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fulfillment for the Award of the Master of Business Administration (MBA) (FINANCE) Submitted By CHANDRASEKHAR GOUD.G Roll No. 08J81E0010 Under the Guidance of MR.SRINIVAS (Assistant Professor of MBA Dept) DEPARTMENT OF BUSINESS MANAGEMENT P.INDRA REDDY MEMORIAL ENGINEEING COLLEGE (Aff iliated to Jawaharlal Nehru Technological University)
DECLARATION I here by declare that this project report entitled “A STUDY OF ONLINE TRADING AND STOCK BROKING” has been prepared by me is an original work submitted to Jawaharla l Nehru Technological University towards partial fulfillment of the requirement for the award of Master of Business Administration. I also here by declare that this project report has not been submitted at any time to any other university o r institute for the award of any Degree or Diploma. (G.CHANDRA SEKHAR GOUD) (08J81E0010) 2
CERTIFICATE This is to certify that the project work entitled “A STUDY OF ONLINE TRADING AND STOCK BROKING” Has been done by G.CHANDRA SEKHAR GOUD (08J81E0010) In the partial fulfillment o f the requirements for the award of the degree of Master of Business Administrat ion from P.Indra Reddy Memorial Engineering College, affiliated to Jawaharlal Ne hru Technological University is a record of bonafide work carried out by them un der my guidance and supervision. The result embodied in this has not been submit ted to any other university or institute for the award of any degree. Internal Guide: Mr. SRINIVAS MR.D.H.B.R.PRASAD Head of the department Master of Business Administration 3
ACKNOWLEDGEMENT I take this opportunity to express my gratitude high regards and sincere thanks to our respected Principal Dr. R.V. Krishnaiah for providing excellent infrastru cture. I thank Mr. D.H.B.R.Prasad Head of the Department of MBA for his constant help and support. I express my sincere thanks to our committed faculty Mr.SRINI VAS for his support and guidance. I have great regard for all the well wishers w hose help is beyond acknowledgement. (G.CHANDRA SEKHAR GOUD) (08J81E0010) 4
Chapter 1 Objectives & Methodology 5 .
6 .OBJECTIVES AND METHODOLOGY NEED FOR THE STUDY: The present study to review the online trading procedure a c ase study of ONLINE TRADING at SHAREKHAN as the exchange has changed it’s trading from the outcry mode to online trading on 20th February 1997. there is need to a ssess the performance of the capital market.
To know about the latest and future development in the stock exchange trading sy stem. It is to study the functions of SHAREKHAN through various departments. which would link the SHAREKHAN to individual / members. To know t he online screen based trading system adopted by SHAREKHAN and about its communi cation facilities.OBJECTIVES OF THE STUDY: It is to analyze the changes in trading after the exchange shifted from outcry t o online trading system. 7 . The appropriate configuration to set the network.
etc. Secondary method: The secondary data collection method includes: The lecturers d elivered by the superintendents of respective departments.METHODOLOGY OF THE STUDY: The data collection methods include both primary and s econdary collection methods. Various books relating to the investments . there were stil l some limitation which I think remains there to draw fruitful conclusion. Primary method: This method includes the data colle cted from the personal interaction with authorized members of Sharekhan Securiti es limited. There were some practical problem which come across and could not be properly death w ith The advisory services being promised by the brokers would be of little use t o investors looking for an insight into the market. The brochures and mat erial provided by Sharekhan Securities limited. The data collected from the maga zines of the NSE. LIMITATIONS OF THE STUDY: Despite of the training my level best. economic times. As a client one will access the NSE through a server of the online brokerage and this may involve queuing de lays If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be a ble to do so. capital market and other related topics. If he want advice on a particular stock in his portfolio he may no t even be able to get that. 8 .
Chapter 2 Company profile 9 .
INDUSTRY PROFILE Following diagram gives the structure of Indian financial system: ] 10 .
E. The unorganized market is composed of indigenous bankers. According to functional basis financial markets are classified into two types. These markets are the centers that provide facilities for buying and selling of financial claims and services. They are: Money markets (short-term) Capital markets (long-term) According to in stitutional basis again classified in to two types. treasury bills. The financial markets match the demands of investment with the supply of capital from various sources.. individual professional and non-professionals. commercial papers. The organized market comprises of official market represented by recognized inst itutions. moneylenders . They are Organized financial market Non-organized financial market.FINANCIAL MARKET: Financial markets are helpful to provide liquidity in the system and for smooth functioning of the system. MONEY MARKET: Money market is a place where we can raise short-term capital.g. bank and government (SEBI) registered/controlled activities and interm ediaries. CD s etc. 11 . Again the money m arket is classified in to Inter bank call money market Bill market and Bank loan market Etc.
Primary market is also referred to as New Issue Market. PRIMARY M ARKET: Primary market is generally referred to the market of new issues or marke t for mobilization of resources by the companies and government undertakings. fo r new projects as also for expansion.: Shares. and Loans etc. addition. modernization. Debentures. E.CAPITAL MARKET: Capital market is a place where we can raise long long-term capi tal. Primary market n. further and 12 . Again the capital market is classified in to two types and they are Primary market and Secondary market. diversification a nd up gradation. operations include new issues of shares by new and existing companies .g.
Banker to the issue 6. Funct ion: The main services of the primary market are origination. Origination deals with the origin of the new issue. The term investor protection ha s a wider meaning in the primary market. ] 13 . Registrar and transfer agent 3.right issues to existing shareholders. underwriting. Distribution refers to the sale of securities to the investors. Depository participant Investors’ protection in the primary market: To ensure healthy growth of primary m arket. bonds. T he following are the market intermediaries associated with the market: 1. Mercha nt banker/book building lead manager 2. The principal ingredients of investors’ p rotection are: Provision of all the relevant information Provision of accurate i nformation and Transparent allotment procedures without any bias. the investing public should be protected. public offers. and distribution. Adviser to the issue 5. and issue of debt instrume nts such as debentures. Underwri ter/broker to the issue 4. The primary market is regulated by the Secur ities and Exchange Board of India (SEBI a government regulated authority). Deposi tory 7. etc. Underwriting c ontract make the shares predictable and remove the element of uncertainty in the subscription.
Portfolio Man ager 3. Listing of scrip’s provides liquidity and offers an opportunity to the investors to buy or se ll the scrip’s. Depository 6. National Stock Exchange of India and Interco nnected Stock Exchange of India. More the n umber of companies entering the primary market. which is commonly known as stock market o r stock exchange. The following are the intermediaries in the secondary market: 1. Investment advisor 4. Share transfer agent 5. Depository p articipants. “The secondary market is a market where scrip’s are traded”. 14 . Secondary market operations involve buying and selling of securities on the stoc k exchange through its members. It is a market place which provides liquidity to the scrip’s issued in the primary market . The companies hitting the primary market are man datory to list their shares on one or more stock exchanges in India. Outstanding securiti es are traded in the secondary market. Trading activities in the secondary market are done through the recognized stock exchanges which are 23 in number including Over Th e Counter Exchange of India (OTCE).SECONDARY MARKET The primary market deals with the new issues of securities. the greater are the volume of tr ade at the secondary market. the growth of secondary market depends on the primary market. B roker/member of stock exchange – buyers broker and sellers broker 2. Thus.
selling or dealing in securities. In the stock mark et. the securities contract (regulation) act became la w in 1956.Gorwala went into the bill for securities regulation. constituted for the purpose of assisting. Gover nment securities. a number of stock exchanges were organized. regulating or controlling the business of buying.D. During the war boom. central legislation was proposed and a committee headed by A. Government securities are traded outside the trading ring in the form of over the counter sales or purchase. On the basis of the committee’s recommend ations and public discussion. purchases and sales of shares are affected in conditions of free competition . Before the control on securities under the constitution in 1950. Soon after it became a central subje ct. These were o rganized as voluntary nonprofit-marking associations of brokers to regulate and protect their interests. Definition of a stock exchange: “Stock exchange means any body or individuals whether incorporated or not. The bargains that are struck in the trading ring by the members of the stock exchanges are at the fairest prices determined by th e basic laws of supply and demand.STOCK MARKETS IN INDIA: Stock exchanges are the perfect type of market for secur ities whether of government and semi-govt bodies or other public bodies as also for shares and debentures issued by the joint-stock companies. the Mumbai st ock exchange was recognized in 1927 and Ahmadabad in 1937. 15 . Bonds History of Stock Exchanges: The only stock exchanges operating in the 19th centu ry were those of Mumbai setup in 1875 and Ahmadabad set up in 1894. Under this act.” The securities include: Shares of public company. it was a state subject and the Bombay securities contracts (control) a ct of 1925 used to regulate trading in securities.
shares and debentures for financing their day-to-day activities. 16 . the central and state government have raised crores of rupees by floating public loans. By giving quotations to the listed companies. By obtaining the listing and trading facilities.the backbone of the cou ntry’s economy-have secured capital of crores or rupees through the issue of stock s. they help trading and rai se funds from the market. public investment is incre ased and companies were able to raise more funds. The quoted companies with wide public interest have enjoyed some benefits and assets valuation has become easi er for tax and other purposes.Functions of Stock Exchanges: Stock exchanges provide liquidity to the listed co mpanies. Over the hundred and twenty years during which the sto ck exchanges have existed in this country and through their medium. trust and local bodies have obtained from the public their f inancial requirements. diversification and modernizat ion. trade and commerce. and industry. Muni cipal corporations. organizing n ew ventures and completing projects of expansion.
Various Stock Exchanges in India: At present there are 23 stock exchanges recognized under the securities contract s (regulation). Act. Coimbatore Stock Exchange Delhi Stock Exchan ge Association 17 . Those are: Ahmadabad Stock Exchange Association Ltd. 1956. Bangalore Stock Exchange Bhubaneshwar Stock Exchange Association Calcutta Stock Exchange Cochin Stock Exchange Ltd.
Magadh Stock Exchange Limited Mee rut Stock Exchange Ltd. Saurashtra Kutch Stock Exchange Lt d. Uttar Pradesh Stock Exchange Association Vadodara Stock Exchange Ltd.Guwahati Stock Exchange Ltd Hyderabad Stock Exchange Ltd. Jaipur Stock Exchange Ltd Kanara Stock Exchange Ltd Ludhiana Stock Exchange Association Ltd Madras Sto ck Exchange Madhya Pradesh Stock Exchange Ltd. Mumbai Stock Exchange National Stock Exchange of India O TC Exchange of India Pune Stock Exchange Ltd. 18 .
Based on the recommendations. 1956 in Apr il 1993. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. which recommende d promotion of a National Stock Exchange by financial institutions (FI’s) to provi de access to investors from all across the country on an equal footing. The Capital Market (Equities) segment commenced operations in Novembe r 1994 and operations in Derivatives segment commenced in June 2000 19 . On its recognition as a stock exchange under the Securities Contracts (Regulation) Act. NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax -paying company unlike other stock exchanges in the country.Out of these major stock exchanges were: NSE (National Stock Exchange) The National Stock Exchange of India Limited has genesis in the report of the Hi gh Powered Study Group on Establishment of New Stock Exchanges.
20 . The standards set by NSE in terms of market practices and technology. NSE i s more than a mere market facilitator. Enabling shorter settlement cy cles and book entry settlements systems. Providing a fair. E nsuring equal access to investors all over the country through an appropriate co mmunication network. efficient and transparent securities mark et to investors using electronic trading systems. The NSE was set-up with the main objectives of: Establishing a nation-wide trading facility for equities and debt instruments. It s that force which is guiding the indu stry towards new horizons and greater opportunities. and Meeting the current international s tandards of securities markets.NSE s mission is setting the agenda for change in the securities markets in Indi a. have becom e industry benchmarks and are being emulated by other market participants.
Mumbai. of India under the Securities Con tracts (Regulation) Act 1956. It is the oldest one in Asia.The Exchange. debt and derivatives upholds the inter ests of the investors and ensures redresses of their grievances whether against the companies or its own member-brokers. It is the first Stock Exchange in the Country to have obtaine d permanent recognition in 1956 from the Govt. popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It also strives to educate and enlighte n the investors by conducting investor education programmers and making availabl e to them necessary informative inputs.BSE (Bombay Stock Exchange) The Stock Exchange. I t has evolved over the years into its present status as the premier Stock Exchan ge in the country. while providing an efficient and tran sparent market for trading in securities. 21 . which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engag ed in the process of converting itself into demutualised and corporate entity. even older than the Tokyo Stock Exchange.
norms. three SEBI nominees. fees. an Executive Committee. six public representatives and an E xecutive Director & Chief Executive Officer and a Chief Operating Officer.A Governing Board having 20 directors is the apex body. 22 . margins and o ther monies payable by the member-brokers to the Exchange. continuance and susp ension of memberbrokers. etc.126 A in its Rules. consisting of three elected direc tors. declaration of a member-broker as defaulter. The Committee considers judicial & quasi matters in which the Governing Board has powers as an Appellate Authori ty. admission. Executive Director & CEO an d Chief Operating Officer has been constituted. The Executive Director as the Chief Executive Officer is responsible for the day -to-day administration of the Exchange and the Chief Operating Officer and other Heads of Department assist him. Accordingly. The Governing Board consists of 9 elected directors. The Exchange has inserted new Rule No. Byelaws pertaining to constitution of the Executive Committee of the Exchange. matters regarding annulment of transactions. which decides the policies and regulates the affairs of the Exchange. three SEBI nominees or public representatives. who are from the broking community (one third of them retire ever year by rotation). pro cedures and other matters relating to arbitration. deposits.
He should be an Indian c itizen. He should be neither a bankrupt nor compound with the creditors. The qualifications for be coming a member of a recognized stock exchange are given below: The minimum age prescribed for the members is 21 years. He should not be engaged in any oth er business connected with a company. He shou ld not be convicted for fraud or dishonesty. The minimum required education is a pass in 12th standard examin ation.REGULATORY FRAME WORK OF STOCK EXCHANGE A comprehensive legal framework was prov ided by the “Securities Contract Regulation Act. Three tier regulatory structure comprising Ministry of finance The Securities And Exchange Board of India Governing body Members of the stock exch ange: The securities contract regulation act 1956 has provided uniform regulatio n for the admission of members in the stock exchanges. He should not be a defaulter of any other stock exchange. 1956” and “Securities Exchange Board of India 1952”. 23 .
With the coming into effect of th e securities and exchange board of India act. 1947and the securities to it by the centr al government. Registering and regulating the w orking of intermediaries associated with securities market as well as working of mutual funds. Regulating substantial acquisition of shares and take over of companies. Regulating the business in s tock exchanges and any other securities market. Performing such functions and exercising such powers under the provi sions of capital issues (control) act. the SEBI shall constitute of a chairman and four othe r members appointed by the central government. in respect of the regulation of stock e xchange were transferred to the SEBI. 1992 some of the powers and functi ons exercised by the central government.SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) The securities and exchange board of India was constituted in 1988 under a resol ution of government of India. OBJECTIVES AND FUNCTIONS OF SEBI To protect the interest of investors in securities.according to this act. It was later made statutory body by the SEBI act 1 992. Prohibiting insider trad ing in securities. Promoting and regulating self-regulatory organizations. 24 .
The broker can use his discretion to buy within the specifi ed limit. The order to buy or sell specifying the number of shares of the comp any of investors’ choice is placed with the broker. ‘buy Reliance Petroleum at Rs. the buyer or seller gives the freedom to the broker to execute the order at the best possible rate quoted on the particular date for buying. the broker is authorized to sell the shares to prevent further loss. It may be lowest rate for buying and highest rate for selling. Generally the approximation price is fixed.g. E.24. Best rate order: Here.SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES): Board of Directors of Stock Exchange has to be reconstituted so as to include no n-members.40”.g. E. If the price falls below the limit. All recognized stock exchanges will have to inform about transactions within 24 hrs.50. public representatives and government representatives to the extent o f 50% of total number of members. The order may be of any type. Capital adequacy norms have been laid down for the members of various stock exch anges depending upon their turnover of trade and other factors. Discretionary order: The investor gives the range of price fo r purchase and sale. After receiving the 25 .50.22. Buying and selling shares: To buy and sell the shares the investor has to locate register broker or sub broker who render prompt and efficient serv ice to him. A particular limit is giv en for waiting. stop lo ss at Rs.’Here. the order has cl early indicated the price at which it has to be bought and the investor is not w illing to give more than Rs. Sell BRC limited at Rs. The orders are of different types. TYPES OF ORDERS: Buy and sell orders placed with members of the stock exchange b y the investors. The order stands as this “bu y BRC 100 shares around Rs. Stop loss order: The orders are given to limit the loss due to unfavorable price movement in the market. Limit orders: Orders are lim ited by a fixed price.
e. The rolling settlement system is not ed by T+N i.’C’. Share settlement is likely to be completed much sooner after the transact ion than under the fixed settlement system.’B1’. The ‘A’ group which are in the carry forward system. In the case of sale of shares on receiving payment from the purchasing broker . price. and the date of delivery of share.order the broker tries to execute the order in his computer terminal. the order is executed. The investor should be account holder in any of the depository participan t.’B2’. Generally longer settlement periods are shortened gradually. The Z group scrips are of the blacklisted compan ies. Once match ing order is found. The stam p duty is one of the percentage considerations. 3 or 5days) after the trading day. If it is bought in the DEMAT form. once the broker gets the share certificate through t he clearing houses he delivers the share certificate along with transfer deed to the investor. ROLLING SETTLEMENT SYSTEM: Under rolling settlement system. the broker has to give a matching instruc tion to his depository participant to transfer shares bought to the investors ac count. the investor should lodge the sh are certificate and transfer deed to the register or transfer agent of the compa ny. It gives the details regarding the name of the company. n umber of shares bought. The ‘F’ group represents the debt market seg ment (fixed income securities). the settlement period is n days after the trading day. SEBI made RS compu lsory for trading in 10 securities selected on the basis of the criteria that th ey were in compulsory demat list and had daily turnover of about Rs. the settlement takes place n days (usually 1. Share groups: The scrips trade d on the BSE have been classified into ‘A’.1 26 . The ‘C’ group covers the odd lot securities in ‘A’. 2.’F’ and ‘Z’ groups. brokerage. The investor has to fill the transfer deed and stamp it. the broker effects the payment to the investor. ‘B1’&’B2’ groups. A rolling period which offers a large number of days negates the advantages of the system. The shares bough t and sold are paid in for n days after the trading day of the particular transa ction. In this physical trading form. The broker then delivers the contract note to the investor.
m on T +1.30 p. Depository participants accept the instructions for pay in securities by inv estors in physical form upto 4 p.00am/on T+2. The exchange/clearing house/cleari ng corporation executes the pay-out of securities and funds latest by 1. Automated Lending and Borrowing Mechanism (ALBM) and Borrowing and lending Secur ities Scheme (BELSS) with effect from Dec 31.m. 27 . Activities on T+1: conformation of the institutional trades by the custodian is sent to the stock exchange by 11. Activities on T+ 2: The depository permits the download of the paying in files of securities and funds till 10. Th e time limit and the additional changes for the exception window are dedicated b y the exchange. After the T+3 rolling settlement experience it was f urther reduced to T+2 to reduce the risk in the market and to protect the intere st of the investors from 1st April 2003. The buy and sale positions in the same scrip can be settled and net quantity has to be settled.m for same day processing. Then it was extended to “A” stocks in Modified Carry Forward Scheme. The depository proces ses the pay in requests and transfers the consolidated pay in files to clearing House/clearing Corporation by 11.m on T+2 from the brokers’ pool accounts.30 a. 2001. the deposi tories accept from other DPs till 8p.m o n T+2 to the depositories and clearing banks. In the demat mode net basis settle ment is allowed.00 am. The exchanges/clearing house/ clearing corporation would process and download the obligation files to the broker’s terminals late by 1. SEBI has introduced T+5 roll ing settlement in equity market from July 2001 and subsequently shortened the cy cle to T+3 from April 2002.crore or more.m and in electronic form upto 6 p. A provision of an exception window would be available for late confirmation.30 p.
ABOUT SHAREKHAN LIMITED Sharekhan Ltd. is one of the leading retail stock broking house of SSKI Group wh ich is running successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI Group, which has over eight decades of experience i n the stock broking business. Sharekhan offers its customers a wide range of equ ity related services including trade execution on BSE, NSE, Derivatives, deposit ory services, online trading, investment advice etc. The firm’s online trading and investment site - www.sharekhan.com - was launched o n Feb 8, 2000. The site gives access to superior content and transaction facilit y to retail customers across the country. Known for its jargon-free, investor fr iendly language and high quality research, the site has a registered base of ove r one lakh customers. The content-rich and research oriented portal has stood ou t among its contemporaries because of its steadfast dedication to offering custo mers best-of-breed technology and superior market information. The objective has been to let customers make informed decisions and to simplify the process of in vesting in stocks. On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application that emulates the broker terminals along with host of ot her information relevant to the Day Traders. This was for the first time that a net-based trading station of this caliber was offered to the traders. In the las t six months Speed Trade has become a de facto standard for the Day Trading comm unity over the net. Share khan’s ground network includes over 1288 centers in 325 cities in India which provide a host of trading related services. Sharekhan has always believed in investing in technology to build its business. The company ha s used some of the best-known names in the IT industry, like Sun Microsystems, O racle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading 28
engine and content. The Morakhiya family holds a majority stake in the company. HSBC, Intel & Carlyle are the other investors. With a legacy of more than 80 yea rs in the stock markets, the SSKI group ventured into institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. SSKI holds a sizeable po rtion of the market in each of these segments. SSKI’s institutional broking arm ac counts for 7% of the market for Foreign Institutional portfolio investment and 5 % of all Domestic Institutional portfolio investment in the country. It has 60 i nstitutional clients spread over India, Far East, UK and US. Foreign Institution al Investors generate about 65% of the organization’s revenue, with a daily turnov er of over US$ 2 million. The Corporate Finance section has a list of very prest igious clients and has many ‘firsts’ to its credit, in terms of the size of deal, se ctor tapped etc. The group has placed over US$ 1 billion in private equity deals . Some of the clients include BPL Cellular Holding, Gujarat Pipavav, Essar, Hutc hison, Planetasia, and Shopper’s Stop. 29
• PROFILE OF THE COMPANY Name of the company: Year of Establishment: Headquarter : Sharekhan ltd. 1925 Sh arekhan SSKI A-206 Phoenix House Phoenix Mills Compound Lower Parel Mumbai - Mah arashtra, INDIA- 400013 Service Provider Depository Services, Online Services an d Technical Research. Over 3500 Data Not Available www.sharekhan.com Your Guide to The Financial Jungle. Nature of Business Services : : Number of Employees : Revenue Website Slogan : : : Vision To be the best retail brokering Brand in the retail business of stock market. Mission To educate and empower the individual investor to make better investment decisio ns through quality advice and superior service. Sharekhan is infact• Among the top 3 branded retail service providers • No. 1 player in online business • Largest network of branded broking outlets in the country se rving more than 7, 00,000 clients. 30
REASON TO CHOOSE SHAREKHAN LIMITED Experience SSKI has more than eight decades of trust and credibility in the Indi an stock market. In the Asia Money broker s poll held recently, SSKI won the In dia s Best Broking House for 2004 award. Ever since it launched Sharekhan as it s retail broking division in February 2000, it has been providing institutional level research and broking services to institutional-level individual investors. Technology With its online trading account one can buy and sell shares in an ins tant from any PC with an internet connection. One can get access to its powerful online trading tools that will help him take complete control over his investme nt in shares. Accessibility Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXEC UTION services for EXECUTION investors. These services are accessible through it s centers across the country over the internet (through the website www.sharekha n.com) as well as over the Voice Tool. Knowledge In a business where the right i nformation at the right time can translate into direct time profits, one can get access to a wide range of information on Sharekhan limited’s content-rich portal. One can also get a useful set of knowledge-based tools that will ased empower h im to take informed decisions. Convenience One can call its Dial-N-Trade number to get investment advice and ex ecute his Trade investment transactions. Sharekhan ltd. have a dedicated call ce ntre to provide this service via a call-centre Toll Free Number 1800-22-7500 & 1 800-22-7050 from anywhere in India. 7500 31
Its anal ysts constantly track the pulse of the market and provide timely investment advi ce to its clients in the form of daily research emails.Customer Service Sharekhan limited’s customer service team will assist one for any help that one may require relating to transactions.com. Its customer service can be contacted via a toll-free number. 32 .sharekhan. printed rep orts and SMS on their mobile phone. demat and other qu eries. email or li ve chat on www. Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical researches. billing. online chat.
are as fo llows: Equity and derivatives trading Depository services Online services ities trading Dial-n-trade Portfolio management Share shops Fundamental research Technical research 33 .SHAREKHAN LIMITED’S MANAGEMENT TEAM Dinesh Murikya Tarun Shah Shankar Vailaya : : : : : : : Owner of the company CEO of the company Director (Operations) Director (Products & Technology) Head of R esearch Vice President of Equity Derivatives Vice President of Research Jaideep Arora Pathik Gandotra Rishi Kohli Nikhil Vora PRODUCTS AND SERVICES OF SHAREKHAN LIMITED The different types of products and services offered by Sharekhan Ltd.
Integrated Banking. This a ccount allow investors to buy and sell stocks online along with the following fe atures like multiple watch lists.com and is suitable for the retail investor who is risk-averse an d hence prefers to invest in stocks or who does not trade too frequently.TYPES OF ACCOUNT IN SHAREKHAN LIMITED Sharekhan offers two types of trading account for its clints Classic Account (wh ich include a feature known as Fast Trade Advanced Classic Account for the onlin e users) and Speed Trade Account CLASSIC ACCOUNT This is a User Friendly Product which allows the client to trade through website www. Real-time portfolio tracking with price alerts and Instant credit & transfer. 34 . Demat and digital contract s.sharekhan.
i. g. Instant cash transfer facility against purchase & sale of shares. This account c omes with the following features: a.30 am c. d.00 am and 9. g. Single screen interface for cash and derivatives. Online trading account for in vesting in Equities and Derivatives b. Alerts and reminders. Market summary (Cost traded scrip. 35 . c. which enables one to buy and sel l in an instant. b. highest value etc. d. Simple and Secure Intera ctive Voice Response based system for authentication IV. Instant order and trade confirmations by e-mail. Single screen trading terminal for NSE Cash. e. Integration of: Online Trading +Saving Ba nk + Demat Account. It is ideal for active traders and jobbers who transact frequen tly during day’s session to capitalize on intra-day price movement. get the trusted. Real-time streaming quotes. f. h. e.) Hot keys similar to broker’s terminal. Multiple Charting. NSE F&O & BS E. Instant order Execu tion and Confirmation.This account comes with the following features: a. After hours order placement f acility between 8. Automatic funds transfer with phone banking facilities (for Citibank and HDFC bank customers) III. tic-by-tic charts. IPO investments. profes sional advice of Sharekhan limited’s Tele Brokers V. Back-up facility to place trades on Di rect Phone lines. f. Two dedicated numbers(1800-22-7500 and 39707500) for placing the orders usin g cell phones or landline phones II. Technical Studies. SPEED TRADE ACCOUNT This is an internet-based software application. Free trading through Phone (Dial-n-Trade) I.
com/Locateus. CHARGE STRUCTURE Fee structure for General Individual: Charge Account Opening Classic Account Rs. 750/= Intra-day – 0. Live market debts.j. 300/= p. investor has to open an account. 36 . Sharekhan has a huge net work all over India (640 centers in 280 cities).50% Speed Trade Account Rs. One can call on the Toll Free Number: 1-800-22-7500 to speak to a Customer S ervice executive b. 1 000/= Intra-day . NIL Rs. One can send them an email at info@sharekhan. he can call on 022-66621111 One c an visit any one of Sharekhan Limited’s nearest branches.10% HOW TO OPEN AN ACCOUNT WITH SHAREKHAN LIMITED? For online trading with Sharekhan Ltd. a.0..10 % Brokerage Delivery .: One need to call them at phone number provided below and asks that he want to open an account with them. Followi ng are the ways to open an account with Sharekhan Ltd.aspx” link to find out the nearest branch. from second calendar year onward Delivery .0.50 % Depository Charges: Account Opening Charges Annual Maintenance Charges Rs.a. Or If one stays in Mumbai.com to know about their products and services. One can also log on to “http://sh arekhan. NIL first year Rs.0.
sharekhan. After the accounts are activated. pin code of the city. 37 .One can also visit the site www. is scrutinized in the branch and then it is sent to Mumbai for further processing where after a few days the clients’ account are generated and activated. a Welcome Kit is dispatched fro m Mumbai to the clients’ address mentioned in the documents provided by them. his email address. After that the forms that has collec ted from the clients. they can start trading and investing in shares. Afte r that the executives of the respective branches contact the prospective clients over phone or through email and give them information regarding the various typ es of accounts and the documents they need to open an account and then fix appoi ntment with the prospective clients to give them demonstration and making them u ndergo the formalities to open the account. city he lives in. phone number. his nearest Sharekhan Ltd. As s oon as the clients receive the Welcome Kit. shop and his preferences regarding the type of account he wants.com and click on the option “Open an Acc ount” to fill a small query form which will ask the individual to give details reg arding his name. These information are compiled in the headquarter of the c ompany that is in Mumbai from where it is distributed through out the country’s br anches in the form of leads on the basis of cities and nearest share shops. which contains the clients’ Trading ID and Trading Password.
Generally the process of opening an account follows the following steps: LEAD MA NAGEMENT SYSTEM (LMS) / REFERENCES CONTACT THE PERSON OVER PHONE OR THROUGH EMAI L FIXING AN APPOINTMENT WITH THE PERSON GIVING DEMONSTRATION YES NO DOCUMENTATION FILLING UP THE FORM SUBMISSION OF THE FORM LOGIN OF THE FORM SENDING ACCOUNT OPENING KIT TO THE CLIENT TRADING 38 .
39 . I nsurance Policy (should be latest and should be in the name of the client) i. j. g. ** A cancelled cheque should be given by the client if he provides Saving Bank S tatement as a proof for correspondence address. e. c.: Photocopy of th e clients’ PAN Card which should be duly attached Photo copy of any of the followi ng documents duly attached which will serve as correspondence address proof: a. one needs to provide with the followin g documents in order to open an account with Sharekhan Limited.Apart from two passport size photographs. 5000). NOTE: Only Saving Bank Account c heques are accepted for the purpose of Opening an account. b. f. Le ase or Rent Agreement. Saving Bank Statement** (should be latest) Two cheques drawn in favour of Sharkhan Limited. one for the Account Opening Fees and the o ther for the Margin Money (the minimum margin money is Rs. Passport (valid) Voter’s ID Card Ration Card Driving License (va lid) Electricity Bill (should be latest and should be in the name of the client) Telephone Bill (should be latest and should be in the name of the client) Flat Maintenance Bill (should be latest and should be in the name of the client) h. d.
These reports are named as Pre-Market Report.RESEARCH SECTION IN SHAREKHAN LIMITED Sharekhan Limited has its own in-house Research Organisation which is known as V alueline. Out of 37 trading calls given by Sharekhan in the month of November 2 007. Generally th e research is based on the Fundamentals and Technical analysis of different comp anies and also taking into account various factors relating to the economy. Sharekhan s trading calls in the month of November 2007 has given 89% st rike rate. As a c ustomer of Sharekhan Limited. 40 . Eagle Eye. Investors Eye. It comprises a team of experts who constantly keep an eye on the share market and do research on the various aspects of the share market. Daring Derivati ves and Post-Market Report. Shar ekhan Limited’s research on the volatile market has been found accurate most of th e time. one receives daily 5-6 Research Reports on their e mails which they can use as tips for investing in the market. 33 hit the profit target. High Noon. Sharekhan Limited issues a monthly subscription by the name of Valueline which is easily available in the market. Apart from these. These exclusive trading picks come only to Sharek han Online Trading Customer and are based on in-depth technical analysis.
AWARDS AND ACHIEVEMENTS SSKI has been voted as the Top Domestic Brokerage House in the research category . twice by Euromoney Survey and four times by Asiamoney Survey. 41 . Sharekhan Limite d won the CNBC AWARD for the year 2004.
Chapter 3 Project Analysis 42 .
Such notes are made on some pad and on it the number of shares. For this. On the close of the bargain. the broker using ‘open out cry’ method makes an offer or bid price. The floor of the stock exchang e is divided into a number of markets also known as ‘post pit’ or wing based on part icular securities dealt there. what membership number etc. the name of the party. The dealer. DISADVANTAGES OF OUTCRY SYSTEM: It lacks transparency. Signal were more important in the outcry system any member who could not interpret the buy/sell signal correctly often landed himself in disaster situat ion. speculation and mal practice i s more. he may turn to some other dealer. If he is not satisfied with the quot e price.PROJECT ANALYSIS OUTCRY SYSTEM The broker has to buy or sell securities for which he has received the orders. the price agreed upo n. he may loose the bargain.. quotes his own price when the quotation of the dealer suits the broker. Due to the above di sadvantages of the outcry system the SHAREKHAN has shifted from outcry system to online trading from February 29th 1997. 43 . In audibility was another disadvantage of the outcry system. For making the necessary bargain. he quot es his purchase or sale price. also known as offer or bid price. the deal er as well as the broker makes a brief note of the particulars of the deal. This method is called the open outcry system. Basically the brok ers shout while buying or selling the securities. The scope of manipulation. In the post pit or wing. to whom the price is quoted. are noted. the broker or his authorized representatives goes to the stock exchange.
A contract 44 .M on all working days Monday to Friday. The order is usually placed by telegram. Limited Discretionary Order.30 P. both broker and jobber make a note in their sauda block books.MANUAL TRADING Trading procedure before introduction of online trading: Trading on stock exchanges is officially done in the trading ring. Execut ion of order or contract: Orders are executed in the trading ring of the BSE. duly authorized by the exchange and carry a pen with them. have to act through member brokers only. fax etc or in person. who wants to placing order for the purchase or sale of securities with a broker. the members and t heir authorized assistants have to wear a badge or carry with them an identity c ard given by the exchange to enter the trading ring. The members or the authorized assistants have to wear a badge given by the exchange to enter into the trading ring. the contract notes are drawn up and posted to the client. Limit Order.Nonmember s are not permitted to enter in to stock market. Th is works from 11:30 to 2. Placement of order: The next step is the The prospective investor who wants to buy shares or the in vestors. The orders ma y take any one of the forms such as At Best Orders. Immediate or Ca ncel Order. They carry a sauda Block Book or conformation memos. To avoid delay. From the sauda book. They can also appoint th eir bankers for this purpose as per the present regulations. T he stock exchanges operations are floor level are technical in nature . it is placed generally over the phone.The steps involved in this method of trading have given below: Choice of broker: sell shares and tran sact business. which are duly authorized by the exch ange when the deal is struck. In the trading ring t he space is provided for specified and non-specified sections. and Open Order. letter. Stop Loss Order. telephone. Hence various stages have to be completed in executing a transaction at a stock exchange . They carry a sauda book or confirmation memos. and a spec ial one-hour session on Saturday.
including other expenses incurred by the bro ker in the price itself. With this. Odd lot shares certificates can also be dematerialized. which are already registere d in your name and belong to the list of securities admitted for Dematerializati on at NSDL.note is written agreement between the broker and his clients for the transaction executed. the process ends. once the shares are delivered to the client effects pa yment for the purchases and pays the stamp fees for transfer. the inv estor gets the option to dematerialize such shares. In order to dematerialize the certificates. a bill is made out giving the total cost of purchase. Dematerialized shares do not have any distinctive or certificate numbers. 45 . an inv estor has to first open an account with a DP and then request for the Dematerial ization Request Form. Drawing Up and Bills: Both sale and purchase bills are prepared along with the contract note and it is posted on the same day or the next day. Demat erialization can only be done to those certificates. This list is steadily incre asing. DEMATERLIZATION: Demateria lization is the process by which physical certificates of an investor are conver ted to an equipment number of securities in electronic from and credited in the investor account with his DP. Investor’s willing to exercise this option sends a Demat request along with the option letter sent by the comp any to his DP. Briefly. The investor has to ensure that he marks “Submitted for Dematerialization” on the certificates before the shares are handed over to the DP for demat. The company or its R&T agent would confirm the Demat request on i ts receipt from the DP to reduce risk of loss in transit. the process is as follows: after completion of transfer. which is DP and submit the same along with the share certi ficates. Most of the active scrip’s in the market including all the scrip’s of S& P CNX NIFTY and BSE SENSEX have already joined NSDL. This i n a purchase transaction. These shares are fungible-wh ich means that 100 shares of a security are the same as any other 100 shares of the security.
this eliminating risk of loss in transit. you save 0. In case of transfer of electronic shares. There is no lost in transit. Benefits of Demat: It reduces the risk of bad deliveries. 46 .Dematerialization normally takes about fifteen to thirty days. You avoid the cost of courier / notarization. in turn saving the cost and wastage of ti me associated with follow up for rectification. RBI has also reduced the minimum margin to 25% for loans against dematerialized securities as against 50% for loans against physical securities. Rematerialization is the process of converting electronic share s in to physical shares.5% by quite a few brokerage firms.5% in stamp duty. request DP for Rematerialization of t he same is made. To get back demat erialized securities in the physical form. You can also expect a lower interest charge for loans taken against Demat shares as compared to loans against physical shares. This has lead to reduction in broke rage to the extent of 0. thus the overheads of getting a duplicate copy in s uch circumstances is reduced. You can receive your bonuses and rights issues into your DA as a direct credit.
downloaded and retransmitted. games. It is exp ected to bring changes in every functional area of business activity including m anagement and financial services. It allows direct. The us e of Internet has grown 2000 percent in last decade and is currently growing at 10 percent per month. In India. e-commerce and etc. business. 47 . commerce and what not it is virtually changing every thing and we are living in dot. It offers stock trading at a lower cost.com age. etc. self-go verned network connecting several other smaller networks and millions of compute rs and persons. health .ONLINE TRADING Before getting in to the online trading we should know some things about the int ernet. work study. It has re-define d the methods of communication. Internet or net is an interconnection of computer communication networks s panning the entire globe. education. enables participation by individuals in business to business a nd business to consumer commerce. This technology shrinks vast dis tances. Inter net can change the nature and capacity of stock broking business in India. banking. to mega sources of information. trade. leisure. crossing all geographical boundaries. accelerating the pace of business reforms and revolutionizing the way co mpanies are managed. c alled the Internet promises to bring unprecedented changes in our lives and busi ness. A combination of time and space. visit to shopping arcades. ubiquitous links to anyone anywhere and a nytime to build up interactive relationships. in cybe r space even the information can be copied. Net being an interactive two way medium. growth of Internet is of recent times. through various websites. 1) What is Internet? Internet is a worldwide.
The net brings data to the investor on-li ne and net broking enables him to trade on a click of mouse. It manages the resources of the computer syste m in a fair and efficient manner. E-commerce refers to the paperless exchange of business information using electronic data inter chan ge. It not only reduces manual processes and paper tran sactions but also helps organization move to a fully electronic environment and change the way they operated. i.e. Now we can enter in to the concept known as on line trading.2. customized services. to attract more investors. market research and news. etc. electronic technologies. The computers are either workstations of individua l office works or serves where large databases and information reside. investors had no option but to contact their broker t o get real time access to market data. EVOLUTION OF BROKING IN INDIA: The evolution of a broking in India can be catego rized in three phases Stockbrokers will offer on their sites features such as live portfolio manager. Brokers will offer online broking and relationship management by providing and o ffering analysis and information to investors during broking and nonbroking hour s based on their profile and needs. In the past. Now information has become easily accessible to both retail as well as big investor. It helps conduct traditional commerce through new way of transferring and processing of information. E-commerce Electronic commerce is associated with buying and selling over com puter communication networks. Network c onnects both categories of computers. Information is electronically transferred from computer to computer in an automated way. 48 . live quotes. PC’s and networking attempts to introduce banks of the tools and technologies requ ired for electronic commerce. the various operating systems are the most basis program within a computer.
tax e better and e-brokers) will offer value management or services like initial pub online. In India: Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. price buy/sell) on broker’s site. The SE BI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. Obje ctives: Internet trading is expected to Increase transparency in the markets. portfolio management. etc. These orders are routed to the stock exchange wit hout manual intervention and executed thereon in a matter of a few seconds. you will access a stockbrok er’s website through your internet enabled PC and place orders through the broker’s internet based trading engine. 49 . En hance market quality through improved liquidity. Introduce flexibility in system. so as to handl e growing volumes easily and to support nationwide expansion of market activity. quantity. The actual definition of “Online Trading” is as explained below: “Online trading is a service offered on the internet for purchase and sale of shares. and enables the investors to tak well considered decisions. Orders are communicated to the stock exchange through website. on-line asset allocation.” In online trading. financial p planning. Under the ORS the client e nters his requirements (security. The net is used as a mode of trading in internet trading.Brokers (now lic offering lanning. insurance services. Reduce settlement risks due to open trades. by increasing quote continuity and market depth. by elimination of mismatches. In the real wor ld you place orders on your stockbroker either verbally (personally or telephoni cally) or in a written form (fax). Provid e management information system.
etc. A bank account 6. Some of the brokers offering net trading include ICICI direct.Besides. Installation of a modem 3. Compliance with SEBI guidelines for net trading The following should be pro duced to get a demat account and online trading account: As identity proof & add ress proof any one of the following: 1) 2) 3) 4) 5) 6) Voter ID card Driving lic ense PAN card( in case of to trade more than 50000) Ration card Bank pass book T elephone bill Other requirements. Requirements for net trading: For investors: 1. through internet trading three fundamental objectives of securities reg ulation can be easily achieved. 50 . Bank manager’s signa ture along with bank’s seal. Telephone connection 4. Depository accoun t 7. Installation of a computer with required specification 2. manager registration code on photograph. which are necessary First page of the bank pass book and last 6 months statement. and Reduction of th e systematic risks. kotakstreet. Reg istration for on-line trading with broker 5. these are: Investor protection Creation of a fair and efficient market.
They are checked electronically against the clients account and routed electronically to the appropriate exchange for execution by the broke r. Adequate back-up system 4. The customer s portfolio and ledger accounts get updated to reflect the transaction. Permission from stock exchange for net trading 2. The net is used as a medium of trading in internet trading. He should also have demat account and bank account. The system permits only a registered client to log in using user id and password. 51 . The SE BI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. and buy/sell ) in broker s site.For stock brokers: 1. experienced and trained staff 6. price. The client receives a confirmation on execution of the order. Communication of order (trade c onfirmation to investor by e-mail) 7. Use of authentication technologies 8. Setting up a websi te. Adequate. Under the Order Routing Sy stem the client enters his requirements (security. Net wort h of Rs. The user s hould have the user id and password to enter into the electronic ring. Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. 50 lac 3. Orders are commu nicated to the stock exchange through website. Secured and reliable software syst em 5. Issu e of contract notes within 24 hours of the trade execution 9. quantity. Order can be placed using place ord er window of the website.
In the open outcry system. Step 7: In c ase the order is rejected by the Broker or the Stock Exchange for certain reason s such as invalid price limit. Step 5: After the review has been satisfactory. the b roker will provide to them a Login name. NEAT-IXS. who are interested in doing t he trading over internet system i. the order has to be sent by cli cking on the send option. Thus. Step 4: It is the process of review. should approach the brokers and g et them self registered with the Stock Broker. Screen based trading provides more transparency. for which there are differe nt mode. only the broker knew the actually transacted price. an appropriate message will appear at the bottom of the screen. Step 3: Actual placement of an order. Step 2: After registration. Step 6: The investor will receive an "Order Confirmati on" message along with the order number and the value of the order. fill in the symbol. An order can then be placed by using the place order window as under: (a) First by entering the symbol and ser ies of stock and other parameters like quantity and price of the scrip on the pl ace order window. When the trade is executed. (b) Second. the broker will ask the in vestor for transfer of funds to his account. Password and personal identification nu mber (PIN). He may also re-set to clear the values. With online trading 52 . a time lag of about 10 seconds is there in executing the trade.Procedure for net trading Step 1: Those investors. the investor has to review the ord er placed by clicking the review option. Step 8: It is regarding charging payment. series and the default quantit y. Some brokers will take some advance payment from the investor and will fix their trading limits. At present.e. Internet trading provides total tra nsparency between a broker and an investor in the secondary market.
Confirmation and execution of trade reaches the investor within the least possible time. Instant feedback is available about the execution. The time g ap has narrowed in every stage of operation. mostly within 30 seconds.investors can see themselves the price at which the deal takes place. News and research report BSE and NSE movements Stock analysis IPO and mutual fun d centers Step by step procedure in online trading: Following steps explain the step by step approach to on-line trading: 1) Log on to the stock broker s websit e 2) Register as client/investor 3) Fill the application form and client broker agreement form on the requisite value stamp paper 4) Obtain user ID and pass wor d 5) Log on to the broker s site using secure user ID and password 6) Market wat ch page will show real time on-line market data 7) Trade shares directly by ente ring the symbol or number of the security 8) Brokers server will check your limi t in the on-line account and Demat account for the number of shares and execute the trade 9) Order is executed instantly (10-30 seconds) and confirmation can be obtained. 53 . 10) Confirmation is e-mailed to investor by broker 11) Contract note is printed and mailed in 24 hours 12) Settlement will take place automatically on the settl ement day 13) Demat account and the bank account will get debited and credited b y electronic means. Some of the websites also off er.
unlike earlier when people boug ht bonds. stock and index options mutual funds. 6) Individuals can invest in a variety of products. Companies can establish themselves accor ding to their gains and losses. 2) Market orders: orders can be filled at unexpected prices. and even insurance. Being online does not id entify the size of any particular organization. and stock for long-term basis and sat on them. Thus we have access to a lot more information online. 3) Online trading has allowed companies to locate themselves where they want as phy sical location is not an issue anymore. It is like going back to sc hool and re-educating oneself on how to trade online. 54 . 2) Online trading has let room for smaller organizations to compete with multinatio nal organizations since it is no longer a leg it issue. therefore. this additional power to the underdogs. 4) Online trading gives control to individuals and they can exercise it over accoun ts thus comprehend what is going on when they trade. ADVANTAGES OF ONLINE TRADING: 1) Online trading has made it possible for anyone to have easy and efficient access to more reports and charts than it was previously possible if one went to any b rokers office. since you have to buy stock at the given price. but this type is much more risky. government. for instance where tax (sales and value added ta xes) is best suited to them. mutual funds. to increase Purchasing pow er. 5) Individuals’ benefit by saving comparatively a lot more when trading online as the cost per trade is less. Now they can invest in stocks. Margi n account: where orders can be placed against stocks. but there is an extra Charg e for this leeway facility since one need to hold a price.ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS: 1) Limit / stop orders: orders that can be go unfilled. 3) 4) Cash account: where funds have to be available prior to placing the order.
A lot of information is online so they can keep up-to-date with what is happening in the trading world. 9) They have access to numerous tools to invest. The immediate im pact will be competition and benefits will accrue to the investors. 5) 6) It will give investors a greater choice and better realization. 55 . easy. and can create their own portfolio . 7) It will lead to brokerage commissions going down and brokers striving to increas e business afloat.INVESTORS REASONS TO TRADE ONLINE: 1) They have control over their accounts. which have better trading conditions and also me mbers to offer them better facilities. They are independent. 8) Investors will now go to place. and convenient. fast. can make their own decisions and don’t have to give reasons for their actions. cheap. It is intere sting. 2) 3) 4) They have a reason to participate in the market and learn about it.
4) 5) One has no idea with whom he is dealing with on the other end. 56 .HERE ARE THE POSSIBLE DISADVANTAGES: 1) When network crashes. there will be problems and delays due to a large influx of rapid online trading criteria. carried away online and begins to trade for too much which cause s losses for him / her. the basic rules of trading are the same. but that is not so. 3) A tax (sales tax and value added tax) evaluation becomes an issue. According to a st udy conducted by Mary Rowland. meaning that an addict ed trader gets. careful investor: is online trading bad for your portfolio. the more one trades the less returns one gets. This simply means t hat the individual is himself / herself alone to. 2) Individuals are restricted to first-hand financial guidance. 6) Individuals think that they are trading with the market directly and know what t hey are doing. It seems that the middleman has been remove d. his trade goes t hrough a broker. especially wh en you are trading internationally. The commissions online pertain to the intermediary. but the truth is that even though technology has taken over. When the individuals click on the mouse. 7) There is a need for more effective communication links over the Internet and the ability of the server to deal with a large volume of visitors.
All these operations are in built. auction orders etc. The best price achie ved in buying and selling. through the computer. The Online trading system imparted a greater level of transparency and in vestors preferred exchanges that offered Online trading because of the following factors: The ease of operation from the view of the both members and the investors. Share Khan is provided with a computer and required software from their register ed stock exchanges. Otherwise. in-house deals. the transaction wil l be executed. CTS will reject the orders and send respective error messa ge to the member concern. orders.TRADING AND SETTLEMENT AT SHARE KHAN The NSE first introduced online trading in India. If there is any mistake in the order. Facilities better monitoring of the market by the exchange.. These computers are connected to the server at the stock exchanges through cable. These centers are called “Broker Work Stations”. Incre ase in the confidence of the investors because of higher level of transparency. All these resulted in ever-increasing volumes on the exchanges offering the onli ne trading. The Central tradi ng system (CTS) will accept these orders and send it for match. The main objective of CTS is to monitor the Stock Exchanges operations. Order placed by the broker will be sent for a match and if the match is found suitable. The member or broker sitting in his office can send the quotations. negotiations. TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING ShareKhan deals in bu ying and selling equity shares and debentures on the National Stock Exchange (NS E). dea ls. the order will be deleted 57 . the Bombay Stock Exchange (BSE) and the Over-TheCounter Exchange of India (O TCEI).
5. client wise net position. Brokers are also provided with information relating to the companies in the matter of Book closure. previous day’s closing price. Trader-wise.M. SEBI has stipulated that all the stock exchanges in India must have same trading period. information about liquidated companies. 6. These include top gainers /losers of the day. Dividend declarations.sharekhan.html Product Demo . BROKER WORK STATION: At the broker workstation the BBO’s. 58 . the order will not cancel.Speed Trade: http://www.M. scrip wise net position.com FAQs: http://sharekhan. market summary etc.com Product Demo .com/Demos/speedt rade/index. highest and l owest prices.com/KnowledgeCentre/S harekhan_FAQ. resolutions in board meeting. Even if the match is not found with in the prescribed period. the weighted average price and total trade value will be available continuously. Sharekhan Website: http://www . 7. to 3:30 P. 3. Useful links about Sharekhan: 1.com/Demos/classic/i ndex. 4. The carry forward transactions ( Good Till cancellation) are forwarded to the next day. on all 5 days of the trading period.Classic: http://www.sharekhan. the day‘s opening price. Monday to Friday is the trading period in all the stock exc hanges. Other information will be available on query from the BWS. company report etc. top scrip by the volume/value .ShareKhan.aspx Phone: 022-66621111 Toll Free: 1-800-22-7500 TRADING SESSION Trading timings are from 9:55 A.automatically after completion of trading time. 2.html Email: info@sharekhan. the las t traded price. as the BBO for each scrip.
The order will t hen be taken up for matching. with the appropriate error message.ORDERS: Orders can be done one at a time or in a batch mode. Or ders sent by the brokers are two types: 1) Good for the day (GFD) 2) Good till c ancellation(GTC) Good for the day: This is also called as “market order”. If the match is not found then after trade time the order gets cancelled that day. Both these traders are informed of the trade being executed at their respective BWS. For example if a member wants t o purchase 1000 shares of satyam info @ 400 each through Good for Day order. if it is a buy order the system tries to find a se ll order. the order is cancelled on the last day of settlem ent period. order gets cancelled automatically and new quota tion has to be placed the next day. If Accept ed at the CTS it will be added to the local pending order book. Next day he has to place a new order. the order is treated as m arket order. which fits the requirement of the buy order. Each trade involves two brokers and respective traders wh o sent the order. 59 . The submitted order will be accepted at the CTS. after validation if it finds any invalid reason th e order is return back to the BWS. Good till cancellation: This order is forwar ded to the last trading day of that settlement period. If a “best bid” founds match with “best order” then the transaction gets ex ecuted. the order is e xecuted. when such match is found a trade gets executed. broker has to select the option of GTC for the order . If the order finds match with in the trading settlement period. If no match is found. This order is not carried forward to the next settlement period. At the BWS the trade is added to the local trade book. This is also called as ca rry forward order like GFD. If the correct match is not found. For an ord er if the member selects the deal as good for the day.
If the match is not found on that day it will be forwarded to the next day until trading settlement period day.basis i. The transferor (or the seller) duly signed transfer deed. 60 . the securities will go for auction. Settlement can be done in the following way. DETAILS OF PROCEDURES: Delivery in : The members who are in pay-out position del ivers share certificates in to clearing house within the settlement period along with the delivery Chelan filled in with the details of share certificates which has folio numbers or distinctive numbers etc. the delivery of securities and payment for them a re affected on the day of the contract itself. Rolling settlement: Under this rolling settlement the trading is on “T+2”. Spot settlement: under this method. Delivery out: The buyer of shares who made pay in position will take delivery of shares from the clearing house.e. the settlement i s made by means of delivering the share certificates along with the transfer dee ds. The buyer then fills up the certificates fills up the part iculars in the transfer deed. if a member a place purchase order of 500 shares of SBI @ 690 per s hare and selects the order as GTC and place an order. In case on non-deli very. Buyers will take the delivery of shares through t he depository participants like SHARE KHAN and others. SETTLEMENT OF TRANSACTIONS: Clearing of transaction in the form of shares and cash is called settlement. It bears a stamp o f the selling broker. if Monday is trading day then Wednesday is the paying day . Finally.For example.
Pay-in: The member who is in paying position shall pay for value of shares with in the trading settlement period (T+2). Payout: The cheques paid in the clearing house will be paid to members who are in paying position. good and bad deliveries p ertaining to the settlement will be settled by the settlement committee of the e xchange. 61 . All disputes arising b etween members regarding non-deliveries. non-payments.
The given flow chart clearly explains the process of online trading: Login Buy transcation The system will check buying limits Sell transcation The system will check your dp account quantity Orders accepted Rejected orders would be communicated along with reasons orders accepted your order is transmitted to exchange for execution pending buy orders would be displayed on your screen on execution of your orders pending sell orders would be displayed on your screen you may edit your pending order you may delete your pending order you may edit your pending order you may delete your pending order flashed on your screen immediately on execution conformationcoul d be send to your e-mail and mobile contract note would be sent to by mail or hand delivery 62 .
Chapter 4 Comparative Analysis 63 .
Your computer may not hav e enough memory to ope n the image.92% 38 46 59 4.COM 6) HDFCSEC.67% 116 13. and t hen open the file again. If the red … The imag e can… The image cannot be display ed. Your co… The image cannot be display ed.67% 192 21.COM 3) KOTAKSTREE T. Your computer may not hav e enough memory to ope n the image. or the image may hav e been corrupted. and t hen open the file again.69% 121 13.… The image cannot be display ed.COM 4) INDIABULLS. or the image may hav e been corrupted. If the red … Th e im ag The image cannot be display ed.45% 194 21.COM POLL RESULTS: BROKER PREFERENCE 5paise Sharekhan Motilal oswal ICICI Direct HDFC Indiabulls Kotak Others The image cannot be display ed. Your computer may not hav e enough memory to ope n the ima… 64 .COM 5) ICICIDIRECT.COM 2) 5PAISA.29% 5.20% 6.THE MAJOR PLAYERS IN ONLINE TRADING 1) SHAREKHAN. Restart your computer. Your computer may not hav e enough memory to ope n the image.11 % The image cannot be display ed. Restart your computer. Your computer may not hav e enough memory to ope n the ima… 119 13.
15%* each side + ST Delivery 0.50%** each side + ST *Rs 25 Min Brokerage per transaction **Rs 8 Min Brokerage per transact ion 65 . Online Account Type: n 3 in 1 HDFC Online Trading A/c: Plain Vanilla Account with focus o advantage. Pioneers in setting up Dial-a-share service with the largest team of Tele-brokers. Pricing of HDFC Account Account Opening: Rs 750 Demat: NIL.for non HDFC Bank Customers (AQB) Brokerage: Trading 0. HDFC and C hase Capital Partners and their associates. 1st year charges included in Account Opening Initial Margin : Rs 5000/.HDFC SECURITIES: Company Background: HDFC Securities Ltd is promoted by the HDFC Bank.
0 02%) for trading and 0.04% Both Sides .10 Cr 10Cr -20 Cr > 20 Cr ---Brokerage .45% 0.70% 0. Demat: NIL.25% < 50 lakhs 50 lakhs – 2 Cr 2Cr-5Cr 5Cr.05% Both Sides .035% Both Sides .1 Cr 1 Cr – 2 Cr 2 Cr – 5 Cr > 5 Cr 0. < 10 lakhs 10 – 25 lakhs 25 – 50 lakh s 50 lakhs .M.010% for delivery while service tax (10.03% Both Sides -------66 .2%) on BROKERAGE land turn over tax is EXTRA.08% Both Sides .75% 0.35% 0.55% 0.30% 0.10% Both Sides . Only Rs 100 as linking charges per DP Initia l Margin : Nil Brokerage: ICICI’s brokerage rates are inclusive of Stamp duty (0. 1st year ch arges included in Account Opening Plus a facility to open additional 4 DP’s without 1st yr AMC. Delivery Vol per QTR Brokerage Square Vol P.ICICI Direct: Account Opening: Rs 750 Schemes: For short periods Rs 750 is refundable against brokerage generated in a qtr. These schemes are introduced 3-4 times a year.
No AMC for this DP * Initial Margin: NIL * Brokerage: Negoti able .20 0 if POA is signed. The Signature Account: Plain Vanilla Account with focus on Equi Power India bulls: Accou equity analysis is a paid service even for A/c holders. Pricing of IB Accounts: Signature Account * Account Opening: Rs 250 * Demat: Rs 200 if POA is signed.M. nt with sophisticated trading tools. 450 + Relationship Managers who act as personal financial advisors. No AMC for this DP * Initial Margin: NIL * Brokerage: Nego tiable PAID Research: SCHEME WebBased-1-Month-500: WebBased-1-Month-6000: PrintR eport-1-Month-750: 67 FACILITY View & Print on Website View & Print on Website V iew & Print on Website Power India Bulls * Account Opening: Rs 750 *Demat: Rs. Online Account Type: ty Analysis. It offers a full range of financial services and products ranging from Equities to Insurance.INDIABULLS: Company Background: India Bulls is a retail financial services company present i n 70 locations covering 62 cities. low commissions and priority access to R.
25% & 0.+ 10 Reports Delivered PrintReport-1-Month-9000: View & Print on Website + 10 Re ports Delivered Kotakstreet: Company Background: Kotakstreet is the retail arm of Kotak Securities.40%) have been moved to the slab wise structu re w.m Initial Margin : Rs 5000(Co mpulsory) Min Margin Retainable : Rs 1000 Brokerage Slab wise: Higher the volume . Limit against share s Free Way: Flat Rs 999 Cover Charge p.5% charges For Kotak FastLane / Keat Lite / Keat Desktop are trading interfaces. 0. Keat Deskt op with advanced tools comes at a charge of Rs 500 p. PRICING OF KOTAK Account Opening : Rs 500 Demat: Rs 22.03% per transaction High Trader : 6 Times Exposure Cash & Derivatives. additional 0. Auto sq off 2:55 Cash Expressway : Spot payme nt. Kotak Sec urities limited is a joint venture between Kotak Mahindra Bank and Goldman Sachs . lower the brokerage.m.5 p. Non refundable.e.f 1/4/2004 68 . Online Account Type Twin Advantage / Green Channel : 2 DP’s.m. Even older customers (on 0.
08% Both Sides * Brokerage is inclusive of All Taxes * DP Charges Extra * Min Brokerage of Rs 0 .05 per share Derivatives Vol off p m < 2 Cr 2 Cr .03% Both Sides -------10 lakhs – 25 lakhs 0. 0.30% 0.035% Both Sides 0.05% Both Sides 0.01 per share Brokerage 0.20 lakhs 20 lakhs – 60 lakhs 60 lakhs .5 Cr 5.40% 0.03% Both Sides * Brokerage is inclusive of All Taxes.M.05% Both Sides 0.65% 0.60% 0.5 Cr – 10 Cr > 10 Cr * Brokerage is inclusive of All Taxes * Min Brokerage of Rs 0.20% < 10 lakhs 25 lakhs .04% Both Sides 0.25% 0.2 Cr >2 Brokerage * Square Vol P.2 Cr 2 Cr 5 Cr > 5 Cr ---do-----Brokerage ** 0. 69 .5.10% Both Sides 0.50% 0.Slab structure of Kotak Delivery Vol p m < 1 lakhs 1 lakhs – 5 lakhs 5 lakhs – 10 la khs 10 lakhs .04% Bo th Sides 0.07% Both Sides 0.
adjustable against brokerage 70 .50% each side + ST (Negotiable t o 0.10% each side + ST Delivery 0.10% each side + ST Delivery 0 .5paisa Company Background Indiainfoline was founded in 1995 and was positioned as a res earch firm In 2000 e-broking was started under the brand name of 5paisa. Apa rt from offering online trading in stock market the company offers mutual funds online. GOI sec urities. present in 2 0 cities Online Account Types Investor Terminal : Investors / Students Trader Te rminal : Day Traders / HNI’s PRICING FOR RETAIL CLIENTS Investor Terminal Account Opening : Rs 500 Demat 1st Yr : Rs 250 Initial Margin : Rs 2500 (Compulsory) Min Margin Retainable : Rs 1000 Brokerage : Trading 0.50% each side + ST PRICING FOR HNI CLIENTS Trader Terminal Account Opening : Rs 500 Demat 1st Yr : Rs 250 Initial Margin : Rs 5000(Compulsory) Min Margin Retainable : Rs 1000 Brok erage : Trading 0.e.05% each side & 0. Company Fixed Deposits. It also acts as a distributor of various financial services i. Insurance.25%) Account Access Charges Monthly Rs 800.com. Limited ground network. adjustable aga inst Brokerage Yearly Rs 8000.
and Intel Pacific Into broking since 80 years Focused on providing equity solutions to every segme nt Largest ground network of 210 Branded Share shops in 90 cities Online Account Types Classis Account / Applet : Investor in equities Speed Trade : Trader in equities & derivatives PRICING FOR HNI CLIENTS Speed Trade Account Opening : Rs 1000 ( Refundable against brokerage in Month + 1) Demat 1st Yr : Incl in Account Opening Initial Margin : Nil Min Margin Retainable : NIL B rokerage : Trading 0.a) 71 . First Caryle. SSKI owns 56% in Sharekhan. balance ownership is HSBC.Sharekhan Company Background Sharekhan is the retail broking arm of SSKI Securities Pvt Ltd. adjustable qtrly against brokerage of Rs 9000/.10% each side + All Taxes Delivery 0.for qtr. No acce ss charges for gold customers (Above 1 lac brokerage p.50% each side + All Ta xes (Negotiable based on volume) Account Access Charges Monthly Rs 500.
the call is transferred Trusted.50% each side + All Taxes Sharekhan online Trading Interfaces The customer can choose the online trading i nterface that meets his requirement based on his trading habits and preferences CLASSIC / APPLET The website is meant for customers who Invests in Equities SPEEDTRADE The speed trade is meant for customers who trade in Equities DIAL-N-T RADE – Toll Free The DNT is a value added services meant for all customers who Wan t to transact but are not online.Pricing for Retail Customers Classic / Applet Account Opening : Rs 750 Demat 1st Yr : NIL Initial Margin : NIL Min Margin Retainable : NIL Brokerage: Trading 0. DNT – TOLL FREE FERTURES Dedicated Toll – Free number for Order placements Automatic fund transfer with pho ne banking* Simple and secure IVR based system for authentication No wait time. professional advic e of Tel-brokers who offer undiluted Sharekhan Research Inputs After-hours order placement facility ** Transfer of money using phone banking is available with Citibank only 72 . 10% each side + All Taxes Delivery 0. on entry of Phone Id & TPIN.
Professional advice of Tele-brokers Facility to enter After Mar ket Orders online & via Phone CLASSIC/WEBSITE FEATURES Daily Research newsletter (Investor Eye) Via e-mail Access to new IPO without an y paperwork Advanced portfolio monitoring Tools Integrated DP account with tradi ng account Option of linking additional 4 DP accounts to trading account Choice of linking 4 banks to trading a/c for online payments Cash and Derivatives tradi ng in a single account E-mail confirmations for all transactions Choice of elect ronic/Physical contracts SPEEDTRADE EXE FEATURES ALL THE FEATURES OF CLASSIC *Real – time streaming quotes using 2 Marker Watches *Trade Execution in 2-3 seconds * Instant Order/trade con firmations in the same window *Hot keys similar to a Broker’s Terminal 73 .55 am and 3.30p.m to 6 p.m to 9.** Between 9 a. shortly Free calls for order placement on To ll-Free Trusted.m CLASSIC/WEBSITE FEATURES Facility to integrate choice of 4 Banks/DP/Trading Account Instant credit for sh ares sold from DP Automatic pick-up of shares from linked DP for pay – in Automati c deposit of shares into linked DP after pay-out 4 Times leverage on Margin Trad es Margin Trading available for entire marker session Slab wise brokerage struct ure for delivery and margin trades.
6. Limited customer appeal as the company product line does not include mutual fund s which is increasingly becoming a preferred customer investment option. Quality research team. 2. 2. and Most Active updated Live SWOT ANALYSIS Strengths 1. 3. Easier access to the customer due to largest ground netwo rk of 280 branded share shops in 120 cities. Abundant information about economy and companies. 8. Inadequate product awareness among the retail investors. which by interpreting the economy and company’s perform ance accurately is enhancing the profitability of the clientele. 7. 4. Highly sophisticated infrastructure. Weaknesses 1. Efficient r esearch and analysis team. 74 . 9.*MULTIPLE Tic-by-Tic Intra-day charts with multiple indicators * Availability of 2 ISP & 6 Servers ensuring maximum uptime * Customized alerts based on multiple parameters * Cancel All/Square Off All Facility * Window for Top Gainers. Strong credibility among investors because of its heritage. Ability to attract and retain superior and quality personnel. Top L osers. Capability of providing superior customer service. Excellent reputation among the business society. 5.
2. 4. 2. Brand awareness is low in the financial market. 75 . Bullish phase of the market attracts investing public. 5. 4. Availability of Unit Linked Insurance Policies (ULIP’s) and mutual funds in the ma rket. 3. Hyderabad covers only 2% of investors which gives huge potential for the market penetration. Threats 1. Awareness campaigns about online trading create new market. Threat of entry is high in this industry as the manpower required is less and ca pital requirement is medium. Promotional activities conducted by the company are not at par with the other firms. Access to the BSE online space for the retail investors creates opportunity to increase clientele base. Opportunities 1. Limited customer appeal as the company does not have access to the BSE online sp ace.3.
Chapter 5 Finding & Observations 76 .
The number of players is increasing at a steady rate and today there are over a dozen of brokerage houses who have opted to offer net trading to their customers and prominent among them are SHARE KHAN. There are more speculators than investors. 4. 2. 3. Information plays a vital role in the secondary mark et. 5. 7. ICICI direct and geojit. 77 . Previously rolling settlement is T+5 days. The Bombay stock exchange sensex zoomed past the 7700 barrier for the first time in history to achieve new all time high of 7800 intra day trade and ended at a historic close of 7732 points. It was also observed that many broking houses offering internet trading allow cl ients to use their conventional system as well just ensure that they do not loos e them and this instead of offering e-broking services they becomes providers. kotakstreet. India bulls. now it changed to T+2 days and fu rther it will be changing to T+1 day.FINDINGS AND OBSERVATIONS: 1. s ervice 6. Fluctuations are more in secondary market than any other market.
Conclusion & Recommendations 78 .
It has helped the bro kers handling a vast amount of transactions and this can be an efficient trading . 3. 6. 2. I recommend the exchange aut horities to be vigilant to curb wide fluctuations of prices. Due to invention of onli ne trading there has been greater benefit to the investors as they could sell / buy shares as and when required and that to with online trading.CONCLUSION AND RECOMMENDATIONS 1. I recommend the exchange authorities to take steps to educate Investors about their rights and duties. not attracting the genuine investors to the greater extent towards the market. I suggest to the exchange a uthorities to increase the investors’ confidences. 4. The speculative pressures are responsible for the wide changes in the price. settlement system with adequate protection to investors. In the present scenario to compete wit h the Broker’s would require sound infrastructure and trading as per international standards. 1. 9. The tradi ng of SHAREKHAN of the first day was Rs. The introduction of on-line trading would influence the investors resulting in an increase in the business of the exchange. and have broug ht the countrywide market to doorstep. this is a service or iented industry hence the survival would require them to provide the best possib le service to the clients. things have changed dramatically over the last 3 to 4 years. New and advanc ed technologies have breached geographical and cultural barriers. The broker’s h as a greater scope than compared to the earlier times because of invention of on line trading. 7. 79 .8 crores. 5. Things have changed for the better with the SH AREKHAN going on-line coupled with endeavor to stream line the whole trading sys tem. The concept of business has changed today. 8. delivering.
10. 80 . 11. Genuine investors are not at all interested in the speculative gain as their investment is based on the future profits. Necessary steps shoul d be taken by the exchange to deal with the situations arising due to break down in online trading. therefore the authorities of the exc hange should be more vigilant to curb the speculation.
Investment management -V.A. Marketing of Fina ncial Services -V. 3.Avadhani Indian Financial System -M.Khan 5.K.BIBLIOGRAPHY Books: 1.A.Avadhani 4.Y. Security Analysis And Portfolio Management -V.Bhalla Investment management -Preethi Singh 2. Newspapers: 81 The Times of India The Economic Times .
com www.investors.com ANY FEEDBACK PLZ MAIL US: firstname.lastname@example.org w.gov.com www.com www.sharekhan.economictimes.investopedia.moneycontrol.in www.com www.sebi.nseindia.com www.bseindia.com 82 ww .