SUMMER INTERNSHIP PROJECT REPORT

On

ANALYSIS OF CONSUMER BEHAVIOR TOWARDS SHARE TRADING IN INDIABULLS SECURITIES LTD

MANAGEMENT THESIS REPORT

FACULTY GUIDE: COMPANY GUIDE:

Prof. N !" #$%&r Mr. So$r&' A(&r)&*

S$+% ,,-! B.: Pr ,/&* S n(" 0NBRN121

TABLE OF CONTENTS
AC#NOWLEDGEMENT PREFACE E3ECUTIVE SUMMARY RESEARCH OBJECTIVE INTRODUCTION TO INDIABULLS. HISTORY AND OTHER CORPORATE MATTERS FUNCTIONAL AREAS OF INDIABULLS. INTRODUCTION TO THE CONCEPT OF SHARE TRADING FINDINGS AND ANALYSIS BIBLIOGRAPHY

AC#NOWLEDGEMENTS
I would like to express my sincere thanks to In! &+$**4 Securities Ltd., Delhi for giving me the opportunity to carry out the Summer Internship Program in their organization. he whole period spent with the organization has !een of

immense learning experience a!out the Indian Stock "arket. Preparing a pro#ect of such a kind is not an easy task in itself and I am sincerely thankful to all those people who help me lot, in preparing and completing this pro#ect. I am grateful to India!ulls Securities Ltd. who has given me this opportunity to carry out the pro#ect An&*.4 4 of Con4$%-r B-"&' or To)&r!4 S"&rTr&! n( n In! &+$**4 S-5$r , -4 L,!. $ study on investor%s perception their !ehavior a!out e&uities. I sincerely thank Mr. So$r&' A(&r)&* '$(P) for providing me this valua!le learning opportunity. *inally I would like to thank Mr. P .$4" J& n '+elationship

"anager) my pro#ect supervisor without his help and guidance the completion of this pro#ect would have !ecome difficult task.

PREFACE
,o professional curriculum is considered complete without work experience. It is well evident that work experience is an indispensa!le part of every professional course. In the same manner practical work in any organization is must for each an every individual, who is undergoing management course. -ithout the practical exposure one cannot consider himself as a &ualified capa!le manager. .ntering in the organization is like stepping into altogether a new world. $t first, everything seems strange and unheard !ut as the time passes one can understands the concept and working of the organization and there!y develop professional relationship. Initially it is felt that as if classroom study was irrelevant and it is useless in any concern working. /ut gradually it is realize that all fundamental !asic concepts studied are linked in one or other ways to the organization. /ut how and what can !e done with fundamentals depends upon the intellectual and applica!ility of an individual.

E3ECUTIVE SUMMARY Investing in e&uities in a market like India is speculative and involves risk that may !e greater than other types of investment strategies. /efore investing an Investor should !e careful enough a!out him investment decision to avoid erosion of wealth. $s seen in the recent times the volatility of market is more

detrimental to the retail investors as it seems to !e lucrative for speculative gains of short duration of time. 0ence an investor has to evaluate his options carefully for a prudent investment, keeping long1term horizon in mind. he report has tried to !ring out the parameters those are of paramount importance to general pu!lic dealing in an e&uity trading on day1to day and delivery !ase trading. he working methodology has !een discussed i.e. the data he

collection methods, sampling methods and the survey &uestionnaire methods.

&uestionnaire prepared is designed so as to cover a wide range of customer 2touch points3

he report given a view a!out the investors perception that what thy think while making investments in shares. $ sample of 45 people was selected randomly and survey was done as per the parameters of the &uestionnaire. he results of every parameter have !een

included in this report and shown graphically 'Pie 6harts, !ar graphs etc.) $ complete structure of the research design has !een included. $part from a!ove discussed points the !rief history of India!ulls Securities Ltd, its !usiness diversification and a !rief introduction a!out the concept of share trading.

RESEARCH OBJECTIVES
o study investor%s !ehavior towards different attri!utes such as risk, return li&uidity etc. of investment in .&uities. o study the issues and challenges that investors face while making investment in share market. o study the preferences and perceptions of investors regarding various financial products from the sta!le of In! &+$**4 Securities Ltd. so that the firm can !enefit from the findings of the report in launching any new investment product in future.

DATA COLLECTION
he data collected was a primary in nature no secondary data was used. Primary data was collected using structured &uestionnaire. he &uestionnaire has !een designed for the target group

to get the !est amount of data possi!le keeping in view the importance and authenticity of the information and convenience of the respondent. he selection of investor was predetermined in

nature Personal contacts were esta!lished to conduct a face1to1face interview. Interview was conducted under strict supervision to maintain the standards of the data collected.

R-4-&r5" D-4 (n
+esearch design is a specification of methods and procedures for ac&uiring the information we need to solve the pro!lems. +esearch design was adopted for the purpose of collection and analysis of data in a manner aimed at getting relevant information. It was conceptual structure within which research was conducted, collected, measured and analyzed.

R-4-&r5" I!-&
o know the market scene of trading and Investment in e&uities through India!ulls securities Ltd.

R-4-&r5" 6$-4, on
-hat is the market trend regarding investment7 -hat difficulties and challenges investors are facing while making investments7

R-4-&r5" S,&,-%-n,
2 o get an insight into the mind of investors regarding trading and investment in .&uities3 2 o get an insight into the mindset of investors regarding the importance assigned to different attri!utes such as risk, return, li&uidity etc. of various investment channels such as e&uities. In the report this tries to understand the investor%s !ehavior while trading.3 2 o study the preferences and perceptions of investors regarding various financial products from the sta!le of India!ulls Securities Ltd. so that the firm can !enefit from the findings of the report in launching any new investment product in future.3

RESEARCH METHODOLOGY

he methodology section is the !lue print for researcher activity and specifies !ow the investigator intents to study the people or descri!e social settings. In other words the methodology section make explicit the study desire and constitutes the 2how to do it3 phase. he pro#ect study has !een conducted !y collecting primary data only using structured &uestionnaire. ,o secondary data is used. I have put my !est possi!le effort to do this research and collect the necessary information to learn a!out this topic thoroughly.

SURVEY 6UESTIONNAIRE

,$".8 $DD+.SS8 P09,. ,:"/.+8

;. -here do you prefer to invest your money7 a) /ank Deposits !) Shares c) "utual *unds d) +eal estate e) Insurance Plans <. -hat are the factors, which attracts you for the investment7 a) 0igh +eturn c) Low +isk =. Do you prefer to invest in shares7 a) >es !) ,o !) "oderate +eturn d) "oderate +isk

?. If yes, out of following, which intermediating company would you go for7 a) @otak Securities c) I6I6I e) 9thers, please specify !) India!ulls Securities d) *ortis Securities

4. If India!ulls, -hat are the factors, which attract you to deal with India!ulls7

A. If 9thers, -hat are the factors, which attract you, please specify7

B. -hat attracts you to invest in Shares7 a) /rokerage c) .xposuresCloan !) .xpertise @nowledge d) /rand

D. 9n what !asis do you prefer to trade in shares7 a) Daily c) >early E. Does the companies profile matter for the investment decisions7 a) >es ;5. Do you re&uire the opinion of portfolio managers to manage your a) >es !) ,o investment7 !) ,o !) "onthly d) other, please specify

;;. -hat is the most important service parameter that you look for while trading7 a) Information c) Fuality ;<. $ny recommendation C Suggestion !) Speed d) 9ther

L % ,&, on4 of ,"- 4,$!.

o study share market is a very vast topic and the search is #ust limited to a small portion.

Due to the reluctant nature of the respondents it was not an easy task to collect relevant information from them. Sometime it was difficult to make the respondents understand the purpose of the survey. /usy schedule of the respondents was also a ma#or hindrance to esta!lish a contact with them. It may !e possi!le the information provided !y them is not true.

INTRODUCTION TO INDIABULLS

India!ulls is IndiaGs leading retail financial services company with over 272 *o5&, on4 in more than 7825 , -4. -hile our size and strong !alance sheet allow us to provide you with varied products and services at very attractive prices, our over 9211 C* -n, R-*&, on4" / M&n&(-r4 are dedicated to serving your uni&ue needs. India!ulls is lead !y a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides our clients with real1time service H <?CB access to all information and products. 9ur flagship In! &+$**4 Prof-44 on&* N-,)or: offers real1time prices, detailed data and news, intelligent analytics, and electronic trading capa!ilities, right at your finger1tips. his powerful technology is complemented !y our knowledgea!le and customer focused R-*&, on4" / M&n&(-r4. India!ulls offers a full range of financial services and products ranging

from .&uities to Insurance to enhance your wealth and hence, achieve your financial goals. India!ulls 6lient +elationship "anagers are availa!le to you to help with your financial planning and investment needs. o provide the highest possi!le &uality of service, India!ulls provides full access to all our products and services through multi1channels.

S&%--r G-"*&$,; R&< ' R&,,&n &n! S&$r&+" M ,,&*, friends got together to start the company. *or some years they worked in the oil field services industry. he idea to start their own

outfit on a technology platform was !orn in ;EEE when G&(&n B&n(& #oined the three IIT=D-*" -n( n--r4 who promoted the company. nothing small works. hese first generation entrepreneurs knew very well that

hey didn%t want to !uild a small !usiness which would get overnight success his idea was to

and shut downI rather they wanted to !uild a sustaina!le profita!le !usiness. target the huge untapped retail segment of the market. sound !usiness model, which was sustaina!le and profita!le.

he first task of course was to work out a hey soon realized the implicit

strength of their model. India was toying around with the idea of !rokerage getting done through the internet and clients directly managing their accounts. $round the middle of ;EEE, the core promoters had got together and ac&uired a shut down !rokerage firm from its promoters at that time. he whole idea was to get a !rokerage license from the stock exchange and a mem!ership of the stock exchange. In ;EEE1<555, there was dotcom !oom, there were a lot of dotcoms coming into !eing, lot of venture capitalists were funding the dotcoms !usiness !ut none of the dotcom had any revenue model so the scope of a dotcom !usiness was immense. India!ulls came into existence to take advantage of this. he three promoters got together and took over a defunct !rokerage company Or+ 4 S-5$r , -41 the whole idea was to get a !rokerage license and a mem!ership of the stock exchange. his !rokerage firm was restarted and it started making miniscule amount of revenue for the company J it !asically catered to the 0,Is 1 0igh ,et worth Individuals. Immediately after this the venture capitalists were contacted. In this there were several models, which were discussed including involving a strategic investor. Initially the company was promoted as a dotcom company. he promoters chose the famous C"&r*-4 S5")&+ %o!-*, which perfectly he idea was that since it he company thus had clear1cut addressed their need to have the !usiness on a technology platform. worked in other parts of the world, it would work here also. Profita!ility is the key to the entire thing.

revenue model. It was very clear in the minds of the promoters that revenue was very important. he emphasis on profita!ility was there from day one. India!ulls has !een profita!le for every financial year !eginning <55515; the only financial year it has not !een profita!le has !een ;EEE1<555. he company focused on the retail segment and used

Internet to exploit the massive scope in the retail segment.

he company also en#oyed the first

mover advantage, as at that time there was no company catering to the needs of retail segment through Internet S&%--r G-"*&$,; took over as chairman and 6.9, and now looks after sales, marketing and external relationships, while R&< ' R&,,&n, in the role of 6*9 and president, manages operations, finance and !ack office.

HISTORY AND OTHER CORPORATE MATTERS OVERVIEW

In! &+$**4 *inancial Services Limited was incorporated on Kanuary ;5, <555 as "Cs 9r!its Info ech Private Limited at ,ew Delhi under the 6ompanies $ct, ;E4A with +egistration ,o. 44 J ;5=;D=. he name of the 6ompany was changed to "Cs. In! &+$**4 *inancial Services Private

Limited on "arch ;A, <55; due to change in the main o!#ects of the 6ompany from Infotech !usiness to Investment H *inancial Services !usiness. It !ecame a Pu!lic Limited 6ompany on *e!ruary <B, <55? and the name of 6ompany was changed to "Cs. In! &+$**4 *inancial Services Limited. 6ompany was promoted !y ,"r-- -n( n--r4 fro% IIT D-*" , and has attracted more than +s.B55 million as investments from venture capital, private e&uity and institutional investors such as L," India Internet (entures L,!., ransatlantic 6orporation L,!., *arallon 6apital Partners, L.P., + + 6apital Partners L.P., and Infinity echnology rustee Pvt. L,!. and has developed

significant relationships with large commercial !anks such as 6iti!ank, 0D*6 /ank, :nion /ank, I6I6I /ank, $/, $m!ro /ank, Standard 6hartered /ank, Lord @rishna /ank and ILH*S. 6ompany and there su!sidiaries have facilities from the a!ove mentioned !anks and financial institutions aggregating to +s. ;BA5 million. 6ompanies head&uarters are co1located in "um!ai and Delhi, allowing it to access the two most important regions for Indian financial markets, the -estern region including "um!ai, rest of "aharashtra and Lu#aratI and the ,orthern region, including the ,ational 6apital erritory of Delhi, near!y cities, parts of 0aryana, :ttar Pradesh and Pun#a!I and he "arketing and Sales efforts

access the highly skilled and educated workforce in these cities.

are head&uartered out of "um!aiI with a regional head&uarter in DelhiI and its !ack office, risk management, internal finances etc. are head&uartered out of Delhi, allowing our 6ompany to scale these processes efficiently for the nationwide network. M& n O+<-5,4 of T"- Co%/&n. he main o!#ects to !e pursued !y the 6ompany on its incorporation are8 7. o hold investments in various step1down su!sidiaries for investing, ac&uiring, holding, purchasing or procuring e&uity shares, de!entures, !onds, mortgages, o!ligations, 4-5$r , -4 of any kind issued or guaranteed !y our 6ompany. 8. o provide financial consultancy servicesI to provide investment advisory services on the internet or otherwiseI provide financial consultancy in the area of personal and corporate financeI pu!lish !ooks and 6D +9"s and any other information related to the a!ove. >. o conduct the !usiness of sale, purchases, distri!ution and transfer of shares, de!ts, instruments and hy!rid financial instruments and to perform all related, incidental, ancillary and allied services. 2. o conduct depository participant servicesI to conduct de1materialization and re1

materialization of sharesI set up depository participant centers at various regions in India and to perform all related, incidental, ancillary and allied services. 9. o receive funds, deposits and investments from the pu!lic, Lovernment agencies, financial institutions and corporate !odiesI grant advances and loansI conduct advisory services related to !anking activities, pro#ect financing, funding of mergers and ac&uisition activitiesI fund management and activities related to money market operations.

?.

o carry on the !usiness of portfolio management services, investment advisory servicesI custodial servicesI asset management servicesI leasing and hire purchaseI mutual fund services and to act as !rokers of real estate and financial instruments.

0.

o carry on the !usiness of financingI provide lease and hire purchase servicesI to provide consultancy in the area of lease and hire purchase financing.

@.

o operate mutual fundsI receive funds from investorsI e&uity or de!t instrument research activity instrument in de!t andCor e&uity instruments.

S"&r-"o*!-r4 A(r--%-n, Shareholders $greement was entered into !y and among our 6ompany 'formerly 9r!is Infotech Private Limited), Infinity echnology rustee Private Limited as the trustee of Infinity ransatlantic 6orporation Limited he (6 Investors

(enture India *und, LNM In! & In,-rn-, V-n,$r-4 L % ,-! ,

'together the 2(6 Investors3) and the Promoters dated ,ovem!er <, <555.

invested an aggregate amount of R4. 81?;111;111 in our 6ompany for which they were issued 44,?<4 e&uity shares at an average price of +s. =,B;A.B= per e&uity share. Pursuant to a letter agreement 'the 2Letter $greement3) dated "ay <B, <55? !etween the parties to the Shareholders $greement, each of the (6 Investors have agreed not to enforce rights that have accrued to them !efore the said Letter $greements and have agreed that the Shareholders $greement, together with all the rights and o!ligation on the parties will stand terminated immediately upon the listing of the shares of our 6ompany and conse&uent to the listing, the rights of the Shareholders $greement, including the rights that have arisen prior to such termination shall !e terminated. $ copy of the Shareholders $greement and a copy of the Letter $greement terminating the Shareholders $greement are availa!le for inspection as material documents at the corporate offices of our 6ompany.

#-. Co%/-, , '- S,r-n(,"4 Diverse /ranch ,etwork /ou&uet of financial products and services

 $dvanced echnology team that delivers market leading product innovation Strong Sales and "arketing eams with continuous reinvestment and training Strong cross Selling 9pportunities Strong eam of .xperienced Promoters Leading Product innovation and marketing strategies -ell capitalized player, with strong !anking relationships and credit ratings $!ility to com!ine People H echnology in uni&ue ways Strong market presence and increased market share leads to virtuous cycle of growth and profita!ility

#-. B$4 n-44 S,r&,-( -4 Increase the num!er of 6lient +elationships 9ffer Diversified *inancial Products H Services J 6apture Lreater Share of -allet "ultiple 6hannels J .nhance 6ustomer .xperience and 9pportunities to interact with us +elationship "anager driven sales model, provide high &uality service and exploit cross1sell opportunities Low cost and highly scala!le !usiness /rokerage 9ffering 9nline $utomated 6hannel hird Party *inancial Products 9ffering.

FUNCTIONAL AREAS OF INDIABULLS he product range offered !y In! &+$**4 includes 7. 8. >. 2. EA$ ,. An&*.4 4 D-/o4 ,or -4 P-r4on&* Lo&n4 EA$ ,. An! D-r '&, '-

9.

In! &+$**4 R-4o$r5- L,!.

7. INDIABULLS EA$ ,. An&*.4 4. /uilding and maintaining your ideal portfolio demands o!#ective, dependa!le information. India!ulls .&uity $nalysis helps satisfy that need !y rating stocks !ased on carefully selected, fact1 !ased measures. $nd !ecause weGre not focused on investment !anking, we donGt have the same conflicts of interest as traditional !rokerage firms. ratings. -hat is India!ulls .&uity $nalysis7 $n .&uity +ating approach is o!#ective and easy to understand India!ulls .&uity $nalysis provides clients with an o!#ective stock rating system for more than 455M stocks $n un!iased approach to help in deciding which shares to !uy and sell. Includes third party opinions to facilitate more informed investing decisions. *eatures of India!ulls .&uity $nalysis his feature of .&uity $nalysis provides its clients in short and precise the company%s !ackground, stock price, asset class, ratings along with the = rd party opinions. *ollowing are the parameters8 9verview8 6ontains precise information a!out the industry 'cement, pharmaceutical, I , etc), current stock price, asset class 'large capI mid capI small cap) and 4< week high1low. i. ii. 6ompany !ackground Cdetails8 Services and products offered 6lient profile 6ore competency $chievements and its relative position 'market share) in the industry. .&uity +atings8 his o!#ectivity is an important difference in our

+atings are !ased on a set of parameters, which are as follows8 *undamentals 1 $ssessed on parameters like net profit margin and +9. '+eturn on .&uity).

(aluation 1 $ssesses the attractiveness of a particular stock. 0igher the current value of the company, lower is its future attractiveness. +isk 1 $ssessed on parameters like price volatility, li&uidity of the stock, de!tCe&uity ratio, etc. "omentum 1 $ssesses the potential of the stock to keep performing at a stronger than market level in the future. he more the num!er of !uyC!uy1hold recommendation the !etter the

momentum rating for the company. iii. 6urrent consensus opinion8

Perspective from the viewpoint of the $nalyst which are used to generate ratings for each company 'scrip wise). his includes the following8 hird party opinions 9nly for companies researched !y some analysts Parameters include /uy, /uyC0old, 0old, -eakC0old, Sell, ,o opinion iv. *undamental information 8

:nder this parameter the company%s share is compared with the industry and market which is !ased on the following parameters8 +evenue8 Income generated from sales of the product. "arket capital 8 ,um!er of shares N market price PriceCsale48 StockGs current price C revenue per share Profit margin'O)8 his parameter is an indicator of profita!ility which is calculated as8 ,et

earnings after taxesCrevenues +9. 'O) +eturn on .&uity 8 his is useful in comparing the profita!ility of a company to

other firms in the same industry and this calculated as8 ,et incomeCshareholder%s e&uity Long erm De!tC.&uity: $ measure of financial leverage indicating the proportion of e&uity

and de!t used !y the company to finance its assets.

v.

Peer analysis8 he Scrip is compared with it peers with respect to various parameters like revenue, growth

PC. and the analyst 6onsensus. his includes the following8 +evenue: Income generated from sales compared to its peers.

 Lrowth O8 Lrowth measured in terms of percentage which is compared to its peers in the same industry. PC.: P. +atio is calculated as the current market price of a share divided !y the earnings per share '.PS). 0igher PC. multiple would indicate the investor%s willingness to pay more for the stock relative to its earnings which is reflected in a high growth O. $nalyst consensus: he $nalyst views are mentioned under this category. vi. Lrowth expectations and valuation measures $nnual .PS rend 6urrent PC. multiples (aluing Potential Lrowth $nnual .PS rend8 .PS: he .PS is arrived !y dividing the net profit !y the num!er of shares in the company. he ratio shows the kind of price that investors are willing to pay for each rupee of earnings. India!ulls .&uity $nalysis provides the clients with a measure of the companies future profita!ility with the help of forecasted .PS, which is derived from historical data. It shows the trend of the annual .PS generated. 6urrent PC. multiples8 PC.: It measures the stock Pprice relative% to its earnings. P. +atio is calculated as the current market price of a share divided !y the earnings per share '.PS). It includes trailing data, which indicates last ? &uarters along with the estimated financials. 0ere the higher PC. multiple would indicate the investor%s willingness to pay more for the stock relative to its earnings which is reflected in a high growth O. It is useful to compare the PC. ratios of companies in the same industry, market, or against the companyGs own historical PC.. his explains the use of this ratio in case of peer analysis and the comparative analysis with respect to the industry and the market as a whole. (aluing Potential Lrowth8 P.L8 he P.L 'priceCearnings to growth) ratio is a tool that can help investors find undervalued and overvalued stocks. If P.L Q; 1 then market is pricing the stock to fully reflect the stockGs .PS growth.

his parameter is !ased on the following valuations8

 If P.L R ; 1 then the stock is possi!ly overvalued or that the market expects future .PS growth to !e greater than what is currently in the market. If the P.L S ; 1 it is a sign of a possi!ly undervalued stock or that the market does not expect the company to achieve the earnings growth that is reflected in the market. 8B D-/o4 ,or -4 India!ulls is a depository participant with the ,ational Securities Depository Limited and 6entral Depository Services 'India) Limited for trading and settlement of dematerialized shares. India!ulls performs clearing services for all securities transactions through its accounts. -e offer depository services to create a seamless transaction platform J execute trades through India!ulls Securities and settle these transactions through the India!ulls Depository Services. India!ulls Depository Services is part of our value added services for our clients that create multiple interfaces with the client and provide for a solution that takes care of all your needs. S60.D:L. 9* 60$+L.S ,SDL 6DSL

>. P-r4on&* Lo&n4. 9ffers the shortest route to a loan with minimum paperwork and procedures. -ith

.asymoney,

you can avail of easy loans for a minimum of +s.;5, 555 to a maximum amount of +s.;,55,555. *eatures of .asymoney are8 *lexi!le loan tenor of up to ? years 'i.e. ; month to ?D months). Loans availa!le from a minimum of +s.;5,555 up to a maximum of +s.;55,555. .asy monthly repayment through e&uated monthly installments '."I). "ediclaim Insurance !undled with every loan you avail. .asy documentation and &uick dis!ursal. >ou take today and you can pay it tomorrow with no penalties

Documents re&uired8 +esidence Proof Identity Proof Income Proof

2. E6UITY C DERIVATIVE .&uity /usiness caters8

 ,eeds of independent investors. $ctive traders ,on1+esident Indian ',+I) investors. India!ulls offers8 /roker assisted trade execution $utomated online investing $ccess to all IP9Gs. India!ulls offers the purchase and sale of securities, which includes .&uity, Derivatives and 6ommodities Instruments listed on ,ational Stock .xchange of India Ltd ',S.IL), .xchange, "um!ai '/S.) and ,6D.T. ypes of $ccounts India!ulls Signature $ccount 1 6omprehensive services including research and investing guidance for independent investors. Power India!ulls = India!ulls is dedicated to empower $ctive service and advanced trading technology. ,on1+esident Indian ',+I) Investor Services 1 -ith an extensive range of investment products, you will discover an unwavering commitment to helping you invest in India. $ll of this comes to you !acked !y your +elationship "anager availa!le to you <?xB. India!ulls is IndiaGs leading retail financial services company with 272 locations spread across 782 cities. 9ver 2211 6lient +elationship "anagers are dedicated to serving your uni&ue needs. Is complemented !y our knowledgea!le and customer focussed +elationship "anagers. Provides our clients with real1time service H <?CB access to all information and products. India!ulls offers a full range of financial services and products ranging from .&uities to Insurance to enhance your wealth and hence, achieve your financial goals. Post +egistration Services8 raders through personal he Stock

Deliver and receive che&ues and securities 9!tain market information Place orders Let access to IP9s via the /ook /uilding route as well as to all the fixed price issues.

Documents re&uired for trading account and D1"at $C6 <1passport size photograph. Photocopy of Income ax Permanent $ccount ,um!er 'P$,) 6ard 1 If you do not have P$,, then you would !e re&uired to give a declaration to that effect and fill form A5. Identity Proof 1 Photocopy of any of the following8 Passport P$, 6ard (oter ID Driving License +ation 6ard $ddress Proof 1 Photocopy of any one of Driving License C PassportC+ation 6ardC(oter 6ardC /ank Statement.

*eatures of Power India!ulls. 'It is a uni&ue offering !y the company which helps an investor to trade online). $n investor can avail this feature !y paying a fee of +s. B45I with this he can track all the listed scripts at ,S.. he features include8 Live Streaming Fuotes *ast 9rder .ntry ic !y ic Live 6harts echnical $nalysis

Live ,ews and $lerts .xtensive +eports for +eal1time $ccounting

9. In! &+$**4 R-4o$r5-4 L,! In! &+$**4 R-4o$r5-4 L,!, a ;55 per cent su!sidiary of India!ulls *inancial Services Ltd., has !een esta!lished with the o!#ective of evolving as an independent oil company over time. in the current ,.LP1A round. hrough its group companies, India!ulls is also engaged in real estate development. he company is in the process of developing modern commercial complexes in the heart of "um!ai. In! &+$**4 E4,&,-4 P', L,!. the real estate arm of India!ulls *inancial Services will set up an integrated township spread across ;55 acres in Sonepat, ;4 km from Delhi. he immediate short1term goal is to partner with oil companies who are willing to come to India and !id

INTRODUCTION AND CONCEPT OF SHARE TRADING rading in shares is old phenomena its regulation had !een started when securities contract act had !een formed in ;E4A. ransfer of resources from those with idle resources to others who

have a productive need for them is most efficiently achieved through the securities market. provides a channel for reallocation of savings to investments.

It

SECURITIES AND E3CHANGE BOARD OF INDIA DSEBIB is a regulatory governing !ody of security market. he S./I $ct ;EE< was enacted to empower S./I with statutory powers for8 Protecting the interests of investors in securities. Promoting the development of the securities market +egulating the securities market

Its regulatory #urisdiction extends over corporate in the issuance of capital and transfer of securities. It has powers to register and regulate all the market all market intermediaries and also to penalize them in case of violations of the provisions of the $6 , rules and regulations made there under. S./I has a full autonomy and authority to regulate and develop an orderly securities market. he share market can !e segmented in two parts one is Primary "arket another is Secondary "arket.

F n&n5 &* %&r:-, 5&n +- ! ' !-! n,o fo**o) n( fo$r 4$+=%&r:-,4. Pr %&r. M&r:-, It provides opportunity to issuers of securities government as well as corporate to raise resources to meet their re&uirements of investments. In this market companies issue fresh security sin exchange of funds through pu!lic issues or private placements. he market design for primary

market is provided in the provision of 6ompanies $ct, ;E4A which deals with issues, listing and allotment of securities. he investors have to apply the shares !y filling the application form issue

!y the company along with the application money. $ccording to Disclosure and Investor Protection guidelines of S./I, ;EE< company has to disclose all the necessary information regarding pricing of issues, listing re&uirements, disclosure norms lock1in1period for promoters contri!ution, contents of offer documents pre and post issue o!ligations etc. 6ompany can issue shares at face value, at premium or at discount. $nother method of pricing which is now days common is issuing the securities through online system of the stock exchange has to comply with the section 44 to ADa of the companies $ct, ;E4A and S./I guidelines

<555.

he company is re&uired to enter in to an agreement with the stock exchanges which have

the re&uisite system for online offer of securities. he advantages for this new system are81 'a) he investors part with money only after allotment. '!) It eliminates refunds except in case of direct applications. 'c) It reduces the time taken for issue process

S-5on!&r. M&r:-, Secondary market is the place for sale and purchase of existing securities. It ena!les an investor to ad#ust his holdings of securities in response to changes in his assessment a!out risk and return. It ena!les him to sell securities for cash to meet his li&uidity needs. It essentially comprises of the stock exchanges which provide platform for trading of securities and a host of intermediaries who assist in trading of securities and clearing and settlement of trades. he securities are traded,

cleared and settled as per prescri!ed regulatory framework under the supervision of the exchanges and oversight of S./I. Tr&! n( M-5"&n 4% .arlier trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. consuming and inefficient. his was time

his imposed limits on trading volumes and efficiency. In order to

provide efficiency, li&uidity and transparency ,ational Stock .xchange introduced a nation wide on line fully automated screen !ased trading system where a mem!er can punch in to the computer &uantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching sale or !uy order from a counter party. Screen !ased trading electronically matches orders on a priceCtime priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It ena!les market participants, irrespective of their geographical locations to trade with one another and it provides e&ual access to every!ody. ,S. has main computer which is connected through (ery Small $perture installed at its office. erminal '(S$ )

he main computer runs on a default tolerant S +$ :S mainframe computer

at the exchange. /rokers have terminals installed at their premises which are connected through (S$ s. $n investor informs a !roker to place an order on his !ehalf. W"&, 4 EA$ ,.E *inancing a company through the sale of stock in a company is known as e&uity financing. $lternatively, de!t financing 'for example issuing /onds) can !e done to avoid giving up shares of ownership of the company. :nofficial financing known as trade financing usually provides the ma#or part of a companyGs working capital 'day1to1day operational needs). rade financing is provided !y vendors and suppliers who sell their products to the company at short1term, unsecured credit terms, usually =5 days. .&uity and de!t financing are usually used for longer1term investment pro#ects such as investments in a new factory or a new foreign market. 6ustomer provided financing exists when a customer pays for services !efore they are delivered, e.g. su!scriptions and insurance. E6UITY MAR#ET Pu!lic e&uity markets are those where corporates raise resources through IP9s !y getting listed in the stock exchanges. Pu!lic e&uity markets are su!#ected to a wide range of governance, disclosure, transparency and compliance norms set !y the securities exchanges commissionsCgovernment agencies and also the self1regulatory functions set !y the exchanges themselves. Institutional and retail investors mostly use this channel. he distinct advantages of the pu!lic e&uity capital are8 Lower cost of capital for the firm Provide li&uidity for current stockholders Shift monitoring costs for private lenders *irm can learn from information contained in the stock price movements. 0owever, pu!lic e&uity capital has some costs too. hese include Disclosure of proprietary information $gency costs of outside e&uity 6osts of reportingCfiling with regulatorsCexchanges 6osts of corporate control :nder1pricing

$ few features generally o!served in the respect of the IP9 markets include8

ypically, IP9 prices are !elow the level that they reach on the market a few days or weeks later, when more pu!lic information is availa!le 'under pricing). 0owever the extent of under1pricing will narrow with several companies coming up for listing.

.ach IP9 generates !eneficial information externalities for other companies that are a!out to go pu!lic. Privatized companies tend to list in pu!lic e&uity markets that offering !etter legal protection of shareholders. he decisions to go pu!lic are affected !y firms% ownership structure. -hen company has only one owner or when !anks holds ma#ority shares, companies are less likely to prefer pu!lic e&uity.

PUBLIC E6UITY CAPITAL Go'-rn%-n,4: he scope of government in further development of pu!lic e&uity markets could consist of8 .xtend the realm of regulation to other markets as well .xtend fiscal support to corporate accessing pu!lic e&uity markets .volve policy framework that will streamline compliance re&uirements and there!y costs of regulation +efine regulation so as to make it cohesive, comprehensive and more integrated. 6hoice of pu!lic e&uity markets in case of privatization and divestment process of government stake. DERIVATIVE MAR#ET $ derivative security can !e defined as a security whose value depends on the values of other underlying varia!les. (ery often, the varia!les underlying the derivative securities are the prices of traded securities. In fact, a derivative transaction helps cover risk, which would arise on the trading of securities on which the derivative is !ased and a small investor can !enefit immensely. Let us take an -F&%/*- of a simple derivative contract8 +am !uys a futures contract. 0e will make a profit of +s ;555 if the price of Infosys rises !y +s ;555.

If the price is unchanged +am will receive nothing. If the stock price of Infosys falls !y +s D55 he will lose +s D55.

$s we can see, the a!ove contract depends upon the price of the Infosys scrip, which is the underlying security. Similarly, futures trading have already started in Sensex futures and ,ifty futures. he underlying security in this case is the /S. Sensex and ,S. ,ifty. D-r '&, '-4 &n! f$,$r-4 &r- +&4 5&**. of > ,./-4: *orwards and *utures 9ptions Swaps

For)&r! 5on,r&5, $ forward contract is the simplest mode of a derivative transaction. It is an agreement to !uy or sell an asset 'of a specified &uantity) at a certain future time for a certain price. ,o cash is exchanged when the contract is entered into. I**$4,r&, on 7: Shyam wants to !uy a (, which costs +s ;5,555 !ut he has no cash to !uy it outright. 0e

can only !uy it = months hence. 0e, however, fears that prices of televisions will rise = months from now. So in order to protect himself from the rise in prices Shyam enters into a contract with the ( dealer that = months from now he will !uy the ( for +s ;5,555. -hat Shyam is doing is that he is locking the current price of a ( for a forward contract. he forward contract is settled at maturity. he dealer will deliver the asset to Shyam at the end of three months and Shyam in turn will pay cash e&uivalent to the ( price on delivery. I**$4,r&, on 8: +am is an importer who has to make a payment for his consignment in six months time. In order to meet his payment o!ligation he has to !uy dollars six months from today. 0owever, he is not sure what the +eCU rate will !e then. In order to !e sure of his expenditure he will enter into a contract with a !ank to !uy dollars six months from now at a decided rate. $s he is entering into a

contract on a future date it is a for)&r! contract and the underlying security is the foreign currency. he difference !etween a share and derivative is that sharesCsecurities is an asset while derivative instrument is a contract In!-F o understand the use and functioning of the index derivatives markets, it is necessary to understand the underlying index. $ stock index represents the change in value of a set of stocks, which constitute the index. $ market index is very important for the market players as it acts as a !arometer for market !ehavior and as an underlying in derivative instruments such as index futures. T"- S-n4-F &n! N f,. In India the most popular indices have !een the /S. Sensex and SHP 6,T ,ifty. he /S.

Sensex has =5 stocks comprising the index which are selected !ased on market capitalization, industry representation, trading fre&uency etc. It represents =5 large well1esta!lished and financially sound companies. he Sensex represents a !road spectrum of companies in a variety of hen there is a /S. national index and /S. industries. It represents ;? ma#or industry groups.

<55. 0owever, trading in index futures has only commenced on the /S. Sensex. -hile the /S. Sensex was the first stock market index in the country, ,ifty was launched !y the ,ational Stock .xchange in $pril ;EEA taking the !ase of ,ovem!er =, ;EE4. he ,ifty index consists of shares of 45 companies with each having a market capitalization of more than +s 455 crore. F$,$r-4 &n! 4,o5: n! 5-4 *or understanding of stock index futures a thorough knowledge of the composition of indexes is essential. 6hoosing the right index is important in choosing the right contract for speculation or hedging. Since for speculation, the volatility of the index is important whereas for hedging the choice of index depends upon the relationship !etween the stocks !eing hedged and the characteristics of the index.

6hoosing and understanding the right index is important as the movement of stock index futures is &uite similar to that of the underlying stock index. (olatility of the futures indexes is generally greater than spot stock indexes. .very time an investor takes a long or short position on a stock, he also has an hidden exposure to the ,ifty or Sensex. $s most often stock values fall in tune with the entire market sentiment and rise when the market as a whole is rising. +etail investors will find the index derivatives useful due to the high correlation of the index with their portfolioCstock and low cost associated with using index futures for hedging Un!-r4,&n! n( n!-F f$,$r-4 $ futures contract is an agreement !etween two parties to !uy or sell an asset at a certain time in the future at a certain price. Index futures are all futures contracts where the underlying is the stock index ',ifty or Sensex) and helps a trader to take a view on the market as a whole. Index futures permits speculation and if a trader anticipates a ma#or rally in the market he can simply !uy a futures contract and hope for a price rise on the futures contract when the rally occurs. -e shall learn in su!se&uent lessons how one can leverage ones position !y taking position in the futures market. In India we have index futures contracts !ased on SHP 6,T ,ifty and the /S. Sensex and near = months duration contracts are availa!le at all times. .ach contract expires on the last hursday of the expiry month and simultaneously a new contract is introduced for trading after expiry of a contract. EF&%/*-: *utures contracts in ,ifty in Kuly <55A Con,r&5, %on," Kuly <55A $ugust <55A Septem!er <55A EF/ r.G4-,,*-%-n, Kuly <B $ugust <? Septem!er <D

On J$*. 80 Con,r&5, %on," $ugust <55A Septem!er <55A 9cto!er <55A EF/ r.G4-,,*-%-n, $ugust <4 Septem!er <D 9cto!er <A hat is you !uy one ,ifty

he permitted lot size is ;55 or multiples thereof for the ,ifty. contract the total deal value will !e ;55N=555 ',ifty value)Q +s =,55,555.

In the case of /S. Sensex the market lot is 45. hat is you !uy one Sensex futures the total value will !e 45N?555 'Sensex value)Q +s <,55,555. he index futures sym!ols are represented as follows8 BSE /STK:,<55A 'Kune contract) /STK:L<55A 'Kuly contract) /ST$:L<55A '$ug contract) NSE *: DT,I* ><D1K:,<55A *: DT,I* ><D1K:L<55A *: DT,I* ><D1$:L<55A

Stock markets !y their very nature are fickle. -hile fortunes can !e made in a #iffy more often than not the scenario is the reverse. Investing in stocks has two sides to it Ja) :nlimited profit potential from any upside 'remem!er Infosys, 0*6L etc) or !) a downside which could make you a pauper. Derivative products are structured precisely for this reason 11 to curtail the risk exposure of an investor. Index futures and stock options are instruments that ena!le you to hedge your portfolio or open positions in the market. 9ption contracts allow you to run your profits while restricting your downside risk. $part from risk containment, options can !e used for speculation and investors can create a wide range of potential profit scenarios. -e have seen in the Derivatives School how index futures can !e used to protect oneself from volatility or market risk. 0ere we will try and understand some !asic concepts of options. W"&, &r- o/, on4E $n option is a contract, which gives the !uyer the right, !ut not the o!ligation to !uy or sell shares of the underlying security at a specific price on or !efore a specific date. P9ption%, as the

word suggests, is a choice given to the investor to either honour the contractI or if he chooses not to walk away from the contract. o !egin, there are two kinds of options8 6all 9ptions and Put 9ptions. $ 6all 9ption is an option to !uy a stock at a specific price on or !efore a certain date. In this way, 6all options are like security deposits. If, for example, you wanted to rent a certain property, and left a security deposit for it, the money would !e used to insure that you could, in fact, rent that property at the price agreed upon when you returned. If you never returned, you would give up your security deposit, !ut you would have no other lia!ility. 6all options usually increase in value as the value of the underlying instrument rises. -hen you !uy a 6all option, the price you pay for it, called the option premium, secures your right to !uy that certain stock at a specified price called the strike price. If you decide not to use the option to !uy the stock, and you are not o!ligated to, your only cost is the o/, on /r-% $%. Put 9ptions are options to sell a stock at a specific price on or !efore a certain date. In this way, Put options are like insurance policies. If you !uy a new car, and then !uy auto insurance on the car, you pay a premium and are, hence, protected if the asset is damaged in an accident. If this happens, you can use your policy to regain the insured value of the car. In this way, the put option gains in value as the value of the underlying instrument decreases. If all goes well and the insurance is not needed, the insurance company keeps your premium in return for taking on the risk. -ith a Put 9ption, you can VinsureV a stock !y fixing a selling price. If something happens which causes the stock price to fall, and thus, VdamagesV your asset, you can exercise your option and sell it at its VinsuredV price level. If the price of your stock goes up, and there is no Vdamage,V then you do not need to use the insurance, and, once again, your only cost is the premium. the primary function of listed options, to allow investors ways to manage risk. echnically, an option is a contract !etween two parties. he !uyer receives a privilege for which his is

he pays a premium. he seller accepts an o!ligation for which he receives a fee. C&** o/, on $n option is a contract !etween two parties giving the taker '!uyer) the right, !ut not the o!ligation, to !uy or sell a parcel of shares at a predetermined price possi!ly on, or !efore a predetermined date. contract. o ac&uire this right the taker pays a premium to the writer 'seller) of the

here are two types of options8 C&** O/, on4 P$, O/, on4 C&** o/, on4 6all options give the taker the right, !ut not the o!ligation, to !uy the underlying shares at a predetermined price, on or !efore a predetermined date. I**$4,r&, on 7: +a# purchases ; Satyam 6omputer 'S$ 69") $:L ;45 6all 11Premium D his contract allows +a#

to !uy ;55 shares of S$ 69" at +s ;45 per share at any time !etween the current date and the end of next $ugust. *or this privilege, +a# pays a fee of +s D55 '+s eight a share for ;55 shares). he !uyer of a call has purchased the right to !uy and for that he pays a premium. ,ow let us see how one can profit from !uying an option. Sam purchases a Decem!er call option at +s ?5 for a premium of +s ;4. hat is he has purchased

the right to !uy that share for +s ?5 in Decem!er. If the stock rises a!ove +s 44 '?5M;4) he will !reak even and he will start making a profit. Suppose the stock does not rise and instead falls he will choose not to exercise the option and forego the premium of +s ;4 and thus limiting his loss to +s ;4.

Let us take another example of a call option on the ,ifty to understand the concept !etter.

,ifty is at =555. he following are ,ifty options traded at following &uotes.

O/, on 5on,r&5, K:,. ,ifty

S,r :- /r 5=555 =;55

C&** /r-% $% +s E5 +s A4 +s ;A5 +s ;=5

K:L> ,ifty

=555 =;55

$ trader is of the view that the index will go up to =;55 in Kuly <55A !ut does not want to take the risk of prices going down. herefore, he !uys ;5 call of Kuly contracts at =;55. 0e pays a premium for !uying calls 'the right to !uy the contract) for ;=5N;5N;55Q +s ;=5555C1. In Kuly <55A suppose the ,ifty index goes up to =;55. 0e sells the call or exercises the option and takes the difference in spot index price which is '=;551=555) N ;55 'market lot) Q ;5,555 per contract. otal profit Q ;55,555C1 ';5,555N;5). 0e had paid +s ;=5,555C1 premium for !uying the call option. So he earns !y !uying call option is +s ?5,555C1 ';=5,5551A5,555). If the index falls !elow =;55 the trader will not exercise his right and will opt to forego his premium of +s A5,555. So, in the event the index falls further his loss is limited to the premium he paid upfront, !ut the profit potential is unlimited. C&** O/, on4=Lon( C S"or, Po4 , on4 -hen you expect prices to rise, then you take a long position !y !uying calls. >ou are +$** 4". -hen you expect prices to fall, then you take a short position !y selling calls. >ou are +-&r 4".

H-!( n(

-e have seen how one can take a view on the market with the help of index futures. order to understand how one can protect his portfolio from value erosion let us take an example. I**$4,r&, on:

he

other !enefit of trading in index futures is to hedge your portfolio against the risk of trading. In

+am enters into a contract with Shyam that six months from now he will sell to Shyam ;5 dresses for +s ?555. he cost of manufacturing for +am is only +s ;555 and he will make a profit of +s =555 if the sale is completed.

Co4, DR4B ;555

S-** n( /r 5?555

Prof , =555

0owever, +am fears that Shyam may not honour his contract six months from now. So he inserts a new clause in the contract that if Shyam fails to honour the contract he will have to pay a penalty of +s ;555. $nd if Shyam honours the contract +am will offer a discount of +s ;555 as incentive.

S".&% !-f&$*,4 ;555 'Initial Investment) ;555 'penalty from Shyam) 1 ',o gainCloss)

S".&% "ono$r4 =555 'Initial profit) '1;555) discount given to Shyam <555 ',et gain)

$s we see a!ove if Shyam defaults +am will get a penalty of +s ;555 !ut he will recover his initial investment. If Shyam honours the contract, +am will still make a profit of +s <555. hedged his risk against default and protected his initial investment. he a!ove example explains the concept of hedging. Let us try understanding how one can use hedging in a real life scenario. Stocks carry two types of risk J company specific and market risk. -hile company risk can !e minimized !y diversifying your portfolio market risk cannot !e diversified !ut has to !e hedged. So how does one measure the market risk7 "arket risk can !e known from /eta. hus, +am has

/eta measures the relationship !etween movement of the index to the movement of the stock. he !eta measures the percentage impact on the stock prices for ;O change in the index. herefore, for a portfolio whose value goes down !y ;;O when the index goes down !y ;5O, the !eta would !e ;.;. -hen the index increases !y ;5O, the value of the portfolio increases ;;O. he idea is to make !eta of your portfolio zero to nullify your losses. 0edging involves protecting an existing asset position from future adverse price

movements. In order to hedge a position, a market player needs to take an e&ual and opposite position in the futures market to the one held in the cash market. .very portfolio has a hidden exposure to the index, which is denoted !y the !eta. $ssuming you have a portfolio of +s ; million, which has a !eta of ;.<, you can factor a complete hedge !y selling +s ;.< mn of SHP 6,T ,ifty futures. S,-/4: ;. Determine the !eta of the portfolio. If the !eta of any stock is not known, it is safe to assume that it is ;. <. Short sell the index in such a &uantum that the gain on a unit decrease in the index would offset the losses on the rest of his portfolio. his is achieved !y multiplying the relative volatility of the portfolio !y the market value of his holdings. herefore in the a!ove scenario we have to shortsell ;.< N ; million Q ;.< million worth of ,ifty ,ow let us study the impact on the overall gainCloss that accrues8

In!-F $/ 71H In!-F !o)n 71H LainC'Loss) in Portfolio LainC'Loss) in *utures N-, Eff-5, +s ;<5,555 '+s ;<5,555) ,il '+s ;<5,555) +s ;<5,555 ,il

$s we see, that portfolio is completely insulated from any losses arising out of a fall in market sentiment. /ut as a cost, one has to forego any gains that arise out of improvement in the overall sentiment. futures market. hen why does one invest in e&uities if all the gains will !e offset !y losses in he idea is that everyone expects his portfolio to outperform the market.

Irrespective of wh

he same methodology can !e applied to a single stock !y deriving the !eta of

the scrip and taking a reverse position in the futures market. hus, we have seen how one can use hedging in the futures market to offset losses in the cash market. .ither the market goes up or not, his portfolio value would increase. Speculation Speculators are those who do not have any position on which they enter in futures and options market. hey only have a particular view on the market, stock, commodity etc. In short, hey speculators put their money at risk in the hope of profiting from an anticipated price change. fundamentals and other data to take their positions. EF&%/*-: +am is a trader !ut has no time to track and analyze stocks. 0owever, he fancies his chances in predicting the market trend. So instead of !uying different stocks he !uys Sensex *utures. 9n "ay ;, <55;, he !uys ;55 Sensex futures W =A55 on expectations that the index will rise in future. 9n Kune ;, <55;, the Sensex rises to ?555 and at that time he sells an e&ual num!er of contracts to close out his position. Selling Price 8 ?555N;55 Q +s ?,55,555

consider various factors such as demand supply, market positions, open interests, economic

Less8 Purchase 6ost8 =A55N;55 Q +s =,A5,555

,et gain Q +s ?5,555 +am has made a profit of +s ?5,555 !y taking a call on the future value of the Sensex. 0owever, if the Sensex had fallen he would have made a loss. Similarly, if would have !een !earish he could have sold Sensex futures and made a profit from a falling profit. In index futures players can have a long1term view of the market up to at least = month.

Ar+ ,r&($n ar!itrageur is !asically risk averse. 0e enters into those contracts were he can earn riskless profits. -hen markets are imperfect, !uying in one market and simultaneously selling in other market gives riskless profit. $r!itrageurs are always in the look out for such imperfections. In the futures market one can take advantages of ar!itrage opportunities !y !uying from lower priced market and selling at the higher priced market. In index futures ar!itrage is possi!le !etween the spot market and the futures market ',S. has provided a special software for !uying all 45 ,ifty stocks in the spot market. ake the case of the ,S. ,ifty. $ssume that ,ifty is at ;<55 and = month%s ,ifty futures is at ;=55. he futures price of ,ifty futures can !e worked out !y taking the interest cost of = months into account. If there is a difference then ar!itrage opportunity exists

. Let us take the example of single stock to understand the concept !etter. If -ipro is &uoted at +s ;555 per share and the = months futures of -ipro is +s ;5B5 then one can purchase I 6 at +s ;555 in spot !y !orrowing W ;<O annum for = months and sell -ipro futures for = months at +s ;5B5. Sale 6ost $r!itrage profit Q Q Q ;5B5 ;555M=5 ;5?5

hese kinds of imperfections continue to exist in the markets !ut one has to !e alert to the opportunities as they tend to get exhausted very fast.

FINDINGS AND ANALYSIS

ANALYSIS OF THE PREFERRED INVESTMENT AREA he investment was !roadly divided into five areas, mainly1/ank deposits. Shares, "utual *und, +eal .state and insurance plans.

*ollowing o!servations can !e made on the !asis of a!ove analysis8 /ank Deposits !eing the most preferred area, ?=O respondents out of hundred invested in !ank deposits. he second preferred area was Shares as <BO respondents were investing in the share market. hen preferred area was the "utual *unds with ;=O of respondents

+eal estates were the least preferred area i.e. only BO

. ANALYSIS OF THE FACTORS AFFECTING INVESTMENT he factors are categorized in to four parameters to know the purpose of investment made !y the investor.

4<O respondents go invests for higher returns. <EO respondents prefer "oderate +eturn for their investments. ;4O prefer moderate risk. 9nly ?O for Low risk.

ANALYSIS FOR INTERMEDIATING COMPANY

hese factors are categorized into !rokerage, Information provided !y them the exposure limit or loan facility provided !y them and their /rand ,ame.

<;O respondents choose @otak Securities Ltd. =DO respondents choose India!ulls Securities Ltd. for trading. BO respondents choose I6I6I direct. ?O respondents choose *ortis. =5O go for others.

ANALYSIS OF THE FACTORS FOR BRO#ING HOUSE

hese factors are categorized into !rokerage, Information provided !y them the exposure limit or loan facility provided !y them and their /rand ,ame.

??O respondents choose their !roking house on !asis of information provided !y them. <DO prefer !y the exposure limit and the loan facility provided to them. ;<O !y the !rokerage charge !y the !roking house. ;AO !y /rand ,ame.

ANALYSIS OF THE INFLUENCE OF THE PAST PROFILE OF A COMPANY

4DO respondents say yes they study profile of the company !efore making investment. ?<O respondents say no.

ANALYSIS OF THE RE6UIREMENT OF E3PERTISE

E=O respondents say yes, they re&uired expertise knowledge. BO respondents say no.

MOST IMPORTANT SERVICE PARAMETER

he most important service parameter that came up as a result of survey is Information i.e. the investors feel that the information contained in the service package is the key to more profits.

Second ma#or parameter is Fuality of service. <5O investors feel that the &uickness of service is a!ove par than any other aspect.

CONCLUSION
The perceptions of people about share markets are very strong. But they can be influenced, if not completely changed. The reason people prefer staying away from the share markets is lack of confidence - about their own understanding of the market and the very nature of the market. The fact that stock markets themselves are volatile and wide open to changes in external forces makes it much more difficult for people to consider them as an investment alternative. The right kind of campaigning directed towards increasing the awareness of people will get new customers. But more than that, this campaign will help retain customers, which is the key to staying ahead in the market. Indiabulls Securities is currently one of the biggest broking houses in the country and its strategies to penetrate further into the market will certainly take it way ahead of its competitors.

RECOMMENDATIONS

I, +9D:6 I9, P+9L+$"S must !e held for the sales teams !efore letting them go into the field. In these induction classes the experienced sales staff employees should share their valua!le live experiences and knowledge, which they have experienced while in field.

-eekly magazines must !e pu!lished and distri!uted to the investors that can help them for making !etter investments.

Sales team must !e fully e&uipped with latest technology such as using Laptop that can !e used for making presentation to the customers especially to the corporate clients a!out their product and services provided !y them.

"ake your site user friendly so that more and more people know a!out trading and do the same also.

$dvertisement through 6anopy, help to generate leads.

6ompany should advertise with a concern that has a !rand name in the market.

Pro%o, on&* S,r&,-( -4

Press publicity: Outdoor publicity:

Pr-44 /$+* 5 ,.:

Paper inserts $dvertisements in newspaper 'local and national). Interest cards distri!ution "ailersCpersonal invitations to selective section of the society Leaflets

O$,!oor /$+* 5 ,.:

/anners in commercial areas and prime sites. $ir !alloons at shopping complex. /us stands shelters. 9ff site $ " for developing !usiness

BIBLIOGRAPHY
www.india!ulls.com www.nseindia.com www.!seindia.com www.se!i.gov.in www.moneycontrole.com .conomics imes 6.+. @othari, "arketing +esearch ,6*" -./reen, 2Low Price1.arnings +atio H Industry +elatives3,

*inancial $nalysts% Kournal, Kuly1*e!urary ;EAD. -./reen H Savage K. 2Portfolio Distri!ution H Security Selection "odels3, Kournal of *inance, Decem!er ;EAD. S./asu, 2Investment Performance of 6ommon Stocks in +elation to heir Price1.arning +atios8 $ est of the .fficient "arket 0ypothesis3, Kournal of *inance, Kune ;EBB. /asu, San#oy, V he +elationship !etween .arnings >ield, "arket (alue and +eturn for ,>S. 6ommon Stocks8 *urther .vidence,V Kournal of *inancial .conomics ;< ';ED=)8 ;<E1;4A.
India!ulls /roachres and "annuals