns during the phase of bull-run. They should understand that the investors forget the high returns posted in any specific period very soon but they take hell lot of time to forget the burns they get during periods of losses. Hence for maintaining the confidence of the retail investors it is very important to control wild fluctuations in the NAVs. Poor performance, poor servicing to clients and failure of third party service providers, are the three major risk factors identified in the survey. These are also going to be crucial in a rapidly growing competitive scenario. Under this setting, it is not just growth that should be the focus area but also better management of all risks and hence, AMCs would do well to keep the investor and his interest in mind before taking any decision.

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BIBLIOGRAPHY

www.google.com www.sharekhan.com Accounting Research (Spring). The Manager's Guide to Financial Analysis. Kothari, C. (2005). Resaerch Methodology (2nd Edition ed.). New Delhi: New AgeInternational Pvt.Ltd M.Y.Khan. (2007). Financial Management. Indian Money Market: Market Structure, Covered Parity and Term Structure, ICFAI Journalof Applied Finance 3(2), July 1997

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QUESTIONNAIRE Q.1. Did you invest your money? a) Yes b) No Q.2. Where you have invest ? a) Bank b) Govt. Securities c) Bonds d) Gold e) Insurance f) Property g) Shares h) IPO Q.3. Do you have d-mat account? a) Yes b) No Q.4 What is the source of your investment information? a) Consultants b) Friends c) Family d) Any Other Q.5 In which company you have your d-mat account? a) Sharekhan b) Indiabulls c) Angel broking d) Kotak e) religare f) Any Other Q.6.Where you got information about Sharekhan? a) Newspaper b) Magazine c) Friends 41

d) Local Channel Q.7 How much you interesting to invest in shares? a) Rs.5000-50000 b) Rs.50001-1lac c) Rs.1lac-2 lac d) Above 2 lac

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Q.8 What is the duration of your investment ? a) b) c) d) 0-6months 6 months-1 year 1yr-2yr Above 2 yr

Q.9 In which you deal with your broker? a) Online b) Off-line Q.10 What type of investor you are? a) Regular b) Moderate c) Low Q.12 Why you have your d-mat account with anyone? a) b) c) d) Better service Easy available Near to operate any other

Q.13 Are you updated with information relating to your investing pattern? a) Yes b) No Q.14 Did you face any problem dealing with broker? a) Yes b) No Q.15 What type of problem you faced? a) b) c) d) Brokerage Up dation better service any other

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List of abbreviations
ADRs - American Depository Receipts AI - Approved Intermediary AMC - Asset Management Company ATM - At-the-Money BOLT - Bombay Online Trading BSE - Bombay Stock Exchange of India Ltd. CDSL - Central Depository Services (India) Ltd. CM - Clearing Members CRISIL - Credit Rating Information Services of India Ltd. DCA - Department of Company affairs DEA - Department of Economic Affairs DIP - Disclosure and Investor Protection DMA - Direct Market Access DP - Depository Participant F&O - Futures and Options FIIs - Foreign Institutional Investors GDRs - Global Depository Receipts ICSE - Inter-connected Stock Exchange of India Ltd. ICICI - Industrial Credit & Investment Corporation of India Ltd. IDBI - Industrial Development Bank of India IEPF - Investor Education & Protection fund IISL - India Index Services & Products Ltd. IPO - Initial Public Offer ITM - In-the-Money MCX - Multi Commodity Exchange of India Ltd. NAV - Net Asset Value NEAT - National Stock Exchange Automated Trading NCDEX - National Commodity and Derivatives Exchange India NSCSL - National Securities Clearing Corporation of India Ltd. NSDL - National Securities Depository Ltd. NSE - National stock exchange of India Ltd. OTM - Out-of the-Money RBI - Reserve Bank of India SAT - Securities Appellate Tribunal SEBI - Securities and Exchange Board of India SLB - Securities Lending & Borrowing SMAC - Secondary Market Advisory Committee S&P - Standard and Poor 44

CHAPTER:- 6 Indian Stock Market-An Introduction Mark Twain once divided the world into two kinds of people: those who have seen the famous Indian monument, the Taj Mahal, and those who haven't. The same could be said about investors. There are two kinds of investors: those who know about the investment opportunities in India and those who don't. India may look like a small dot to someone in the U.S., but upon closer inspection, you will find the same things you would expect from any promising market. Here we'll provide an overview of the Indian stock market and how interested investors can gain exposure.
The BSE and NSE

Most of the trading in the Indian stock market takes place on its two stock exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started trading in 1994. However, both exchanges follow the same trading mechanism, trading hours, settlement process, etc. At the last count, the BSE had about 4,700 listed firms, whereas the rival NSE had about 1,200. Out of all the listed firms on the BSE, only about 500 firms constitute more than 90% of its market capitalization; the rest of the crowd consists of highly illiquid shares. Almost all the significant firms of India are listed on both the exchanges. NSE enjoys a dominant share in spot trading, with about 70% of the market share, as of 2009, and almost a complete monopoly in derivatives trading, with about a 98% share in this market, also as of 2009. Both exchanges compete for the order flow that leads to reduced costs, market the order flow that leads to reduced costs, market efficiency and innovation. The presence of arbitrageurs keeps the prices on the two stock exchanges within a very tight range.
Trading Mechanism

Trading at both the exchanges takes place through an open electronic limit order book, in which order matching is done by the trading computer. There are no market makers or specialists and the entire process is order-driven, which means that market orders placed by investors are automatically matched with the best limit orders. As a result, buyers and sellers remain anonymous. The advantage of an order driven market is that it brings more transparency, by displaying all buy and sell orders in the trading system. However, in the absence of market makers, there is no guarantee that orders will be executed. 45

All orders in the trading system need to be placed through brokers, many of which provide online trading facility to retail customers. Institutional investors can also take advantage of the direct market access (DMA) option, in which they use trading terminals provided by brokers for placing orders directly into the stock market trading system.
Settlement Cycle and Trading Hours

Equity spot markets follow a T+2 rolling settlement. This means that any trade taking place on Monday, gets settled by Wednesday. All trading on stock exchanges takes place between 9:55 am and 3:30 pm, Indian Standard Time (+ 5.5 hours GMT), Monday through Friday. Delivery of shares must be made in dematerialized form, and each exchange has its own clearing house, which assumes all settlement risk, by serving as a central counterparty.
Market Indexes

The two prominent Indian market indexes are Sensex and Nifty. Sensex is the oldest market index for equities; it includes shares of 30 firms listed on the BSE, which represent about 45% of the index's free-float market capitalization. It was created in 1986 and provides time series data from April 1979, onward. Another index is the S&P CNX Nifty; it includes 50 shares listed on the NSE, which represent about 62% of its free-float market capitalization. It was created in 1996 and provides time series data from July 1990, onward.
Market Regulation

The overall responsibility of development, regulation and supervision of the stock market rests with the Securities & Exchange Board of India (SEBI), which was formed in 1992 as an independent authority. Since then, SEBI has consistently tried to lay down market rules in line with the best market practices. It enjoys vast powers of imposing penalties on market participants, in case of a breach.

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Why a customer should choose Sharekhan Ltd. 1) Experience SSKI has more than eight decades of trust and credibility in the Indian stock market. In the AsiaMoney 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 beenproviding institutuonal-level research and broking services to individual invcestors. 2) Technology With our online trading account you can buy and sell shares in an instant from any PC with aninternet connection. You will get access to our powerful online trading tools that will help youtake complete control over your investment in shares. 3) Accessibility Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION servies for investors.These services are accessible through our centres across the country (Over 588 locations in 148cities) over the internet (through the website www.sharekhan.com) as well as over the VoiceTool. 4) Knowledge In a business where the right information at the right time can translate into direct profits, you get access to a wide range of information on our content-rich portal, sharekhan. You will also get auseful set of knowledge-based tools that will empower you to take informed decisions. 5) Convenience You can call our Dial-N-Trade number to get investment advice and execute your transactions.We have a dedicated call-centre to provide this service via a Toll Free Number 1800-22-7500 & 1800-22-7050 from anywhere in India. 6) Customer Service Our customer service team will assist you for any help that you need relating to transactions,billing, demat and other queries. Our customer service can be contracted 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 technicalresearches. Our analysts constantly track the pulse of 47

the market and provide timely investmentadvice to you in the form of daily research emails, online chat, printed reports and SMS on yourmobile phone.

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SWOT Analysis
A SWOT analysis focuses on the internal and external environments, examining strengths andweaknesses in the internal environment and opportunities and threats in the external environment. STRENGTHS 1) Services As a product Sharekhan is a extremely innovative product with very less cost.Services like online trading facility, institutional and domestic broking, customized researchreports with almost 80% efficiency etc give Sharekhan an edge over its competitors. Sharekhanprovides other support services that make retail investors more confident and assured with theirtrading. SMS alerts (allowing traders and investors to make the most of the availableopportunities), Softer, intangible features like imagery, equity driving preference. Through

efficient trading processes Investors can place their orders directly on the Internet, do all theinformation seeking and basically own the investing process. 2) Distribution Network Sharekhan with almost 250 branches spread across 123 cities beefedup by comprehensive online research, advice and transaction services. In near future expect tomake 200000+ retail customers being serviced through centralized call centre / web solution,60branches/semi branches servicing affluent/aggressive traders through highly skilled financialadvisors, 250 independent investment managers/franchisees servicing 50000 highly valuedclients, strong advisory role through Fundamental & technical research and new initiatives arebeing made in Portfolio Management Services & Commodities trading. 3) Marketing -

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Sharekhan is a product of SSKI, a veteran equities solutions company with overdecades of experience in the Indian stock markets. Sharekhan does not claim expertise in too many things. Share khans expertise lies in stocks and that's what it 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. 4) Products Companys product line is quite flexible in the sense that there is a product for every kind of investors. Also all the products cover all the loop holes of all the products offeredby the other competitors like low cost, user friendly online trading services etc. Weaknesses 1) Customer Satisfaction - As far as customer satisfaction goes Sharekhan has to tighten theirsocks. Many broking house catering to heavy investors or small segment of the market can afford to and does provide relationship managers for their customers, who can understand the tradingneeds of individual customers, and advise accordingly. However, a broking house likeSharekhan, which caters to the mass segment, is in no position to provide relationship managersfor individual customers. 2) Branding - Though the company has a efficient products but large part of investmentinterested population does not know the company. The most basic expectation for a trader orinvestor when one begins trading is that one must get timely delivery of shares and proceeds fromsale of shares. Also ones cash balances with the broker must be safe and secure. Though thisconfidence in the broker comes with time and experience, good and transparent practices alsoplay a major role in imbibing confidence in traders. 3) Competition from banks - Most of the banks due to good branding have the faith of thecustomers of their banking database. So they enjoy the liberty of huge database and customersfind it more reliable to trade their rather than with a unknown broker. Also banks like HDFCBank and ICICI Bank have the advantage of linking the trading accounts of their customers tosaving accounts. This makes trading easier, and at the same time a trader withdraws exactly asmuch money from his account as is needed to complete the trade. Similarly sales proceeds arecredited directly to saving account. 50

Opportunities
The external environment analysis may reveal certain new opportunities for profit and growth. 1) Ever-increasing market - After the NSE brought the screen based trading system stock markets are now more secured which has attracted lot of retail investors and the demand is increasing day by day. This has resulted in improved liquidity and heavy volumes ontransactions. Sharekhan is one of the early entrants here. As to how much it will roar and howswift it can swoop on the market, the future alone can answer such queries. Sharekhan has been amega player and is known for being a mover of stocks. It is also known for putting big dealsthrough and enjoys good networking with the FIIs. It has been dynamic enough to move with thetimes and capture the opportunities that the market throws up from time to time. 2) Improving Technology - In country like India technology is always improving which givesthe company a chance to keep on improving their product with time whereas for the small playerslike local brokers it will be difficult to keep the same pace as the changing technology. Also withSEBI lying down some strict guidelines small brokers are finding it harder to retain the customerswith no research department and small capital. The traditional business model is highlydependent on a large network of sub-brokers, and many established players may not have systems(technology, customer service, etc.) capable of directly servicing so many retail customers. 3) Unfulfilled needs of the customers - With so many competitors offering their products in themarket but no one is able to completely satisfy the customers. Some have the problem of lack of information or some were scared of volatility of the stock markets. Sharekhan has the opportunityto tap this unsatisfied set of customers and to make hold in the market. The Internet serves tobreak all barriers to information, as it offers an extremely hassle-free investing platform. And,Sharekhan hopes to fully utilize and capitalize on this platform. This original idea by Sharekhanitself was born out of the consumer's need for a more transparent, easy to understand andconvenient option of investing in stocks. 4) Education Level The education level in the country is improving year after year as far astechnology goes. With that the understanding of the stock market is also 51

increasing and a lot of retail investors are steeping in the markets which is being shown by increasing volumes,transactions and indices.

Threats
1) New Competitors - A lot of new competitors are trying to enter the market in this bullish runto taste the flavor of this cherry. This is creating a lot of competition for large players likeSharekhan and it is creating little confusion in the minds of the customers about the servicesprovided by the broker. Also many banking firms are entering into the market with hugeinvestment. Competitors like icici, kotak, hdfc, 5-paisa etc. are posing a lot of threats to thecompany. 2) Technology based business - Online trading is totally based on the technology which is quitecomplex. Typically, the technology solution has to start from the Internet front-end (or the screenthat you see when you begin trading). Then it needs to get into the 'middle tier' of risk management systems that assess data from banks and depository participants (DP), calculateclient risk at that point in time, and give the 'Go/No go' advice to the trade. So technology is akind of threat because unless until it is working properly it is good but internet is not that safe.Though a lot of cyber laws are being made but not yet executed.

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