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In partial fulfillment in award of PGDM Two-year Full Time

Under the guidance of

Faculty guide Company guide

Mr.Gaurav Bagra Miss Vartika Sharma

Submitted By:
Tanujaa Makhija

Maharishi Arvind
Institute Of Science and Management
Ambabari Circle, Ambabari, Jaipur- 302023(INDIA)
Phone: 2335487, 2234216, Fax: 0141- 2335120
First of all I would like to express my intellectual debt of gratitude to Mr. Deepak, Relationship
manager of Kotak Securitites Ltd., Jaipur Branch, for giving me such an innovative and
interesting subject which gave me thorough knowledge of the subject and which will help me
in future.
I would like to thanks to my corporate guide Miss. Vertika Sharma for the giving me her
precious time which she devoted to the project and also show the confidence in me without
whom the project could not have seen the light of the day and also providing me with relevant
material and information.
I am deeply thankful to the staff members of Kotak Securities Ltd. for their time &
support, which helped me to study such an extensive and complex subject.
Special thanks to the faculty guide Mr. Gaurav Bagra for guiding and providing me their
valuable suggestions that helped me to move steadily towards accomplishments of the project
Finally, I would like to thanks to my institute for giving me an opportunity to learn and
add to my knowledge and to gain some experience through this summer training project.

(Tanujaa Makhija)
Kotak Securities Ltd.
304-305, 3rd floor,
Green House,
15th July,2008 Ashok Marg, Jaipur.


This is to certify that Miss. Tanujaa Makhija has completed 8 weeks of Summer Internship i.e.
from May 17th 2008 to July 15th 2008 with Kotak Securities Ltd.

During this time, she has exhibited great interest and enthusiasm.Her project was in the area of
Equity & Derivatives. She has successfully completed the following project.

“Investment strategy of an investor in stock market”

We value her contribution to Kotak securities Ltd. The insights and recommendations of her
project reports were extremely useful.

Rahul Chhabra,
Cluster Head Bank Channel

This is to certify that MISS TANUJAA MAKHIJA of PGDM III semester of session 2007-
09 has completed her project study work as per the requirements of PGDM programme of
MAISM, Ambabari Jaipur.

She has done her project on “Investment Strategy of Investor in Stock Market”, at Kotak
Securities in Jaipur Under my guidance. The work is done only for academic purpose.

I am fully satisfied with her work and recommend its acceptance in the partial fulfilment of the
requirements for the award of PGDM course.

I wish her all the success.


Executive Summary

As per the summer training project topic “Investment Strategy of Investor in Stock
Market”, it involves work process of the stock exchange, the stock market, securities
exchange board of India, national stock exchange, Bombay stock exchange, the depository
system(NSDL and CDSL) and the process of share trading.
I used various resources to understand these things better. For this purpose I consult to
company guide, faculty guide, magazines (business standard, capital market) newspaper (like
economic times, business times), online and books. After taking a deep knowledge of stock
market, start meeting with those people who are investing their money in stock market and try
to understand their strategy of investing like how to invest, when to invest, where to invest. At
last I made a questionnaire to understand the strategies of investor’s and taking the opinion
from those who are trading and investing in stock market.












The Indian capital market is more than a century old. Its history goes back
to 1875, when 22 brokers formed the Bombay Stock Exchange (BSE). Over
the period, the Indian securities market has evolved continuously to
become one of the most dynamic, modern, and efficient securities markets
in Asia. Today, Indian market confirms to best international practices and
standards both in terms of structure and in terms of operating efficiency.
Indian securities markets are mainly governed by a) The Company’s Act
1956, b) the Securities Contracts (Regulation) Act 1956 (SCRA Act), and c)
the Securities and Exchange Board of India (SEBI) Act, 1992. A brief
background of these above regulations are given below:

a) The Companies Act 1956 deals with issue, allotment and transfer of
securities and various aspects relating to company management. It
provides norms for disclosures in the public issues, regulations for
underwriting, and the issues pertaining to use of premium and discount on
various issues.

b) SCRA provides regulations for direct and indirect control of stock

exchanges with an aim to prevent undesirable transactions in securities. It
provides regulatory jurisdiction to Central Government over stock
exchanges, contracts in securities and listing of securities on stock

c) The SEBI Act empowers SEBI to protect the interest of investors in the
securities market, to promote the development of securities market and to
regulate the security market. The Indian securities market consists of
primary (new issues) as well as secondary (stock) market in both equity
and debt. The primary market provides the channel for sale of new
securities, while the secondary market deals in trading of securities
previously issued. The issuers of securities issue (create and sell) new
securities in the primary market to raise funds for investment. They do so
either through public issues or private placement. There are two major
types of issuers who issue securities. The corporate entities issue mainly
debt and equity instruments (shares, debentures, etc.), while the
governments (central and state governments) issue debt securities (dated
securities, treasury bills). The
secondary market enables participants who hold securities to adjust their
holdings in response to changes in their assessment of risk and return. A
variant of secondary market is the forward market, where securities are
traded for future delivery and payment in the form of futures and options.
The futures and options can be on individual stocks or basket of stocks like
index. Two exchanges, namely National Stock Exchange (NSE) and the
Stock Exchange, Mumbai (BSE) provide trading of derivatives in single
stock futures, index futures, single stock options and index options.
Derivatives trading commenced in India in June 20
Mr. M. Damodaram
Chairman of SEBI

In 1988 the Securities and Exchange Board of India (SEBI) was established by the
Government of India through an executive resolution, and was subsequently upgraded as a
fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities
and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government
Control, a statutory and autonomous regulatory board with defined responsibilities, to cover
both development & regulation of the market, and independent powers have been set up.
Paradoxically this is a positive outcome of the Securities Scam of 1990-91
The basic objectives of the Board were identified as:
• to protect the interests of investors in securities;
• to promote the development of Securities Market;
• to regulate the securities market and
• for matters connected there with or incidental thereto
SEBI has introduced the comprehensive regulatory measures, prescribed registration norms,
the eligibility criteria, the code of obligations and the code of conduct for different
intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars,
portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws, risk
identification and risk management systems for Clearing houses of stock exchanges,
surveillance system etc. which has made dealing in securities both safe and transparent to the
end investor. Another significant event is the approval of trading in stock indices (like S&P
CNX Nifty & Sensex) in 2000. A market Index is a convenient and effective product because
of the following reasons:
• It acts as a barometer for market behaviour;
• It is used to benchmark portfolio performance;
• It is used in derivative instruments like index futures and index options;
• It can be used for passive fund management as in case of Index Funds.

Two broad approaches of SEBI is to integrate the securities market at the national level, and
also to diversify the trading products, so that there is an increase in number of traders including
banks, financial institutions, insurance companies, mutual funds, primary dealers etc. to
transact through the Exchanges. In this context the introduction of derivatives trading through
Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark.
Derivatives have been accorded the status of `Securities'. The ban imposed on trading in
derivatives in 1969 under a notification issued by the Central Government was revoked.
Thereafter SEBI formulated the necessary regulations/bye-laws and intimated the Stock
Exchanges in the year 2000. The derivative trading started in India at NSE in 2000 and BSE
started trading in the year 2001.


SEBI has been obligated to protect the interests of the investors and securities and to promote
and development of, and to regulate the securities market by such measures as it thinks fit.
SEBI, in particular, has power for:-
a) Regulating the business in stock exchange and other securities markets;
b) Registering and regulating the working of stock-brokers, sub-brokers, share transfer
agents, banks to an issue, trustee of trust deals, registrars to an issue, merchant banks,
underwriter, portfolio managers, and other intermediaries associated with the securities
c) Registering and regulating of collective investment schemes including mutual funds;
d) Promoting and regulating the working of self-regulatory organizations;
e) Prohibiting fraudulent and unfair trade practices relating to securities markets;
f) Promoting investor’s education and training of intermediaries of securities market;
g) Prohibiting insiders trading in securities.

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock
market trading system on par with the international standards. On the basis of the
recommendation of high powered Pherwani committee, the National Stock Exchange was
incorporated in 1992 by Industrial Development Bank of India, industrial credit and investment
corporations of India, Industrial Finance Corporation of India, all Insurance Corporation,
selected commercial banks and others.
Trading at NSE can be classified under two broad categories:
a) Wholesale debt market and
b) Capital market.
Wholesale debt market operations are similar to money market operations – institutions and
corporation bodies enter into high value transaction in financial instruments such as
government securities, treasury bills, public bonds, commercial paper, certificate of deposit,
There are two kinds of players in NSE:
a) Trading members and
b) Participants.
Recognized members of NSE are called trading members who trade on behalf of themselves
and their clients. Participants include trading members and large players like who take direct
settlements responsibility.
Trading at NSE takes place through a fully automated screen-based trading mechanism which
adopts the principle of an order- driven market. Trading members can stay at their offices and
execute the trading, since they are linked through a communication network. The prices at
which the buyer and seller are willing to transact will appear on the screen. When the prices
match the transaction will be completed and a confirmation slip will be printed at office of the
trading member.
NSE has several advantages over the trading exchanges. They are as follows:
• NSE brings an integrated stock market trading network across the nation.
• Investors can trade at he same price from anywhere in the country since inter-market
operations are streamlined coupled with the countrywide access to the securities.

• Delay in communication, late payments and malpractice’s prevailing in the traditional

trading mechanism can be done away with greater operational efficiency and
informational transparency in the stock operations, with the support of total
computerized network.
Unless stock market provide professionalized service, small investors and foreign
investors will not be interested in capital market operations. And capital market being one of
the major sources of long term finance for industrial projects, India cannot afford to damage
the capital market path. In this regard NSE gains vital importance in the Indian capital
market system.

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage.
Popularly known as “BSE”, it was establish as “ The Native Share & Stock Brokers
Association” in 1875. It is the first stock exchange in the country to obtain permanent
recognition in 1956 from the government of India under the securities contracts (Regulation)
Act, 1956. The Exchange’s pivotal and pre-eminent role in the development of the Indian
capital is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an
association of persons (AOP), the exchange is now a demutualised and corpotised entity in
corporated under the provisions of the companies act, 1956, pursuant to the BSE
(corporations and demutualisation) Scheme, 2005 notified by the Securities and Exchange
Board of India (SEBI).
With demutualization, the trading rights and ownership rights have been de-linked
effectively addressing concerns regarding perceived and real conflicts of interest. The
exchange is professionally managed under the overall direction of the board of directors. The
board comprises eminent professionals, representative of trading members and the managing
directors of the exchange. The board is inclusive and is designed to benefit from the
participation of market intermediaries.
In terms of organization structure, the board formulated larger policy issue and exercise
over all control. The committees and constituted by the board are broad-based. They day to day
operations of the exchange are managed by the managing director and a management team of
The Exchange has a nation-wide reach with a presence in 417 cities and towns of India.
The systems and process of the Exchange are designed to safeguard market integrity and
enhance transparency in operations. During the year 2004-05, the trading volumes on the
Exchange showed robust growth.
The Exchange provides an efficient and transparent market for trading in equity, debt
instruments and derivatives. The BSE’s online trading system (BOLT) is a proprietary system
of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement
functions of Exchange are ISO 9001-2000 certified.


Depository system essentially aims at eliminating voluminous and cumbersome paper work
involved in the script-based system and offers scope for ‘paperless’ trading through state of-
the-art technology. Depository system enables conversion of physical securities in the
electronic form through a process of’ dematerialization’ (also known as ‘demat’) of share
certificates and facilitates share transactions and transfers electronically without involving any
share certificate or transfer deed. Depository system offers option for converting the shares
from electronic form to physical or paper from through a process of ‘rematerialization’ (also
known as ‘remat’).
Depositories in India
1. National Securities Depository Limited(NSDL)
It is an organisation promoted by UTI and National Stock Exchange of India Ltd. The
aim is to provide facilities for holding and handling securities in electronic form.
Subsequently; SBI (acquired a 4.76 per cent in NSDL), HDFC. bank, Deusche bank, Dena
Bank, Canara Bank, Global Trust Bank, Standard Chartered bank, Citibank NA and HSBC
have acquired stake in NSDL. It commenced its operations in November 1996. Its headquarter
is situated at Mumbai. It is holding and handling securities in electronic form. It facilitates
faster settlement cycles. It provides services related to transactions in securities. It interfaces
with the investors through its agents called depository participant (DPs). As a depository,
a) acts as a custodian as well as legally transfer beneficial ownership,
b) reduces settlement risk by minimizing the paper work involved in trading, and settling and
transferring securities.
NSDL offers the following benefits:
(a) dematerialization, (b) rematerialization, (c) electronic settlement trades in stock exchanges
connected to NSDL, (d) pledging/ hypothecation of dematerialized securities against bank
loan, (e) electronic credit of securities, (f) receipt of non-cash corporate benefits such as bonus
in electronic form, (g) other services viz., holding debt instruments in the same account,
availing stock lending/ borrowing facility etc.

2.) Central Depository Services (India) Ltd. (CDSL).

It is the second depository in the country, after NSDL. It is promoted by the Bombay Stock
Exchange (BSE), Bank of India, Bank of Baroda, The NSDL. HDFC Bank, State bank of
India. The functions rendered by this depository is almost similar that of the NSDL.

Selection of a Depository Participant:

To select a depository participant, one can consider the following factors.
1. Reputation of the institution.
2. Track Record.
3. Strength-as measured by net worth and capital adequacy.
4. Dedicated manpower.
5. Infrastructure
6. Safety
7. Convenience and networking
8. Hidden costs like opening a Savings Bank account with minimum balance.

Role of Depository:
Depository is an organization where the securities of an investor are held in electronic form
through the medium of Depository Participants (DPs). It enables surrender and withdrawal of
securities to and from the depository through the process of demats and remats. Maintains
investor’s holdings in electronic form. Effect settlement of securities traded in depository
made on the stock exchanges. Carries out settlement of traders not done on the stock
exchanges (off-market trades).

Role of Depository participants:

A depository participant is a representative in the depository system of an investor. As per the
SEBI guidelines, financial institutions/banks/custodians/stock brokers etc. can become
depository participants provided they meet the necessary requirements prescribed by SEBI. A
depository participant is a first point of contact with the investor. The depository participant
serves a link between the investor and the company through the depository in dematerialization
of shares and other electronic transactions.

De-materialization: It is a process by which company through the depository takes share

certificates of shareholders participant, verified and found in order, dematerialization is
confirmed by the company. The depository participant credits equal number of shares to the
account of shareholder as electronic holding. The entire process of dematerialisation has to be
completed within two weeks period of time.

Re-materialization: Rematerialisation is a process of converting the electronic holdings

back into share certificates in paper form the process of rematerialization is also carried out
through the depositary participant. This process has been completed within a period of 30 days.

Comparison between bank and depository:

A depository system functions very much like a banking system. The given chart gives an
analogy between the banking and depository system :


Holds funds in accounts Holds securities in accounts

Transfer securities between

Transfer funds between accounts accounts
Transfer without handling
Transfer without handling money securities

Safekeeping of money Safekeeping of securities


Company Corpoarate Investor

Diagram: Flow process involved in the Depository System
In the flow process, various steps involved are:
Step 1:
Shareholders/investors approaches to a depository participant of his choice and opens an
account just like an account with a bank.. With the opening of account, shareholder gets an
identification number called “Client’s ID" which serves as a reference point for all
transactions and correspondence with the depository participant. The shareholder fills up a
Dematerialization Request Form (DRF) to be provided by the depository participant and hands
it over along with share certificates duly cancelled by writing “Surrendered for
dematerialization” to the depository participant for demat. The DP will accept certificates
registered only in the name that holds the share certificates.
Step 2:
Upon receipt of DRF along with the original share certificates, the DP sends an electronic
request to company through Depository for conformation of demat and simultaneously
surrenders the shareholdings. DRF and share certificates are accompanied standard letter to
the company for demat confirmation.
Step 3:
A Company should be equipped with the requisite hardware/software facility. It must be linked
to the Depository network through a V-Sat connection.
Step 4:
On receipt of the DRF and share certificates of the shareholde,:” necessary verification is done
and demat is confirmed to depository.
Step 5:
The depository further confirms the demat to the shareholders’s DP.
Step 6:
DP credits the shareholders’account with the number of shares so dematerialized and thereafter
the shareholder holds the securities in electronic form. DP of the shareholder gives a statements
of holdings and updates account after each transaction just like bank account.

Electronic Transactions:
Once shareholder opens an account with the depository participant, he can buy or sell shares in
electronic form without any paper work. The shareholder need not pay any stamp duty of 0.5%
as applicable to scrip based transactions. The depository participants charge the shareholder’s /
investor’s acquaintance, a list of service charges appended. A shareholder can
Open accounts with any number of DPs of his choice just as opening bank account with a
number of banks. Shareholder can trade in depository mode through any broker registered with
National Stock Exchange.
Pledging Facility:
Shareholders can pledge/ hypothecate shares held in electronic form by making an application
to his depository participant. Likewise, shareholder can also request for closure of
pledge/hypothecation. A number of banks have announced that they will charge lower interest
rates for loans against demate-rialized shares. Reserve Bank of India has announced that the
maximum amount of advances against pledge of dematerialized securities has been allowed up
to Rs. 20 lakhs.

Charges levied by a Depository:

1. Entry Fee
2. Annual Fees
3. Custody Charges
4. Remat Charges
5. Transaction Charges
6. Inter-depository Charges

Benefits of Depository System:

• Electronic transactions eliminate the problems and delays out scrip-based system.
• There is no scope of any risk of loss, theft, damage or fraud.
• Bad deliveries are eliminated.
• A lot of paper work involved is avoided.
• There is no hassle of filling a transfer deeds and lodging/ dispatching the transfer documents
with the company.
• Shareholder no longer has to wait for the shares transferred in his name. Delay is almost
• This system totally eliminates risks associated with loss/ fraudulent interception of share
certificates in postal transit.
• Settlement process in case of purchases is very quick.
• Settlement process in case of sale is very fast.
• Shareholder saves stamp duty @ 0.5 per cent of the market value of shares. Of course, he has
to incur some service charges charged by the DPs.
• Investment is highly liquid at all times as there is shorter waiting period.
• The marketable lot for transaction in depository mode has been fixed as one share. Therefore,
the problem of odd lots is totally eliminated.
• Transmission of shares can be effected immediately.
• Transaction costs are generally lower than the physical segment.


1. What is a stock market?

The stock market is a central market place for raising funds by Goverments and
various corporations to expand their business and shareholding base. This is usually done by
issuing shares a company which can then be bought and sold.

2. What is stock exchange?

The fundamental role of stock exchange is to provide a fair and internationally
competitive market place for the trading of financial securities for the benefit of all participants
(Listed Companies, Institutions and small investors). All countries who have a local stock
exchange aim to provide a market place whereby:
• Companies and governments can raise funds, and
• Investors can surplus funds in anticipations of dividends and capital gain from their
share investments.

3. What is a share market?

The share market comprises of two markets:
The first is a primary market whereby companies or Governments issue new shares in
order to raise capital to operations (for whatever reasons) and take on a wider range of
shareholders. This is done by issuing statement and a prospectus through an organizing or
underwriting broker.
The second is the secondary market. Which is the central market place provided by the
stock exchange, where investors trade existing securities/shares.

4. What is a share and what is their use?

A share is a basic unit of ownership in a company. When you buy a share, you become
a part-owner of a company. Ownership of that company is divided into millions of parts.
These parts are called shares and each person who buys a share is shareholder.
• The directors of the company are employed to manage the business, but the
company is wholly owned by its shareholders.

• When is company is founded, it often progresses and develops and often to expand,
it requires financial help. The company can opt to borrow funds from the bank and
pay interest like a loan or they can opt to raise funds by becoming a listed company
on the share market. There are many Rules and Regulations that a company must
abide by and comply with, if they wish to list and issue securities on the New
Zealand Stock Exchange. These rules are administrated and enforced by an
independent market Surveillance Panel. Once a company has become a listed
Company on the NZX, it can raise funds by offering shares in return for ‘ cash’. A
share of ownership is what the investor gets in exchange for their financial support.

• Once the share are listed on the market, they can be bought and sold among
investors in what is called the secondary market. It is the secondary market attracts
the most attention and is where most of the share transactions take place.

• When shares are purchased, the ownership of a shares entitles the share holder to
vote on company matters in proportion to their share holding and they are also
entitled to a share of the profits distributed by the issuer in the form of dividends.


Kotak Securities was set up in 1994 and it’s a subsidiary of Kotak Mahindra Bank which is
part of Kotak Mahindra Group. So first of all I will discuss about the structure of Kotak
Mahindra Group.

The journey so far

Kotak Mahindra Group

Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial
solutions that encompass every sphere of life. From commercial banking, to stock broking, to
mutual funds, to life insurance, to investment banking, the group caters to the diverse financial
needs of individuals and corporates.

The group has a net worth of over Rs. 5,824 crore, employs around 20,000 people in its various
businesses and has a distribution network of branches, franchisees, representative offices and
satellite offices across 370 cities and towns in India and offices in New York, London, San
Francisco, Dubai, Mauritius and Singapore. The Group services around 4.4 million customer

Uday Kotak, the Managing Director of Kotak Mahindra Bank, one of India's top
private sector banks, has cautioned Indian companies not to be too exuberant about buying
overseas acquisitions, and saying that prosperity for the country's financial sector lay in
domestic opportunities.

Kotak Securities Ltd.

Kotak Securities Ltd. is one of the oldest and leading stock broking houses in India with a
market Kotak Securities Ltd. has also been the largest in IPO distribution.
The accolades that Kotak Securities has been graced with include:
• 'Best Performing Equity Broker in India - CNBC TV 18' – Optimix Financial Advisory
Awards, 2008
• 'Best Brokerage Firm in India' by Asiamoney in 2007
• ‘The Leading Equity House in India’ in Thomson Extel Surveys Awards for the year
• Euromoney Award (2006 & 2007) - Best Provider of Portfolio Management : Equities
• Avaya Customer Responsiveness Awards (2006) in Financial Institution Sector
• Asiamoney Award (2006)- Best Broker In India
• Euromoney Award (2005)-Best Equities House In India
• Finance Asia Award (2005)-Best Broker In India
• Finance Asia Award (2004)- India's best Equity House
• Prime Ranking Award (2003-04)- Largest Distributor of IPO's

The company has a full-fledged research division involved in Macro Economic studies,
Sectoral research and Company Specific Equity Research combined with a strong and well
networked sales force which helps deliver current and up to date market information and news.
Kotak Securities Ltd is also a depository participant with National Securities Depository
Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit
services wherein the investors can use the brokerage services of the company for executing the
transactions and the depository services for settling them.
Kotak Securities has 877 outlets servicing over 4,30,000 customers and a coverage of 321
cities., the online division of Kotak Securities Limited offers Internet
Broking services and also online IPO and Mutual Fund Investments.
Kotak Securities Limited has over Rs. 3300 crore of Assets Under Management (AUM) as
of 31th March, 2008. The portfolio Management Services provide top class service, catering to
the high end of the market. Portfolio Management from Kotak Securities comes as an answer
to those who would like to grow exponentially on the crest of the stock market, with the
backing of an expert.

Account Types:
Kotak offers different account types according to users requirement:
1. Kotak Gateway
Kotak securities gateway account opens the gateway to a world of investing opportunities for
beginners. Kotak gateway user can trade anywhere, anytime using internet.Kotak also offers
call and trade facility.
They provide sms alert, research report, free news and market updates. Best feature of Kotak
gateway is call and trade facility. Anybody can activate Kotak securities gateway account with
any amount between Rs 20,000 to 5, 00,000. This can be in form of cash deposit or the value of
the shares you buy. Brokerage will be charged based on the account type. For intraday trading
brokerage is .06% both sides for less then 25 lakhs and .023% for more then 25 crores.
2. Kotak Privilege Circle
This is the premium account for its users. Along with kotak gateway account benefits they
provides independent market expertise and support through a dedicated relationship manager
and a dedicated customer service desk which provides assistance in opening accounts, handling
day-to-day problems, and more. They provides KEAT premium which is an exclusive online
tool that lets you monitor what is happening in the market and view your gains and losses in
real-time. One can activate Kotak securities privilege circle account with any amount more
than Rs. 10, 00,000/- as margin, by way of cash or stock. For intraday trading brokerage is .
06% both sides for less then 25 lakhs and .03% for more then 25 crores.

3. Kotak High Trader

This is the best offer for daily trader or intraday traders. This is an Auto Square Off product
where you can enjoy the benefits of intra-day trading. Trader can get the 6 times exposure on
the margin. They provide all the benefits which kotak gateway and privilege account provides.
Trader can apply paper free order for IPO. One can activate Kotak securities high trader with
any amount less than Rs 5, 00,000/- as margin, by way of cash or stock. The minimum
brokerage that is applicable in the Kotak high trader account is 4 paisa on delivery and 4 paisa
in the cash segment.

4. Kotak Freeway
Frequent trader use this account type because freeway account enables it’s users to trade as
many times as they like - at a fixed brokerage. One can activate Kotak securities freeway with
any amount less than Rs. 1, 25,000/- as margin, by way of cash or stock. They charge fixed
brokerage of Rs.999/- a month and on delivery transaction brokerage is .59% on less then
1lakhs and .18% on more then 2 crores.

5. Kotak Flat
This product is best suited for the needs of the Indian retail investor who actively invests
through the internet. Kotak flat introduces the international trend of charging brokerages on per
trade basis. Brokerage rate works up to 0.18% on delivery trades and 0.018% for intraday
6. Kotak Assist
This account most suits to long term investors. This account provides Complete assistance on
all your financial investment.

















As per the summer training project the researcher got the topic of “Investment Strategy of
investor in Stock Market”.
The topic (Investment strategy of investor in stock market) is described those
fundamental and strategies of investor which taken by them while trading in stock exchange.
These strategies show that how an investor like to invest his money in stock market.
To know about the investment strategies of investor researcher used various sources to
understand these things better. For this purpose researcher consult to company guide, faculty
guide , magazines ( business standard, capital market) newspaper ( like economic times,
business times), online and books and made a questionnaire which was filled by those person
who trade in stock market.
The questionnaire include that questions which show how and when a investor like to
invest money, What strategies he adopt when market is going up and going down, what is the
deciding factor while investing or trading in a company.
Project Title:
The task which was assigned to researcher by the company was “ Investment Strategies
of investor in stock market” Investment strategies of investor describe those fundamental
planning which is used by an investor during his investment. To know these strategies
researcher used various sources and make a questionnaire and fills it with those people who
trade in stock market.

The main objective of conducting this research is as under:
• Understand the nature of stock market.
• Understand the psychology and sentiments of investor.
• Know the procedure of trading in stock market.
• Gathered the useful information from different kinds of investors.
• Know the investing behaviour in stock market.
• Know the deciding factor of investing money in stock market.


The researcher completed the research on the topic of “ investing strategies of Investor in
stock market”. This is a very interesting and knowledgeable topic for any other person.
The research helps to know the investor behaviour in terms of the trading and investment
strategies used by investor in stock market. The study completed on those people who live
in Jaipur. The study tells that how an investor trade in stock market.


• Help to know researcher to know the market.
• Help to know the investor strategies for new researcher.
• Help to know the importance of demat account.
• Help to give idea of trading methods of investor who lives in Jaipur.


• Give the brief knowledge of kotak securities.
• Give the knowledge of stock market.
• Give the information related to investor strategy.
• Met the different kinds of people and know the nature of investment.
• Help to increase the knowledge related to market in practical manner.

Stock represents a piece of ownership of a particular company. When we purchase a stock of a

company we immediately become one of its owners. As a result we have right over the profits
the company makes and some voting rights depending on the type of the stock. So, if we
consider the stock profitable and beneficial we should strive to purchase as much shares of it as

Basically, there are two types of stocks:
1. Common stocks- provide voting rights and dividends.
2. Preferred stocks - no voting rights are provided. However, if the company is dissolved,
stockholders that hold preferred stocks are the first to get dividends and assets. This type of
stocks is chosen by investors that prefer dividend income.
Class A vs. Class B Stocks
The company itself decides on the classes of stocks that are to be issued when it goes public.
Class A stocks are offered to the general public and give their holders one vote per share, thus
they are traded as common stocks.
On the other hand, the company may issue class B stocks that are offered only to the
company's founders. These stocks carry 10 votes per share. The goal is to keep control of the
company within the hands of the founders.

Daily Stock Price Establishment:

In the setting of the prices of actively traded stocks the laws of supply and demand are
followed. This means that when the demand is high (more buyers than sellers) the price rises.
The vice versa is true when the supply is higher than the demand (more sellers than buyers).
The number of buyers and sellers is influenced by the following factors:
Economic events
Political events
Natural disasters
If the magnitude of these events is significant, the overall conditions in the market can be
drastically changed.
Risk in Investing
Investing and risk go in hand. Risk can be defined as the price of the potential reward we will
get. Risk and reward follow a linear direction, which means the higher the risk the greater the
potential reward we will get from a particular investment.
Thus, we should identify the level of risk we are willing and able to face. Additionally, we
should be able to determine the risk that a particular stock carries so that we can determine
whether it is worth purchasing it.
Finally, investments that are characterized with low levels of risk also bring lower returns. So,
we should determine for ourself whether we are willing and able to take a lower risk and lower
returns or risk more and potentially gain more.


IPOs represent one of the most closely observed events in the stock market since they mark
the inception of a new trading opportunity. Since every business starts as a small enterprise, the
new player on the stock market issues only a few stocks, Which results in a relatively small
number of stockholders.
Company Registration
The first step a company should take in order to become publicly traded includes registration
with the Securities and Exchange Commission (the SEC). After this a public offering is
prepared, which should include a company's prospectus and other legal documents that are
required by the SEC.
Every potential investor has the right to receive a company's prospectus. The latter represents a
legal and accounting document, which explains in detail the situation in the company,
including information about the senior staff, majority stockowners and the potential risks the
company faces.

Setting the Price of the Stock:

After the company has registered with the SEC and met its other requirements, the company
should contact with an investment bank(s) and sign a contract for the distribution of the shares
the company is willing and able to sell. The other contractors may agree to underwrite the
distribution of shares. After this both parties agree on an initial price at which the stocks to be
opened for sale. This price is based on the earnings or potential earnings of the company as
well as its growth. Additionally, considerations about the market's willingness to accept the a
reed price should be made.
After the contracts have been signed and the price considerations made, the underwriters are
ready to make the first offers to major broker clients. In turn they offer these bundles of stocks
to their big retail and institutional clients. Along this chain every participant gets his/her
Since the stock goes through several people until it reaches the final investors, its final price
may be well above the initially set price. This is especially true if the company that issues the
stock enjoys the status of being a hot deal.
As you can see individual investors suffer from such a system since at the time the stock
reaches their hands, its price is significantly above the IPO level.

How to Make Money from IPOs?

Basically, you can make money by using IPOs in two ways:
1. Buy early, sell early
The first way in which you can benefit from an IPO is buy purchasing a stock as quickly as
possible and hope that it will quickly increase its price. After this happens, sell the stock and
enjoy the profits. However, this strategy is not really investing in itself. Nevertheless, if you are
not too risk averse and have the time to make the necessary researches and market
observations, maybe this risky strategy for making money is for you.
2. Establish a target price
The second strategy includes the establishment of a target price. Once the stock reaches this
target price you should see whether you can purchase the stock at this price. There are cases in
which the price may go up and down. So you should apply the necessary patience and wait for
the stock's price to come to a reasonable level.


There are basically three ways to trading in shares. These are:

• Delivery based trading
• Intraday trading
• Trading in derivatives
a) future
b) options

1.Delivery based trading:

It is basically for investor ,who want to invest their money in shares as a investment .firstly
they purchases a particular stock and wait for increases the prices of that particular stock or sell
that particular stock when they need their fund. Kotak securities ltd. is the place where you
are in complete control. All you have to do is login to your account and place your order at the
desired price. After order execution, the shares and the money would automatically be
debited/credited into your demat/bank account.

2.Intrading trading:
It is basically for trader, who trading in this type he has to covering the position on the same
day by buying/selling the shares. Kotak securities provide margin to their client according to
category to the stock.

3. Trade in derivatives:
In futures trading, investor take Buy/Sell position in index or stock contracts having a longer
contract period of up to 3 months. Trading in future is simple, If, during the course of the
contract life, the price moves in investor favour (i.e. rises in case investor have to buy position
or falls in case investor have a sell position), make a profit.
Presently only selected stocks, which meet the criteria on liquidity and volume, have been
enabled for future. Calculated Index and know investor Margin are tools to help in calculating
investor margin requirements and also the index and stock price movements.

Some investors tend to sign option contracts, which include the right to buy or sell securities
when a certain price is reached. This is done when a particular date is reached or even before
this date. Options give owners the right to do so, but they are not obliged to sell or buy a
security under these conditions.
The following are some basic characteristics of options:
1. Options are sold in lots of 100. This means that if an option is sold at $3, then you will have
to pay $300 to buy options.
2. Options are identified by their date of expiration and the strike price (also known as exercise
price). The latter represents the price that is quoted in the option contract. So, if you read "ABC
May 30 Call", then this means that this is a call option that will expire in May and its strike
price is $30.
As a rule options expire on every third Friday of the month. If this Friday is a holiday, then the
expiration date will be on Thursday. So, the expiration date represents the month in which the
option is expected to expire by contract.

Types of Options
Generally there are two major types of options. The latter are traded just as regular stocks.

Call Options
Under the conditions of call options, owners have the right to buy a security after a particular
price has been reached. This should be done at a particular date or before it. Options have
expiration date. So, investors usually buy call options if they expect that the price of the stock
is about to go up. In order to clarify the idea, consider the following example. John anticipates
that the stock price of company ABC is about to increase. The current stock price is $30. So, he
decides to purchase a call option, which gives him the right to purchase 100 shares of the stock
during the following 60 days. The cost of the option is $100. Thus, if the price really rises let's
say to $35 before the option expires, then John will benefit a profit of $4 per share.
Another tactic that John may undertake is to trade the option and enjoy the profit without even
purchasing the share of stock. However, if the price of the stock falls, you will incur a loss of
$100, which represents the cost of the option.

Put Options
Under the conditions of put options, owners have the right to sell a security after a particular
price has been reached. This should be done at a particular date or before it. Put options are
generally preferred if the price of the stock is expected to fall before the option expires.
So, if an investor expects that the price of the stock is about to fall, s/he can short the stock.
This is done by purchasing a put option giving the investor the right to sell shares at a certain
price. Thus, when the price of the stock falls, the investor can purchase stock on the open
market at the new lower price and exercise the put option selling the stock at the higher price.
Shorting the stock, however, carries a certain degree of risk and should be exercised with
caution. Finally, if you are a beginner investor, then it may be not a good idea to use options as
an investment tool, since they have many complexities.


1. Bid and Ask Prices
The stock exchanges are the places where the actual setting of the stock prices happens. They
are the places where bid and ask prices cross their ways and the exchange serves as the
intermediary between the two. So, as an educated investor you should be acquainted with the
meaning of bid and ask prices. Bid price is the price announced by the buyer at which s/he is
willing to purchase a stock. Ask price is the price announced by the seller at which s/he is
willing to sell a stock.
The major role of the exchange is to coordinate the bid and ask prices of buyers and sellers.
This service, of course, is not for free. Bid and ask prices are never the same. In fact, the price
announced by the seller (the ask price) is always higher than the bid price. As a result you are
required to pay the ask price in case you have decided to purchase a stock and pay a higher
price. On the other hand, if you decide to sell a stock you will have to receive the bid price,
2. Short selling:
This term is applied if the investor anticipates a fall in the price of a stock. If this is the case,
the investor borrows a particular number of shares and sells them at the still high price. When
the price drops, the investor purchases stocks at the lower price in order to repay his/her debt.
As you can calculate money are left to the investor, which represent his/her profit. However, if
the investor's expectations about a falling price are not met and instead the price rises, then s/he
will sustain losses.

Some of the orders are as follows which is provided to the shareholders in

their trading:

Market Orders
Under a market order, a stock is purchased at the prevailing market price by your broker under
your orders. The responsibilities of the broker are very limited, which results in a lower
commission for him.
Limit Order
You specify a particular price. This price level is used for the future stock trades. For instance,
your broker can purchase a stock at the specified price or below it. On the other hand, s/he can
sell a stock at the specified price or above it.
Stop Order
Under a stop order the broker executes a stock purchase when its price reaches a level above
the current market price. On the other hand, the broker executes a stock sale when its price
reaches a level below the current market price.
Day Order
Under the day order, the broker is required to execute the trade until the end of the trading day.
Failure to do so leads to unfilled order.
Fill or Kill
Under a fill or kill order, the broker is required to execute the trade at once. Failure to do so
results in an unexecuted order.


Stock investing includes many terms with which every investor should become familiar in
order to make educated decisions. Additionally, the different shares, such as authorized,
treasury, outstanding and etc. have different characteristics. Thus it is important to become
acquainted with the different types of shares so that you make successful investment choices.
Some of the major types of shares include:

Authorized Shares
When a company is created it is authorized to issue a total number of shares of stock, which is
what is called authorized shares. The number is liable to changes under the agreement of the
shareholders. Additionally, not all authorized shares have to be offered to the public and many
companies decide to keep some of the shares for later uses.

Treasury Shares
These are the shares that the company doesn't offer to the public or the employees. They are
kept for other uses.

Restricted Shares
This type of shares is used in different compensation plans. Additionally, companies use
restricted shares as part of various incentive plans for their employees. In order to sell a
restricted share, the holder should ask for the permission of the SEC.

Float Shares
Float shares are the shares that are traded on the open market. These are actually the shares that
investors trade with.

Outstanding Shares
These shares include all the shares that a particular company has issued. These include float
shares as well as restricted shares.

Share Types Relationships

As it can be seen from the definition of each share type, they are all closely linked to one
another. The first relationship that you should observe is the ratio of treasury shares and
restricted shares to the number of float shares. Most companies prefer to hold a large
percentage of their authorized shares in their treasuries or in the hands of their employees so
that they can avoid the taking of control of an unfriendly competitor over the company.
Additionally, companies may prefer to hold a larger percentage of their shares in order to have
them at hand for future uses. Additionally, by holding a greater percentage of the company's
stocks, the company ensures itself that it will have the voice over the decisions regarding
important company issues.
Another aspect that should be observed regarding the shares issued by a company is the
number of float shares that are offered to the public. If for instance the company has issued a
small number of float shares, this may lead to imbalances. The latter will be caused by the
smaller number of shares chased by a larger number of buyers. As a result the price of the
stock may increase to unrealistic levels that don't cover the earnings of the company. z
On the other hand, if the stock is no longer interesting to investors, the holders may find
it difficult to unload it. As a result the price may fall rapidly. Another important issue concerns
the actions of restricted stockholders. It may be valuable to observe their actions through the
many online resources that provide information on such issues. For instance, if restricted
shareholders sell their stocks, it may be an indication that there is something wrong in the
company. Finally, many financial ratios use float shares, whereas others use outstanding
shares in their calculations. We should be well aware of these differences since the results may
vary a lot.

The diagram shows the various phases of business cycles. 50 is the full employment line.
Above this line we see we see Boom as well as recession phases while below this line we see
depression and recovery phases of business cycles. As the economy moves through the
various phases shown in this chart, investors need to change their investment strategy to take
advantage of new emerging opportunities.

Phase 1. The economy slows down below its long-term trend (below the 50 level in this chart).
During these times, there is a sharp fall in production, increase in mass unemployment,
falling prices, falling profits, low wages, investors can expect inflation, bond yields,
short-term interest rates, and commodities to decline. It is that stage of business cycle in
which the business is at the lowest level.
Phase 2. It is that stage of business cycle in which rays of hope appear in the minds of the
businessmen and they feel that economic situation was not as bad as it was in the phase 1.
Businessmen thinks it better to start production, increases in employment opportunities,
new inventions and innovations take place in such an atmosphere, short-term interest
rates and commodities to stop declining . Such changes are the signs of phases 2.

Phase 3. The economy is strong and growing at well above potential. During these times,
there is full employment, existence of high stocks, high commodity prices, high profits,
investors can expect inflation, bond yields, short-term interest rates, and commodities to
start rising. This phase of business cycle is called ‘Boom’.

Phase 4. After the Boom has reached its peak the downward trend starts. During these times,
profits start declining, Businessmen stop orders for capital goods, price start falling, all
the activities are going to fall and they are finally stopped, unemployment increases in all
the industries and finally the situation is converted into 1 phase of business cycle.

Our research shows investors need to change investment strategies when the business cycle
moves through the various phases. Each phase presents investment opportunities and risks.
Specific strategies need to be implemented to take advantage of what is happening.

There are several investing strategies for common stocks. Investor can choose for himself the
ones that best meet his needs and financial goals.

Investing Strategy 1- Buy and Hold

If investor choose this investing strategy he will have to purchase a stock and be ready to hold
it over a long period of time, since buy and hold strategy is based on the assumption that the
price of the stock will rise with time. However, due to the dynamics of the market he can
never be sure that this will happen. This investing strategy elaborates on the idea that the
market will continue to expand due to its capitalist nature. As a result it assumes that the stock
prices will continue to rise and shareholders will enjoy higher dividends. The market
fluctuations and inflation levels are smoothed over the long-term. The advantage of this
investing strategy is that he pay less commission fees and taxes since he trade less. he hold
the stocks for a long time and don't trade on frequent basis.

Investing strategy 2 - Growth Investing Strategy

This strategy aims to identify the growth potential of a company. Companies with high
earnings growth are very attractive to investors who believe that such companies will
experience continuing rise in their stock price since more and more investors will want to take
advantage of the regular and large dividend paying. One of the most important factors for
consideration in growth investing is the earnings per share of the company. Investors observe
the changes in the earnings per share over the years not neglecting the revenue growth as well.
What is more, in order to get a clear view on the willingness of the market to pay for a given
earnings growth, investors examine the relationship between the price/earnings ratio and the
annual earnings growth. Keep in mind that this strategy carries a certain degree of risk, since
the target companies are usually young. However, as you know risk and reward go hand in
hand, meaning the higher the risk the higher the potential reward from the investment.
Investing Strategy 3 - Value Investing Strategy
Value investors are often referred to as bargain seekers. This means that they search for stocks
that are sold at a price that is below the real value of the company. No matter what the current
price of the stock is, be it $20 or $100, it should be below the real value of the company. Value
stocks are those that have been overlooked by the market and as a result their price is lower.
The latter may be caused by the chasing of the market after stocks that are currently considered
to be more attractive. Generally, growth and value investing are considered to be positioned in
opposite sides of the investment spectrum.

Investing Strategy 4 - Timing the Market

The major idea behind market timing is the buying low and selling high. Market timers believe
that they can successfully predict the behavior of the market regarding the price movement of
stocks. This makes timing the market the opposite of the buy and hold strategy. If you are to
time the market, you should familiarize yourself with such tools as technical and fundamental
analysis as well as even intuition. Most financial experts are against timing the market because
it is difficult to identify whether a particular stock price has reached its peak or bottom. It may
eventually go even higher or lower. Additionally, with the often trades that are executed under
this strategy commission fees will greatly reduce your profits especially of you make frequent
trades of small amounts. Another disadvantage of timing the market is that in theory over the
long-term the market goes up. Therefore, it is better to stay fully invested during the time in
order not to miss the long-term stock rewards.

Investing Strategy 5 - GARP Investing Strategy

Growth at Reasonable Price (GARP) represents a combination between the value and growth
investing strategies. Therefore, applying this strategy will involve the search of a stock that is
both undervalued and has a potential for future growth. You may find it difficult to find such a
stock due to the opposing characteristics of growth and value investing. However, it is not
unattainable. Investors applying this strategy use the PEG (price-to-earnings-growth) ratio as
an indicator for a stock that possesses a growth potential at a price that is below the real value
of the company. Generally, successful investors use the help of different systems to distinguish
the bad trades from the good ones.
The investment process consists of two tasks. The first task is security analysis which focuses
on assessing the risk and return characteristic of the available investment alternatives. The
second task is portfolio selection which involves choosing the best possible portfolio from the
set of feasible portfolios.
Portfolio theory, originally proposed by Harry Markowitz in the 1950s, and he was the
first person to show quantitatively why and how diversification reduces risk.
Portfolio analysis considers the determination of future risk and return in holding various
blends of individual securities and it is necessary that use rational asset allocation when
building your portfolio. As a rule of thumb (or at least- one of the rules), the percentage of
stocks in your portfolio should not be higher than 100 minus your age in percentages (for
example: if you are 40 years old, stocks holding percentage should not be higher than 60%).
Higher percentage could be riskier considering the fact that you will eventually need to convert
the stocks into cash. Thus, diverse your portfolio with a rational blend of assets – stocks, ETFs,
bonds, and cash. Always keep some of your savings in cash or other risk-free securities that
would be available for usage in the short term (for emergency situations or unpredictable
That’s not all. It is also recommended to diversify the stock portion of your portfolio as
well. You never know in advance which sector would be the one to get hit in the future. Thus,
choose stocks from different sectors, different regions around the globe (investing in the global
marker is also a venue to consider), and also in different kind of stocks – growth, value,
dividends etc. This will protect your portfolio from catching on fire even if few sectors or a
specific region in the world suffer from a temporary recession or economical weakness.

We shall use an example to show how efficient portfolios might be constructed;

Sectoral Allocation:
STOCKS are often grouped by the size of the companies we can invest in -- big,
small or tiny. By size we mean a company's value on the stock market: the number of
shares it has outstanding multiplied by the share price. This is known as market
capitalization, or cap size. Big companies tend to be less risky than small fries. But
smaller companies can often offer more growth potential. The best idea is probably to
have a mix of funds that give you exposure to large-cap, midsize and small
companies. How these different types of stocks behave, take a look at our Stocks
Large-Cap Stocks:
Large-capitalization Stocks are generally those companies with market values of
greater than $8 billion. large-cap Stocks are less volatile than Stocks that invest in
smaller companies. Usually, that means you can expect smaller returns, but lately,
large caps have outperformed all others. For Example: in this we can take stocks
which are showing in the following table:

Bid No. of
Scripts Description price share

NTPC Sector 162.35 50
DLF Estate 393.4 60
SUZLON Energy 189 35
Y Pharma 470.7 20

Mid-Cap Stocks:
As the name implies, these stocks fall in the middle. They aim to invest in companies
with market values in the $1 billion to $8 billion range -- not large caps, but not quite
small caps, either. The stocks in the lower end of their range are likely to exhibit the
growth characteristics of smaller companies and therefore add some volatility to these
stocks. They make the most sense as a way to diversify your holdings. For Example,
in this we can take stocks which are showing in the following table:
Scripts Price No. of share
Jindal Drilling 1564.95 10
Jai Balaji 220 15
Indiabulls 59.4 10

Small-Cap Stocks:
Companies with market capitalization less than $1 billion,Smaller Companies are
those which are in the early stages of business and they are presumed to have
significant growth potential, but are not as financially strong as established as larger
companies on the other hand, Small cap companies can also be great investment for
those who can tolerate more risk and are looking for more aggressive growth. Due to
more risk I will invest in it only in 1 stocks we can invest in Ashiana Housing Suppose
current market price is 59.65 and we buy 20 share of this stocks for diversify our
Our Portfolio can be shown in the following Chart :

3% 2% 15% NTPC

Scripts Description Bid Volume TOTAL % of money

NTPC POWER 162.35 50 8117.5 15%
DLF REAL ESTATE 393.4 25 9835 18%
SUZLON ENERGY 189 40 7560 14%
RANBAY PHARMA 470.7 25 11767.5 21%
JINDAL DRILLING 5 5 7824.75 14%
JAI BALAJI 220 25 5500 10%
INDIABULLS 59.4 30 1782 3%
ASHIANA 59.65 25 1491.25 2%

225 53878

After dividing their % of money in different sector an investor can minimize their risk because
if one sector is not performing very well other sector can covering their loss , For Example in
our portfolio total investment is 53,878 and DLF, ASHIANA, JINDAL DRILLING AND
INDIABULLS is not performing well but other sector is performing well can covering their
losses, Overall performance can be show in the following table:

% of
Bid of 1 Ask
Scripts Price month Price Volume Total
NTPC 162.35 15% 186.7 50 9335
DLF 393.4 -9% 358 25 8950
SUZLON 189 7% 202.23 40 8096
RANBAXY 470.7 4% 489.52 25 12238
DRILLING 1565 -3% 1518.05 5 7590.25
JAI BALAJI 220 2% 224.4 25 5610
INDIABULLS 59.4 -8% 54.64 30 1639.2
ASHIANA 59.65 -12% 52.49 25 1312.25


Net Profit of the investor for 1 month is 54770.7-53878= Rs. 892.70


In a declining stock market (also called a bearish market), such as we have been experiencing
for the last several months, the first instinct of many investors is to abandon their stock
holdings and hide in the treasury bonds or cash shelters in order to reduce their losses. It is a
classic case of what financial professionals call "chasing performance", meaning trying to jump
onto a ship that may already have sailed. There’s a better way to succeed when the stock
market is slow or volatile: a well-planned and executed policy of asset allocation built for the
long term.
Asset allocation means building a long term portfolio composed of a mix of securities
including growth stocks, value stocks, bonds, T-bills (Treasury bill) and cash, along with
rebalancing of the portfolio from time to time. Asset allocation is actually the opposite of
market timing.
Some may claim that saying “long term investing works over the long term” is too
axiomatic. But, historical analysis of the market proves that this statement is actually right, and
that long term thinking is probably the best way to survive periods of bear market.

Look at the historical performance of the market :

2001 - Statistics
Aug 2001 – Sensex Nov 2001 – Sensex Bounce
Peak back
3318 3322
% of Stock Fall % of Stock Rise
> Sensex > Sensex
33% 56%

Flows Flows
FIIs – Rs 9.6 bn
FIIs – Rs (4.5) bn
Domestic – Rs (10.7)
Domestic –Rs 1.1 bn

Sep 2001 – Trough

3 months

This is 2001- Statistics and it shows that in Aug. 2001 , the sensex was in peak to 3318 and at
that time FIIs (Foreign Institutional Investors) were Rs. 4.5 bn and( In 1991 when the FIIs
were invited to trade directly in Indian Stock Exchange the main expectations were
that the market would help corporates raise resources directly from
investors, and facilitate the process of privatisation.)the main reason that the
infotech boom and helped the Sensex to its peak but in Sep 2001, due to terrorist attack
on world trade center in New York city, individual Business performance,
financing, travel, valuation expectations, and currency fluctuations have greatly
impacted and sensex reached its trough to 2600 and the percentageof stock fall was 33 after
that it took 2 months for Bounce back and in Nov.2001 FIIs had increased to Rs. 9.6 bn and the
sensex was 3322 or it came its 3300 level.
2004 - Statistics
Jan 2004 – Sensex Nov 2004 – Sensex Bounce
Peak back
6679 5973
% of Stock Fall % of Stock Rise
> Sensex > Sensex
29% 69%
Flows Flows
FIIs – Rs (25) bn
FIIs – Rs 124 bn
Domestic –Rs 13.3
Domestic – Rs (17) bn

May 2004 – Trough

11 months

NDA government collapsed

Source: Bloomberg

2004 was one more unusual year in India's stock markets. It began with the Sensex still
at a high and above the 6000 mark. It witnessed a decline to a low in mid-May of around
4500, delivered ultimately with the market's single day loss of close to 565 points.

Movements in the Sensex during these times , have clearly been driven by the behaviour of
foreign institutional investors (FIIs), Given the presence of foreign institutional investors in
Sensex companies and their active trading behaviour, their role in determining share price
movements must be considerable. Indian stock markets are known to be narrow and shallow in
the sense that there are few companies whose shares are actively traded. Thus, although there
are more than 4700 companies listed on the stock exchange, the BSE Sensex incorporates just
30 companies, trading in whose shares is seen as indicative of market activity. This
shallowness would also mean that the effects of FII activity would be exaggerated by the
influence their behaviour has on other retail investors, who, in herd-like fashion tend to follow
the FIIs when making their investment decisions.

The SEBI had issued notices to 12 FIIs for not complying with its rules on furnishing
details about PNs issued to overseas investors. However, it could pin down only one FII,
UBS Securities Asia, following its probe into the stock market crash of 17th May 2004 and
imposed a ban on its issuing PNs for a year. Despite efforts the SEBI could not get details of
the other FIIs and investors who had withdrawn huge funds and contributed to the market crash
and once again it came down its trough in May 2004 to 4505 and after that sensex rise with
69% because of it FIIs investment where before it was Rs. 25 bn now it has increased to
Rs.124 bn and in Nov. 2004 the sensex has increased to Rs. 5973.
2006 - Statistics
May 2006 – Sensex Oct 2006 – Sensex Bounce
Peak back
12612 12736
% of Stock Fall % of Stock Rise
> Sensex > Sensex
80% 34%

Flows Flows
FIIs – Rs (103) bn FIIs – Rs 144 bn
Domestic –Rs 56 bn Domestic – Rs 17 bn

Jun 2006 – Trough

5 months
Concerns that US will raise rates and draw overseas investors away from
emerging markets and surging commodity prices will hurt company
Source: Bloomberg

This is 2006- Statistics and it shows that in May 2006 the Sensex was 12612 and at
that time it was in its peak and suddenly Stock Market experienced its biggest intra-day fall
ever on 22nd May 2006, with the BSE Sensex sliding by 1111.70 points. Trading had to be
suspended for an hour due to the sharp fall (the index-based circuit breakers came into play).
After some reassurances from the Finance Minister, SEBI and the RBI, the market recovered
and finally closed at 10,481.77, which still meant a net fall of 456 points. This comes after a
fall of 826 points on 18th May and 452 points fall on 19th May.
This was the biggest stock market meltdown experienced in India. Although a further
decline could be prevented, mainly on account of buying by the public financial institutions
like the LIC and UTI as well as Mutual Funds, the stock markets continue to witness gyrations.
On 24th May, the Finance Minister issued a statement in Rajya Sabha on ''Recent
Developments in the Stock Market'' where he sought to downplay the market crash and
reiterated that the rise in the interest rate in the US due to inflationary expectations and a
global fall in metal and other commodity prices were the prime reasons for the market
meltdown and the sensex reached its trough in June 2006 to 8929 and after that flows come
and again bounce back to 12736 in Oct 2006.
2008 - Statistics
Jan 2008 – Sensex
Peak Sensex Bounce back - ??

% of Stock Fall
21000 > Sensex
FIIs – Rs (149) bn
Domestic –Rs 54 bn

July 2008 – Trough

?? months

Sub-prime crisis
Source: Bloomberg

This is 2008- Statistics and the sensex crossed the 21,000 mark in intra-day trading after 49
trading sessions. This was backed by high market confidence of increased FII investment and
strong corporate results for the third quarter. 14,220, June 25, 2008 The sensex touched an
intra day low of 13,731 during the early trades, then pulled back and ended up at 14,220 amidst
a negative sentiment generated on the Reserve Bank of India hiking CRR by 50 bps.
FII outflow continued in this week. 12,822, July 2, 2008 The sensex hit an intra day low of
12,822.70 on July 2nd, 2008. This is the lowest that it has ever been in the past year.

Six months ago, on January 10th, 2008, the market had hit an all time high of 21206.70. This is
a bad time for the Indian markets, although Reliance and Infosys continue to lead the way with
mostly positive results. The impact of the United States sub-prime loan market troubles
impacting on the Indian stock exchanges, ''It would be an oversimplification if the fall in
the stock market in India is linked only to sub-prime mortgage crisis in the US, stock
prices are a determinant of several factors operating on a given day, '' '' Mr M.
Damodaran ( chairman of SEBI) said” . According to history it will start rising and again
Bounce back will be there But when and how many months it will take for this no body knows

GLOBAL PERSPECTIVE: Most major international markets are still in intermediate

downtrends. The Dow will enter an uptrend if it establishes above 11550. The Sensex has lost
14.3% in the 12 months that ended on July 17, taking it back down to the 10th spot among 40
well-known global indices considered for the study. Slovakia now heads the list with a 7.5%
gain. Egypt and Brazil have the next two spots. The Dow Jones Industrial Averages has lost
17.8% and Nasdaq Composite 14.3% over the same interval.

Sensex peaks at 21000 levels
in Jan 2008

Sensex crosses Euphoria Sensex crashes to

18000 in Oct 2007 15332 on Jan 22
(sharp rally of 2008 there by
4000 pts in 1 ½ Belief retracing to Aug
mths) 2007 levels
(within 7 trading
sessions of
achieving a peak)

Apr ex unde 00
t 150
2007 r 130
e x b ack a 08
00 in Sens in Mar 20
Of-course, past performance is no guarantee for future results. Nevertheless, experience
strongly suggests that in bear markets, patience pays. So, in order to smoothly pass the bearish
period and succeed in your investing goals, consider the

following factors which are affecting the stock market:

1.)Demand and Supply –. The price is directly affected by the trend of stock market
trading. When more people are buying a certain stock, the price of that stock increases and
when more people are selling he stock, the price of that particular stock falls. Now it is
difficult to predict the trend of the market but your stock broker can give you fair idea of
the ongoing trend of the market but be careful before you blindly follow the advice.

2.) News – News is undoubtedly a huge factor when it comes to stock price. Positive news
about a company can increase buying interest in the market while a negative press release can
ruin the prospect of a stock. Having said that, you must always remember that often times,

despite amazingly good news, a stock can show least movement. It is the overall performance
of the company that matters more than news. It is always wise to take a wait and watch policy
in a volatile market or when there is mixed reaction about a particular stock.

3.) Market Cap – If you are trying to guess the worth of a company from the price of the
stock, you are making a huge mistake. It is the market capitalization of the company, rather
than the stock, that is more important when it comes to determining the worth of the company.
You need to multiply the stock price with the total number of outstanding stocks in the market
to get the market cap of a company and that is the worth of the company.

4.)Earning Per Share – Earning per share is the profit that the company made per share on
the last quarter. It is mandatory for every public company to publish the quarterly report that
states the earning per share of the company. This is perhaps the most important factor for
deciding the health of any company and they influence the buying tendency in the market
resulting in the increase in the price of that particular stock. So, if you want to make a
profitable investment, you need to keep watch on the quarterly reports that the companies and
scrutinize the possibilities before buying stocks of particular stock.

5.)Price/Earning Ratio - Price/Earning ratio or the P/E ratio gives you fair idea of how a
company’s share price compares to its earnings. If the price of the share is too much lower than
the earning of the company, the stock is undervalued and it has the potential to rise in the near
future. On the other hand, if the price is way too much higher than the actual earning of the
company and then the stock is said to overvalued and the price can fall at any point.

6.) Economic Factors: Corporate earnings and news, political news, and general market
sentiment can all move the market. But economic factors have the most influence on long-
term market performance. Of all the economic indicators, the three most significant to stock
market investors are inflation, gross domestic product (GDP), and labor market data.

a.)INFLATION: Inflation is a significant indicator for securities markets because it

determines how much of the real value of an investment is being lost, and the rate of return you
need to compensate for that erosion. For example, if inflation is at 3% this year, and your
investment also increases by 3%, in real terms you have just managed to stay even. And to
take on market risk, most individuals require a “risk premium” above and beyond the inflation
rate. So investors who buy stocks do so expecting they will get a return equal to (or better
than) that risk premium adjusted by the inflation rate. So the higher the inflation rate, the
higher nominal return is needed for a stock price to remain the same.
There are many causes of inflation. From a supply-demand standpoint, it can be due to
increased demand for a particular product, from an increase in a company’s cost of supplies, or
from limited supplies (like OPEC members restricting oil supplies), or even just due to fear
that supplies might be limited at some point in the future. But the single most important
determinant of inflation is the output gap, which is the balance between supply and demand in
the economy.
But the effect inflation has on the stock market is even more complicated than that. The
main impact of inflation on stock prices actually comes from the effect it has on a company’s
earnings. Low inflation keeps a company’s costs down, and increases profits. So all other
things being equal, (a favorite phrase of all economists), low inflation is better for the market
than high inflation.

b.) GROSS DOMESTIC PRODUCT: While GDP is an important component in inflation, it

is also important as an economic indicator in its own right. When compared to the previous
year’s reading, it tells you how fast the economy is growing (or contracting). GDP is the dollar
value of all goods and services produced by a given country during a certain period. It is
measured by either adding all of the income earned in an economy, or by all the spending in an
economy. Both measures should be roughly equal.Gross domestic income includes wages and
salaries, corporate profits, interest collected by lenders, and taxes collected by governments.
GDP domestic expenditures includes consumer spending, housing investment, government
spending, business spending (investment in factories, equipment, and inventory), as well as
foreign spending on our exports minus our spending on their imports.

Any significant change in the GDP, either up or down, can have a major effect on
investing sentiment. If investors believe the economy is improving (and corporate earnings
along with it) they are more likely to pay more for a given stock. If there is a decline in GDP
(or investors expect a decline) they would be willing to pay less for a given stock, leading to a
decline in the stock market.

C.)THE LABOUR MARKET: The final major factor influencing the economy is the labour
market. The key indicators most investors focus on are total employment and the
unemployment rate. US citizens who are already working represent the employed, while those
who are actively looking for work, but haven’t found it yet, are the unemployed. The
unemployment rate does not include people without jobs who are not looking for jobs, such a
retirees or just people who are discouraged and have given up trying to find a job.
Before we conclude this discussion on share prices, I would say that that there are so many
other reasons behind the fall or rise of the share price. Especially there are stock specific
factors that also play its part in the price of the stock. So, it is always important that you do
your research well and stock trading on the basis of your research and information that you get
from your broker.


Research methodology can be defined as “A careful investigation or inquiry especially through

search for new facts in any branch of knowledge.”
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is down scientifically. Research methodology
is a technique to solve a problem logically.

Finding the strategy of investor were basically who are investing and trading in stock market.
The universe comprised of the number of investor and it can be considered homogenous in
Nature to a great extent.

The research was “descriptive” in nature as it dealt with describing the market and investing
strategies of investors in stock market. The research was designed to know about the
potentiality of the stock market at Jaipur and also the survey of the investors to know about
their strategy, the psychological factors associated the stock market, the strategy they are using
in the stock market in terms of fluctuation in the market. The research was carried out after
making a questionnaire which is fulfilled by those peoples who trade in stock market.

The first step in order to accomplish the task was to draw a sample. To serve this purpose, the
sampling technique adapted was “Stratified Random Sampling”. For that purpose researcher
surveyed many places at Jaipur like Jaipur Stock Exchange Ltd., some of the stock brokers and
met those people who trade in stock market for the purpose of minimizing the bias and
maximizing the reliability of the data. Also, by adopting this procedure it was ensured that
sample drawn would have the same composition and characteristics of the population.


Population of research was homogenous in nature to a large extent, hence a sample size of 100
respondents were taken into account to achieve the objective of the study.


There are two types of data;
• Primary Data
• Secondary Data
Data used during research is a primary data and collected through the questionnaire filled by
the consumers. The other sources of data collection is through interview of the persons who
trade in the stock market.

• Lack of time period
• Result of the research is not applicable on the whole investors.
• Hard to reach online customers.
• Hard to fine the forex investors and ncdex investors.
• Research is conducted only out of some brokerage house.
• The process of reach the is so hard.
• Lack of interest disposed by respondents.
• The sector will not remain same at all time. They will change according to time.

Data and Data Analysis

Q1. Do you invest in stock market?



The researcher met people and firstly he asked that “Are they investing their money in stock
market or not” because this is necessary to know of him for their research and the result is 45%
are people are investing their money in stock market and 65% are not investing their money in

Q2. How long you are investing in stock market?

14% less than 1 yr
1-5 yrs
5-10 yrs
more than 10 yrs


The researcher met those people who are trading in stock market to know the time period.
According to him there are 28% people who are working in stock market since less than 1 year
like this there are 48% people who are working since 1 to 5 years, 14% people are working
since 5 to 10 years and 10 % people working in stock market since more than 10 years.
Q3. Which type of trading do you trade in stock market?






t ra













t ra


There are three option of trading in stock mardet:1) Intraday(buy today sell today), 2) Delivery
and Future and Options. There were 14% investor trade in Intraday, 13% in Delivery, 6% in
Future & Options, 41% in Intraday and Delivery, 11% in Intraday and Future & Options and
4% in Delivery and Future & Options and 11% investors in Intraday, Delivery and Future &

Q4. Which among the following is deciding factor before your investment ?
Total of Averags
respondents rank of Adjusted
Values Values Values Rank
ITEMS/RANKS 1 2 3 4 5 6 7
Newspaper 11 13 22 20 29 5 0 358 3.58 0.325 3
t.v. 9 15 18 38 9 11 0 320 3.2 0.355 5
Online 5 9 13 6 8 59 0 480 4.8 0.96 6
relatives 15 31 15 14 20 5 0 308 3.08 0.205 2
Brokers 11 21 16 12 23 17 0 366 3.66 0.332 4
Self 49 11 16 10 11 3 0 232 2.32 0.047 1
Others 0 0 0 0 0 0 100 0 0 ~ 7


For giving the rank on scale of 1 to 7 these items the researcher took the technique of simple
rank method. For using this method the researcher collect the different data from the investors
and analyzing them by made a table. The table include those data which are deciding factor
before the investment in stock market. After collecting the whole data the researcher find the
ranks which are giving by the different kinds of people as per the items.

After collecting the data the researcher take the total of the rank values and taken the averages
of that values. After taken the averages of values researcher gives the adjusted averages value
to the items. Adjusted averages value calculated always by 1st rank of items. After giving the
adjusted values researcher gave them ranks according to minimum adjusted values from
maximum adjusted value in the series of 1 to 7.

For example:
Newspaper has the ranked by 1 to 7 from the respondents in the numbers of 11,13,22,20,29,5
and 0. After that researcher found the total of ranks like this
358 is divided by the total numbers of respondents that is 100. 358/100=3.58
3.58/11=0.325 for adjusted average value.After finding the adjusted averages value researcher
allocate the rank of this.

Q4. What factors affect your strategy of Investment?

26% Company name
Price of share
12% 40% Annual Report


Every investor thinks before investing money in any kind of investment. In stock market
whenever and however an investor invest money he just think about that where he is investing
his money in good company or not. So every investor has some strategy before investment.
There are 14% investment on the basic of brand name of the company, 40% investor watch the
growth of the company, 8% investment see the investment of the company, 12% investor take
the decision of investment on the basic of price of shares and 26% investor invest money after
watch on annual result or report of the company.

Q5. In which particular sector do you invest your money?

10% IT
Real Estate
54% 6%
10% Mix


There are 23 sectors in stock market but researcher take some sector from them those are
running on boom at present. As per the matter of investment in different types of sectors of the
investors invest money in more than one sector. There are 54% investors who in more than one
sector, 14% are like to invest to invest in Bank, 10% are in IT, 6% are in Real Estate, 10% are
in Petrolium and 6% are in retail sector.

Q6. When would you like to invest your money?







Raising Time Falling Time


In stock market 68% investor like to invest there money in Falling Time. Because that time the
price of share is going to less and investor thinks is the right time of investment. It is a fact that
most of the investor in stock market are like to buy shares at minimum price. There are 32%
investors believes investing there money in Raising Time. Because in raising time these
investors thinks that market is going more up so they like to buy share that time.

Q7. What strategy do you adopt when market is going up?




When the market is going up 68% investors sell out there shares and short sell the shares.
Investors who trade on Delivery basis they sell out there shares on the higher price as compare
to buying price of shares so that they get returns in higher market and investor who trade on
intraday basis they short sell the shares and waiting for the down of price of short sell share
and buy them to make profit. 24% like to buy the shares when market is going up.8% investors
does not want to trade at this time. They just wait and watch the market.

Q8. What strategy do you adopt when market is going down?





40% Series1




Purchases Sell None


When market is going down 74% investors like to buy at this time. The reason being most of
the investors like to purchases shares at minimum price,8% investors sell out their shares that
time reason being the limit of trading, capacity of facing loss and fear of market can go down
more,18% investors are waiting for right investment at right time.

Conclusion, Finding and Suggestions


• It is very difficult to predict the stock market.

• Market fluctuation plays an important role in investment.
• Most of the people have same strategies.
• All strategies fail when market is suddenly turned.


• According to many persons Stock Exchange is a place of high risk and high return.
• Most of the people are trade according to themselves.
• Company growth and annual result plays a crucial role in investment.
• Investment in long turm is safe and gives secured returns.


• Think before investment.

• Try to take others opinion related to market.
• Do not try to earn as soon as earliest.
• Try to invest in those companies which are growing up.

Monthly Income : 1) less than 15000 2) 15000-25000

3) 25000-40000 4) greater than

1. Do you invest in stock market?

a) Yes b) No

2. How long you are investing in stock market?

a) less than 1 yr b) 1-5 yrs
c) 5-10 yrs d) above 10 yrs

3. In which activity of stock market do you trade and how?

a) Intraday b) Delivery c) F & O
d) Intraday and delivery e) Intraday and F & O
f) Delivery and F & O g) all these

4. Which among the following is the deciding factor before

Your investment(rate the following)

Onlin friends Broke Other

Items newspaper T.V. e & r self s

(on the scale of 1 to 7)

5. What factor effect your strategy of investment?
a) Company’s name b) Growth
c) investment d) Price of share
e) Company’s annual results

6. In which particular sector do u invest your money?

a) Bank b) IT
c) Real Estate d) Petroleum
e) Retail f) others

7. When would you like to invest your money?

a) Raising time b) Falling time

8. What strategy do you adopt when market is going to be increase or in bullish market?
a) sell b) Purchases
c) None

9. What strategy do you adopt when market is going to decrease or in bearish market?
a) sell b) Purchases
c) None