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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.
of India under the Securities Contracts (Regulation) Act. three SEBI nominees. Mumbai. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". The Exchange. It is the oldest one in Asia. It has evolved over the years into its present status as the premier Stock Exchange in the country. BSE(BOMBAY STOCK EXCHANGE) The Stock Exchange. even older than the Tokyo Stock Exchange. 4 . It also strives to educate and enlighten the investors by conducting investor education program and making available to them necessary informative inputs. six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer. who are from the broking community (one third of them retire ever year by rotation). A Governing Board having 20 directors is the apex body. debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own memberbrokers. 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. which decides the policies and regulates the affairs of the Exchange. which was established in 1878. 1956. while providing an efficient and transparent market for trading in securities. The Governing Board consists of 9 elected directors.
It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. It provides a nation-wide. 5 . screen-based. Products . NSE(NATIONAL STOCK EXCHANGE) NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. technology. It started operations in June 1994. risk management. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. automated trading system. 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. The standards set by the exchange in terms of market practices. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market practices. technology and service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time. 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 take the stock market to the doorsteps of the investors. with a high degree of transparency and equal access to investors irrespective of geographical location. NSE has been able to achieve all the objectives for which it was set up. clearing and settlement and investor service. infrastructure. with trading on the Wholesale Debt Market Segment.
LIC. 2003. 6 . NCDEX (NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE) NCDEX started working on 15th December. hedgers and arbitrageurs. This exchange provides facilities to their trading and clearing member at different 130 centers for contract. NCDEX is one of the traditional media which gives online information NCDEX is one of the Indian commodity exchange. 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. constructed on the basis of the current national institutes the exchange has been established with the coloration of leading institutes like NABARD. banks and developers of kiosk network NCDEX is able to provide current rates and contracts rate. In commodity market the main participants are speculators. 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. NSI etc…. In India NCDEX has maximum settlement guarantee fund. industrial companies. private and easy services. news agencies.
NCDEX is working with tax officer to make clear different types of sales and service taxes. To prepare guidelines related to special products of securitization NCDEX works with bank. To avail farmers from risk of fluctuation in prices NCDEX provides special services for agricultural. NCDEX is providing attractive products like “weather derivatives” 7 .
low. volume (in 000’s). high. sell qty. online digital exchange for commodities futures trading in the country and has accordingly initiated several steps to translate this vision into reality. buy price. MCX has taken several initiatives for users In a new generation commodities futures market in the process. MCX(MULTI COMMODITY EXCHANGE) ‘MULTI COMMODITY EXCHANGE’ of India limited is a new order exchange with a mandate for setting up a nationwide. sell price. average trade price.% change.P. online multi-commodity marketplace. 8 . an independent and a de-mutualized exchange since inception. MCX. 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. is all set up to introduce a state of the art.R. price quotation unit. value (in lac). buy qty. close & open interest. D. become the country’s premier exchange. This window displays the following details: Symbol. Expiry. As a true neutral market. open. last traded price. offering unlimited growth opportunities to commodities market participants.
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. He selects a broker and instructs him to place buy/sell order on an exchange. At the end of the trade cycle. the trades are netted to determine the obligations of the trading member’s securities/funds as per settlement cycle. 9 . the whole business of Securities and Stock Broking has emerged. Just because of this Transaction cycle. And as an extension of stock broking. A securities transaction cycle is presented above. decides to buy or sell the securities. 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. The order is converted to a trade as soon as it finds a matching sell/buy order. Buyer/seller delivers funds/ securities and receives securities/funds and acquires ownership of the securities.
75 0.40 0.kotakstreet. 5. Citibank.05 Interface Banks Associated with HDFC. HDFC.A.50 0.COM (www. OBC.com) KOTAK SECURITIES LTD.com) 8.5paisa. IDBI & Citibank ICICI Bank N.10 0. OBC. 9.59 0.com) ICICI WEB TRADE LTD. (www.indiabulls. HDFC SECURITIES LTD.20 Square Off 0.A. 10.sharekhan. 2. REFCO SIFY SECURITIES PVT LTD. (www.hdfcsec. (www. 3.com) 5 PAISA. Parameters A/c Opening Fee Trading Demat NIL NIL 250 NIL Brokerage Delivery 0. IDBI CAPITAL MARKET SERIVICES LTD. 7. MOTILAL OSWAL SECURITIES LTD. NIL 0.15 10 .10 0.icicidirect.18 0.com) INDIABULLS (www.com) 6. S S KANTILAL ISHWARLAL SECURITIES PVT LTD. UTI SECURITIES LTD.MAJOR PLAYERS 1. UTI. 4.06 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.50 0. (www.
5PAISA. ICICIdirect. Kotak Mahindra MF.com was the first entrant into e-broking. IL&FS MF. JM 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. (sharekhan. India’s leading stock broker is the retail arm of SSKI. Principal MF. ICICI WEB TRADE LTD. TATA MF and DSP MERRILL LYNCH MF) through their trading account.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. Standard Chartered MF. ICICdirect. Birla Sun Life MF. Franklin Templeton India MF. LTD. Sundaram MF.com): Sharekhan. KANTILAL ISHWARLAL SECURITIES PVT. An investor can also invest in 14 Mutual Funds (Prudential ICICI MF. which are having one of the highest success rates in the industry. and offers you depository services and trade execution facilities for equities. (ICICIdirect. That’s why Sharekhan has the trading products. S. And it has started MF (Mutual Funds) on priority basis but wants to grow in it. Sharekhan is planning to enter in Mutual funds. margin or spot segments.com): ICICIdirect.com has the option of trading in shares in cash. Reliance Capital MF. ICICIdirect. In future. S.com doesn’t provide the facility of trading in a traditional way. Insurance sector and banking sector to expand beyond the market currently covered by it.COM 11 . derivatives and commodities backed with investment advice tempered by decades of broking experience. A research and analysis team is constantly working to track performance and trends. Sharekhan is having 240 share shops in 110 cities. Alliance Capital MF. HDFC MF. the largest chain of retail share shops in India is of Sharekhan.
000 customers. The company has 42 branches servicing around 1. TDA and Reeshanar. 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. ICICI. Kotak 12 ..com the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments.5paisa is the trade name of India Infoline Securities Private Limited (5paisa).6 %. It also provides the research on commodities. a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% . For those who prefer to trade the traditional way. KOTAK SECURITIES LIMITED (kotakstreet. 5paisa has emerged as one of leading players in ebroking space in India. one of the leading technology companies in the world promoted by the UK government. Investors can benefit from its analysis and advice available at the click of the mouse. Mumbai. It has also won the Best Equity House Award from Finance Asia .It was ranked number One in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME Database. Its institutional investors include Intel Capital. India’s leading and most popular finance and investment portal. Kotak Securities Ltd. Kotakstreet. commodities broking and mutual funds.com): Kotak Securities Ltd. 00. member of National Stock Exchange and The Stock Exchange. India Infoline investor points are available across the country.April 2004. Kotak Securities Limited manages assets over 1700 crores under Portfolio Management Services (PMS) which is mainly to the high end of the market. 5paisa is a wholly owned subsidiary of India Infoline Ltd. The company’s brokerage is one of the lowest in the industry. The company offers a slew of products such as stock and derivatives broking. has been the largest in IPO distribution . India Infoline was founded by a group of professionals in 1995.one of the world’s leading investment banks and brokerage firms) is India’s leading stock broking house with a market share of 5 .
MOSt was founded in 1987 as a small subbroking unit. Hong Kong and Singapore. detailed data and news. Commodities Trading. right at your finger-tips. our over 750 Client Relationship Managers are dedicated to serving your unique needs. MOSt provides Advice-Based Broking. Focus on customer-firstattitude.Securities Limited has newly launched “Kotak Infinity” as a distinct discretionary Portfolio Management Service which looks into the middle end of the market. research-based value investing and implementation of cutting-edge technology have enabled it to blossom into a thousand-member team. Derivatives. Demat services and Insurance to enhance wealth and to achieve the financial goals. UK. 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. Indiabulls offers a full range of financial services and products ranging from Equities. In a recent media report MOSt was rated as one of the top-10 brokers in terms of business transacted for FIIs. The institutional business unit has relationships with several leading foreign institutional investors (FIIs) in the US. (MOSt): One of the top-3 stock-broking houses in India. Its size and strong balance sheet allows providing varied products and services at very attractive prices. The Indiabulls Professional Network offers realtime prices. and IPO and Mutual 13 . ethical and transparent business practices. intelligent analytics. Portfolio Management Services (PMS). Depository Services. respect for professionalism.000 investors through 270 outlets spanning 150 cities and 22 states. E-Broking Services. and electronic trading capabilities. The retail business unit provides equity investment solutions to more than 50. INDIA BULLS Indiabulls is India's leading retail financial services company with 77 locations spread across 64 cities. MOTILAL OSWAL SECURITIES LTD. with just two people running the show. MOSt is amongst the best-capitalized firms in the broking industry in terms of net worth. This powerful technology is complemented by our knowledgeable and customer focused Relationship Managers. with a dominant position in both institutional and retail broking.
they will also start offering the following online trading services on the BSE and NSE: 1.Mega Funds . Margin trading products. Trading in Derivatives on the NSE 4. 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. 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. the capital is now held by the Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI). UTI Securities has been working as an independent professional entity for providing financial intermediary and advisory services to its corporate and retail clientele. In a few months. 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.Fund Investment Advisory Services.while in 2000 and 2002 it has been rated as the Best Domestic Equity Research House and Second best amongst Indian Brokerage firms respectively. 14 . The services comprise online buying and selling of equity shares on the National Stock Exchange (NSE). UTI SECURITIES LTD. IPO subscriptions. Right issues. Buying and selling of select corporate debt and government securities on the NSE would be introduced in a subsequent phase. HDFC SECURITIES LTD (HDFCsec): HDFC securities is a brand brought to you by HDFC Securities Ltd. Arbitrage between NSE & BSE 3. Buying and selling of shares on the BSE 2.: (UTISEL) UTI Securities Ltd was incorporated on June 24. purchase of Insurance policies and asset financing.
The Company has presence in major cities with 20 branches and 50 franchisees to service a wide range of clients. private placements.Commenced trading in Interest Rate Swaps 15 .000 October 2002.Started operations as a Depository Participant 1996 .Commenced operations as a Portfolio Manager February 1999 .Commenced Equity Broking on NSE CM segment July 1995 . institutional and corporate clients. institutional and corporate clients. we have emerged as a leading player in each of these businesses. depository services. USEc Commodities Ltd. IDBI Capital is a leading Indian securities firm offering a complete suite of products and services to individual. equities brokerage.Started operations as a Primary Dealer June 2000 . The services include fixed income trading.Acquired Derivatives memberships of BSE and NSE March 2002 . portfolio management and distribution of financial products. (IDBI Capital). IDBI Capital Market Services Ltd. The company has also invested in the joint-venture company with Standard Chartered Bank viz. offering a complete suite of products and services to individual. that is engaged in primary dealership and Government securities. is a leading Indian securities firm. research. Over the last five years.Built agent Distribution Network across the country October 1996 . Standard Chartered UTI Securities (P) Ltd. Mumbai November 1999 .Started to act as Arranger to Privately Placed Bond issues April 1998 . a wholly owned subsidiary of Industrial Development Bank of India (IDBI).Commenced Debt Broking on NSE WDM segment December 1996 . March 1995 . debt and equity derivatives.Achieved an outright secondary market turnover exceeding Rs100.Acquired membership of BSE. The company is very soon going to start Commodity Trading through its subsidiary. IDBI Capital Market Services Ltd. which provides facility of commodity trading on NCDEX and MCX.
. Its proprietary systems and global infrastructure provide the flexibility to meet all client requirements. Refco also provides clients with prime brokerage services. 16 . REFCO . 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. Refco is a leader in providing clients with the latest technological advances in products and services. equities. USA. headquartered in Mumbai. fixed income. OTC derivatives and asset management. foreign exchange. Ltd.. LTD Refco-Sify Securities India Pvt.SIFY SECURITIES INDIA PVT. is a joint venture between the Refco Group Holding Ltd.
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.com 5paisa. Refco Group Ltd.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 . Services Ltd. IDBI Capital Mkt.
18 . etc. etc. they cannot go for forward integration. have low bargaining power. Here again stock broking houses have to follow rules and regulation of the same.e. If say for example stock broking houses switches over to other web maintainers then that company cannot understand the mechanisms of software’s.com. But here there is one advantage that NSE/BSE have i. NSE & BSE are playgrounds where common an investor trade through stock broking houses. would be less. SHCIL. Also these regulatory bodies have got an upper hand as the bargaining power stock broking houses like SSKI. for which they have to take permission from NSE/BSE. Web maintainers are companies which maintain web sites & technical aspects of the same. So it is quite high switching cost. Here stock broking houses like SSKI can have more bargaining power due to stiff competition among web maintaining companies. MCX & NCDEX are stock exchanges which trade in commodities and derivatives. Web maintainers are companies who make and maintain software’s for stock broking houses. NSE & BSE are under the purview of SEBI. that’s why stock broking houses like SSKI.SUPPLIERS NSDL & CSDL are the regulatory bodies for Depository Participants like SSKI. ICICIdirect.
19 . competitors are offering low brokerage and best services with added feature. But the in case of mutual fund companies and institutional investors bargaining power is less. business partners. So switching cost is pretty much less. So here we can say that bargaining power of stock broking houses is high in case of small investors & HUF. institutional investors and mutual fund companies. There is competitive buzz in stock broking industry. Here the bargaining power of stock broking houses depends on how big the investor is. medium net worth investors. So the buyer can easily switch over to competitors product. While the bargaining power is moderate in case of HNI (High New Worth Investors)/ MNI’s (Medium Net Worth Investors) and business partners. which includes investors like small investors.BUYERS There are various types of investors who trade through stock broking houses like SSKI.
The instruments like Bank FD. insurance. mutual funds are the substitutes. Bank Of Baroda. There are also other big names like Indiabulls. Nationalized banks are also thinking to enter in this field by tying up with broking houses.com and Kotakstreet.com. 5paisa and Marwadi encircles the company form both the sides by providing online and off-line trading with competitive services. 20 . POTENTIAL ENTRANTS The potential entrants in like Investmart. If the use of this instruments increase this may be disadvantage for the stock broking houses.COMPETITORS The company is facing the competition from local as well as national level players. The companies and banks which are having these instruments can plunge into this industry. The local players provide facility for off-line trading while the national players like ICICIdirect. Motilal Oswal. HDFC Security provide online trading services. SUBSTITUES Here substitutes are such instruments which can be used instead of investing in shares.g. E. Jeojit and Cipher which are coming in near future to Rajkot City.
Whenever a new player comes in the industry. regulators constraints could be an entry barrier. Stock broking requires huge capital to make their products user friendly. Marwadi). technology could be one of the entry barriers. it needs to have some kind of financial background and expertise. which say that. before the entry of so many mew companies. and ICICI is very efficient and spreaded all over India.Obtaining a license is a tedious job for a stock broking house. The network of the companies like Motilal Oswal. Technology:. Regulatory Constraints:. Thus. the old companies have an option to reduce the prices of their product. etc. Sharekhan. Network:. Experience curve:. fundamental as well as technical script analysis. E.g. For a stock broking houses to plunge into the stock broking industry. etc.” Expected Retaliation:.The “Reach” to the customer is the key factor in the industry.Technology for stock broking houses is life saving device. Motilal Oswal.Capital is necessary not only for fixed facilities but also for customer’s credit and absorbing start up losses. It will take time for a new entrant to establish such a huge network (e.g. Sharekhan was having two 21 .ENTRY BARRIERS Huge capital:. Thus. this is very difficult for new companies to imitate. Also the most important thing which helps already established firms is-“TRUST” which people would be having on firms like SSKI .”Network can come up as most difficult entry barrier to overcome.The core competency in this industry is the services which are provided to the end-users and the research based activities which includes “TIPS”. which in turn requires capital to employ skilled manpower. NSDL. It should comply with the regulation of the governing bodies like SEBI. one needs huge capital for technology up gradation and skilled manpower. To start a stock broking house. 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.
which were costing 1000 & 1500 account opening charges respectively. speed trade plus with the account charges of Rs.com and Kotakstreet. CHALLENGER: Sharekhan.e. they have come up with only one account i.types of accounts viz. Indiabulls is also challenging with low brokerage rates and class one services. Motilal Oswal. 24. COMPETITIVE ANALYSIS Follower: The followers are those who just blindly follow the other player which are leader and challenges. Kotakstreet and Indiabulls come under this head. Kotakstreet are the followers. But due to competition. speed trade speed trade plus.com are the two stock broking houses which are focusing only on online investors.000 offline accounts. HDFC Securities. NICHER: ICICIdirect. 22 .com is a leader in the online account which is having 1.000 accounts in the country. While in offline account Sharekhan is leading with 64. Sharekhan challenges competitors by providing quality services and research based advice. The players like 5 paisa.1000. LEADER: ICICIdirect.
So. There was a chance of inaccuracy of price because it is a time consuming process.Broking Today is world of technology. E. the investors invest their money in shares under the guidance of the Brokers of any stock broking company. So. So. with trading turnover at around Rs. other don’t. Some provide quality research.Traditional Broking Traditionally In stock Market. It is a paperless transaction so it reduces the cost of company. 23 . Brokerage rates here are higher. EBroking means broking through electronic means. there was an emergence of new concept e-Broking. The information of investor may leak by the broker. This is convenient to those investors who are not familiar with the computer and the use of internet. There are two types of online trading service: DISCOUNT BROKER and FULL SERVICE ONLINE BROKER. online trading has a long way to go. The cost of the company also increases due to more paperwork. Discount online brokers allow you to trade via Internet at reduced rates. which give exact price of share which prevailing in the market at that time. online trading is still in its infancy stage in India. get the success. These brokers allow their client to place online orders with the option of talking/chatting to brokers if advice is needed. There was a facility of live streaming quotes. The investor point of view. They trade any time at any place when the stock market is open. the person who adopt it. there was a problem of privacy. 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 investors have a large range of option for the trading. to remove these limitations of traditional broking. But it requires more dealers to the share broking companies to give guidance related to investment. The cost of transaction is also reducing with time.10 crores per day from online trading compared to a combined gross turnover of around Rs.9000-10000 crores handled by the BSE and NSE together. Full service online brokerage is linked to existing brokerage.
that is. presently Internet trading can take place through the order routing system. The development of broking in India can be categorized in 3 phases: 1. This will also require interface with banks to facilitate instant cash debit or credit and the depository system for debit or credit of securities. 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. asset allocation. investors had no option but to contact their broker to get real time access to market data. The Net brings data to the investor on line and net broking enables him to trade on a click. In the US. customized services. Now information has become easily accessible to both retail as well as big investors. 3. Brokers (now e-brokers) will offer value management or services such as initial public offerings on line. 82 per cent of the deals are done on line. The European on line broking market is expected to be of $8 billions and is likely to raise five fold by 2002. market research and news to attract more investors. insurance services and enable the investors to take better and well-considered decisions. Stock brokers offering on their sites features such as live portfolio manager.INTERNET TRADING IN INDIA: In the past. 2. financial planning. 24 . which will route client orders to exchanges trading systems for execution of trades on stock exchanges (NSE and BSE). live quotes. tax planning. In India. portfolio management.
offers World-class facilities for buying and selling Shares on BSE and NSE. 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. 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. Sharekhan does not claim expertise in too many things. 25 . Share Khan comes under retail arm of SSKI (Shripal Sevantilal Kantilal Ishwarlal ) investors Services Pvt. Almost 4000 employees and 100000 trading customers. Demate Services(DP)Derivatives(F&O). They having 14 branches.ABOUT SHAREKHAN COMPANY INTRODUCTION Sharekhan is stock broking company. 400 franchises also having 466 shops in 210 cities. Ltd. 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. 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. In Rajkot branch daily dealing Rs. 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. it is something that is spoken with years of focused learning and experience in the stock markets.
Respond to progressive globalization and achieving international standard. CORE VALUE Customer satisfaction through Providing quality service effectively and efficiently “Smile. while maintaining human values. MISSION To provide the best customer service and product innovation tuned to diverse needs of clientele Continuous up-gradation with changing technology. integrity and People 26 . Efficiency and effectiveness built on ethical practices. We believe that our growth depends on client satisfaction.CURRENT POSITION VISION To empower the investor with quality advice and superior service to help him take better investment decisions. it enhances your face value ” is a service quality stressed on periodic customer service Audits Maximization of stakeholder value Success through Teamwork.
S.sharekhan.GENERAL INFORMATION NAME : S.400013 PH NO E-MAIL WEB SITE BRANCH OFFICES : 1800 . PHOENIH HOUSE. BAPTA MARG. PHOENIH MILL COPUND. MUMBAI . SENAPATI.com : www. 3970 75 00 : firstname.lastname@example.org 7500 . LOWER PAREL. LTD.sharekhan. HEAD OFFICE : SHAREKHAN LTD. KANTILAL ISHWARLAL SECURITEIS PVT. A – 206.com : 100 BRANCHES CHIEF EXECUTIVE OFFICER: TARUN SHAH 27 .
pay the amount due (which automatically gets debited into your account with the on line brokerage firm). your bank and DP accounts will reflect the changes accordingly. customers may consult information provided on the Web Site and log into their accounts to place orders and monitor account activity" 28 . So. 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. an account with a bank (which has a web presence) and a depository account. Imagine a scenario where you log on to your account. get your account statement. get the live quotes of scripts you are interested in. In most cases customers access a brokerage firm's Web Site through their regular Internet Service Provider. a subscription to an ISP. the picture is different. you get the confirmation on your screen. Once there. and other new technologies with online trading. a modem. All this through just one click of a mouse. A few seconds later. and the delivery of your shares into your Demat account. get advise from experts and research reports on your investment choice and then just click the mouse to place your order. The speed of transaction. And after the trade settlement. And they can choose from a plethora of e-trading web sites. Today.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. Seems like a dream? But with online trading this has become a reality. touch-tone telephones. All they need is a PC. 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.
SSKI Corporate Finance Pvt. Mauritius 7% Intel Pacific Inc. 200+crs average daily Vol. Ltd. Mauritius 18.Corporate Structure Owns 56% of SSKI Securities Pvt.5% First Carlyle Ventures.5% SSKI Securities Pvt.5% HSBC Private Equity Management. Morakhia Family & Associates Owns 50. Retail broking arm of the group Shareholding pattern 56% Morakhia family (promoters) 18.5 % Morakhia family Integrated Equity Solutions Provider • • • • • • Among the top 3 branded retail service providers (Rs. Investment Banking arm of the group Shareholding pattern 50. Ltd. 49.FY 03-04) Multi-channel access to clients Tailor made research and products Depository Services Derivatives Innovative products for enhanced performance 29 . Ltd.5% of SSKI Investor Services Pvt. Ltd.SSKI Group .
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 • • SpeedTradePlus was launched on October 28. It has $25m/trades every day. It has specialized research product for the small investors and day traders Largest chain of share shops. 2000 and named it as www. 103 Franchisees & 17 Branches across India. for cash as well as derivatives. 2002 for trading in Derivatives It offers its customers with the trade execution facilities on the NSE. depository services 30 . It acts as a discount brokerage house to a full service investment solutions provider • • • • • • It has a 150 member strong team.sharekhan.com • The SpeedTrade account of share khan is the next generation technology product launched on April 17. 2000. Leading player today with 20% market share Over 8000 online clients • The site was also launched on February 8.
31 . And execute the instruction immediately on receiving it and thereafter the customer can view his updated account statement on Internet. A customer can avail of Demat \ Remat. whether trading is done daily or occasionally. Transmission facilities at any of the Share khan branches and business partners outlets. The customer will be entitled to a host of value added services. providing the customer with a multi-channel access to the stock markets. • Sharekhan Depository Services offers demat services to individual and corporate investors. and offers a suite of products and services. in the investment process depending on his investing style and frequency. It has a team of professionals and the latest technological expertise dedicated exclusively to their demat department. Pledge.• Ensures convenience in trading experience: Share Khan’s trading services are designed to offer an easy. • 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. hassle free trading experience. • It helps the customer meet his pay-in obligations on time thereby reducing the possibility of auctions. The company believes in flexibility and therefore allows accepting late instructions without any extra charge. Repurchase.
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 .
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.sharekhan. Hot keys similar to Brokers Terminal. attractive & colorful Website. Price watch on any number of scripts. 34 .com has been specially designed to facilitate its users to buy and sell shares in an instant at anytime and from anywhere they like. The site is user friendly allowing even a layman to easily operate without any hassles.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. Those 3 varieties are: • • • Quality User Friendly. Customized Alerts based on Multiple Parameters.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.for high net worth investors dealing in derivative market. Classic. equity Design The website of Share khan namely www.
executed and rejected orders. Details of pending. Intra day charts. Flexibility to customize screen layout and setting.e. Facility to square off all transactions at one click. Top Gainers. Facility to customize any number of portfolios & watch lists. Best 5 bids and offers. Top Losers. index stock information live. Index information.bit super safe encryption. Competitive Brokerage. Live updated Order and Trade Book. Facility to place after market orders Online fund transfer facility from leading Banks Online intra-day technical calls. ideas that help you to make money!!! 35 . Exhaustive database of over 2000 companies Historical charts and technical analysis tools. marked to market profit & loss report. i.Back up Facility to place trades on Direct Phone Lines. index chart. updated live. and Most Active. tick-by-tick. Online access to Customer Service. Last but not the least. Market depth. position. 128 . updated live for all scripts Online access to both accounts and DP. updated live. Facility to cancel all pending orders at one click. Instant Order\ Trade Confirmation in the same window Live margin.
On dialing the toll free number 1600-22-7050 and on entering the customers TPIN number. Dial-n-trade is also an exclusive service available to all Sharekhan customers for trading in shares via the telephone. the company preferred to name itself as “SHARE KHAN”. the customer will be directed to a telebroker who will buy or sell shares for him. The company has preferred to name themselves under a Blanket Family Name. But in its online division started since 1997. Ltd. derivatives and commodities backed with investment advice tempered by decades of broking experience. depository services and trade execution facilities for equities. Services Share khan offers its customers. PRICE • List Price CLASSIC SPEED TRADE One time registration fee Minimum brokerage 750 Nil 1000 1000 SPEED TRADE PLUS 1500 1500 36 . Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal Securities Pvt. The teams of its dedicated analysts are constantly at work to track performance and trends. 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.Brand Name The company as a whole in its offline business has named itself as SSKI Securities Pvt.
by keeping 1/4th margin with them. Generally investor doesn’t like to come out from conventional way of share trading. Share khan has introduced this product in.e.In equity Market: On Trading: 0.Charges Quarterly • Brokerage – Share khan in its online business charges brokerage as follows: .e.1% On Delivery: 0. 1 per script held per month. there are slabs in brokerage rates. the payment of the transaction taken place has to be made within two days of its occurrence. • Credit terms Share khan allows its customers to trade up to 4 times i. • Discounts For investors with High Net worth. 15 on every turnover of Rs.015% (Rs.5% . PROMOTION Online share trading is totally a new concept in Indian Market.In Derivative Market On Trading: 0. • Turnover tax + Stamp duty -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. Share khan adopts the following tools for promoting the product 37 . 100000) • Custody Charge Re.1% • Service Tax -8% on Brokerage. The concept and Product are still new in the market.12% (Total brokerage) On Delivery: 0.
• Seminar The Company also arranges seminar in corporate world for creating awareness about the product. • Sales Promotion The Company offers Rs. it had organized for a seminar in ONGC.com and rediff. Recently. It advertises itself as an innovative Brand with a cartoon of tiger-called SHERU. This is the most effective way to communicate the three-in-one concept which company offers. For this. Besides attractive and colorful brochures as well as posters are used giving full details about the product.300 for IIM students. • Telemarketing 38 . • Direct Marketing Company emphasizes more on direct marketing. Also. it provides online trading accounts for just Rs. • Sales Force The Company has an aggressive sales force. stalls are opened up now and then at places where prospective customers can be approached. Mails are sent to people logging on to sites like moneycontrol.500 instead of Rs. which is given incentives. as many people are still not aware of this new way of smart trading. IIM. Print Media-in leading dailies and outdoors media. the company recruits and trains sales representatives so as to explain the product and solve customer queries related to the product. Also.750 for corporate accounts (more than 20 accounts).• Advertising Company advertises its product through TV media on channels like CNBC. The sales force is given intensive training continuously. based on their sales.com.
For this. Kanpur. Darjleeng. Allahbad. the company collects the database of the people belonging to different professional segments. • Research Team 39 . Midnapore. ⇒ Training: Intensive training is provided to the employees till a week once they join and even at times required after that. It has 180 share shops located in 90 cities all over India like Pune. Surat. PEOPLE • Employees ⇒ Selection: Employees are selected on the basis of their experience and qualification as applicable to the job. Gaziabad. etc. Luckhnow. ⇒ Motivation: The employees are motivated through incentives they are provided. 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. Baroda. Chennai. Delhi. Hydrabad. Banglore. Thane. Kolkata.This is another promotional tool company is using to boost up its sales. • Locations Share khan has the largest chain of retail share shops in India.
Share khan has a team of dedicated analysts who have years of working experience in the industries that they track. 40 . and a proven track record in using their knowledge of the investment science to deliver results.
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
which it caters to its customers and it boasts of 70-90% strike rates in booking recommendations. SUPERORDINATE GOALS: This refers to guiding concepts. Share khan is known for its timely advice (suggestions/tips). estimating budgets and the accounting system of Share khan. SKILLS: The term skills refer to those activities organizations do best and for which they are known. It provides the customers the best service as it believes in customer satisfaction and retention. 44 . If need arises. values and aspirations that unite an organization in some common purpose. Talented employees are assigned as mentors and given real responsibility and moved into higher positions. STAFF: Share khan values its employees as its assets and therefore carefully trains and motivates them by giving them incentives at regular intervals. STRATEGY: Share khan believes not only in developing the strategies but also in its successful execution. the top management can assign the role to any of its employees which it considers capable and skillful. STYLE: Style refers to all the symbolic actions undertaken by top managers of Share khan and its influence on the subordinates.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.
⇒ Cannonball Season’s favourites. ⇒ Vulture’s Pick Companies with valueable assets at throwaway prices.Could double in two to three years time. Get in.Stratlingly high returns possible. ⇒ Ugly Duckling Trading below fair value or at huge discount to peer group.Buy & await predators. Typically fast gainers in rising markets. 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. robust management credentials. could return 30-50% within six months. Potentially ten-baggers if you’re patient. the niches could balloon into full-blow markets. ⇒ Emerging Star Young companies likely to rule chosen niches. But somtehing’s cooking. ⇒ Applegreen Potentially steady compounders.SHAREKHAN’S STOCK CLUSTER We categorize all the scrip’s that are under coverage into six clusters. Could gallop at 25-30 per year over the next two to three years. Will steadily compound 18-20% per year for next five to ten years. 45 . Even better. but five to ten years graph bit unclear. supernormal shareholder returns. ⇒ Evergreen Dominant players with strong brands. get out. cash in.
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 .
Portfolio Management Services 7. Commodity Trading 4. 47 . 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: 1.500(One time) ⇒ For 1st Year Demat A/C is Free. ⇒ The A/C opening charges Rs. Online IPO 8. Derivative Trading 5. Mutual fund 6.On 2nd Year AMC charge is applicable. Depository Services 3. Dial-n-Trade 2.
750(onetime Charge). UTI Bank 4. Union Bank of India 48 . HDFC Bank 2. For 1st Year Demat A/C is Free. Type with 7 banks through which one can transfer or withdraw his fund online. OBC Bank 5.On 2nd Year AMC charge is applicable. Indusind Bank 7.Which are as follows 1. ONLINE A/C Opening Charges Rs. CITY Bank 6. IDBI Bank 3.
of course. This account enables you to buy and sell shares through our website. assurance of Features of Classic Account that enables you to invest effortlessly Online trading sharekhan.Otherwise one has to make fund transfer or withdraw by cheque. Minimum 128 MB RAM Windows 2000/XP Internet Connection ticker! 49 . You get features like a) Streaming quotes (using the applet based system) b) Mutltiple watchlists c) Integrated Banking. the secure transactions. demat and digital contracts d) Instant credit and transfer e) Real-time portfolio tracking with price alert and.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.Any one who have A/C either of above banks they can use this facility.
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. 50 . then Rs.1000/-(onetime Charge). Monthly charges Rs.500/-(But if Client give Brokerage of Rs.1500/-that was charged of a Quarter will be Reimbursed). Otherwise one has to make fund transfer or withdraw by cheque.1500/-in a Quarter.0 Java enabled in IE SPEEDTRADE A/C Opening Charges Rs. For 1st Year Demat A/C is Free.Internet Explorer 6. On 2nd Year AMC charge is applicable. Type with 7 banks through which one can transfer or withdraw his fund online.
Features of SpeedTrade that enable you to trade effortlessly Instant order Execution & Confirmation Single screen trading terminal Real-time streaming quotes. 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. tic-by-tic charts Market summary (most traded scrip.0 Java enabled in IE 51 .
50 0. enter your TPIN number (which is provided at the time of opening your 52 .10 0. IDBI.06 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.UTI.59 0.UTI.18 0.OBC.20 0. the Dial-n-Trade service enables you to place orders for buying and selling shares through your telephone.HDF C.OBC .75 0.50 0. City Bank Kotak Bank.15 ICICI Bank . City Bank HDFC & Other Bank HDFC.10 0.05 0.40 0. All you have to do is dial any one of our two dedicated numbers (1-800-22-7050 or 30307600). 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.
account) and on authentication you'll be directed to a telebroker who will buy and sell shares for you.30 am It takes approximately 10 minutes of your time to place an order 53 . 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.00 am to 9. 1.50 per minute for STD calls. professional advice of our telebrokers After hours order placement facility between 8. we also have a Reliance number 30307600 which is charged at Rs. please dial 022-1-800-22-7050 Currently for Citibank and HDFC customers.00 am and 9. Features of Dial-n-Trade that enable you to trade effortlessly TWO dedicated numbers for placing your orders with your cellphone or landline. wherever you are Requirements All you need is access to a phone .either a landline or a cellphone: (the type of phone doesn't matter) If calling from a cellphone. Enter your TPIN to be transferred to our telebrokers You also get the trusted. For people with difficulty in accessing the toll-free number. More banks to be added soon After hour order timings: 8. Toll free number: 1-800-22-7050.30 am (timings to be extended soon) Reliable service.
PORTFOLIO MANAGEMENT SYSTEM With the Sharekhan Team Managing Your Portfolio. you can be assured that your investments are in safe hands! We follow a multi-disciplined approach incorporating quantitative analysis. This multi-pronged approach enables us to provide risk-controlled returns for you. fundamental analysis and technical analysis. 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 .
Investors pay a small fraction of their total funds to the AMC each year as investment management fees. but what exactly are they? Are they like shares in a company. 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. Investors buy a scheme if it fits in with their investment goals. like getting a regular income now or letting the money accumulate over the long term.to keep money liquid or give a regular income or grow the money long term. 55 . The AMC offers to invest the money of hundreds of investors according to a certain objective . MUTUAL FUND Introduction Everybody talks about mutual funds. Meaning A mutual fund is a pool of money that is invested according to a common investment objective by an asset management company (AMC).
You have two choice through which you can invest in Mutual Fund. corporate and institutional debt paper. 56 .money market. Debt funds invest mainly in debt instruments like government securities. 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. Submit the duly filled copy with payment either to Nearest Sharekhan Branch Or Mutual Fund Company. print and fill up relevant details. debt and equity. Equity funds invest in the stock market and suit long term investors who want capital appreciation. They are also called income funds since people buy them for their income needs. 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. and in the near future will be expanding our scope to include a whole lot more. Applying for a mutual fund through us is open to everybody.Categories of Mutual Fund There are three broad categories of funds in the Indian market . property and gold funds are yet to come into India. Commodity. 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. returns better than a bank deposit and liquidity high. 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. regardless of whether you are a Sharekhan customer.
forgeries. Demat as a parallel solution offers freedom from delays. apart from a national network of franchisee.We have a team of professionals and the latest technological expertise dedicated exclusively to our demat department. Transfer the shares in the electronic form from one account to another. bonus. Facilitate pledge of your electronic securities. our commitment is to provide a complete demat solution which is simple. making our services quick.Sharekhan Depository Services Dematerialization and trading in the demat mode is the safer and faster alternative to the physical existence of securities. settlement risks and paper work. rights etc. Convert your electronic holding into physical holding (which is called "dematerialization of securities") 57 . safe and secure. convenient and efficient. 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. 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. thefts. At Sharekhan. Give electronic credit of new share allotments such as public issues.
Investor’s Eye. These all publication provides: In-depth analysis of the markets Analysis Before. Hemang Jani forwards all the details regarding all stocks and scripts to all the branches through Internet. 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.RESEARCH BASED ADVICE Every investor’s needs and goals are different. Eagle eye. High Noon. Commodities Beat. During (live market updates) and After market timings Special sector tracking reports sent regularly 58 . At the end of each trading day there is a Teleconference. Derivatives Digest. etc. Commodity Trader’s corner. Sharekhan Xclusive. The R&D department Head Mr. through which the R&D department Head MR. The various publications of Sharekhan viz. are being prepared by the research team of Sharekhan made up of highly experienced people from diverse field. 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. Sharekhan provides a comprehensive set of research reports. To meet these needs. The quarries regarding stock positions and other relevant matter of the branch heads of each branch is being solved through teleconference. Commodities Buzz. Sharekhan’s Valueline.
not reaching in time.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. etc. 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. 59 .
etc. resolving the problems of the customers. we had come to know the Strengths-WeaknessesOpportunities-Threats for the company and it is very useful for a company to analyze them.SWOT ANALYSIS During this training at sharekhan. Strengths: Well-maintained infrastructure.t.r. A positive image in the existing clients. On-line Trading products. One of the best DPs in India. Therefore. Wide product range to enable the clients to choose the best alternative. the SWOT analysis is presented here and the suggestions for maintaining strengths and removing weaknesses are explained. Dedicated. 60 . Intelligent and Loyal staff. Competitors. The best investment advice correct up to 70-90 % through dedicated research and reports. Service quality is not maintained accordingly how they are promoted. Lowest brokerage and other charges w. Time consuming process for account opening. Opportunities: Slope of stock market towards delivery based transaction. Weaknesses: Less awareness in the market.
Attract the customers who are dissatisfied with other broker & DPs. Loosing the untapped market with the entry of the competitors. A threat of loosing clients for any kind of weakness of the company. An indirect opportunity generated by the market from its bullishness. Increasing competition against other brokers & DPs Poor marketing activities for making the company known among the customers. 61 . Threats: Decreasing rates of brokerage in the market. Open interest of the people to enter in stock market for investing. Large untapped market in the Saurashtra region of Gujarat. Large potential market for delivery and intra-day transactions.
taking into consideration the size. market perception and the level of capital. futures and options. In addition. the risks associated with operations of banks and All India Financial Institutions have become increasingly complex. The emergence of the market for derivative products. it is no denying the fact that financial market is extremely volatile by nature. requiring strategic management. especially banks. 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. the financial markets are marked by a very high degree of volatility. Out of various risks. can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. As a result. Indian financial market is not an exception to this phenomenon.ABOUT THE DERIVATIVES DERIVATIVES INTRODUCTION Keeping in view the experience of even strong and developed economies the world over. most notably forwards. which are commonly acknowledged by various categories of Financial Institutions particularly banks. it is very much required to design risk management architecture. As 62 . Credit Risk and Interest Rate risk are the two core risks. Through the use of derivative products. risk philosophy. The attendant risk arising out of the volatility and complexity of the financial market is an important concern for financial analysts. In keeping with spirit of the guidelines on Asset-Liability Management (ALM) systems and on integrated risk management systems. among others. it is possible to partially or fully transfer price risks by locking–in asset prices. With gradual liberalization of Indian financial system and the growing integration among markets. the concept of derivatives comes into picture. the logical need is for those financial instruments which allow fund managers to better manage or reduce these risks. complexity of business. By their very nature. For enabling the banks and the financial institutions. 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.
Satyam and Infosys traded on stock exchanges in the USA and England have their own values? No. Here. the wheat forward is the “derivative” and wheat on the spot market is “the underlying”. which is derivative of milk. and supply of milk. However. which in turn depends upon the demand. Nifty options and futures. American depository receipts/ global depository receipts of ICICI. “derivative product”. MEANING A derivative is a financial instrument. these examples prove that derivatives are not so new to us. Example: A very simple example of derivatives is curd. by locking-in asset prices. The price for such a contract would obviously depend upon the current spot price of wheat. Such a transaction could take place on a wheat forward market. 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. Futures and options are the most common and popular form of derivatives. Consider how the value of mutual fund units changes on a day-to-day basis. See it this way. FOREX. The price of curd depends upon the price of milk.instruments of risk management. commodity or any other asset. 63 . They draw their price from the underlying shares traded in India. which derives its value from some other financial price. The underlying asset can be equity. This “other financial price” is called the underlying. these generally do not influence the fluctuations in the underlying asset prices. And you know what. 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. these are. The most important derivatives are futures and options. derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of riskaverse investors. Reliance futures and options. Satyam futures and options etc are all examples of derivatives. The terms “derivative contract”. or “derivative” are used interchangeably.
Options trading on Sensex and Nifty commenced in June 2001. without retaining any net-risk on the balance sheet (except credit risks). Banks. cotton and oil etc for decades in the gray market.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. Foreign Institutional Investors. India has been trading derivatives contracts in silver. spices. The minimum quantity you can trade in is one market lot. the intensity of derivatives usage by institutional investors (viz. In June 2000. Derivatives on stocks were traded in the form of “Teji” and “Mandi” in unorganized markets. 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. Mutual Funds. DERIVATIVES: AN INDIAN CONTEXT: In Indian context. coffee. Financial Institution. 64 . Recently futures contract in various commodities was allowed to trade on exchanges. Trading derivatives contracts in organized market was legal before Morarji Desai’s government banned forward contracts. Very soon thereafter trading began on options and futures in 31 prominent stocks in the month of July and November respectively. The market lots keeps on changing from time to time. and/or Covered Intermediation: On-balance-sheet derivatives intermediation for client transaction. gold. NSE and BSE started trading in futures on Sensex and Nifty.
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 . speculative dealings and comes across as an instrument which is the prerogative of a few ‘smart finance professionals’. a derivative transaction helps cover risk.” Very often. the variables underlying the derivative securities are the prices of traded securities.TYPES OF DERIVATIVES Derivative as a term conjures up visions of complex numeric calculations. 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. In reality it is not so.
What Shyam is doing is that he is locking the current price of a TV for a forward contract. The forward contract is settled at maturity. fears that prices of televisions will rise 3 months from now. He can only buy it 3 months hence. The Marking to Market provides both parties with a daily accounting of their financial obligations under the terms of the Future. which costs Rs 10. and are valued.000. Futures often are settled in cash or cash equivalents. rather than requiring physical delivery of the underlying asset. No cash is exchanged when the contract is entered into. FORWARDS: A forward contract is the simplest mode of a derivative transaction. 66 . Parties to a Futures contract may buy or write Options on Futures. He. the counterparty to a Futures contract is the clearing corporation on the appropriate exchange. 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. 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. however. 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.000 but he has no cash to buy it outright. or "Marked to Market” daily.Shyam wants to buy a TV. Illustration: . It is an agreement to buy or sell an asset (of a specified quantity) at a certain future time for a certain price. 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. Unlike Forward Contracts. Futures are similar to Forward Contracts. but are standardized and traded on an exchange.
Put options are like insurance policies. to buy the underlying shares at a predetermined price. CALL OPTIONS Call options give the taker the right. and you are not obligated to. the price you pay for it. A Call Option is an option to buy a stock at a specific price on or before a certain date. is a choice given to the investor to either honor the contract. "damages" your asset. which gives the buyer the right.Raj purchases 1 Satyam Computer (SATCOM) AUG 150 Call --Premium 8 67 . your only cost is the option premium. but not the obligation to buy or sell shares of the underlying security at a specific price on or before a specific date." then you do not need to use the insurance. OPTIONS: An option is a contract. The buyer receives a privilege for which he pays a premium. an option is a contract between two parties. your only cost is the premium. you can exercise your option and sell it at its "insured" price level. ‘Option’. If you decide not to use the option to buy the stock. Technically. but not the obligation. If the price of your stock goes up. In this way. If something happens which causes the stock price to fall. on or before a predetermined date. as the word suggests. secures your right to buy that certain stock at a specified price called the strike price. you can "insure" a stock by fixing a selling price. When you buy a Call option. The seller accepts an obligation for which he receives a fee. Illustration: . With a Put Option. Put Options are options to sell a stock at a specific price on or before a certain date. once again. and thus. and there is no "damage. called the option premium. and. or if he chooses not to walk away from the contract. There are two kinds of options: Call Options and Put Options.
but he does not want to take the risk in the event of price rising so purchases a put 68 . Illustration:. You are bullish. Raj pays a fee of Rs 800 (Rs eight a share for 100 shares). Now let us see how one can profit from buying an option. then you take a long position by buying calls. If the stock rises above Rs 55 (40+15) he will break even and he will start making a profit. You are bearish. then you take a short position by selling calls. When you expect prices to fall. The buyer of a call has purchased the right to buy and for that he pays a premium.Raj is of the view that the a stock is overpriced and will fall in future.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. Call Options-Long & Short Positions When you expect prices to rise. 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. Sam purchases a December call option at Rs 40 for a premium of Rs 15. 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. That is he has purchased the right to buy that share for Rs 40 in December. For this privilege.
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. In order to understand how one can protect his portfolio from value erosion let us take an example. You are bearish. 69 . then you take a long position by buying Puts. 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. then you take a short position by selling Puts. Put Options-Long & Short Positions When you expect prices to fall. When you expect prices to rise. 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). The other benefit of trading in index futures is to hedge your portfolio against the risk of trading.option at Rs 70 on ‘X’. You are bullish.
SPECULATION Speculators are those who do not have any position on which they enter in futures and options market. economic fundamentals and other data to take their positions. In short. Ram fears that Shyam may not honor his contract 6 months from now. They only have a particular view on the market. And if Shyam honors the contract Ram will offer a discount of Rs 1000 as incentive. Shyam defaults 1000 (Initial Investment) 1000 (penalty from Shyam) . he fancies his chances in predicting the market trend. Ram has hedged his risk against default and protected his initial investment. 70 . However. 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. Illustration: Ram is a trader but has no time to track and analyze stocks.Illustration: Ram enters into a contract with Shyam that six months from now he will sell to Shyam 10 dresses for Rs 4000. If Shyam honors the contract. The above example explains the concept of hedging.(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. 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. Ram will still make a profit of Rs 2000. market positions. open interests. stock. They consider various factors such as demand supply. commodity etc. Thus. Cost (Rs) 1000 Selling price 4000 Profit 3000 However. The cost of manufacturing for Ram is only Rs 1000 and he will make a profit of Rs 3000 if the sale is completed.
000 Ram has made a profit of Rs 40.000 by taking a call on the future value of the Sensex.000 Rs 40. Let us take the example of single stock to understand the concept better. In index futures players can have a long-term view of the market up to atleast 3 months. 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 arbitrage is possible between the spot market and the futures market. Selling Price : 4000*100 Less: Purchase Cost: 3600*100 Net gain = = Rs 4. if would have been bearish he could have sold Sensex futures and made a profit from a falling profit. the Sensex rises to 4000 and at that time he sells an equal number of contracts to close out his position. 2001. 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 there is a difference then arbitrage opportunity exists.On May 1. However. Similarly. The futures price of Nifty futures can be worked out by taking the interest cost of 3 months into account.000 Rs 3. he buys 100 Sensex futures @ 3600 on expectations that the index will rise in future. if the Sensex had fallen he would have made a loss.60. ARBITRAGE An arbitrageur is basically risk averse. 2001. When markets are imperfect. buying in one market and simultaneously selling in other market gives risk less profit. Arbitrageurs are always in the look out for such imperfections. On June 1.00. He enters into those contracts were he can earn riskless profits. Assume that Nifty is at 1200 and 3 month’s Nifty futures is at 1300.
The initial margin amount is large enough to cover a one-day loss that can be encountered on 99% of the days. 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.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. 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). 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. Initial margins 2. 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. Daily margining is of two types: 1. 72 . MARGINS The margining system is based on the JR Verma Committee recommendations. The mark-to-market settlement is done in cash. Initial margin amount computed using VaR is collected up-front.
000) Margin released 3.000 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 = 2.000 42.300 (45.80.700 (22.000 (45.000 3000) (17.000) Net cash inflow 18.00.000 Margin = 42.02.000 (20.80.000 Payment to be made NEW POSITION ON DAY 2 Value of new position = 1.300 .000 (200 x 1500) Rs 45.Let us take a hypothetical trading activity of a client of a NSE futures division to demonstrate the margins payments that would occur.000 (3. A client purchases 200 units of FUTIDX NIFTY 29JUN2001 at Rs 1500.000 184.108.40.206.000) Payment to be recd 73 . The initial margin payable as calculated by VaR is 15%.00.000 .000 .3300) 18.80.400*200= 2. = = Rs 3.000) 3.700 Loss 20.000) Net cash outflow 17.000 Close Price 1510 x 200 = Gain 22.02.000 (3.000 Addn Margin 3.
300 Rs 45. 02.700 Rs 18.700 at the end of Day 3 and the total cash inflow at the close of trade is Rs 63.300 63. ABOUT COMMODITIES 74 .000 (3.000 + 45.000 Rs 19.300.000) Rs 18.02.700 = = = (-) Rs 45.POSITION ON DAY 3 Value of new position = 1510*200 = Rs 3.20.000 Payment to be recd Gain 18.300* The client has made a profit of Rs 19.000 Rs 42.300 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 Margin = Rs 3.300 Close Price 1600*200 =3.000 (+)Rs 3.300* = 63.000 Rs 3.000-3.20.000) Net cash inflow 18.
A three-pronged approach has been adopted to revive and revitalize the market. sesame. a separate association by the name "Bombay Cotton Exchange Ltd. It is only in the last decade that commodity future exchanges have been actively encouraged. Firstly." in 1875. which carried on futures trading in groundnut . following widespread discontent amongst leading cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association. The era of widespread shortages in many essential commodities resulting in inflationary pressures and the tilt towards socialist policy. The securities market was a poor cousin of this market as there were not many papers to be traded at that time. saw the decline of this market since the mid-1960s. In 1893. 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." was constituted. 75 . However. Before the Second World War broke out in 1939 several futures markets in oilseeds were functioning in Gujarat and Punjab. This coupled with the regulatory constraints in 1960s. A statement in the first ever National Agriculture Policy. resulted in virtual dismantling of the commodities future markets. Forward trading was permitted in cotton and jute goods in 1998. in which the role of market forces for resource allocation got diminished. the markets have been thin with poor liquidity and have not grown to any significant level.INTRODUCTION Commodities Market In India Organized futures market evolved in India by the setting up of "Bombay Cotton Trade Association Ltd. castor seed and cotton. 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. in 1999. on policy front many legal and administrative hurdles in the functioning of the market have been removed. followed by some oilseeds and their derivatives. Futures trading in oilseeds was organized in India for the first time with the setting up of Gujarati Vyapari Mandali in 1900. cottonseed etc. such as groundnut. issued in July. mustard seed.
In India. Of the country's total GDP. exchange rate risks are WHY STRUCTURED COMMODITY MARKET? 76 . Indore (NBOT).Secondly. and National Board of Trade. as the existing exchanges are slow to adopt reforms due to legacy or lack of resources.. strengthening of infrastructure and institutional capabilities of the regulator and the existing exchanges received priority. all these shortcomings will be addressed rapidly. are regional in nature. One major reason being that the awareness is lacking amongst actual users. run mainly by entities which trade on them resulting in substantial conflict of interests.. technology driven exchanges with nationwide reach and adopting best international practices. Multi Commodity Exchange Ltd. 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. Ahmedabad (NMCE). which have reduced bottlenecks in the development and growth of commodity markets. which itself cannot be ignored. Mumbai (NCDEX). 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. National Commodities and Derivatives Exchange. new promoters with resources and professional approach were being attracted with a clear mandate to set up demutualized. opaque in their functioning and have not used technology to scale up their operations and reach to bring down their costs. Securities (Contract) Rules. Mumbai (MCX). such as. This period also witnessed other reforms. commodities related (and dependent) industries constitute about roughly 50-60 %. Most of the existing Indian commodity exchanges are single commodity platforms. 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. amendments to the Essential Commodities Act. Interest rate risks. Thirdly. But with the strong emergence of: National Multi-commodity Exchange Ltd.
speculator. 77 . Where the production is less but. Now more then 40 commodity items are included. precious metal. Presently nearly in 122 commodities tread is being done Transaction in the organized market: Organized markets have structured forms of transactions. In this way the total area of market will become broad. The various commodities that tread on the NCDEX and look at some commodity specific issues. and hedger can tread. If sellers and buyers come together at a place then it will create a market. The commodity exchanges are regulated as per rules and regulations define in The Forward Contracts (Regulation) Act.1. In December 2003. Total turnover of commodity of market is nearly Rs.Today the business is not limited to our area only. In this market not only producer and seller are included but arbitrageur. In this commodity market classified as agriculture products. soyabean. Here against one seller there will be more then one buyer. In which 60. 10. crude palm oil and RBD Palmolive are being offered. MCX To begin with contacts in gold. rapeseed oil. In this market buyers will come across the country for transactions. On the contrary where the production is high but demand is comparatively low the prices will go down.000 corer. other metal and energy which we discuss above. crude. But due to some restriction it was not properly worked. mustered seed. etc… Today in our country most of the trade is done in unorganized market. silver.000 corer comes from agriculture and left is coming from coal. Promissory contracts have been started science 1875. cotton. 1952 for regulating forward\future contracts. Day by day number of commodity items is incising. the National Commodity and Derivative Exchange Ltd (NCDEX) launched futures trading in nine major commodities. In our country agricultural products form 25% of GDP. soya oil. In the market current and future contracts are done. demand is comparatively high prices of the product will go up.
COMMODITIES 78 .
The delivery periods are specified. c. Some of the important features are as under: a. 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. In futures market actual delivery of goods takes place only in a very few cases. In case he decides to deliver goods. The seller in a futures market has the choice to decide whether to deliver goods against outstanding sale contracts. 79 . 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. d. 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". The units of price quotation and trading are fixed in these contracts. 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. b. e. 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.
it enables him to hedge his risk by operating in futures market. 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. There should be fluctuations in price. which decide the suitability of the commodities for future trading: The commodity should be competitive.e. and consequently the price substantially. Other benefits of futures trading are: Price stabilization-in times of violent price fluctuations .no individual or group of persons acting in concert should be in a position to influence the demand or supply.this mechanism dampens the peaks and lifts up the valleys i. 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. It enables the consumer get an idea of the price at which the commodity would be available at a future point of time. Leads to integrated price structure throughout the country. the best that suits him. Having entered into an export contract. Encourages competition and acts as a price barometer to farmers and other trade functionaries. the amplititude of price variation is reduced. Helps balance in supply and demand position throughout the year.. there should be large demand for and supply of the commodity . Facilitates lengthy and complex. It is useful to all segments of economy. COMMODITIES ARE SUITABLE FOR FUTURE TRADING The following are some of the key factors. 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. 80 . production and manufacturing activities. He can do proper costing and also cover his purchases by making forward contracts.e. i.
81 . Silver M. which forms an essential component of Commodity Exchange. Wheat. Yellow Peas. Castor Oil. Tur Cereals: Rice. RBD Palmolein. Cottonseed Spices: Pepper. Mustard Seed Oil. Tin Fibre: Kapas. Guargum Bandhani. Crude Palm Oil. Guarseed NEED FOR FUTURES TRADING IN COMMODITIES Commodity Futures. Red Chilli. Gur. can be broadly classified into precious metals. Sarbati Rice Energy: Crude Oil Others: Bandhani Rubber. Soy Seeds. Gold M. Steel Flat. Groundnut Oil. Turmeric Metal: Steel Long. Maize. Jeera. Silver. Urad. The market for the commodity should be free from substantial government control. agriculture. Medium Staple Cotton Pulses: Chana. Soymeal. Copper. Gold HNI. Guargum. Cashew Kernel. Mustard Seed. THE FOLLOWING ITEMS ARE TRADED IN THE MULTI COMMODITY EXCHANGE Bullion: Gold. Long Staple Cotton. Silver HNI Oil & Oil Seeds : Castor Seeds. Cottonseed Oilcake. Refined Soy Oil. energy and other metals. Basmati Rice. The commodity should have long shelf life and be capable of standardization and gradation. Nickel. Guar Seed.
It also helps in improving the cropping pattern for the farmers. It reflects views and expectations of a wider section of people related to a particular commodity. traders and processors to exporters/importers and end-users of a commodity. which provides the necessary immunity to the above interests in the marketing of commodities from the risk of adverse price fluctuations. In each of these two cases. trading and arbitrage opportunities to market players. pricing in commodities futures has been less volatile compared with equity and bonds. hence going forward the industry can hedge this risk by trading in the commodities market. 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. Industry in India today runs the raw material price risk. a purchase in the ready market is off-set by an opposite sale in the 82 . Futures trading in commodities results in transparent and fair price discovery on account of large-scale participations of entities associated with different value chains. The significance of raw materials can further be strengthened by the fact that the "increase in raw material cost means reduction in share prices". HEDGING Hedging is a sophisticated mechanism. thus providing an efficient portfolio diversification option. It acts as a smart investment choice by providing hedging. thus minimizing the losses to the farmers. It also provides effective platform for price risk management for all segments of players ranging from producers.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. In other words "Share prices mimic the commodity price movements". Historically.
futures market and a sale in the ready market is off-set by purchase in the futures market. per se. be made up with the profit made in the ready market. in certain circumstance. They. But. 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. To the extent that they do not move together by the same extent. These operators are called speculators. But a dealer. By and large. however. interested in such speculative losses or gains. When the price of a commodity has declined in the ready market. which would. Similarly. 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. His only interest is to ensure that he gets the necessary insurance against unforeseen fluctuation in prices. the sale or purchase hedge contract is closed out by an offsetting reverse purchase or sale contract in the futures market. 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. if the price rises in the ready market after the hedge sale had been entered into the futures market. manufacturer or exporter is not. hedging in a futures market does afford such a protection to the various functionaries. thus provide the much needed breadth and liquidity to the futures markets which in their absence would remain narrow and unstable. When the purchase or sale commitment in the ready market is fulfilled. 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. 83 . hedging itself may be a source of minor gains or losses. the ready and futures prices may not move together or the spread between the two may increase or decrease sharply.
there is no corresponding transaction in the ready market.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. 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. 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. When a transaction takes place in a futures market. 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. the form or nature of transactions entered into by both in the futures market is similar. Further. period of delivery and all other terms are pre-determined. 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. While it is possible for the individual parties to enter into futures contracts. period of delivery etc. the transaction may well be between two hedgers or two speculators or between a hedger and a speculator. REGULATORY BODY 84 . these exchanges/associations also help in evolving standard terms of contracts in which the quantity and quality of the goods traded. such contracts are generally entered under the auspices of commercial bodies known as commodity exchanges or associations. in the case of a speculative transaction. While the motives of the speculator in entering into futures trans actions are different from a hedger. are predetermined so that they can be entered into primarily for the purpose of exchange of money differences.
Also multiple restrictions exist on interstate movement and warehousing of commodities. logistics. the issues in price dissemination. If there is a broker in Mumbai and a broker in Kolkata. which needs use of futures and derivatives as price-risk management system. there are a lot of hassles such as octroi duty. thus lowering cost of doing business. Fundamentally price you pay for goods and services depend greatly on how well business handle risk. standards. Curbing the illegal activities of the diehard traders who continued to trade illegally is the major role of the Forward Markets Commission. PROBLEMS FACED BY COMMODITIES MARKETS IN INDIA Institutional issues have resulted in very few deliveries so far. Exchanges are used only to hedge price risk on spot transactions carried out in the local markets. The commission was set up under the Forward Contracts (Regulation) Act of 1952. in the bullion markets. For an agricultural country like India. octroi duty. transportation costs. 85 . For e. Commodity Market will serve as a suitable alternative to tackle all these problems efficiently.The Forward Markets Commission (FMC) is the regulatory body for commodity futures/forward trade in India. logistical problems prevent trading to take place. with plethora of mandis. The FMC is headquartered in Mumbai while its regional office is located in Kolkata. WHY COMMODITIES MARKET? India has very large agriculture production in number of agri-commodities. By using effectively futures and derivatives. Commodity players use it as a hedge mechanism as well as a means of making money.g. certification and warehousing are bound to occur. businesses can minimize risks. Currently. players hedge their risks by using futures Euro-Dollar fluctuations and the international prices affecting it. trading in over 100 crops. It is responsible for regulating and promoting futures/forward trade in commodities.
vendors etc) not fulfilling his obligations on due date or at any time thereafter is the most common risk. Commodity enterprises primarily face the following classes of risks. Talking about the nationwide commodity exchanges. 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. the quantity risk. the yield/output risk and the political 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. client.
if the Indian Commodity Exchange needs to be competitive in the Global Market. reach of the organization and adding value on the ground. method of execution. transparency of platforms. In addition to this. 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. 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. size of the trade guarantee fund. Audit and review of Members. wider participation of Hedgers. Robust Trading & Settlement systems. KEY EXPECTATIONS OF COMMODITIES EXCHANGES The following are some of the key expectations of the investor's w. Fair and Transparent Price Discovery & Dissemination.r. covering a wide range of commodities. then it should be backed with proper "Capital Account Convertibility". Proper Product Conceptualization and Design. Effective Management of Counter party Credit Risk. Self-Regulation to ensure: Overview of Trading and Surveillance. as these are the people who are exposed to risk and price fluctuations. robustness of settlement structures. acceptable clearing mechanism. households and producers are most important. credibility of the institution. The interests of Indian consumers. • • • • • 87 . scaleable technology. Speculators and Arbitrageurs.t. background of promoters.
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. since they globally know the commodities. by the Mutual Funds in India. The MSP programme will not be sustainable in such a scenario. equity markets. Following are some of the applications. Indian markets have recently thrown open a new avenue for retail investors and traders to participate: commodity derivatives. they have added depth to the equity markets. commodities are the best option. The farmer will have to look at ways of being in a position to trade on commodity exchanges in future. they will add depth to the commodities markets. Mutual Funds as investors can invest in gold and get returns as they get from debt instruments. Launch of the "Commodity Funds". FUTUREPROSPECTS With the gradual withdrawal of the government from various sectors in the postliberalization era. ACTIVE INVOLVEMENT OF MUTUAL FUND INDUSTRY IN INDIA Currently Mutual Funds are prohibited from not using derivatives apart from hedging. 88 . Also. bonds and real estate. corporate will feel the pressure to hedge their price risk once the frontiers open up for free trade. 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. AMFI & SEBI need to collectively work towards the same. the need has been felt that various operators in the commodities market be provided with a mechanism to hedge and transfer their risks. Government subsidy may go down as a result of WTO. As. can serve as a newer investment avenue for investors. For those who want to diversify their portfolios beyond shares.
Liquidity. Spreads. act or trade on quotes posted by others. Differentials. and settlement terms ranging from Oil. This is because the Internet boom in Indian is on the rise only now. Swaps. They can be acted on with full assurance of a completed transaction. 89 . It provides for various media ranging from Physical Delivery and Financial Cash Settlement. where any user can view all quotes posted by other users in real time. Complex Derivatives. This allows any user to extend the trading day. many-to-many system. 24 hours a day. ONLINE COMMODITY TRADING Online commodity trading offers a way for an open. There are further derivative options available ranging from Forwards. It is in this scenario that online trading is becoming more the way of trading in India. seven days a week. Natural Gas. Precious Metals. without favoritism or control by a chosen few. Electric Power. All quotes posted by users on any online commodity trading systems are live and firm. is perhaps the best measure of success of an online trading commodity trading system. structures. Emissions and Weather. 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. 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. where every user has equal access to price quotes and trading functionality. With most online commodity trading systems. and easily pass the trading objectives to others in companies in different times zones. The Online trading system operates almost continuously around the clock. The online commodity trading system in India is only an emerging segment yet. Options. or trade activity. It provides a level playing field for all. 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.
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 . To know the scope for the 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 influencing force behind the decision making while trading in Derivatives and Commodity. Secondary objectives are: To know the awareness of Derivatives and Commodity. Hα: There is significant difference in level of awareness of 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. To know the investment habit and purpose of investing.
So far as our research is concerned. 92 . we have not used secondary data for our research. we have not collected any information from any sources. Secondary Data Primary Data The data. is called primary data. So.SOURCES OF DATA There are two main sources of data Primary Data 1. which is collected directly from the respondent to the base of knowledge and belief of the research. 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.
We have selected the selected the samples as per per convenience.SAMPLING PROCESS It is very true that to do the research with the whole universe. As we know that it is feasible to go to population survey because of the n number of customers and their scattered location. 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 selected Income Earners with saving to invest in Rajkot city. we have taken sample size of 300 respondents. 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 . So far as our research is concerned. All the respondents are stratified on the basis of their profession and savings.
This will help the company. This will help the company to know the taste of masses and turn it towards Derivatives and Commodities. how to make people aware about Derivatives and Commodities by imparting best education. 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.The research would be useful in the following respect. 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 also help to select right medium for trading in Derivatives and Commodities segment. Time Limit: The time duration given for the research is less. Mind share of Sharekhan can be known. 94 .
which is of 100 only. Sample Size: The last limitation is Sample Size. due to which we may not get the proper results. so we cannot know the degree of the literacy outside the city. 95 .Area: The area was limited to Rajkot City only.
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
Instruments Bullion Spices Fiber Oil Metal F&O No. 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. So the preference for commodity (Bullion) is more than the Derivatives. 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. Factors that are to be consider by Individual at the time of investment 99 .
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. 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. 117 55 Rank 1 3 100 . Medium prefer by individual at the time of investment Factor Broker Magazine No.
Internet Other 102 26 2 4 140 120 100 80 60 40 20 0 117 102 55 26 1 Broker 3 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 .
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.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. 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.
05 3.) Level of Significance : σ The Level of significance should be set at α = 0.” Therefore.TESTING OF HYPOTHESIS Testing of Hypothesis using Z test (Two tailed): 1. H0 : u = H1: u ≠ 50% 50% 2.) 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.
8676 5.763) is larger than 1.9+ 0.96 (the result will be between two) σx = = = Z = = 5 / root of 300 . of standard deviations for the desired level of confidence. Z = No.1. Alternate Hypothesis is accepted.) Draw a statistical conclusion The absolute value of the computerized Z statistic (5.975 1. therefore null hypothesis is rejected.8676 55 – 50 / 0. 105 .) The Decision Rule 1.1 15/17.025) = 0.763 5.000 (1-0.96 & .29 0.96. So.6 = 1. X = Mean of the sample U= Mean of the population or hypothetical mean σx = Estimate for the standard error or the mean 4.Z = X – u / σx Where.
H1: There is significant difference in level of literacy about Derivatives & Commodities among the people of Rajkot City. 106 .
Those people who want to invest in Derivatives & Commodities are investing mainly for reducing risk and they consider them as investment tool. People generally want to take trading decisions independently or under the guidance of Friends or Well Known Stock Broking Houses. Literature and Self Experience can be taken as the best method to impart education about derivatives & commodities RECOMMENDATION 107 .CONCLUSION • • • • • Most of the people in Rajkot City are investing in fixed return Instruments. But there are investors who use Equity as an investment tool.
taking part in consumer fairs. • • • • • 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. Sharekhan should educate the investors about Derivatives & Commodities by organizing classes. Sharekhan can also use Newspapers and Local New Channels as a medium of advertising.• • Sharekhan needs to make its marketing team strong and also it should increase marketing activities such as promotional campaigns. Company may appoint special team for giving education & attracting people towards trading on Derivatives & Commodities. corporate presentations. organizing events. QUESTIONNAIRE 108 .
Name:____________________________________________ 2.2 If YES. Occupation: Male 21-35 Female 36-50 Above 50 ___________________________________ Professional Govt. Gender: 3. Education: 5. Age: 4.: Post schemes: Insurance: Mutual Fund: Gold: Equity: Derivatives: Commodities: Q.4 Which factor plays crucial role when you make a decision to invest in Derivatives & Commodity? Risk Reduction: Leverage Benefit: 109 . Where do You invest Your savings? Bank F.1 Do you invest Your surplus money in saving instrument? Yes: No: Q. Employee Businessman Employess working Q.3 If You invest in Derivatives OR Commodity.D.1. Which would be your first preference from the list given below? Bullion: Spices: Fiber: Oil & Oil Seed: Metal: F&O: Q.
6 which stock exchange would you prefer to carry out your transaction? BSE: MCX: NSE: NCDEX: Q. 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. Which medium is the most reliable for trading in Derivatives & Commodity ? 1 Hour : 110 .10 How much time will you be able to devote for learning Derivatives OR Commodity? ½ Hour: 2 Hour : Q.7 Do You consider investment in Derivatives & Commodities are safer then Other investment avenues? 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.8 If No.5 which mediums do you use to invest in Derivatives & Commodity? Broker: Magazine: Internet: News channels Q.Arbitrage Benefit: Liquidity preference: Speculative Motive: Q.11 According to You.
Stock Broking Company: Franchises: Online: Q. I also know that how to implement theory in practice. I also got the chance for trading Share khan’s product like Sales Executives so 111 .____________ 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.____________ 2.
It is a memorable experience to be a part of share khan family.It also increase my confidence. New Delhi. BIBLIOGRAPHY Books: • Kothari C.Ltd. Vikas Publishing House pvt. I am always thankful to them.R. 1978 112 .. Research Methodology.that it improve my convincing power and also give chance to meet different people .
bseindia.ncdex. www.com.Ltd.com 5.Google. Websites: 1.Indian Financial Syatem.• Pathak Bharti v. www.com 2.Person Education(Singapore) Pvt.nseindia.com 7.moneycontrol.mcx. 6.. www. www. www. www. www.sharekhan.com 113 .Delhi.com 4.com 3.
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