This action might not be possible to undo. Are you sure you want to continue?
Stock exchanges to some extent play an important role as indicators, reflecting the performance of the country’s economic state of health. Stock market is a place where securities are bought and sold. It is exposed to a high degree of volatility, prices fluctuate within minutes and are determined by the demand and supply of stocks at a given time. Stock brokers are the ones who buys and sells securities on behalf of individuals and institutions for some commission. The Securities and Exchange Board of India (SEBI) is the authorized body, which regulates the operations of stock exchanges, banks and other financial institutions. The past performances in the capital markets especially the securities scam by ‘Hasrshad Mehta’ has led to tightening of the operations by SEBI. In addition the international trading and investment exposure has made it imperative to better operational efficiency. With the view to improve, discipline and bring greater transparency in this sector, constant efforts are being made and to a certain extent improvements have been made.
HISTORY OF THE STOCK BROKING INDUSTRY
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as "The Stock Exchange"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. Thus in the same way, gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges.
An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers’ Association at Bombay in 1875, the precursor of the present-day Bombay Stock Exchange. This was followed by the formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. In order to check such aberrations and promote a more orderly development of the stock market, the central government introduced a legislation called the Securities Contracts (Regulation) Act, 1956. Under this legislation, it is mandatory on the part of a stock exchanges to seek government recognition. As of January 2002 there were 23 stock exchanges recognized by the central Government. They are located at Ahemdabad, Bangalore, Baroda, Bhubaneshwar, Calcutta, Chenni,(the Madras stock Exchanges ), Cochin, Coimbatore, Delhi, Guwahati, Hyderbad, Indore, Jaipur, Kanpur, Ludhiana, Mangalore, Mumbai(the National Stock Exchange or NSE), Mumbai (The Stock Exchange), papularly called the Bombay Stock Exchange, Mumbai (OTC Exchange of India), Mumbai (The Inter-connected Stock Exchange of India), Patna, Pune, and Rajkot. Of course, the principle bourses are the National Stock Exchange and The Bombay Stock Exchange , accounting for the bulk of the business done on the Indian stock market. While the recognized stock exchanges have been accorded a privileged position, they are subject to governmental supervision and control. The rules of a recognized stock exchanges relating to the managerial powers of the governing body, admission, suspension, expulsion, and re-admission of its members, appointment of authorized representatives and clerks, so on and so forth have to be approved by the government. These rules can be amended, varied or rescinded only with the prior approval of the government.
while providing an efficient and transparent market for trading in securities. which decides the policies and regulates the affairs of the Exchange. BSE(BOMBAY STOCK EXCHANGE) The Stock Exchange. of India under the Securities Contracts (Regulation) Act. 1956. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. The Governing Board consists of 9 elected directors. 4 . who are from the broking community (one third of them retire ever year by rotation). debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own memberbrokers. It has evolved over the years into its present status as the premier Stock Exchange in the country. The Exchange. even older than the Tokyo Stock Exchange. A Governing Board having 20 directors is the apex body. six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer. It is the oldest one in Asia. three SEBI nominees. It also strives to educate and enlighten the investors by conducting investor education program and making available to them necessary informative inputs. popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". which was established in 1878. Mumbai. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity.
with a high degree of transparency and equal access to investors irrespective of geographical location. screen-based. 5 . risk management. infrastructure. Products . The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market practices. clearing and settlement and investor service. The high level of information dissemination through on-line system has helped in integrating retail investors on a nation-wide basis. NSE has been able to achieve all the objectives for which it was set up. It started operations in June 1994. with trading on the Wholesale Debt Market Segment. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. NSE(NATIONAL STOCK EXCHANGE) NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It provides a nation-wide. NSE has been able to take the stock market to the doorsteps of the investors. technology and service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. The standards set by the exchange in terms of market practices. automated trading system. technology. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments.
In commodity market the main participants are speculators. private and easy services. 6 . Promoters of NCDEX are National Stock Exchange(NSE) ICICI bank Life Insurance Corporation(LIC) National Bank for Agricultural and Rural Development (NABARD) IFFICO Punjab National Bank (PNB) CRISIL WHY NCDEX? NCDEX is nationalized screen based system which is providing transparent. news agencies. NCDEX (NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE) NCDEX started working on 15th December. 2003. constructed on the basis of the current national institutes the exchange has been established with the coloration of leading institutes like NABARD. NCDEX has appointed two exports for checking quality at the time of delivery FACILITIES PROVIDED BY NCDEX NCDEX has developed facility for checking of commodity and also provides a wear house facility By collaborating with industrial partners. LIC. NCDEX is one of the traditional media which gives online information NCDEX is one of the Indian commodity exchange. This exchange provides facilities to their trading and clearing member at different 130 centers for contract. hedgers and arbitrageurs. In India NCDEX has maximum settlement guarantee fund. banks and developers of kiosk network NCDEX is able to provide current rates and contracts rate. NSI etc…. industrial companies.
To avail farmers from risk of fluctuation in prices NCDEX provides special services for agricultural. NCDEX is working with tax officer to make clear different types of sales and service taxes. NCDEX is providing attractive products like “weather derivatives” 7 . To prepare guidelines related to special products of securitization NCDEX works with bank.
online digital exchange for commodities futures trading in the country and has accordingly initiated several steps to translate this vision into reality. last traded price. average trade price. MCX(MULTI COMMODITY EXCHANGE) ‘MULTI COMMODITY EXCHANGE’ of India limited is a new order exchange with a mandate for setting up a nationwide. price quotation unit.% change.R. Expiry. This window displays the following details: Symbol. become the country’s premier exchange. is all set up to introduce a state of the art. offering unlimited growth opportunities to commodities market participants.P. value (in lac). sell qty. online multi-commodity marketplace. Market Watch: The market watch window is used to view the market details for a particular or group of contracts and for a particular instrument type. an independent and a de-mutualized exchange since inception. sell price. buy qty. buy price. close & open interest. MCX. As a true neutral market. high. volume (in 000’s). low. MCX has taken several initiatives for users In a new generation commodities futures market in the process. D. 8 . open.
either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets. And as an extension of stock broking. 9 . A securities transaction cycle is presented above. At the end of the trade cycle. Just because of this Transaction cycle. Buyer/seller delivers funds/ securities and receives securities/funds and acquires ownership of the securities. He selects a broker and instructs him to place buy/sell order on an exchange. decides to buy or sell the securities. The order is converted to a trade as soon as it finds a matching sell/buy order. the whole business of Securities and Stock Broking has emerged. TRANSACTION CYCLE Decision to trade Placing Order Funds or Securities Transacti on Cycle Trade Execution Settleme nt of trades Clearing of Trades A person holding assets (Securities/Funds). the business of Online Stock broking/ Online Trading/ EBroking has emerged. the trades are netted to determine the obligations of the trading member’s securities/funds as per settlement cycle.
com) 5 PAISA.10 0.A.com) 8. IDBI CAPITAL MARKET SERIVICES LTD.59 0.A. (www.hdfcsec. UTI. 3. 10.com) ICICI WEB TRADE LTD.75 0. REFCO SIFY SECURITIES PVT LTD. OBC. OBC. Citibank.com) 6.kotakstreet. NIL 0.MAJOR PLAYERS 1.40 0. MOTILAL OSWAL SECURITIES LTD. (www. HDFC SECURITIES LTD. S S KANTILAL ISHWARLAL SECURITIES PVT LTD. 7. 5.5paisa. Parameters A/c Opening Fee Trading Demat NIL NIL 250 NIL Brokerage Delivery 0.com) INDIABULLS (www.18 0. (www.50 0. UTI SECURITIES LTD.15 10 . 4.05 Interface Banks Associated with HDFC.20 Square Off 0. UTI & ICICI Bank Kotak Bank & Citibank HDFC & Other 4 Banks Sharekhan ICICI Direct Indiabulls 5 paisa A/c 750 750 750 800 Kotak Street HDFC Securities 500 700 N.com) KOTAK SECURITIES LTD.COM (www.sharekhan.06 0. 2. IDBI & Citibank ICICI Bank N.indiabulls. (www. 9.10 0.50 0.icicidirect. HDFC.
Sharekhan is having 240 share shops in 110 cities. ICICIdirect. margin or spot segments. (sharekhan. Insurance sector and banking sector to expand beyond the market currently covered by it. (ICICIdirect. A research and analysis team is constantly working to track performance and trends. S. An investor can also invest in 14 Mutual Funds (Prudential ICICI MF. ICICI WEB TRADE LTD. Franklin Templeton India MF. That’s why Sharekhan has the trading products. the largest chain of retail share shops in India is of Sharekhan. KANTILAL ISHWARLAL SECURITIES PVT.com provides the 3-in-1 to the users which ties in their saving bank account and their Demat account to their brokerage account electronically. HDFC MF. This integration ensures that money is transferred to/from their bank account and the shares are transferred from/to their Demat account automatically without writing any cheques or transfer instructions while carrying out their trades in shares.com): Sharekhan. S. Sharekhan is planning to enter in Mutual funds. 5PAISA. Sundaram MF. India’s leading stock broker is the retail arm of SSKI. Principal MF. Kotak Mahindra MF. IL&FS MF. TATA MF and DSP MERRILL LYNCH MF) through their trading account. Standard Chartered MF. ICICIdirect. Birla Sun Life MF. And it has started MF (Mutual Funds) on priority basis but wants to grow in it. which are having one of the highest success rates in the industry.com): ICICIdirect. and offers you depository services and trade execution facilities for equities. Reliance Capital MF.com doesn’t provide the facility of trading in a traditional way. Alliance Capital MF. In future. LTD. ICICdirect. JM MF.com has the option of trading in shares in cash. derivatives and commodities backed with investment advice tempered by decades of broking experience.com was the first entrant into e-broking.COM 11 .
It was ranked number One in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME Database. a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% . has been the largest in IPO distribution . It has also won the Best Equity House Award from Finance Asia . India’s leading and most popular finance and investment portal.6 %. It also provides the research on commodities.com): Kotak Securities Ltd.5paisa is the trade name of India Infoline Securities Private Limited (5paisa). commodities broking and mutual funds. one of the leading technology companies in the world promoted by the UK government. Kotakstreet. 00. KOTAK SECURITIES LIMITED (kotakstreet. India Infoline investor points are available across the country. The company offers a slew of products such as stock and derivatives broking. TDA and Reeshanar. Its institutional investors include Intel Capital. 5paisa has emerged as one of leading players in ebroking space in India. member of National Stock Exchange and The Stock Exchange. India Infoline was founded by a group of professionals in 1995.April 2004.000 customers. Investors can benefit from its analysis and advice available at the click of the mouse. ICICI. For those who prefer to trade the traditional way. Kotak 12 . Kotak Securities Limited manages assets over 1700 crores under Portfolio Management Services (PMS) which is mainly to the high end of the market. 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. The company has 42 branches servicing around 1. The company’s brokerage is one of the lowest in the industry.. 5paisa is a wholly owned subsidiary of India Infoline Ltd.one of the world’s leading investment banks and brokerage firms) is India’s leading stock broking house with a market share of 5 . Kotak Securities Ltd. Mumbai.com the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments.
The Indiabulls Professional Network offers realtime prices. ethical and transparent business practices. Its size and strong balance sheet allows providing varied products and services at very attractive prices. Depository Services. with a dominant position in both institutional and retail broking. right at your finger-tips. detailed data and news. Demat services and Insurance to enhance wealth and to achieve the financial goals. Commodities Trading. MOSt provides Advice-Based Broking. Focus on customer-firstattitude. Derivatives. UK. Portfolio Management Services (PMS). Hong Kong and Singapore. This powerful technology is complemented by our knowledgeable and customer focused Relationship Managers. (MOSt): One of the top-3 stock-broking houses in India. Indiabulls offers a full range of financial services and products ranging from Equities. INDIA BULLS Indiabulls is India's leading retail financial services company with 77 locations spread across 64 cities. with just two people running the show. MOSt is amongst the best-capitalized firms in the broking industry in terms of net worth. Indiabulls is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides real-time service & 24/7 access to all information and products. research-based value investing and implementation of cutting-edge technology have enabled it to blossom into a thousand-member team. our over 750 Client Relationship Managers are dedicated to serving your unique needs. MOSt was founded in 1987 as a small subbroking unit. E-Broking Services. and IPO and Mutual 13 .000 investors through 270 outlets spanning 150 cities and 22 states. The institutional business unit has relationships with several leading foreign institutional investors (FIIs) in the US. In a recent media report MOSt was rated as one of the top-10 brokers in terms of business transacted for FIIs. respect for professionalism. The retail business unit provides equity investment solutions to more than 50. and electronic trading capabilities. intelligent analytics. MOTILAL OSWAL SECURITIES LTD.Securities Limited has newly launched “Kotak Infinity” as a distinct discretionary Portfolio Management Service which looks into the middle end of the market.
they will also start offering the following online trading services on the BSE and NSE: 1.Fund Investment Advisory Services. HDFC SECURITIES LTD (HDFCsec): HDFC securities is a brand brought to you by HDFC Securities Ltd.: (UTISEL) UTI Securities Ltd was incorporated on June 24. Its Value PMS Scheme gave a 160% post-tax return for the year ended March 2004 In AsiaMoney Brokers Poll 2003 MOSt has been rated as the Best Domestic Research House. Margin trading products. purchase of Insurance policies and asset financing. Buying and selling of shares on the BSE 2. UTI SECURITIES LTD. 1994 by Unit Trust of India as a 100% subsidiary and on the repealing of the UTI Act. They are also planning to include buying and selling of Mutual Funds. 14 .Mega Funds . In a few months. Trading in Derivatives on the NSE 4. UTI Securities has been working as an independent professional entity for providing financial intermediary and advisory services to its corporate and retail clientele. the capital is now held by the Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI). Buying and selling of select corporate debt and government securities on the NSE would be introduced in a subsequent phase. Arbitrage between NSE & BSE 3. Right issues. The services comprise online buying and selling of equity shares on the National Stock Exchange (NSE).while in 2000 and 2002 it has been rated as the Best Domestic Equity Research House and Second best amongst Indian Brokerage firms respectively. which has been promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base of the HDFC Group and other investors a capability to transact in the Stock Exchanges & other financial market transactions. IPO subscriptions.
Built agent Distribution Network across the country October 1996 . portfolio management and distribution of financial products. (IDBI Capital). IDBI Capital Market Services Ltd. IDBI Capital Market Services Ltd.Started operations as a Primary Dealer June 2000 .Commenced trading in Interest Rate Swaps 15 . Mumbai November 1999 . which provides facility of commodity trading on NCDEX and MCX. Standard Chartered UTI Securities (P) Ltd.Started operations as a Depository Participant 1996 .Commenced operations as a Portfolio Manager February 1999 .Achieved an outright secondary market turnover exceeding Rs100. institutional and corporate clients. offering a complete suite of products and services to individual. The company has also invested in the joint-venture company with Standard Chartered Bank viz. IDBI Capital is a leading Indian securities firm offering a complete suite of products and services to individual. is a leading Indian securities firm.000 October 2002. equities brokerage.The Company has presence in major cities with 20 branches and 50 franchisees to service a wide range of clients. that is engaged in primary dealership and Government securities. research. Over the last five years. The company is very soon going to start Commodity Trading through its subsidiary.Acquired Derivatives memberships of BSE and NSE March 2002 .Acquired membership of BSE. a wholly owned subsidiary of Industrial Development Bank of India (IDBI). March 1995 . we have emerged as a leading player in each of these businesses. USEc Commodities Ltd.Commenced Equity Broking on NSE CM segment July 1995 .Started to act as Arranger to Privately Placed Bond issues April 1998 . debt and equity derivatives. institutional and corporate clients. depository services.Commenced Debt Broking on NSE WDM segment December 1996 . private placements. The services include fixed income trading.
and Satyam Infoway Limited (NASDAQ: SIFY) to offer online and offline equity and derivatives trading for retail customers as well as execution and clearing services for financial institutions. OTC derivatives and asset management. equities.. is a joint venture between the Refco Group Holding Ltd.. REFCO . USA. headquartered in Mumbai. fixed income. Refco also provides clients with prime brokerage services. 16 . LTD Refco-Sify Securities India Pvt.SIFY SECURITIES INDIA PVT. Its proprietary systems and global infrastructure provide the flexibility to meet all client requirements. Refco is a leader in providing clients with the latest technological advances in products and services. foreign exchange. Ltd.
Services Ltd. IDBI Capital Mkt.com Kotak Securities Ltd Kotak Securities Ltd India Bulls India Bulls Motilal Oswal Securities Ltd Motilal Oswal Securities Ltd HDFC Securities Ltd HDFC Securities Ltd Marwadi Finance Ltd Marwadi Finance Ltd BUYERS BUYERS Small Investors Small Investors Franchise/Business Franchise/Business Partners Partners HNI’s HNI’s MF Companies MF Companies HUF HUF Institutional Institutional Investors Investors SUBSTITUTES SUBSTITUTES Mutual Funds Mutual Funds Insurance Insurance Bank FD Bank FD 17 . SUPPLIERS SUPPLIERS Web maintainers Web maintainers NSCL NSCL CSDL CSDL NSE NSE BSE BSE MCX MCX NCDEX NCDEX COMPETITORS COMPETITORS ICICI Web Trade Ltd ICICI Web Trade Ltd 5paisa.INDUSTRY ANALYSIS INDUSTRY ANALYSIS USING PORTER’S 5 FORCES MODEL POTENTIAL ENTERANT Investmart Various Banks Geojit Cipher UTI Securities Ltd. Refco Group Ltd.com 5paisa.
But here there is one advantage that NSE/BSE have i. etc. If say for example stock broking houses switches over to other web maintainers then that company cannot understand the mechanisms of software’s. that’s why stock broking houses like SSKI. they cannot go for forward integration. SHCIL. etc. for which they have to take permission from NSE/BSE.e. MCX & NCDEX are stock exchanges which trade in commodities and derivatives. Web maintainers are companies which maintain web sites & technical aspects of the same. NSE & BSE are under the purview of SEBI. ICICIdirect. Here again stock broking houses have to follow rules and regulation of the same. 18 .com. Here stock broking houses like SSKI can have more bargaining power due to stiff competition among web maintaining companies. have low bargaining power. Web maintainers are companies who make and maintain software’s for stock broking houses. would be less. So it is quite high switching cost. NSE & BSE are playgrounds where common an investor trade through stock broking houses. Also these regulatory bodies have got an upper hand as the bargaining power stock broking houses like SSKI.SUPPLIERS NSDL & CSDL are the regulatory bodies for Depository Participants like SSKI.
medium net worth investors. While the bargaining power is moderate in case of HNI (High New Worth Investors)/ MNI’s (Medium Net Worth Investors) and business partners.BUYERS There are various types of investors who trade through stock broking houses like SSKI. But the in case of mutual fund companies and institutional investors bargaining power is less. business partners. There is competitive buzz in stock broking industry. competitors are offering low brokerage and best services with added feature. So here we can say that bargaining power of stock broking houses is high in case of small investors & HUF. So switching cost is pretty much less. 19 . Here the bargaining power of stock broking houses depends on how big the investor is. institutional investors and mutual fund companies. which includes investors like small investors. So the buyer can easily switch over to competitors product.
20 . The instruments like Bank FD.com and Kotakstreet.com.COMPETITORS The company is facing the competition from local as well as national level players. There are also other big names like Indiabulls. SUBSTITUES Here substitutes are such instruments which can be used instead of investing in shares. Nationalized banks are also thinking to enter in this field by tying up with broking houses. Bank Of Baroda. E. insurance. mutual funds are the substitutes. The local players provide facility for off-line trading while the national players like ICICIdirect. If the use of this instruments increase this may be disadvantage for the stock broking houses. HDFC Security provide online trading services. The companies and banks which are having these instruments can plunge into this industry. POTENTIAL ENTRANTS The potential entrants in like Investmart.g. 5paisa and Marwadi encircles the company form both the sides by providing online and off-line trading with competitive services. Jeojit and Cipher which are coming in near future to Rajkot City. Motilal Oswal.
one needs huge capital for technology up gradation and skilled manpower. etc.Obtaining a license is a tedious job for a stock broking house. Thus. The network of the companies like Motilal Oswal. this is very difficult for new companies to imitate. it needs to have some kind of financial background and expertise. Sharekhan was having two 21 . Also the most important thing which helps already established firms is-“TRUST” which people would be having on firms like SSKI .” Expected Retaliation:. This kind of practice is called expected Retaliation which is also possible in this industry in terms of less brokerage rates and reduced account opening charges.The “Reach” to the customer is the key factor in the industry. It will take time for a new entrant to establish such a huge network (e. Stock broking requires huge capital to make their products user friendly. Motilal Oswal.The core competency in this industry is the services which are provided to the end-users and the research based activities which includes “TIPS”. technology could be one of the entry barriers. Technology:. Regulatory Constraints:.Whenever a new player comes in the industry.ENTRY BARRIERS Huge capital:.g. Experience curve:. and ICICI is very efficient and spreaded all over India. It should comply with the regulation of the governing bodies like SEBI. Network:. before the entry of so many mew companies.”Network can come up as most difficult entry barrier to overcome. To start a stock broking house. E. the old companies have an option to reduce the prices of their product. Thus.g.Capital is necessary not only for fixed facilities but also for customer’s credit and absorbing start up losses. regulators constraints could be an entry barrier. which say that. etc. fundamental as well as technical script analysis.Technology for stock broking houses is life saving device. NSDL. Marwadi). which in turn requires capital to employ skilled manpower. Sharekhan. For a stock broking houses to plunge into the stock broking industry.
Indiabulls is also challenging with low brokerage rates and class one services.com is a leader in the online account which is having 1. speed trade plus with the account charges of Rs. 22 . HDFC Securities.e.000 accounts in the country. speed trade speed trade plus.com are the two stock broking houses which are focusing only on online investors. But due to competition. 24. Motilal Oswal. Kotakstreet and Indiabulls come under this head. Kotakstreet are the followers. which were costing 1000 & 1500 account opening charges respectively. The players like 5 paisa.1000.types of accounts viz. While in offline account Sharekhan is leading with 64.com and Kotakstreet. LEADER: ICICIdirect. Sharekhan challenges competitors by providing quality services and research based advice. they have come up with only one account i. COMPETITIVE ANALYSIS Follower: The followers are those who just blindly follow the other player which are leader and challenges. CHALLENGER: Sharekhan.000 offline accounts. NICHER: ICICIdirect.
This is convenient to those investors who are not familiar with the computer and the use of internet. It is a paperless transaction so it reduces the cost of company. So. The cost of transaction is also reducing with time. with trading turnover at around Rs. There was a facility of live streaming quotes.Traditional Broking Traditionally In stock Market. E. online trading has a long way to go. The investor point of view. Full service online brokerage is linked to existing brokerage.Broking Today is world of technology.9000-10000 crores handled by the BSE and NSE together. They trade any time at any place when the stock market is open. The investors have a large range of option for the trading. online trading is still in its infancy stage in India.10 crores per day from online trading compared to a combined gross turnover of around Rs. 23 . to remove these limitations of traditional broking. which give exact price of share which prevailing in the market at that time. The information of investor may leak by the broker. So. These brokers allow their client to place online orders with the option of talking/chatting to brokers if advice is needed. get the success. there was a problem of privacy. Discount online brokers allow you to trade via Internet at reduced rates. other don’t. The cost of the company also increases due to more paperwork. There was a chance of inaccuracy of price because it is a time consuming process. E-Broking is the broking in which the investors who are familiar with the use of computer and Internet they directly trade in stock market. the person who adopt it. There are two types of online trading service: DISCOUNT BROKER and FULL SERVICE ONLINE BROKER. So. But it requires more dealers to the share broking companies to give guidance related to investment. Brokerage rates here are higher. the investors invest their money in shares under the guidance of the Brokers of any stock broking company. there was an emergence of new concept e-Broking. Some provide quality research. EBroking means broking through electronic means.
presently Internet trading can take place through the order routing system. This will also require interface with banks to facilitate instant cash debit or credit and the depository system for debit or credit of securities. Now information has become easily accessible to both retail as well as big investors. The Net brings data to the investor on line and net broking enables him to trade on a click. 3. Brokers offering on line broking and relationship management by providing and offering analysis and information to investors during broking and nonbroking hours based on their profile and needs. tax planning. that is. investors had no option but to contact their broker to get real time access to market data. insurance services and enable the investors to take better and well-considered decisions. The European on line broking market is expected to be of $8 billions and is likely to raise five fold by 2002. which will route client orders to exchanges trading systems for execution of trades on stock exchanges (NSE and BSE). 2. The development of broking in India can be categorized in 3 phases: 1.INTERNET TRADING IN INDIA: In the past. 24 . market research and news to attract more investors. financial planning. 82 per cent of the deals are done on line. Brokers (now e-brokers) will offer value management or services such as initial public offerings on line. Stock brokers offering on their sites features such as live portfolio manager. asset allocation. In the US. portfolio management. customized services. live quotes. In India.
They having 14 branches. In Rajkot branch daily dealing Rs. Share Khan comes under retail arm of SSKI (Shripal Sevantilal Kantilal Ishwarlal ) investors Services Pvt. 400 franchises also having 466 shops in 210 cities. 25 . In fact Sharekhan runs India's largest chain of share shops with over hundred outlets in more than 80 cities! What's a share shop? How do you locate a share shop in your city? Sharekhan is 80 years old company which is started online in the year 2000 & it is the first company who started online in 1984 they ventured into institutional broking& corporate finance. Demate Services(DP)Derivatives(F&O). So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse. Ltd. you'd be glad to know that Sharekhan offers you the facility to visit (or talk to) any of our share shops across the country.16 crore & 400 crore daily dealing all over India. Sharekhan's expertise lies in stocks and that's what he talks about with authority. SSKI group also comprises of Institutional broking and Corporate Finance. Sharekhan does not claim expertise in too many things. And these beliefs are reflected in everything Sharekhan does for you! Those of you who feel comfortable dealing with a human being and would rather visit a brick-and-mortar outlet than talk to a PC. Almost 4000 employees and 100000 trading customers. offers World-class facilities for buying and selling Shares on BSE and NSE.ABOUT SHAREKHAN COMPANY INTRODUCTION Sharekhan is stock broking company. it is something that is spoken with years of focused learning and experience in the stock markets.
it enhances your face value ” is a service quality stressed on periodic customer service Audits Maximization of stakeholder value Success through Teamwork. Efficiency and effectiveness built on ethical practices. integrity and People 26 . Respond to progressive globalization and achieving international standard. CORE VALUE Customer satisfaction through Providing quality service effectively and efficiently “Smile. We believe that our growth depends on client satisfaction. MISSION To provide the best customer service and product innovation tuned to diverse needs of clientele Continuous up-gradation with changing technology.CURRENT POSITION VISION To empower the investor with quality advice and superior service to help him take better investment decisions. while maintaining human values.
BAPTA MARG. MUMBAI . 3970 75 00 : shrinivasb@branch. LTD. KANTILAL ISHWARLAL SECURITEIS PVT. SENAPATI. LOWER PAREL. HEAD OFFICE : SHAREKHAN LTD.sharekhan. S. PHOENIH MILL COPUND. PHOENIH HOUSE.sharekhan.22 7500 .GENERAL INFORMATION NAME : S.com : 100 BRANCHES CHIEF EXECUTIVE OFFICER: TARUN SHAH 27 .com : www.400013 PH NO E-MAIL WEB SITE BRANCH OFFICES : 1800 . A – 206.
touch-tone telephones. and other new technologies with online trading. Imagine a scenario where you log on to your account. pay the amount due (which automatically gets debited into your account with the on line brokerage firm). you get the confirmation on your screen. Seems like a dream? But with online trading this has become a reality. And after the trade settlement. and the delivery of your shares into your Demat account. So. The speed of transaction. the picture is different. get the live quotes of scripts you are interested in. confidentiality about the prices and ease of settlement in the paperless mode should be good reasons for retail investors to jump on to the Net. All they need is a PC. get your account statement. a modem.CHANGING TREND Remember the time when you left orders with your broker in the morning and received a confirmation fax late in the evening? You wondered whether you had acquired the shares at the best possible price for the day. your bank and DP accounts will reflect the changes accordingly. And they can choose from a plethora of e-trading web sites. an account with a bank (which has a web presence) and a depository account. a subscription to an ISP. In most cases customers access a brokerage firm's Web Site through their regular Internet Service Provider. Once there. customers may consult information provided on the Web Site and log into their accounts to place orders and monitor account activity" 28 . A few seconds later. get advise from experts and research reports on your investment choice and then just click the mouse to place your order. Today. All this through just one click of a mouse. finally the changing trend is known as E-trading which really means Buying and selling securities via the Internet or other electronic means such as wireless access.
Retail broking arm of the group Shareholding pattern 56% Morakhia family (promoters) 18. 200+crs average daily Vol.5% SSKI Securities Pvt.Corporate Structure Owns 56% of SSKI Securities Pvt. Ltd.5% of SSKI Investor Services Pvt. Ltd. 49.SSKI Group . Mauritius 7% Intel Pacific Inc. Ltd.FY 03-04) Multi-channel access to clients Tailor made research and products Depository Services Derivatives Innovative products for enhanced performance 29 . Morakhia Family & Associates Owns 50.5% First Carlyle Ventures. Ltd. Investment Banking arm of the group Shareholding pattern 50.5% HSBC Private Equity Management.5 % Morakhia family Integrated Equity Solutions Provider • • • • • • Among the top 3 branded retail service providers (Rs. SSKI Corporate Finance Pvt. Mauritius 18.
It acts as a discount brokerage house to a full service investment solutions provider • • • • • • It has a 150 member strong team. for cash as well as derivatives. 2000. depository services 30 .About Sharekhan • • • SSKI named its online division as SHARE KHAN and it is into retail Broking The business of the company overhauled 4 years ago on February 8. 2002 for trading in Derivatives It offers its customers with the trade execution facilities on the NSE. It has $25m/trades every day. 2000 and named it as www. It has specialized research product for the small investors and day traders Largest chain of share shops.com • The SpeedTrade account of share khan is the next generation technology product launched on April 17. Leading player today with 20% market share Over 8000 online clients • The site was also launched on February 8. 103 Franchisees & 17 Branches across India.sharekhan. 2002 • • SpeedTradePlus was launched on October 28.
hassle free trading experience. and offers a suite of products and services. Pledge. Repurchase. whether trading is done daily or occasionally. providing the customer with a multi-channel access to the stock markets. Transmission facilities at any of the Share khan branches and business partners outlets. in the investment process depending on his investing style and frequency. • Sharekhan Depository Services offers demat services to individual and corporate investors.• Ensures convenience in trading experience: Share Khan’s trading services are designed to offer an easy. The customer will be entitled to a host of value added services. A customer can avail of Demat \ Remat. • It gives advice based on extensive research to its customers and provides them with relevant and updated information to help him make informed about his investment decisions. • Share khan offers its customers the convenience of a broker-DP. • It helps the customer meet his pay-in obligations on time thereby reducing the possibility of auctions. And execute the instruction immediately on receiving it and thereafter the customer can view his updated account statement on Internet. 31 . The company believes in flexibility and therefore allows accepting late instructions without any extra charge. It has a team of professionals and the latest technological expertise dedicated exclusively to their demat department.
MARKET COVERAGE Ground Network – Largest in India 122 Franchisees and 28 branches Covers 82 cities in 17 states across India Trade execution facility on BSE and NSE for Cash as well as Derivatives Depository/Demat account services Personalized Sharekhan research advice Uniform service standards 32 .
Award-Winner Winner of Chip magazine’s ‘Best Financial Website Award’ 33 .
attractive & colorful Website. Customized Alerts based on Multiple Parameters.for high net worth investors dealing in derivative market.SEVEN P’S OF SHAREKHAN PRODUCT Product Variety Share khan offers 3 types of online trading accounts for its customers specially designed according to their volume in share trading. equity Design The website of Share khan namely www.com has been specially designed to facilitate its users to buy and sell shares in an instant at anytime and from anywhere they like. Price watch on any number of scripts.for retail investors Speed Trade: for high net worth investors with large and active portfolio who need to monitor and action swiftly Speed trade Plus.sharekhan. Features: Share khan’s product comes with the following features: Trade execution in a fraction of a second! Single Screen Trading Terminal Real time streaming quotes. The site is user friendly allowing even a layman to easily operate without any hassles. Classic. Hot keys similar to Brokers Terminal. Those 3 varieties are: • • • Quality User Friendly. 34 .
Last but not the least. Best 5 bids and offers. position. executed and rejected orders. index stock information live. Details of pending. updated live. Facility to cancel all pending orders at one click. Live updated Order and Trade Book. Facility to place after market orders Online fund transfer facility from leading Banks Online intra-day technical calls. Flexibility to customize screen layout and setting. Facility to square off all transactions at one click. Online access to Customer Service. i. Intra day charts. Instant Order\ Trade Confirmation in the same window Live margin. marked to market profit & loss report. 128 . ideas that help you to make money!!! 35 . and Most Active. updated live. tick-by-tick.Back up Facility to place trades on Direct Phone Lines.e. Facility to customize any number of portfolios & watch lists. Top Losers. Exhaustive database of over 2000 companies Historical charts and technical analysis tools.bit super safe encryption. Market depth. updated live for all scripts Online access to both accounts and DP. Index information. Top Gainers. index chart. Competitive Brokerage.
Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal Securities Pvt. the customer will be directed to a telebroker who will buy or sell shares for him. Services Share khan offers its customers. depository services and trade execution facilities for equities. derivatives and commodities backed with investment advice tempered by decades of broking experience. But in its online division started since 1997.Brand Name The company as a whole in its offline business has named itself as SSKI Securities Pvt. the company preferred to name itself as “SHARE KHAN”. Ltd. The teams of its dedicated analysts are constantly at work to track performance and trends. On dialing the toll free number 1600-22-7050 and on entering the customers TPIN number. The company has preferred to name themselves under a Blanket Family Name. Dial-n-trade is also an exclusive service available to all Sharekhan customers for trading in shares via the telephone. PRICE • List Price CLASSIC SPEED TRADE One time registration fee Minimum brokerage 750 Nil 1000 1000 SPEED TRADE PLUS 1500 1500 36 . The Brand Name “SHARE KHAN” itself suggests the business in which the company is dealing so that the consumer could easily identify the product or service category.
e.In Derivative Market On Trading: 0. Generally investor doesn’t like to come out from conventional way of share trading.5% . • Credit terms Share khan allows its customers to trade up to 4 times i. Share khan has introduced this product in. the payment of the transaction taken place has to be made within two days of its occurrence. by keeping 1/4th margin with them.In equity Market: On Trading: 0.1% On Delivery: 0. • Payment Period The transaction settlement date in the securities market is T+ 2 days i. Therefore the company has undertaken extensive promotion campaign to create awareness about the product.e. there are slabs in brokerage rates.015% (Rs. Share khan adopts the following tools for promoting the product 37 . • Turnover tax + Stamp duty -0. PROMOTION Online share trading is totally a new concept in Indian Market. 100000) • Custody Charge Re.1% • Service Tax -8% on Brokerage. 15 on every turnover of Rs. 1 per script held per month.12% (Total brokerage) On Delivery: 0. The concept and Product are still new in the market.Charges Quarterly • Brokerage – Share khan in its online business charges brokerage as follows: . • Discounts For investors with High Net worth.
500 instead of Rs. Besides attractive and colorful brochures as well as posters are used giving full details about the product. It advertises itself as an innovative Brand with a cartoon of tiger-called SHERU.300 for IIM students. • Direct Marketing Company emphasizes more on direct marketing. • Sales Force The Company has an aggressive sales force.• Advertising Company advertises its product through TV media on channels like CNBC. stalls are opened up now and then at places where prospective customers can be approached. • Telemarketing 38 . • Sales Promotion The Company offers Rs. the company recruits and trains sales representatives so as to explain the product and solve customer queries related to the product.com. it provides online trading accounts for just Rs.750 for corporate accounts (more than 20 accounts). it had organized for a seminar in ONGC. Recently. which is given incentives. The sales force is given intensive training continuously. • Seminar The Company also arranges seminar in corporate world for creating awareness about the product. Also. Print Media-in leading dailies and outdoors media. Mails are sent to people logging on to sites like moneycontrol. based on their sales.com and rediff. For this. IIM. as many people are still not aware of this new way of smart trading. Also. This is the most effective way to communicate the three-in-one concept which company offers.
Allahbad. Midnapore. etc. Delhi. PEOPLE • Employees ⇒ Selection: Employees are selected on the basis of their experience and qualification as applicable to the job. Chennai. Luckhnow. Kolkata. ⇒ Motivation: The employees are motivated through incentives they are provided. Surat. • Research Team 39 . Banglore. PLACE • Channels Share khan uses various channel alternatives to reach to its customers through Internet Tele Marketing Retail Share Shops Franchisee Owners Power Brokers Sales Force • Coverage Access to the website from any part of the globe. For this.This is another promotional tool company is using to boost up its sales. Kanpur. ⇒ Training: Intensive training is provided to the employees till a week once they join and even at times required after that. • Locations Share khan has the largest chain of retail share shops in India. Gaziabad. Baroda. It has 180 share shops located in 90 cities all over India like Pune. Thane. the company collects the database of the people belonging to different professional segments. Hydrabad. Darjleeng.
and a proven track record in using their knowledge of the investment science to deliver results.Share khan has a team of dedicated analysts who have years of working experience in the industries that they track. 40 .
The heart of sharekhan are really treated loyally like the kings. The customer care, which comprises of highly trained executives operating from 9:30 to 8:00 p.m.
PHYSICAL EVIDENCE • Locality of the office:
In Ahmedabad, two franchise outlets are located in posh areas like Navrangpura and Maninagar. A new franchise is going to open up in Vastrapur.
• Office Environment:
The ambience within the office is what can make the customer feel comfortable in trading. The cordial and friendly atmosphere at office is like a full time motivation for the employees.
• Interiors and Infrastructure:
The office is well furnished and has 24 computer terminals on which tick-bytick price movements of the securities are displayed.
• In this service organization, the ways in which the customers receive delivery of the service constitutes the process. Here, the process involves adding ‘value’ or ‘utility’ so that the customers get full satisfaction for the money spent by them. • • • Here the process begins from the step when customer wants to open e-invest account and ends when his account is actually activated. All Indian residents and NRI are eligible to avail this service. Customers can open a sharekhan e-invest account by filling a single application form. This form includes 9 agreements like 1. Main form with customer details
2. Agreement between sharekhan and client in respect of the ONLINEINVESTMENT SUPPORT service offered. 3. Agreement between the Depository Participant and the client for providing the transaction statement through Internet. 4. Irrevocable power of attorney 5. Agreement between the DP and the person seeking to open an account with the DP. 6. Maintenance of client’s account on a running account bases by SSKI. 7. Agreement giving the right of lien on the credit balance of client in NSE trading. 8. Agreement giving the right of lien on the credit balance of client in BSE trading. 9. Risk disclosure document (cash segment)
SEVEN ‘S’ MODEL
Structu re Strateg y Syste Super ordinat e Goals goals ms
If need arises. the top management can assign the role to any of its employees which it considers capable and skillful. 44 . values and aspirations that unite an organization in some common purpose. Share khan is known for its timely advice (suggestions/tips). SUPERORDINATE GOALS: This refers to guiding concepts. STYLE: Style refers to all the symbolic actions undertaken by top managers of Share khan and its influence on the subordinates. which it caters to its customers and it boasts of 70-90% strike rates in booking recommendations. STRATEGY: Share khan believes not only in developing the strategies but also in its successful execution. STAFF: Share khan values its employees as its assets and therefore carefully trains and motivates them by giving them incentives at regular intervals. SKILLS: The term skills refer to those activities organizations do best and for which they are known.Share khan is flexible in terms of making temporary structural changes to cope up with specific strategic tasks without any hassles. SYSTEMS: This constitutes of all the training and development systems. estimating budgets and the accounting system of Share khan. Talented employees are assigned as mentors and given real responsibility and moved into higher positions. It provides the customers the best service as it believes in customer satisfaction and retention.
Get in. ⇒ Applegreen Potentially steady compounders. Even better. ⇒ Emerging Star Young companies likely to rule chosen niches. but five to ten years graph bit unclear. Each cluster represents a certain profile in terms of business fundamentals as well as the kind of returns you can expect over a certain time horizons and return objectives best. ⇒ Cannonball Season’s favourites. cash in.Buy & await predators.Could double in two to three years time. ⇒ Evergreen Dominant players with strong brands. ⇒ Ugly Duckling Trading below fair value or at huge discount to peer group.SHAREKHAN’S STOCK CLUSTER We categorize all the scrip’s that are under coverage into six clusters.Stratlingly high returns possible. Will steadily compound 18-20% per year for next five to ten years. Potentially ten-baggers if you’re patient. ⇒ Vulture’s Pick Companies with valueable assets at throwaway prices. Typically fast gainers in rising markets. 45 . robust management credentials. get out. But somtehing’s cooking. could return 30-50% within six months. Could gallop at 25-30 per year over the next two to three years. the niches could balloon into full-blow markets. supernormal shareholder returns.
Publications of sharekhan ⇒ Sharekhan’s Valueline ⇒ Derivatives Digest ⇒ Eagle Eye ⇒ High Noon ⇒ Investor’s Eye ⇒ Commodities Buzz ⇒ Commodities Beat ⇒ Commodity Trader’s Corner ⇒ Sharekhan Xclusive 46 .
Depository Services 3.On 2nd Year AMC charge is applicable. Research Based Information Provided OFFLINE ⇒ Offline A/c is the A/c for the investors who are not familiar with the use of computer.PRODUCTS OF THE SHAREKHAN COMPANY ShareKhan’s product Offline Online Other Services Classic A/C Speed Trade A/C Other Services: 1. Portfolio Management Services 7. 47 . ⇒ The A/C opening charges Rs. Online IPO 8.500(One time) ⇒ For 1st Year Demat A/C is Free. Derivative Trading 5. Commodity Trading 4. Mutual fund 6. Dial-n-Trade 2.
Union Bank of India 48 . IDBI Bank 3.750(onetime Charge). CITY Bank 6. For 1st Year Demat A/C is Free. Type with 7 banks through which one can transfer or withdraw his fund online. ONLINE A/C Opening Charges Rs. UTI Bank 4. HDFC Bank 2.On 2nd Year AMC charge is applicable. Indusind Bank 7. OBC Bank 5.Which are as follows 1.
com account for investing in Equities and Derivatives via Integration of: Online trading + Bank + Demat account Instant cash transfer facility against purchase & sale of shares Make IPO booking You get Instant order and trade confirmations by e-mail Streaming Quotes Personalised Market Scan with your own customized stock Single screen interface for cash and derivatives Your very own Portfolio Tracker! System Requirements you’ll need access to a computer which has at least the following configuration: Pentium 3 PC. Minimum 128 MB RAM Windows 2000/XP Internet Connection ticker! 49 . demat and digital contracts d) Instant credit and transfer e) Real-time portfolio tracking with price alert and. You get features like a) Streaming quotes (using the applet based system) b) Mutltiple watchlists c) Integrated Banking.Any one who have A/C either of above banks they can use this facility. This account enables you to buy and sell shares through our website.Otherwise one has to make fund transfer or withdraw by cheque. of course. the secure transactions. assurance of Features of Classic Account that enables you to invest effortlessly Online trading sharekhan.
Internet Explorer 6.0 Java enabled in IE SPEEDTRADE A/C Opening Charges Rs.Which are as follows HDFC Bank IDBI Bank UTI Bank OBC Bank CITY Bank Indusind Bank Union Bank of India Any one who have A/C either of above banks they can use this facility.1500/-that was charged of a Quarter will be Reimbursed). On 2nd Year AMC charge is applicable. Monthly charges Rs. then Rs.500/-(But if Client give Brokerage of Rs. 50 . Type with 7 banks through which one can transfer or withdraw his fund online.1000/-(onetime Charge). For 1st Year Demat A/C is Free.1500/-in a Quarter. Otherwise one has to make fund transfer or withdraw by cheque.
Features of SpeedTrade that enable you to trade effortlessly Instant order Execution & Confirmation Single screen trading terminal Real-time streaming quotes. tic-by-tic charts Market summary (most traded scrip. highest value and lots of other relevant statistics) Hot keys similar to a brokers terminal Alerts and reminders Back-up facility to place trades on Direct Phone lines Single screen interface for cash and derivatives System Requirements You'll need access to a computer which has at least the following configuration: Pentium 3 PC Minimum 128 MB RAM Windows 2000/XP Dial-up Modem / Cable modem Internet Connection Account Internet Explorer 6.0 Java enabled in IE 51 .
the Dial-n-Trade service enables you to place orders for buying and selling shares through your telephone.10 0. All you have to do is dial any one of our two dedicated numbers (1-800-22-7050 or 30307600).50 0.HDF C.UTI.15 ICICI Bank . IDBI.06 0. City Bank ICICI Bank Sharekhan ICICI Direct IndiaBulls 5 Paisa Kotak Street HDFC Securities Dial-n-Trade Trade in Equity by using your phone! Free with your Sharekhan Classic Account.OBC .05 0.40 0.OBC. City Bank Kotak Bank.UTI.75 0. City Bank HDFC & Other Bank HDFC.18 0.Charges of Different companies for online A/C Parameters Opening Fee Brokerage Interface Trading Demate Delivery Square Bank A/C A/c Off Associated 750 750 750 NIL NIL 250 NIL 500 700 NIL 0. enter your TPIN number (which is provided at the time of opening your 52 .20 0.10 0.59 0.50 0.
Toll free number: 1-800-22-7050. Automtic funds tranfer with phone banking (for Citibank and HDFC bank customers) Simple and Secure Interactive Voice Response based system for authentication No waiting time.50 per minute for STD calls. please dial 022-1-800-22-7050 Currently for Citibank and HDFC customers.00 am and 9.account) and on authentication you'll be directed to a telebroker who will buy and sell shares for you. we also have a Reliance number 30307600 which is charged at Rs. professional advice of our telebrokers After hours order placement facility between 8.either a landline or a cellphone: (the type of phone doesn't matter) If calling from a cellphone. More banks to be added soon After hour order timings: 8. wherever you are Requirements All you need is access to a phone . Enter your TPIN to be transferred to our telebrokers You also get the trusted. For people with difficulty in accessing the toll-free number. Features of Dial-n-Trade that enable you to trade effortlessly TWO dedicated numbers for placing your orders with your cellphone or landline.00 am to 9. 1.30 am It takes approximately 10 minutes of your time to place an order 53 .30 am (timings to be extended soon) Reliable service.
Right from choosing the combination of stocks most suitable for you based on your risk appetite to monitoring their movements and discussing them with you at special events. 54 . This multi-pronged approach enables us to provide risk-controlled returns for you. you can be assured that your investments are in safe hands! We follow a multi-disciplined approach incorporating quantitative analysis. fundamental analysis and technical analysis. PORTFOLIO MANAGEMENT SYSTEM With the Sharekhan Team Managing Your Portfolio.
Investors pay a small fraction of their total funds to the AMC each year as investment management fees. MUTUAL FUND Introduction Everybody talks about mutual funds. The AMC offers to invest the money of hundreds of investors according to a certain objective . like getting a regular income now or letting the money accumulate over the long term. Meaning A mutual fund is a pool of money that is invested according to a common investment objective by an asset management company (AMC). Investors buy a scheme if it fits in with their investment goals.to keep money liquid or give a regular income or grow the money long term. or are they like bonds and fixed deposits? Will I lose all my money in funds or will I become an overnight millionaire? Big questions that get answered in just five minutes. but what exactly are they? Are they like shares in a company. 55 .
and in the near future will be expanding our scope to include a whole lot more. B) Alternatively you can call up our customer service 1600-22-7500 and give your contact detail wherey we will arrange to mail you a hard copy of application of desired schemes from the list offered by Sharekhan. You have two choice through which you can invest in Mutual Fund. Applying for a mutual fund through us is open to everybody. Submit the duly filled copy with payment either to Nearest Sharekhan Branch Or Mutual Fund Company. A) On the main page of this micro-site and scheme snapshot page we have provided with a link to PDF version of application form which you just need to download. They are also called income funds since people buy them for their income needs.Categories of Mutual Fund There are three broad categories of funds in the Indian market . Debt funds invest mainly in debt instruments like government securities. corporate and institutional debt paper.money market. Investing in Mutual Funds through Sharekhan We're glad to announce that you will now be able to invest in Mutual Funds through us! We've started this service for a few mutual funds. property and gold funds are yet to come into India. Commodity. Equity funds invest in the stock market and suit long term investors who want capital appreciation. print and fill up relevant details. returns better than a bank deposit and liquidity high. 56 . regardless of whether you are a Sharekhan customer. A money market fund invests in short-term government debt paper and is good for parking money for the short term since the principal is safe. debt and equity.
Sharekhan Depository Services Dematerialization and trading in the demat mode is the safer and faster alternative to the physical existence of securities. rights etc. making our services quick. our commitment is to provide a complete demat solution which is simple. Facilitate pledge of your electronic securities. Give electronic credit of new share allotments such as public issues.We have a team of professionals and the latest technological expertise dedicated exclusively to our demat department. forgeries. thefts. settlement risks and paper work. Demat as a parallel solution offers freedom from delays. At Sharekhan. Convert your electronic holding into physical holding (which is called "dematerialization of securities") 57 . safe and secure. Transfer the shares in the electronic form from one account to another. convenient and efficient. bonus. This system works through depository participants (DPs) who offer demat services and hold the securities in the electronic form for the investor Sharekhan Depository services offers dematerialisation services to individual and corporate investors. apart from a national network of franchisee. The services offered by Depository Participant Convert your physical holding into electronic holding (which is called "dematerialization" of securities) Keep custody of your holdings in electronic form.
These all publication provides: In-depth analysis of the markets Analysis Before. The quarries regarding stock positions and other relevant matter of the branch heads of each branch is being solved through teleconference. The R&D department Head Mr. through which the R&D department Head MR. Hemang Jani talks with each Branch heads and discusses about each day’s closing position and shows their predictions about next day’s opening position. Sharekhan’s Valueline. Derivatives Digest. Hemang Jani forwards all the details regarding all stocks and scripts to all the branches through Internet. Sharekhan provides a comprehensive set of research reports. To meet these needs. Investor’s Eye. The various publications of Sharekhan viz. At the end of each trading day there is a Teleconference. Sharekhan Xclusive. Commodities Beat. Commodities Buzz. etc.RESEARCH BASED ADVICE Every investor’s needs and goals are different. During (live market updates) and After market timings Special sector tracking reports sent regularly 58 . so that one can take the right investment decisions regardless of their investing preferences! The Research and Development at Sharekhan is done at its Head office Mumbai. Commodity Trader’s corner. Eagle eye. High Noon. are being prepared by the research team of Sharekhan made up of highly experienced people from diverse field.
59 .ONLINE IPO Online IPO (Initial Public Offering) is a new service started by Sharekhan for providing the application form of any company’s issues of shares just like the TCS issue can be subscribed by filling an online form to reduce the paper work and the fund transfer facility is also provided to the clients for transferring the funds online. It is given on its web-site for helping the clients who are not able to collect the forms manually and the speed of filling and reducing the risk of misplacing of forms. etc. not reaching in time.
Lowest brokerage and other charges w. Wide product range to enable the clients to choose the best alternative. 60 . A positive image in the existing clients. The best investment advice correct up to 70-90 % through dedicated research and reports. On-line Trading products. Intelligent and Loyal staff. Dedicated. Therefore. Competitors. the SWOT analysis is presented here and the suggestions for maintaining strengths and removing weaknesses are explained. One of the best DPs in India. Opportunities: Slope of stock market towards delivery based transaction.t.r. etc. Time consuming process for account opening.SWOT ANALYSIS During this training at sharekhan. Weaknesses: Less awareness in the market. Strengths: Well-maintained infrastructure. we had come to know the Strengths-WeaknessesOpportunities-Threats for the company and it is very useful for a company to analyze them. resolving the problems of the customers. Service quality is not maintained accordingly how they are promoted.
Large untapped market in the Saurashtra region of Gujarat. An indirect opportunity generated by the market from its bullishness. Large potential market for delivery and intra-day transactions. Open interest of the people to enter in stock market for investing. Increasing competition against other brokers & DPs Poor marketing activities for making the company known among the customers. 61 . A threat of loosing clients for any kind of weakness of the company. Loosing the untapped market with the entry of the competitors. Attract the customers who are dissatisfied with other broker & DPs. Threats: Decreasing rates of brokerage in the market.
the financial markets are marked by a very high degree of volatility. Indian financial market is not an exception to this phenomenon. complexity of business. to manage their risk effectively. fine-tuning the risk management system to deal with credit and market risk is also the need of the hour. requiring strategic management. the risks associated with operations of banks and All India Financial Institutions have become increasingly complex. Credit Risk and Interest Rate risk are the two core risks. Through the use of derivative products. As a result. risk philosophy. the logical need is for those financial instruments which allow fund managers to better manage or reduce these risks. In addition. Effective management of these core risks is a critical factor in comprehensive risk management and is essential for the long-term financial health of business organizations. it is no denying the fact that financial market is extremely volatile by nature. the concept of derivatives comes into picture. which are commonly acknowledged by various categories of Financial Institutions particularly banks. market perception and the level of capital. The attendant risk arising out of the volatility and complexity of the financial market is an important concern for financial analysts. it is very much required to design risk management architecture. Out of various risks. The emergence of the market for derivative products. In keeping with spirit of the guidelines on Asset-Liability Management (ALM) systems and on integrated risk management systems. By their very nature. especially banks. among others. For enabling the banks and the financial institutions.ABOUT THE DERIVATIVES DERIVATIVES INTRODUCTION Keeping in view the experience of even strong and developed economies the world over. it is possible to partially or fully transfer price risks by locking–in asset prices. most notably forwards. taking into consideration the size. can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. futures and options. With gradual liberalization of Indian financial system and the growing integration among markets. As 62 .
these generally do not influence the fluctuations in the underlying asset prices. Here. which in turn depends upon the demand. Consider how the value of mutual fund units changes on a day-to-day basis. Nifty options and futures. derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of riskaverse investors. Futures and options are the most common and popular form of derivatives. Such a transaction could take place on a wheat forward market. The most important derivatives are futures and options. which derives its value from some other financial price. Satyam futures and options etc are all examples of derivatives. The price for such a contract would obviously depend upon the current spot price of wheat. by locking-in asset prices.instruments of risk management. these examples prove that derivatives are not so new to us. They draw their price from the underlying shares traded in India. commodity or any other asset. FOREX. Satyam and Infosys traded on stock exchanges in the USA and England have their own values? No. This “other financial price” is called the underlying. Don’t mutual fund units draw their value from the value of the portfolio of securities under the schemes? Aren’t these examples of derivatives? Yes. And you know what. “derivative product”. 63 . and supply of milk. or “derivative” are used interchangeably. See it this way. American depository receipts/ global depository receipts of ICICI. the wheat forward is the “derivative” and wheat on the spot market is “the underlying”. However. MEANING A derivative is a financial instrument. Example: A very simple example of derivatives is curd. these are. The terms “derivative contract”. The price of curd depends upon the price of milk. which is derivative of milk. The underlying asset can be equity. A wheat farmer may wish to contract to sell his harvest at a future date to eliminate the risk of a change in prices by that date. Reliance futures and options.
NSE and BSE started trading in futures on Sensex and Nifty. DERIVATIVES: AN INDIAN CONTEXT: In Indian context. Banks. without retaining any net-risk on the balance sheet (except credit risks). Options trading on Sensex and Nifty commenced in June 2001. and/or Covered Intermediation: On-balance-sheet derivatives intermediation for client transaction. 64 . In June 2000. Financial Institution. India has been trading derivatives contracts in silver. The minimum quantity you can trade in is one market lot. Recently futures contract in various commodities was allowed to trade on exchanges. Very soon thereafter trading began on options and futures in 31 prominent stocks in the month of July and November respectively. Trading derivatives contracts in organized market was legal before Morarji Desai’s government banned forward contracts. spices. cotton and oil etc for decades in the gray market. gold. Life and General Insurers) depend on their ability and willingness to use derivatives for one or more of the following purposes: Risk containment: using derivatives for hedging and risk containment purposes Risk Trading/Market Making: Running derivatives trading book for profits and arbitrage. Foreign Institutional Investors.HISTORY The derivatives markets has existed for centuries as a result of the need for both users and producers of natural resources to hedge against price fluctuations in the underlying commodities. coffee. Derivatives on stocks were traded in the form of “Teji” and “Mandi” in unorganized markets. Mutual Funds. the intensity of derivatives usage by institutional investors (viz. The market lots keeps on changing from time to time.
Derivatives and futures are basically of 3 types: Forwards and Futures Options Swaps DERIVATIVES Options Futures Swaps Forwards Put Call Commodi Interest Security Currenc 65 . a derivative transaction helps cover risk.” Very often. In reality it is not so. In fact. “A derivative security can be defined as a security whose value depends on the values of other underlying variables. which would arise on the trading of securities on which the derivative is based and a small investor can benefit immensely. the variables underlying the derivative securities are the prices of traded securities. speculative dealings and comes across as an instrument which is the prerogative of a few ‘smart finance professionals’.TYPES OF DERIVATIVES Derivative as a term conjures up visions of complex numeric calculations.
however. Illustration: . but are standardized and traded on an exchange. or "Marked to Market” daily. He can only buy it 3 months hence.Shyam wants to buy a TV. A Future represents the right to buy or sell a standard quantity and quality of an asset or security at a specified date and price. He. FORWARDS: A forward contract is the simplest mode of a derivative transaction. The forward contract is settled at maturity. which costs Rs 10. The Marking to Market provides both parties with a daily accounting of their financial obligations under the terms of the Future. No cash is exchanged when the contract is entered into. Futures are similar to Forward Contracts. FUTURES: It is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price through exchange traded contracts. Parties to a Futures contract may buy or write Options on Futures.000 but he has no cash to buy it outright. What Shyam is doing is that he is locking the current price of a TV for a forward contract. 66 . fears that prices of televisions will rise 3 months from now. Futures often are settled in cash or cash equivalents. rather than requiring physical delivery of the underlying asset.000. So in order to protect himself from the rise in prices Shyam enters into a contract with the TV dealer that 3 months from now he will buy the TV for Rs 10. and are valued. It is an agreement to buy or sell an asset (of a specified quantity) at a certain future time for a certain price. The dealer will deliver the asset to Shyam at the end of three months and Shyam in turn will pay cash equivalent to the TV price on delivery. the counterparty to a Futures contract is the clearing corporation on the appropriate exchange. Unlike Forward Contracts.
and thus. and you are not obligated to. Technically. but not the obligation to buy or sell shares of the underlying security at a specific price on or before a specific date. In this way. Illustration: . and. as the word suggests. OPTIONS: An option is a contract. an option is a contract between two parties. If something happens which causes the stock price to fall. If the price of your stock goes up. and there is no "damage. you can exercise your option and sell it at its "insured" price level. Put options are like insurance policies. CALL OPTIONS Call options give the taker the right. once again. is a choice given to the investor to either honor the contract. your only cost is the premium. but not the obligation. There are two kinds of options: Call Options and Put Options. "damages" your asset. you can "insure" a stock by fixing a selling price. secures your right to buy that certain stock at a specified price called the strike price. or if he chooses not to walk away from the contract. to buy the underlying shares at a predetermined price." then you do not need to use the insurance. on or before a predetermined date. With a Put Option. When you buy a Call option. A Call Option is an option to buy a stock at a specific price on or before a certain date. The seller accepts an obligation for which he receives a fee. Put Options are options to sell a stock at a specific price on or before a certain date. your only cost is the option premium. called the option premium. which gives the buyer the right. If you decide not to use the option to buy the stock. the price you pay for it. The buyer receives a privilege for which he pays a premium.Raj purchases 1 Satyam Computer (SATCOM) AUG 150 Call --Premium 8 67 . ‘Option’.
then you take a short position by selling calls. You are bearish. Suppose the stock does not rise and instead falls he will choose not to exercise the option and forego the premium of Rs 15 and thus limiting his loss to Rs 15. Sam purchases a December call option at Rs 40 for a premium of Rs 15. If the stock rises above Rs 55 (40+15) he will break even and he will start making a profit. That is he has purchased the right to buy that share for Rs 40 in December. but he does not want to take the risk in the event of price rising so purchases a put 68 . then you take a long position by buying calls. For this privilege. Illustration:. Now let us see how one can profit from buying an option. The buyer of a call has purchased the right to buy and for that he pays a premium. You are bullish.This contract allows Raj to buy 100 shares of SATCOM at Rs 150 per share at any time between the current date and the end of next August.Raj is of the view that the a stock is overpriced and will fall in future. Raj pays a fee of Rs 800 (Rs eight a share for 100 shares). PUT OPTIONS A Put Option gives the holder of the right to sell a specific number of shares of an agreed security at a fixed price for a period of time. Call Options-Long & Short Positions When you expect prices to rise. When you expect prices to fall.
In order to understand how one can protect his portfolio from value erosion let us take an example. 69 . then you take a long position by buying Puts. Put Options-Long & Short Positions When you expect prices to fall. So he will breakeven only after the stock falls below Rs 55 (70-15) and will start making profit if the stock falls below Rs 55.option at Rs 70 on ‘X’. You are bullish. The other benefit of trading in index futures is to hedge your portfolio against the risk of trading. By purchasing the put option Raj has the right to sell the stock at Rs 70 but he has to pay a fee of Rs 15 (premium). then you take a short position by selling Puts. When you expect prices to rise. CALL OPTIONS If you expect a fall in price(Bearish) If you expect a rise in price (Bullish) Short Long PUT OPTIONS Long Short IMPORTANT FACTORS IN DERIVATIVES HEDGING We have seen how one can take a view on the market with the help of index futures. You are bearish.
stock. If Shyam honors the contract. economic fundamentals and other data to take their positions. They only have a particular view on the market.(No gain/loss) Shyam honors 3000 (Initial profit) (-1000) discount given to Shyam 2000 (Net gain) As we see above if Shyam defaults Ram will get a penalty of Rs 1000 but he will recover his initial investment.Illustration: Ram enters into a contract with Shyam that six months from now he will sell to Shyam 10 dresses for Rs 4000. Ram will still make a profit of Rs 2000. Cost (Rs) 1000 Selling price 4000 Profit 3000 However. Ram has hedged his risk against default and protected his initial investment. Ram fears that Shyam may not honor his contract 6 months from now. commodity etc. Thus. 70 . Shyam defaults 1000 (Initial Investment) 1000 (penalty from Shyam) . The above example explains the concept of hedging. However. Illustration: Ram is a trader but has no time to track and analyze stocks. So he inserts a new clause in the contract that if Shyam fails to honor the contract he will have to pay a penalty of Rs 1000. he fancies his chances in predicting the market trend. The cost of manufacturing for Ram is only Rs 1000 and he will make a profit of Rs 3000 if the sale is completed. open interests. SPECULATION Speculators are those who do not have any position on which they enter in futures and options market. In short. They consider various factors such as demand supply. And if Shyam honors the contract Ram will offer a discount of Rs 1000 as incentive. So instead of buying different stocks he buys Sensex Futures. speculators put their money at risk in the hope of profiting from an anticipated price change. market positions.
However. Arbitrageurs are always in the look out for such imperfections. Similarly. On June 1. When markets are imperfect. 2001.On May 1.60.000 Rs 40. He enters into those contracts were he can earn riskless profits. In the futures market one can take advantages of arbitrage opportunities by buying from lower priced market and selling at the higher priced market. if the Sensex had fallen he would have made a loss. In index futures arbitrage is possible between the spot market and the futures market. ARBITRAGE An arbitrageur is basically risk averse. buying in one market and simultaneously selling in other market gives risk less profit. If there is a difference then arbitrage opportunity exists.000 Rs 3. If Wipro is quoted at Rs 1000 per share and the 3 months futures of Wipro is Rs 1070 then one 71 . In index futures players can have a long-term view of the market up to atleast 3 months. Assume that Nifty is at 1200 and 3 month’s Nifty futures is at 1300. the Sensex rises to 4000 and at that time he sells an equal number of contracts to close out his position.00. 2001. Let us take the example of single stock to understand the concept better.000 Ram has made a profit of Rs 40. The futures price of Nifty futures can be worked out by taking the interest cost of 3 months into account. if would have been bearish he could have sold Sensex futures and made a profit from a falling profit. he buys 100 Sensex futures @ 3600 on expectations that the index will rise in future.000 by taking a call on the future value of the Sensex. Selling Price : 4000*100 Less: Purchase Cost: 3600*100 Net gain = = Rs 4.
The initial margin amount is large enough to cover a one-day loss that can be encountered on 99% of the days. Sale Cost= 1000+30 Arbitrage profit = = = 1070 1030 40 These kinds of imperfections continue to exist in the markets but one has to be alert to the opportunities as they tend to get exhausted very fast. 72 .can purchase ITC at Rs 1000 in spot by borrowing @ 12% annum for 3 months and sell Wipro futures for 3 months at Rs 1070. Daily margining is of two types: 1. MARGINS The margining system is based on the JR Verma Committee recommendations. The actual margining happens on a daily basis while online position monitoring is done on an intra-day basis. Mark-to-market profit/loss The computation of initial margin on the futures market is done using the concept of Value-at-Risk (VaR). The daily settlement process called "mark-to-market" provides for collection of losses that have already occurred (historic losses) whereas initial margin seeks to safeguard against potential losses on outstanding positions. The mark-to-market settlement is done in cash. Initial margin amount computed using VaR is collected up-front. Initial margins 2. VaR methodology seeks to measure the amount of value that a portfolio may stand to lose within a certain horizon time period (one day for the clearing corporation) due to potential changes in the underlying asset market price.
000 Addn Margin 3.80.000) Net cash outflow 17.400*200= 2.000 (20.000 Margin = 42.80.300 (45.000) Margin released 3.000 (200 x 1500) Rs 45.000) Payment to be recd 73 .2.700 (22.80. = = Rs 3.00.000) Net cash inflow 18.000 42.000 .000 3000) (17.42.000 (3.000 2.3300) 18.700 Loss 20.000 (3.80.000 Total long position Initial margin (15%) Assuming that the contract will close on Day + 3 the mark-to-market position will look as follows: POSITION ON DAY 1 Close Price 1400 x 200 = 2. A client purchases 200 units of FUTIDX NIFTY 29JUN2001 at Rs 1500.000) 3.000 .300 .000 (45.02.02. The initial margin payable as calculated by VaR is 15%.Let us take a hypothetical trading activity of a client of a NSE futures division to demonstrate the margins payments that would occur.000 Close Price 1510 x 200 = Gain 22.000 Payment to be made NEW POSITION ON DAY 2 Value of new position = 1.00.
20.300 Margin account* Initial margin Margin released (Day 1) Position on Day 2 Addn margin Total margin in a/c Net gain/loss Day 1 (loss) Day 2 Gain Day 3 Gain Total Gain = = = = (Rs 17.000 Rs 19.300 Close Price 1600*200 =3.300* = 63.700 = = = (-) Rs 45. ABOUT COMMODITIES 74 .000 Rs 42.000 Rs 3.000 Payment to be recd Gain 18.000 (3.700 at the end of Day 3 and the total cash inflow at the close of trade is Rs 63.POSITION ON DAY 3 Value of new position = 1510*200 = Rs 3.300* The client has made a profit of Rs 19.02.000 + 45.000 Margin = Rs 3.000-3.000) Rs 18.000) Net cash inflow 18.300.000 (+)Rs 3.300 Rs 45. 02.300 63.700 Rs 18.20.
INTRODUCTION Commodities Market In India Organized futures market evolved in India by the setting up of "Bombay Cotton Trade Association Ltd. A three-pronged approach has been adopted to revive and revitalize the market. The era of widespread shortages in many essential commodities resulting in inflationary pressures and the tilt towards socialist policy. A statement in the first ever National Agriculture Policy. This coupled with the regulatory constraints in 1960s. in 1999. on policy front many legal and administrative hurdles in the functioning of the market have been removed. Futures trading in oilseeds was organized in India for the first time with the setting up of Gujarati Vyapari Mandali in 1900." was constituted. Before the Second World War broke out in 1939 several futures markets in oilseeds were functioning in Gujarat and Punjab. However. The securities market was a poor cousin of this market as there were not many papers to be traded at that time. In 1893. which carried on futures trading in groundnut . 2000 by the government that futures trading will be encouraged in increasing number of agricultural commodities was indicative of welcome change in the government policy towards forward trading. 75 ." in 1875. Firstly. following widespread discontent amongst leading cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association. issued in July. saw the decline of this market since the mid-1960s. sesame. castor seed and cotton. mustard seed. Forward trading was permitted in cotton and jute goods in 1998. cottonseed etc. in which the role of market forces for resource allocation got diminished. such as groundnut. resulted in virtual dismantling of the commodities future markets. followed by some oilseeds and their derivatives. There were booming activities in this market and at one time as many as 110 exchanges were conducting forward trade in various commodities in the country. a separate association by the name "Bombay Cotton Exchange Ltd. the markets have been thin with poor liquidity and have not grown to any significant level. It is only in the last decade that commodity future exchanges have been actively encouraged.
Mumbai (MCX). commodities related (and dependent) industries constitute about roughly 50-60 %. all these shortcomings will be addressed rapidly. Multi Commodity Exchange Ltd. The current mindset of the people in India is that the Commodity exchanges are speculative (due to non delivery) and are not meant for actual users. such as. technology driven exchanges with nationwide reach and adopting best international practices. One major reason being that the awareness is lacking amongst actual users. Of the country's total GDP.Secondly. are regional in nature. National Commodities and Derivatives Exchange. new promoters with resources and professional approach were being attracted with a clear mandate to set up demutualized. which have reduced bottlenecks in the development and growth of commodity markets. opaque in their functioning and have not used technology to scale up their operations and reach to bring down their costs. This period also witnessed other reforms. Most of the existing Indian commodity exchanges are single commodity platforms.. The year 2003 marked the real turning point in the policy framework for commodity market when the government issued notifications for withdrawing all prohibitions and opening up forward trading in all the commodities. as the existing exchanges are slow to adopt reforms due to legacy or lack of resources. In India. Interest rate risks. Mumbai (NCDEX). and National Board of Trade. Indore (NBOT). Securities (Contract) Rules. strengthening of infrastructure and institutional capabilities of the regulator and the existing exchanges received priority. Thirdly. But with the strong emergence of: National Multi-commodity Exchange Ltd. which itself cannot be ignored.. amendments to the Essential Commodities Act. Ahmedabad (NMCE). run mainly by entities which trade on them resulting in substantial conflict of interests. These exchanges are expected to be role model to other exchanges and are likely to compete for trade not only among themselves but also with the existing exchanges. exchange rate risks are WHY STRUCTURED COMMODITY MARKET? 76 .
But due to some restriction it was not properly worked.1. Where the production is less but. rapeseed oil. Presently nearly in 122 commodities tread is being done Transaction in the organized market: Organized markets have structured forms of transactions. If sellers and buyers come together at a place then it will create a market. mustered seed. MCX To begin with contacts in gold. silver. crude.000 corer. and hedger can tread. 1952 for regulating forward\future contracts. Total turnover of commodity of market is nearly Rs.Today the business is not limited to our area only. In the market current and future contracts are done. In this way the total area of market will become broad. In which 60. Day by day number of commodity items is incising. crude palm oil and RBD Palmolive are being offered. soyabean. In this commodity market classified as agriculture products. precious metal. speculator. the National Commodity and Derivative Exchange Ltd (NCDEX) launched futures trading in nine major commodities. cotton. Here against one seller there will be more then one buyer. demand is comparatively high prices of the product will go up. In December 2003. On the contrary where the production is high but demand is comparatively low the prices will go down. In this market buyers will come across the country for transactions. The various commodities that tread on the NCDEX and look at some commodity specific issues. Promissory contracts have been started science 1875. The commodity exchanges are regulated as per rules and regulations define in The Forward Contracts (Regulation) Act. In this market not only producer and seller are included but arbitrageur. etc… Today in our country most of the trade is done in unorganized market. 10. Now more then 40 commodity items are included. other metal and energy which we discuss above.000 corer comes from agriculture and left is coming from coal. In our country agricultural products form 25% of GDP. soya oil. 77 .
COMMODITIES 78 .
In case he decides to deliver goods. e. d. The units of price quotation and trading are fixed in these contracts. 79 . It is invariably entered into for a standard variety known as the "basis variety" with permission to deliver other identified varieties known as "tender able varieties". In futures market actual delivery of goods takes place only in a very few cases. The delivery periods are specified. Some of the important features are as under: a. c. The seller in a futures market has the choice to decide whether to deliver goods against outstanding sale contracts. b. Transactions are mostly squared up before the due date of the contract and contracts are settled by payment of differences without any physical delivery of goods taking place. Futures’ trading is necessarily organized under the auspices of a market association so that such trading is confined to or conducted through members of the association in accordance with the procedure laid down in the Rules & Bye-laws of the association. parties to the contracts not being capable of altering these units. f. CHARACTERISTICS OF FUTURES TRADING A "Futures Contract" is a highly standardized contract with certain distinct features. he can do so not only at the location of the Association through which trading is organized but also at a number of other pre-specified delivery centers.
it enables him to hedge his risk by operating in futures market. the amplititude of price variation is reduced. i. 80 . He can do proper costing and also cover his purchases by making forward contracts. It enables the consumer get an idea of the price at which the commodity would be available at a future point of time. which decide the suitability of the commodities for future trading: The commodity should be competitive. there should be large demand for and supply of the commodity . COMMODITIES ARE SUITABLE FOR FUTURE TRADING The following are some of the key factors. Helps balance in supply and demand position throughout the year.this mechanism dampens the peaks and lifts up the valleys i. Having entered into an export contract. Encourages competition and acts as a price barometer to farmers and other trade functionaries. ECONOMIC BENEFITS OF THE FUTURES TRADING Futures contracts perform two important functions of price discovery and price risk management with reference to the given commodity. The futures trading is very useful to the exporters as it provides an advance indication of the price likely to prevail and thereby help the exporter in quoting a realistic price and thereby secure export contract in a competitive market.e. the best that suits him. Facilitates lengthy and complex. Leads to integrated price structure throughout the country. and consequently the price substantially. It is useful to producer because he can get an idea of the price likely to prevail at a future point of time and therefore can decide between various competing commodities. It is useful to all segments of economy.e. There should be fluctuations in price.no individual or group of persons acting in concert should be in a position to influence the demand or supply.. production and manufacturing activities. Other benefits of futures trading are: Price stabilization-in times of violent price fluctuations .
Silver. Wheat. Silver HNI Oil & Oil Seeds : Castor Seeds. Jeera. Long Staple Cotton. Crude Palm Oil. Gur. THE FOLLOWING ITEMS ARE TRADED IN THE MULTI COMMODITY EXCHANGE Bullion: Gold. Cottonseed Spices: Pepper. Nickel. Cottonseed Oilcake. Maize. Gold M. agriculture. Silver M. Copper. Soymeal. 81 . Guar Seed. which forms an essential component of Commodity Exchange. Mustard Seed. Yellow Peas. Castor Oil. Medium Staple Cotton Pulses: Chana. Tur Cereals: Rice. Sarbati Rice Energy: Crude Oil Others: Bandhani Rubber. RBD Palmolein. Refined Soy Oil. The commodity should have long shelf life and be capable of standardization and gradation. Steel Flat. Red Chilli. Groundnut Oil. can be broadly classified into precious metals. energy and other metals. Soy Seeds. Turmeric Metal: Steel Long. Cashew Kernel. Tin Fibre: Kapas. Guargum Bandhani. Mustard Seed Oil. Basmati Rice. Guargum. Urad. The market for the commodity should be free from substantial government control. Gold HNI. Guarseed NEED FOR FUTURES TRADING IN COMMODITIES Commodity Futures.
It also helps in improving the cropping pattern for the farmers. In each of these two cases. The significance of raw materials can further be strengthened by the fact that the "increase in raw material cost means reduction in share prices". Historically.Current futures volumes are miniscule compared to underlying spot market volumes and thus have a tremendous potential in the near future. Raw materials form the most key element of most of the industries. a purchase in the ready market is off-set by an opposite sale in the 82 . It also provides effective platform for price risk management for all segments of players ranging from producers. In other words "Share prices mimic the commodity price movements". traders and processors to exporters/importers and end-users of a commodity. It reflects views and expectations of a wider section of people related to a particular commodity. thus minimizing the losses to the farmers. pricing in commodities futures has been less volatile compared with equity and bonds. Futures trading in commodities results in transparent and fair price discovery on account of large-scale participations of entities associated with different value chains. It acts as a smart investment choice by providing hedging. Industry in India today runs the raw material price risk. A Hedge is a countervailing contract transacted in a futures market through which those who have bought in the ready market will sell in the futures market and those who have sold in the ready market would buy in the futures market. which provides the necessary immunity to the above interests in the marketing of commodities from the risk of adverse price fluctuations. trading and arbitrage opportunities to market players. hence going forward the industry can hedge this risk by trading in the commodities market. thus providing an efficient portfolio diversification option. HEDGING Hedging is a sophisticated mechanism.
there would be a loss in the futures market. Hedging on futures markets cannot be practiced unless there are operators willing to assume the risk of adverse price fluctuations which the hedgers desire to transfer. however. 83 . When the price of a commodity has declined in the ready market. When the purchase or sale commitment in the ready market is fulfilled. But. its price in the futures market would normally have also declined so that the loss incurred in the ready market would be recovered by the profit made in the futures market. be made up with the profit made in the ready market. the sale or purchase hedge contract is closed out by an offsetting reverse purchase or sale contract in the futures market. These operators are called speculators. To the extent that they do not move together by the same extent.futures market and a sale in the ready market is off-set by purchase in the futures market. which would. in certain circumstance. if the price rises in the ready market after the hedge sale had been entered into the futures market. thus provide the much needed breadth and liquidity to the futures markets which in their absence would remain narrow and unstable. hedging in a futures market does afford such a protection to the various functionaries. His only interest is to ensure that he gets the necessary insurance against unforeseen fluctuation in prices. hedging itself may be a source of minor gains or losses. But a dealer. manufacturer or exporter is not. By and large. They. The ready and futures prices of a commodity ordinarily do move together in sympathy with each other because both ready and futures prices are basically determined by the demand and supply factors of that particular commodity. the ready and futures prices may not move together or the spread between the two may increase or decrease sharply. interested in such speculative losses or gains. per se. The practice of hedging is based on the assumption that the ready and futures prices of the commodity move more or less parallel to each other. Similarly.
When a transaction takes place in a futures market. Futures trading in these commodity exchanges/associations are confined to or conducted through its members in accordance with the procedure laid down in its rules members in accordance with the procedure laid down in its rules and bye-laws. there is no corresponding transaction in the ready market. REGULATORY BODY 84 .A speculator operating in a futures market is the one who buys or sells futures contracts without any countervailing commitments or transactions in the actual commodity with a view to making profit from the fluctuations in the prices. period of delivery etc. the form or nature of transactions entered into by both in the futures market is similar. The basic distinction between a hedge and speculative transaction on a futures market is that while in the case of a hedge transaction there is a corresponding opposite transaction in the ready market. in the case of a speculative transaction. such contracts are generally entered under the auspices of commercial bodies known as commodity exchanges or associations. While it is possible for the individual parties to enter into futures contracts. the only variable being the price at which the contracts helps the members of associations in entering into uniform types of contracts in which the quantity and quality of goods. While the motives of the speculator in entering into futures trans actions are different from a hedger. these exchanges/associations also help in evolving standard terms of contracts in which the quantity and quality of the goods traded. The need for organizing futures trading under the auspices of such commodity exchanges or associations arises mainly in order to ensure that payment of differences arising from settlement of purchase and sale contracts entered into by the members of such exchanges or aassociations take place in a smooth and orderly manner and thus defaults on account of non-payment of such differences are avoided. are predetermined so that they can be entered into primarily for the purpose of exchange of money differences. period of delivery and all other terms are pre-determined. Further. the transaction may well be between two hedgers or two speculators or between a hedger and a speculator.
octroi duty. there are a lot of hassles such as octroi duty. 85 . trading in over 100 crops. Commodity players use it as a hedge mechanism as well as a means of making money. businesses can minimize risks. PROBLEMS FACED BY COMMODITIES MARKETS IN INDIA Institutional issues have resulted in very few deliveries so far. For an agricultural country like India. Also multiple restrictions exist on interstate movement and warehousing of commodities. It is responsible for regulating and promoting futures/forward trade in commodities. Currently. WHY COMMODITIES MARKET? India has very large agriculture production in number of agri-commodities. players hedge their risks by using futures Euro-Dollar fluctuations and the international prices affecting it.g. Fundamentally price you pay for goods and services depend greatly on how well business handle risk. Exchanges are used only to hedge price risk on spot transactions carried out in the local markets. The FMC is headquartered in Mumbai while its regional office is located in Kolkata. If there is a broker in Mumbai and a broker in Kolkata. The commission was set up under the Forward Contracts (Regulation) Act of 1952.The Forward Markets Commission (FMC) is the regulatory body for commodity futures/forward trade in India. Commodity Market will serve as a suitable alternative to tackle all these problems efficiently. in the bullion markets. which needs use of futures and derivatives as price-risk management system. For e. with plethora of mandis. standards. certification and warehousing are bound to occur. logistical problems prevent trading to take place. By using effectively futures and derivatives. logistics. transportation costs. thus lowering cost of doing business. the issues in price dissemination. Curbing the illegal activities of the diehard traders who continued to trade illegally is the major role of the Forward Markets Commission.
namely: the price risk. but the same can be transferred to someone who can handle it better or to someone who has the appetite for risk. Commodity enterprises primarily face the following classes of risks. the quantity risk. the yield/output risk and the political risk. client. Talking about the nationwide commodity exchanges. vendors etc) not fulfilling his obligations on due date or at any time thereafter is the most common risk. This risk is mitigated by collection of the following margins: • • • • • Initial Margins Exposure margins Market to market of positions on a daily basis Position Limits and Intra day price limits Surveillance Commodity price risks include: • • • Increase in purchase cost vis-à-vis commitment on sales price Change in value of inventory Counter party risk translating into commodity price risk KEY FACTORS FOR SUCCESS OF COMMODITIES MARKET The following are some of the key factors for the success of the commodities markets: • • • How one can make the business grow? How many products are covered? How many people participate on the platform? 86 . the risk of the counter party (trading member. RISKS ASSOCIATED WITH COMMODITIES MARKETS No risk can be eliminated.
Self-Regulation to ensure: Overview of Trading and Surveillance. as these are the people who are exposed to risk and price fluctuations. then it should be backed with proper "Capital Account Convertibility". Audit and review of Members. if the Indian Commodity Exchange needs to be competitive in the Global Market. Effective Management of Counter party Credit Risk. reach of the organization and adding value on the ground. households and producers are most important. Robust Trading & Settlement systems.t. robustness of settlement structures. wider participation of Hedgers. transparency of platforms. any commodity exchange: • To get in place the right regulatory structure to even out the differences that may exist in various fields. financial soundness and capability. acceptable clearing mechanism. Enforcement of Exchange rules. KEY FACTORS FOR SUCCESS OF COMMODITIES EXCHANGES The following are some of the key factors for the success of the commodities exchanges: Strategy. size of the trade guarantee fund. • • • • • 87 . In addition to this. Fair and Transparent Price Discovery & Dissemination. background of promoters. covering a wide range of commodities. scaleable technology. Speculators and Arbitrageurs. credibility of the institution. KEY EXPECTATIONS OF COMMODITIES EXCHANGES The following are some of the key expectations of the investor's w. The interests of Indian consumers. method of execution. Proper Product Conceptualization and Design.r.
equity markets. they have added depth to the equity markets. India's obligation under WTO to open agriculture sector to world trade would require futures trade in a wide variety of primary commodities and their products to enable diverse market functionaries to cope with the price volatility prevailing in the world markets. For those who want to diversify their portfolios beyond shares. the need has been felt that various operators in the commodities market be provided with a mechanism to hedge and transfer their risks. can serve as a newer investment avenue for investors. Following are some of the applications. which can utilize the power of the commodity markets and create a win-win situation for all the involved parties: - REGULATORY APPROVAL / PERMISSION TO FII'S FOR TRADING IN THE COMMODITY MARKETS FII's are currently not allowed nor disallowed under any law. The MSP programme will not be sustainable in such a scenario. 88 . bonds and real estate. corporate will feel the pressure to hedge their price risk once the frontiers open up for free trade. they will add depth to the commodities markets. As. ACTIVE INVOLVEMENT OF MUTUAL FUND INDUSTRY IN INDIA Currently Mutual Funds are prohibited from not using derivatives apart from hedging. The farmer will have to look at ways of being in a position to trade on commodity exchanges in future. by the Mutual Funds in India. commodities are the best option. since they globally know the commodities. Mutual Funds as investors can invest in gold and get returns as they get from debt instruments. Also. Indian markets have recently thrown open a new avenue for retail investors and traders to participate: commodity derivatives. Government subsidy may go down as a result of WTO. FUTUREPROSPECTS With the gradual withdrawal of the government from various sectors in the postliberalization era. AMFI & SEBI need to collectively work towards the same. Launch of the "Commodity Funds".
and easily pass the trading objectives to others in companies in different times zones. is perhaps the best measure of success of an online trading commodity trading system. This is because the Internet boom in Indian is on the rise only now. Differentials. The online commodity trading system in India is only an emerging segment yet. where any user can view all quotes posted by other users in real time. Emissions and Weather. without favoritism or control by a chosen few. post their own prices and quantities for others to trade The Online commodity trading site usually lists a large number of unique products covering a variety of commodities. seven days a week. many-to-many system. Swaps. It provides for various media ranging from Physical Delivery and Financial Cash Settlement. All quotes posted by users on any online commodity trading systems are live and firm. Options. They can be acted on with full assurance of a completed transaction. It provides a level playing field for all. It is in this scenario that online trading is becoming more the way of trading in India. Precious Metals. or trade activity. 89 . The Online trading system operates almost continuously around the clock. ONLINE COMMODITY TRADING Online commodity trading offers a way for an open. There are further derivative options available ranging from Forwards. where every user has equal access to price quotes and trading functionality. Electric Power. The greatest advantage of an online system for trading is that just a click can be used to hit a bid or lift an offer. Spreads. structures. With most online commodity trading systems. Natural Gas. Complex Derivatives. act or trade on quotes posted by others. This allows any user to extend the trading day. The Internet charges are becoming minimal and the Internet is soon becoming a way of life in India. traders can be sure of finding an interesting market development or trading opportunity almost every time they log on. 24 hours a day. and settlement terms ranging from Oil. Liquidity.
Where our dealer/RM are always help for market information as well as buy/sell call 90 . SHAREKHAN ADVANTAGE COMMODITY KEY BENEFITS OF COMMODITIES@ SHAREKHAN: You are getting 20time exposer in MCX &10 time in NCDEX depends on commodity to open an account We have sms facility where u getting market information as well as buy/sell call You are also getting yahoo chat.
Derivatives and Derivatives and 91 . Secondary objectives are: To know the awareness of Derivatives and Commodity. Hα: There is significant difference in level of awareness of Commodity. To know the influencing force behind the decision making while trading in Derivatives and Commodity. HYPOTHESIS: H0: There is no significant difference in level of awareness of Commodity. To find out the best medium to educate the masses about Derivatives and Commodity. of the people of Rajkot City.RESEARCH Research Objective The main objective of the study is to analysis the awareness of derivatives and commodities segment and their potential market among the people of Rajkot City. To know the investment habit and purpose of investing. To know the scope for the Derivatives and Commodity.
SOURCES OF DATA There are two main sources of data Primary Data 1. Secondary Data Primary Data The data. we have not collected any information from any sources. The most preferred way is to interview the individuals to get a sense of how they feel Secondary Data When the data is collected and compiled from the published nature or any other’s primary data is called secondary data. 92 . is called primary data. So. So far as our research is concerned. we have not used secondary data for our research. which is collected directly from the respondent to the base of knowledge and belief of the research.
Sample Universe Sampling Technique Sample Size Sampling Unit: Rajkot City Stratified and Random 300 Respondents Professional Random Business Man Random Government Employees Random Employees working in private firms Random = = = = SCOPE OF STUDY 93 .SAMPLING PROCESS It is very true that to do the research with the whole universe. We have selected the selected the samples as per per convenience. As we know that it is feasible to go to population survey because of the n number of customers and their scattered location. All the respondents are stratified on the basis of their profession and savings. So for this purpose sample size has to be determined well in advance and selection of sample also must be scientific so that it represents the whole universe. we have taken sample size of 300 respondents. So far as our research is concerned. We have selected Income Earners with saving to invest in Rajkot city.
This will help the company. LIMITATION OF THE STUDY The limitations of the study are as follow: Personal Bias: Individuals may have personal bias towards particular investment option so they may not give correct information and due to which the conclusion may be derived. how to make people aware about Derivatives and Commodities by imparting best education. This will help the company to frame effective Marketing Strategy as well as select the right media for advertising to create brand awareness as well as to give knowledge of the product. This will help the company to know the taste of masses and turn it towards Derivatives and Commodities. Time Limit: The time duration given for the research is less. 94 .The research would be useful in the following respect. Mind share of Sharekhan can be known. This will also help to select right medium for trading in Derivatives and Commodities segment.
so we cannot know the degree of the literacy outside the city.Area: The area was limited to Rajkot City only. which is of 100 only. due to which we may not get the proper results. 95 . Sample Size: The last limitation is Sample Size.
ANALYSIS & INTERPRETATION
1.Gender Ratio: Male 196
250 200 150 104 100 50 0 Male Series1 Female 196
2.Age: Below 30 212 30-50 35 More than 50 53
250 200 150 100 50 0
More than 50
3.Education Qualification: Post Graduate 112
200 180 160 140 120 100 80 60 40 20 0
Under Graduate 16
16 Post Graduate Graduate Series1 Under Graduate
4.Occupation: Govt. Non-Govt. Business Professional Employees Employees Man 120 62 70 48
140 120 100 80 60 40 20 0 Govt. Employees Non-Govt. Employees Business Man Professional 62 70 48
5.Investment Pattern: Securities Bank F.D. Post office Insurance Mutual Fund Gold Equity Derivatives Commodities No. 114 63 28 30 22 19 10 14 Percentage(%) 38 21 9 10 7 6 3 5
120 100 80 60 40 20 0
63 38 21 28 9 30 10 22 7 19
ce In su ra nc e
ut ua lF un d
G ol d
Eq ui ty
es De riv a tiv
Po st of fi
It can be seen from the graph that the respondents have given first preference for investment to Bank F.D. and Gold, Equity, Derivatives and Commodity having almost equal share.
Preference for investment Derivatives & Commodity: 98
Co m m
od itie s
Oil Metal F&O Percentage(%) When asked to the respondents that out of the given options which one would they prefer? So they prefer Bullion first. So the preference for commodity (Bullion) is more than the Derivatives. 79 33 19 50 43 76 Percentage(%) 26 3 11 17 14 25 90 80 70 60 50 40 30 20 10 0 79 76 50 26 33 19 3 Bullion Spices 11 17 43 25 14 Fiber No. Factors that are to be consider by Individual at the time of investment 99 .Instruments Bullion Spices Fiber Oil Metal F&O No.
117 55 Rank 1 3 100 . Rank 1 2 12 5 129 112 No.Obstacles Risk Reduction Leverage Benefit Arbitrage Benefit Speculative Motive Liquidity preference 140 120 100 80 60 40 20 0 Risk Reduction Leverage Benefit Arbitrage Benefit No. Each and every investor are not risk taker though they want more return from the investment. 129 112 12 15 32 Rank 1 2 5 4 3 32 15 4 3 Liquidity preference Speculative Motive So. Medium prefer by individual at the time of investment Factor Broker Magazine No.
2 Internet Rank 4 Other Exchange preferred by individual Derivatives BSE NSE 156 154 152 150 148 146 144 142 140 BSE Series1 NSE 145 155 155 145 Commodity MCX 189 NCDEX 111 101 .Internet Other 102 26 2 4 140 120 100 80 60 40 20 0 117 102 55 26 1 Broker 3 Magazine No.
200 180 160 140 120 100 80 60 40 20 0 189 111 MCX Series1 NCDEX Constraints that are holding back to individual for investment Lack of knowledge Lack of Guidance Lack of Fund Availability Lack of Risk taking Ability 120 100 80 60 40 20 0 Lack of knowledge Lack of Guidance No. 64 58 70 108 Percentage (%) 21 19 23 36 108 Percentage (%) Individual take decision through Independently Broker/Agent News Channels News Papers Internet Tax consultant No. Lack of Fund Lack of Risk Availability taking Ability 21 64 70 58 36 19 23 No. 97 73 19 20 68 23 Rank 1 2 6 5 3 4 102 .
Rank Medium reliable for individual for trading Stock Broking Companies Franchisees Online 180 160 140 120 100 80 60 40 20 0 168 43 Stock Broking Companies Franchisees Series1 Most preferred Broking Companies of the Rajkot City India Bulls ShareKhan Marwadi Motilal oswal HDFC Securities ICICI Direct Kotek street Skse 3 2 5 8 7 1 6 4 Ta x 168 43 89 89 Online 103 .120 100 80 60 40 20 0 In de pe nd e 97 73 19 20 68 23 5 In te rn et 1 2 6 3 co ns ul ta nt 4 nt ly Br ok er /A ge Ne nt ws C ha nn el s Ne ws Pa pe rs No.
H0 : u = H1: u ≠ 50% 50% 2.05 3.) Level of Significance : σ The Level of significance should be set at α = 0.) The Statistical Test : 104 .) The Null Hypothesis (H0): “There is no significant difference in level of literacy about Derivatives & Commodities among the people of Rajkot City.” Therefore.TESTING OF HYPOTHESIS Testing of Hypothesis using Z test (Two tailed): 1.
Alternate Hypothesis is accepted.6 = 1.29 0.96.) Draw a statistical conclusion The absolute value of the computerized Z statistic (5.96 & . Z = No.1 15/17. So. X = Mean of the sample U= Mean of the population or hypothetical mean σx = Estimate for the standard error or the mean 4.96 (the result will be between two) σx = = = Z = = 5 / root of 300 .) The Decision Rule 1.8676 5.9+ 0.025) = 0. therefore null hypothesis is rejected.Z = X – u / σx Where.1.763) is larger than 1. 105 .975 1. of standard deviations for the desired level of confidence.000 (1-0.8676 55 – 50 / 0.763 5.
106 .H1: There is significant difference in level of literacy about Derivatives & Commodities among the people of Rajkot City.
Those people who want to invest in Derivatives & Commodities are investing mainly for reducing risk and they consider them as investment tool. But there are investors who use Equity as an investment tool.CONCLUSION • • • • • Most of the people in Rajkot City are investing in fixed return Instruments. Literature and Self Experience can be taken as the best method to impart education about derivatives & commodities RECOMMENDATION 107 . People generally want to take trading decisions independently or under the guidance of Friends or Well Known Stock Broking Houses.
• • • • • Company should show the benefits of trading on Derivatives & Commodities Sharekhan should turn existing customers (who are trading in Equity only) towards Derivatives & Commodities. Sharekhan may also use its helpline number for giving education on Derivatives & Commodities. organizing events. Sharekhan should educate the investors about Derivatives & Commodities by organizing classes. Company may appoint special team for giving education & attracting people towards trading on Derivatives & Commodities. corporate presentations. QUESTIONNAIRE 108 .• • Sharekhan needs to make its marketing team strong and also it should increase marketing activities such as promotional campaigns. taking part in consumer fairs. Sharekhan can also use Newspapers and Local New Channels as a medium of advertising.
: Post schemes: Insurance: Mutual Fund: Gold: Equity: Derivatives: Commodities: Q.3 If You invest in Derivatives OR Commodity. Which would be your first preference from the list given below? Bullion: Spices: Fiber: Oil & Oil Seed: Metal: F&O: Q. Age: 4. Employee Businessman Employess working Q.4 Which factor plays crucial role when you make a decision to invest in Derivatives & Commodity? Risk Reduction: Leverage Benefit: 109 . Education: 5.D. Name:____________________________________________ 2. Where do You invest Your savings? Bank F.1.2 If YES. Occupation: Male 21-35 Female 36-50 Above 50 ___________________________________ Professional Govt. Gender: 3.1 Do you invest Your surplus money in saving instrument? Yes: No: Q.
9 How do You take decisions If You want to trade in Derivatives & Commodity? Independently: News Channels: Internet: Broker/Agent: News Papers: Tax Consultant: Q.10 How much time will you be able to devote for learning Derivatives OR Commodity? ½ Hour: 2 Hour : Q.Arbitrage Benefit: Liquidity preference: Speculative Motive: Q. Which medium is the most reliable for trading in Derivatives & Commodity ? 1 Hour : 110 .7 Do You consider investment in Derivatives & Commodities are safer then Other investment avenues? YES: No: Q.5 which mediums do you use to invest in Derivatives & Commodity? Broker: Magazine: Internet: News channels Q.8 If No.6 which stock exchange would you prefer to carry out your transaction? BSE: MCX: NSE: NCDEX: Q.11 According to You. than What are constraints that are holding you back? Lack of Knowledge: Lack of Guidance from Broker: Lack of Funds Availability: Lack of Risk taking ability: Q.
I also know that how to implement theory in practice.____________ MY LEARNING During the two months training I explore my knowledge of stock market.12 Name any 2 Stock Broking companies that deal in Derivatives & Commodity 1.Stock Broking Company: Franchises: Online: Q.____________ 2. I also got the chance for trading Share khan’s product like Sales Executives so 111 .
Research Methodology.R. I am always thankful to them.that it improve my convincing power and also give chance to meet different people ..Ltd. BIBLIOGRAPHY Books: • Kothari C. It is a memorable experience to be a part of share khan family. Vikas Publishing House pvt. 1978 112 .It also increase my confidence. New Delhi.
Websites: 1.nseindia. www. 6.bseindia.Delhi.Ltd.Google. www.ncdex.Person Education(Singapore) Pvt.com 5.com 7.moneycontrol. www. www. www.com 3.com 113 .Indian Financial Syatem.com 4.sharekhan. www.mcx. www.com 2.com.• Pathak Bharti v..