A PROJECT REPORT

ON ‘RESEARCH ON INDIAN CAPITAL MARKET’

Summer Training Report Submitted in The partial fulfillment of Master of Business Administration of Session 20010-12

Submitted by: Satendra Singh
MBA –IInd Year Roll No. –1042570015

Under guidance of Mr.Megha Bansal
Faculty of MBA Deptt.

MEERUT INTERNATIONAL INSTITUTE OF TECHNOLOGY, MEERUT

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INDEX

Sr.
I II III 1. 2. 3. 4.1 4.2 4.3 4.4 4.5 4.6 4. 5. 6. 7. 8. 9. 10`

PARTICULAR
Preface Declaration Acknowledgement Abstract Industry Profile Company Profile Objective & Scope Indian capital market Broking sector in India Basic of Stock & Capital Market Stock exchange & trading Product Profile Research Methodology Data Analysis Findings Recommendation & Suggestion Result Conclusion Bibliography

PAGE No.
3 4 6 7 9-17 18-24 25-27 28-42 43-51 52-57 58-66 67-72 73-79 80-89 90-91 92-95 96-97 98-100 100-102

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PREFACE

Every individual who is undergoing any management course has to go under a summer training. As we know that without practical exposure one can not qualify & is not capable to work in any organization. Hence to fulfill the requirement, I completed my summer training at INDIA INFO LINE Ltd . to improve my practical & professional skills.

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DATE: SATENDRA SINGH PLACE: MBA II Year ROLL NO. AMAN CHADDHA is my original work. I have not submitted this project report to Mahamaya Technical University Noida or any other University for the purpose of compliance of any requirement of any examination or degree. 1042570015 4 .STUDENT DECLARATION I Satendra Singh student of MBA here by declared that the research report entitled “REASEARCH ON INDIAN CAPITAL MARKET” WITH SPECIAL REFERENCE TO INDIA INFOLINE’ is completed and submitted under the guidance of Mr. The imperial finding in this report is based on the data collected by me.

P. Meerut has under gone a summer training project on RESEARCH ON INDIAN CAPITAL MARKET and submitted a report based on the same as a mandatory requirement the degree of MASTER OF BUSINESS ADMINISTRATION . U. (R K AGERWAL) Director MIIT (Meerut) Date: 5 . Luckhnow.CERTIFICATE This is to certify that Mr satendra Singh student of MBA II year MIIT. Technical University .

He guided me immensely during the training period. First of all I would like to thank my project company guide Mr. Megha Bansal He motivated me to carry out this research report. secondly my project faculty guide Mr. (SATENDRA SINGH) ABSTRACT 6 .ACKNOWLEDGEMENT I would like to express my deep sense of gratitude towards few people who have supported & helped me to complete the research .Aman Chadha. And last but not the least my friends who helped me at the time of training. And.

charts & tables.The project work entitled a study of RESEARCH ON INDIAN CAPITAL MARKET with special reference to INDIA INFO LINE Ltd (MEERUT) is mainly conducted to identify how to handle all the parameters related to the STOCK MARKET and how to do the work on ONLINE TRADING in India info line ltd. In this perspective this study examines the nature of relationship between stock market and growth through capital accumulation in India. Trading system / stock exchange works by 2 parameters: 1 BSE (Bombay stock exchange ) 2 NSE ( National stock exchange) The Stock Exchange. Channels like CNBC offer array of experts from economist to brokers to analyst. Today lot of investor’s depend on TV channel for recommendation about stocks to sell. and was incorporated in November 1992 as a tax-paying company. The data needed for the study has been collected from the employees through questionnaire. And. data has been presented through diagrams. Share market where dealing of securities is done is known as share market . 7 . The National Stock Exchange of India was promoted by leading financial institutions at the behest of the Government of India. Most of these people have vested interest in stocks they recommend and promote. Mumbai (BSE) and National Stock Exchange (NSE) are also a depository participant with NSDL. or buy or hold.The Broking Houses not only act as an intermediate link for the Equity Market but also for the Commodity Market.

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INDUSTRY PROFILE 9 .

10 . The development of Sensex options along with equity derivatives followed in 2001 and 2002. the Bombay Stock Exchange switched to an electronic trading system in 1995. the NSE has become the largest stock exchange in India. The Bombay Stock Exchange developed the BSE Sensex in 1986.INDUSTRY PROFILE ORIGIN AND DEVELOPMENT OF THE INDUSTRY The Bombay Stock Exchange (BSE) is known as the oldest exchange in Asia. Capital market reforms in India and the launch of the Securities and Exchange Board of India (SEBI) accelerated the integration of the second Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a few years of operations. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as ‘The Native Share & Stock Brokers Association’. as the number of brokers constantly increased. the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. It traces its history to the 1850s. It took the exchange only fifty days to make this transition. Historically an open-cry floor trading exchange. In 2000 the BSE used this index to open its derivatives market. trading Sensex futures contracts. giving the BSE a means to measure overall performance of the exchange. In 1956. expanding the BSE’s trading platform. when stockbrokers would gather under banyan trees in front of Mumbai’s Town Hall. The location of these meetings changed many times.

Three segments of the NSE trading platform were established one after another. The Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today the NSE takes the 14th position in the top 40 futures exchanges in the world. In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50 stocks from 25 different economy sectors. The Indices are owned and managed by India Index Services and Products Ltd (IISL) that has a consulting and licensing agreement with Standard & Poor’s. In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the Indian financial market by gaining many awards such as ‘Best IT Usage Award’ by Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999). The National Stock Exchange of India was promoted by leading financial institutions at the behest of the Government of India, and was incorporated in November 1992 as a taxpaying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000.

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Since the early 1950s till the early 1990s, Indian policy makers had been nourishing the goal of Socialist pattern of society. They had been following the development planning strategy of the former Soviet Russia in a mixed economic framework. From July 1991, in the face of an unprecedented foreign exchange crisis, Indian economy started experiencing an IMF-World Bank dictated regime of liberalisation. One aspect of this is financial liberalisation. There is a move towards privatisation of nationalised banks – these banks are selling their shares in the stock market. Transnational banks are encouraged to operate in the Indian banking sector. Attempts are made to attract foreign direct investment in different sectors. There is an increasing entry of foreign portfolio capital due to stock market liberalisation. People are encouraged to invest in stocks through income tax benefits and abolition of capital gains tax. There is a move to develop a national pension fund which will be invested in different stocks to get returns out of which pension will be provided to retired people. It is expected that boosting up of stock market will accelerate the process of capital accumulation and growth. Stock market development has been an important part of financial liberalisation in the less developed countries (LDCs). In the pro-liberalisation circle, stock market is assigned to play an important role in the capitalist development of LDCs. There are many studies supporting the positive link between stock market development and growth. Let us mention some of the recent studies. One important study was undertaken by Levine and Zervos (1998). Their cross-country study found that the Development of banks and stock markets has a positive effect on growth. In another study Levine (2003) argued that although theory provides ambiguous relationship between stock market liquidity and economic growth, the cross-country data for 49 countries over the period 1976-93 suggest a

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strong and positive relationship (see also Levine, 2001). Henry (2000) studied a sample of 11 LDCs and observed that stock market liberalisations lead to private investment boom. Recently, Bekaert et al (2005) analysed data of a large number of countries and observed that the stock market liberalisation ‘leads to an approximate 1 % increase in annual real per capita GDP growth’. There are some economists who are sceptical. Long time back Keynes (1936) compared the stock market with casino and commented: ‘when the capital development of a country becomes the by-product of the activities of a casino, the job is likely to be ill-done’. Referring to the study of World Bank (1993) Singh (1997) pointed out that stock markets have played little role in the post-war industrialisation of Japan, Korea and Taiwan. He argued that the recent move towards stock market liberalisation is ‘unlikely to help in achieving quicker industrialisation and faster long-term economic growth’ in most of the LDCs. In this perspective this study examines the nature of relationship between stock market and growth through capital accumulation in India.

GROWTH AND PRESENT STATUS OF THE INDUSTRY

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actively listing on the stock market indexes. ICICI are breaking their own records every financial years. ONGC. Foreseeing sure and substantial returns on investments (ROI) companies are pro. With 7-8% of GDP growth. Air India etc. in turn has 14 . HPCL and GAIL. Tata. 'Markets in India' has witnessed meteorite rise of the Indian Software. BHEL. Hindustan Antibiotics Limited. SAIL. Government agencies once much hated for red tape and bribes has shed its image. Biocon. With a liberal and proactive government at the center the road ahead for 'Markets of India' is very rosy. BPCL. to name a few. NTPC. 'Markets in India' are well protected by legal guidelines and efficient administrators. LIC. Telecommunication and Banking Industry. young and English speaking work force the 'pull' for opportunities are luring. MTNL. The bandwidth of 'India Market' is enviably wide and very deep.The ever-growing and fast-maturing 'India Market' is a lucrative business destination for developed countries. Public Enterprises like IOC. Liberal and transparent financial policies has effected free-in-flow of FII and as a result of which 'India Market' has grown to a colossal monster in the international market. Birla Corporation. are giving Private Indian companies a good run for their money. Bajaj Auto. Professionalism is their new mantra. Jet Airways. Infosys. huge analytical. Ranbaxy. This has propelled growth of Urban Indian class which. 'Market India' has witnessed exponential growth over past one and half decade. Private giants like Reliance Industries Limited. SBI.

Today considering the stock markets. Indian Stock Market including both NSE-National Stock Exchange and the BSE-Bombay Stock Exchange have certainly taken a tremendous beating in the past few weeks. but there is the OTCEI or the Over the Counter Exchange of India. Retail Industry along with Agriculture & Food industry are yet to contribute their share to the growth story of 'Market India'. In terms of market capitalization. There are about 22 stock exchanges in India which regulates the market trends of different stocks. Electronics. each and every type of industry of 'Market India' like Infrastructure. If all the economic parameters are unchanged Indian Equity Market will be conducive for the growth of private equities and this will lead to an overall improvement in the Indian economy. There is the SEBI or the Securities and Exchange Board of India which supervises the functioning of the stock markets in India.increased consumerism. Generally the bigger companies are listed with the NSE and the BSE. short-term swing traders and also very short term intra-day traders. but also the position traders. FMCG etc. there are over 2500 companies in the BSE chart list with the levels providing a profitable business to all those who had been investing in the Indian Equity Market. We are 15 . Thus. which lists the medium and small sized companies. has tremendous growth potential. the growing financial capital markets of India being encouraged by domestic and foreign investments is becoming a profitable business more with each day. The SENSEX today has rose from 1000 levels to 8000 Indian Equity Market at present is a lucrative field for the investors and investing in Indian stocks are profitable for not only the long and medium-term investors. Today. Pharmaceutical & Biotechnology. Banking & Insurance. Reliance Industries Limited is at the top.

16 . However the anticipation went wrong.sure most of us here knew that the correction in the trading curve was round the corner which would be healthy. and the US recession story along with global and Indian commodity prices have added fuel to the global equity market turmoil on a whole. and the markets would bounce back from 18k levels with the help of mutual fund investments & buying of Indian stocks again.

Less than one percent of population own stocks and less than 1000 individuals control the market. India will begin one of the best dasas of the Sun. as a country is running a very good period and the position of planets in the transit are giving wonderful results. So before 2009 Indian bourses should see an all time high. • • • There can be some correction in the BSE sensex in the 7500 points level. The credit should go to media for making stock market headlines. I appreciate the Indian politicians and the industrialists who being pawns of destiny are doing things positive and productive.7000 till mid august. There will be a time when it can even reach 3000 points in the nifty. The question many people in the market ask: Will the bull run continue? What heights we can reach? First of all. which will work in its favour. 17 . the majority being the FIIS. In any case if you are long terms players then step-in and buy now and forget for another 10 years. The market will hover between the 6000. There will be huge fluctuations. mark my words Indian bourses in the future will be one of the best investments in the world.Future of the industry The stock market is booming in spite of the low agriculture output. India. Now this bull run will continue. The monsoon is good in an overall sense but still the question remains who takes the credit? The answer is the karma of the people. Investors and new entrants to the market to cool down a bit and come well below 7000. the promoters of the company. You will make a killing in the Indian markets.

COMPANY PROFILE 18 .

They also undertake research. CDC of the UK. India Info Line is members of both the leading stock exchanges of India viz.com) and distribution of mutual fund and other personal investment products .Company is also the no. MCX and NCDEX. The Stock Exchange. ours is a professionally managed company. which is treasured by Institutions. Indian as well as global as well as retail investors across the country. 1 corporate agent of the no. India Infoline also has seats on both the leading commodity exchanges of the country. TDA Capitals patterns.COMPANY PROFILE About India Infoline: India Infoline ltd. ICICI Econet among others 19 . For all the investment needs the compa close to you owing to our network ofInvestors points across the country. is one of the country’s leading player in the business of investment advisory and intermediation. (5paisa. This group has presence across India in various businesses through its wholly owned subsidiary businesses are broking in equities and commodities (where company is popular known by the brand name. Reeshanar. with world-class investors such as Intel Capital.1 private life insurance company. Founded in 1995. Mumbai (BSE) and National Stock Exchange (NSE) and also a depository participant with NSDL. ICICI Prudential Life Insurance company.

chartered accountant 20 . B. Chartered & Cost Accountant Mr.Tech: IIT Kanpur Mr. Nirmal Jain MBA: IIM-A. India Info line has the concept of an Investment Team. Anand Tandon Subramaniam MBA: IIM-A. Venkat B.sc.PILLARS OF THE ORGANIZATION  Unlike others. B.Tech: IIT Kharagpur Mr. R Venkataraman MBA: IIM-B.  The brains behind all the investment strategies and decisions regarding Wealth Management Services are: Mr.

Paid research report on Indiainfoline. Expanded breadth of content considerably.com) .India Infoline: The beginning • • • • • Set up by a group of professionals in October 1995. Www. India Infoline Securities Ltd.com. Rapid rounds of funding (Intel Capital. Embracing the web: • • • • Early 1999. we decided to deliver content only through net. corporate and banks. Focus on Transactions • India Infoline changed business model from information to transaction oriented in Year 2000. ICICI Venture. CDC. Extended its offering to products in September 1996.indiainfoline. (5paisa.com launched on May 11. A small team of 5-6. • • • India Infoline Distribution Company Ltd. 1999. TDA). Client list read like who’s who of business. Began with research assignments for FIIs. grew to 15-20 by 1999. 21 .

com) – – Overwhelming response to 5paisa. Whole spectrum of Personal Finance Products (PFPs) available . Strong brand with top-of-mind recall . • Online Trading (5paisa.India Infoline Group Co. 22 .. “Full service discount brokerage” option to customers . • Distribution of PFPs (Investor Point) – – “Brick & Click” model established . • Online Financial Portal – – Leader in business and finance space in India.

23 .com Distribution Company Ltd. Ltd Margin Funding. • India Infoline. Mobilization of Mutual Funds & other personal investment products. Ltd. Ltd.India Infoline Ltd. Research and Online Media Property (wholly-owned Subsidiary) • India Infoline Securities Pvt. • India Infoline Insurance Services Ltd. Secondary market securities trading & portfolio management services. Commodities Trading. • India Infoline Commodities Pvt. Corporate agent for ICICI Prudential Life Insurance Company. • India Info line Investment Services Pvt.

Corporate Mutual Fund-Key Relation  ACC  Bank Of Baroda  Bayer India  Canara Bank  Indian Bank  Indian Overseas Bank  UTI Venture Fund  IDFC  I Gate Solutions  L&T Financial Services  Karnataka Bank 24 .

This project will help me in enhancing my analytical skills and will give me a better understanding of how things move on and are to be studied. that how various comparisons in between the Indian stock market and foreign stock market. The main focus will be on understanding.OBJECTIVE OF THE STUDY The objective of the project is to identify. 25 . At the same time with this study I will be providing the organization a list of factors that affect the market. so that they can keep a watch on the same and use the same for the benefit of clients and company and also increase their accuracy and profits. understand and analyze the comparison of stock market. By undertaking this study I would like to keep my first step in the field of research. This will be my contribution to this huge company. analyzing and providing a valid explanation both theoretically and technically.

In share markets. SCOPE OF STUDY • • It gave me an opportunity to study the stock market in a detailed manner. Thus. This is justified by the proof that in both BSE and NSE we have separate index for Shares. I got knowledge of prevailing Market Scenario. • • It helped me in learning the market dynamics. theoretically and technically. Thus. Stock market are a major part of any economic system. It is of great importance to understand. the rise and the fall of market is greatly affected by the performance of Banking Sector Shares also and this report revolves around all those factors. their understanding and a theoretical and technical analysis of the same. SCOPE & LIMITATIONS PURPOSE The PURPOSE of the report is to analyze the comparative study of stock market. It helped me in understanding and learning the corporate culture 26 . for our study we have taken only Nifty which is a part of NSE and SENSEX which is a part of BSE. the performance of share market. study the movement of share prices and to give a proper justification for the same. They provide a strong base to Indian economy too. this report is a move in path of understanding those factors and analyzing the impact of the same.PURPOSE. learn and analyze the same. the performance of bank shares is of great importance.

The objective which we want to fulfill in this project is really good. I have tried my level best to show a glimpse of my Research in twith the objectives. • • The Sector is very vast and it was not possible to cover every nook and corner of this sector. but then also. which can definitely improve the performance of the organization. LIMITATIONS OF THE STUDY Though the resources seem sufficient enough to achieve high standard for this research.• And above all. 27 . the concerned organization can get some valuable recommendations. still we foresee the following limitations of study. but the major demerit to our study is the availability of time for our search and analysis.

INDIAN CAPITAL MARKET 28 .

and got listed in the BSE. mainly listed in Gujarat. the then finance minister. with the resultant shortages increasing prices all round. led to a huge fall in the markets. Krishnamachari. There was a melt down in software stock in early 2000. Several systemic changes have taken place during the short history of modern capital markets. This period also coincided with the dotcom bubble in the US. The dividend freeze and tax on bonus issues in 1958-59 also had a negative impact.History of Indian Capital Markets Controller of Capital Issues Act (CCI) was passed in 1947. Mr. The end1990s saw the emergence of Ketan Parekh and the information. War with China in 1962 was another memorably bad year. in particular can be traced back to 1861 when the American Civil War began. The setting up of the Securities and Exchange Board (SEBI) in 1992 The history of the Indian capital markets and the stock market. which was again a very bad period. and hundreds of companies. only to be punctured by the Harshad Mehta scam in 1992.T. Several companies were formed during this period and many banks came to the fore to handle the finances 29 . lifting taxes on long-term gains and introducing short-term turnover tax. and this led to aresurgence of interest in the capital markets. opening up of the companies. The imposition of wealth and expenditure tax in 1957 by Mr. The markets have recovered since then and we have witnessed a sustained rally that has taken the index over 13000. The opening of the Suez Canal during the 1860s led to a tremendous increase in exports to the United Kingdom and United States. together with the introduction of the Gold Control Act in 1963. This led to a ban on forward trading in commodity markets in 1966. T. P Chidambaram continued the liberalization and reform process. communication and entertainment companies came into the limelight. The stock markets have had many turbulent times in the last 140 years of their existence. with software companies being the most favoured stocks. The mid-1990s saw a rise in leasing company shares.

the The markets have witnessed several golden times too. encountered a real lottery because those were the days when the CCI decided the price at which the shares could be issued. which started doing business in the city under a banyan tree. The planning process started in India in 1951. which led to a compulsory sale of shares or issuance of fresh stock.relating to these trades. Sir Phiroze Jeejeebhoy was another who dominated the stock market scene from 1946 to 1980. The BSE building. the Stock Exchange. V. Indian investors. The general public was so unfamiliar with share certificates that Dhirubhai is rumoured to have distributed them to educate people. Mumbai. There had been much fluctuation in the stock market on account of the American war and the battles in Europe. with the entry of Mr. The Reliance public issue and subsequent issues on various Reliance companies generated huge interest. There was no free pricing and their formula was very conservative. with very little interest evinced by the general public.J. With many of these registered under the British Companies Act. Singh’s fiscal budget in 1984 was pathbreaking for it started the era of liberalization. Mr.P. Tower in his memory. who applied for these shares. To regulate the issue of share prices. were forced to reduce foreign share holding to below a certain percentage. is called P. Business was essentially confined to company owners and brokers. with importance being given to the formation of institutions and markets The Securities Contract Regulation Act 1956 became the parent regulation after the Indian Contract Act 1872. with operations in India. The removal of estate duty and reduction of taxes led to a swell in the new issue market and there was a deluge 30 . a basic law to be followed by security markets in India. Retail investors began participating in the stock markets in a small way with the dilution of the FERA in 1978. came into existence in 1875. It was an unincorporated body of stockbrokers. He was a good regulator and many crises were averted due to his wisdom and practicality. The next big boom and mass participation by retail investors happened in 1980. Dhirubhai Ambani. Multinational companies. icon of the Indian capital markets. His word was law and he had a great deal of influence over both brokers and the government. Sir Premchand Roychand remained a kingpin for many years. Dhirubhai can be said to be the father of modern capital markets.

as measured statistically. There are mainly two types of Portfolio management strategies. with a possible impact on financial market and economic developments at a macro level. Asset management firms allow investors to estimate both the expected risks and returns. and instead relies on diversification to match the performance of some market index. Mr. delegated brokerage management is arguably one of the most important agency relationships intervening in the economy. As the per-capita-income of the city is on the higher side. so it is quite obvious that they want to invest their money in profitable ventures. a substantial part of financial wealth is not managed directly by savers. Therefore.of companies in 1985. On the other hand. which implies the existence of an agency contract between the investor (the principal) and a broker or portfolio manager (the agent). ● Passive Portfolio Strategy ● Active Portfolio Strategy 1. but through a financial intermediary. Manmohan Singh INTROODUCTION OF STOCK MARKET In most industrialized countries. 31 . A passive strategy assumes that the marketplace will reflect all available information in the price paid for securities. a number of brokerage houses make sure the hassle free investment in stocks. Passive Portfolio Strategy: A strategy that involves minimal expectation input.

This is part of the financial market where enterprises issue their new shares and bonds. which entitles its holder to be one of the owners of the company. Share market where dealing of securities is done is known as share market. The Stock Market is an invisible market that trades in stocks of various companies belonging to both the public and private sectors. they are initially offered in the primary market.2. There are two ways in which investors gets share from market: Primary market: markets in which new securities are issued are known as primary market. It is characterized by being the only moment when the enterprise received money in exchange for selling its financial assets. Most trading is done in the secondary market. The market where securities are traded after. 32 . Active Portfolio Strategy: A strategy that uses available information and forecasting techniques to seek a better performance than a portfolio that is simply diversified broadly. Indian Stock Market Share or stock is a document issued by a company. The Indian Stock Market is often referred to as the Share Market since it deals primarily with shares of various companies. A share is issued by a company or can be purchased from the stock market. Secondary Market: Market in which existing securities are dealt is known as secondary market.

the Stock Market of India provides able assistance to the individual investors through daily updates on current position of the stocks of the respective companies that are enlisted in the Stock Index in which the movement of prices in a section of the market are captured in price indices. 33 . the liquidity provided by the exchange enables the investors to sell securities owned by them easily and quickly. Such exchanges may be a corporation or mutual organization which specializes in the business of introducing the sellers with the buyers of stocks and securities. The chief function of the Stock Market of India is to help raise money as capital for the growth and expansion of various private and public sector enterprises.A Stock Exchange is a place where the stocks are listed and traded. who is subjected to sudden dearth of funds. Besides. The popular acronym for Stock Index is Sensitive index or sensex. it is ranked among the top five stock exchanges in the world. The Indian Stock Market in India comprises of two stock exchanges: ● Bombay Stock Exchange (BSE) ● National Stock Exchange (NSE) BSE The Bombay Stock Exchange (BSE) was established in 1875. Hence a person. can immediately sell his shares for cash in India Stock Market. In terms of volume of transactions. also known as “BSE 30” is a widely used market index not only in India but across Asia.The BSE India Stock Exchange serves as the most important for companies to raise money. The BSE Sensex. Moreover.

FY08. Foreign inflows into the country swelled to more than Rs 2. and India Inc reported robust performance year after year. which was equal to almost 80% of the net cumulative FII investments in India at the end of FY08. The phenomenal surge in FII investments and stock indices reflected the future value and quick growth opportunities in India. as India turned into one of the fastest growing economies across the world. 34 . The strong momentum in the equity market was in line with the robust economic growth witnessed during the last few years.301 billion in stock markets during FY04.Sensex goes on a free fall in 2008 During CY03-CY07 the Indian equity markets experienced impressive growth and grew by leaps and bounds.

The number of companies listed on the stock exchanges increased to 1.5 trillion.0% during 2007-08. the average market capitalisation of companies listed on Bombay Stock Exchange (BSE) was Rs 53. The market capitalisation to GDP ratio rose from just 21.381 in FY08.In FY08.9% in 2002-03 to over 109. almost 9% more than the country’s GDP during the same year. The surge in activity and participation at the Indian stock exchange reflects in the total turnover to GDP ratio shown in the table below. the trend set in 2008 turned out to be a sharp contrast to the trend seen in preceding years as volumes dropped amid global sell-off triggered by the crisis in the global financial markets and the fall out of major banks 35 . In terms of movement of stock indices. up by around 68% as compared with FY03. The foreign investment in India grew more than 24 times during FY03 to FY08. The sharp surge in market capitalisation-to-GDP ratio and the continuous boom in stock market were synchronous with the robust GDP growth that the Indian economy witnessed.

63-billion ($3 billion) Reliance Power IPO.08 billion. India Inc looks towards public capital markets for funds Riding high on the wave of economic boom.020 million in FY08 as compared with Rs 2.29 billion while in FY07 the same number of issues could collect only Rs 335. only three IPOs per month were raised as compared with eight IPOs in a month raised during 2007. In FY08.206 on Jan 10.across the world. and increased opportunities for risk sharing. After climbing up to 21. In FY08 larger issues made way into the market. The average size of the issue was Rs 7. there was a surge in large IPOs worth few billion dollars in the last few years. India Inc opted strongly for the initial public offer (IPO) route to raise finances during FY05-FY08. when on an average. which was an indication of both the growing size as well as the attractive valuations earned by Indian companies. However. The burgeoning size of the Indian IPOs increased the borrowers’ access to capital. Wockhardt Hospitals withdrew or failed during the year. Moreover. and more than 30 mega issues (issue size of above Rs 3 billion) hit the stock exchanges. 36 . 124 public issues (including rights issue) garnered Rs 870. 2008. few large high profile IPOs like that of Emaar MGF. the scene changed drastically in 2008.903. including the Rs 115. offered more efficient prices. The bull-run in India’s capital markets encouraged a shift in financing from banks to public capital markets. the Sensex went on a free fall of more than 50% and ended the year at 9.700 million in FY07.

However. After ten years. 37 .914 billion.051 (27. During the same year.051. especially in FY04. India registered a net outflow in equity investments by foreign investors way back in FY99. when approximately 5% of the cumulative net investment by FIIs was liquidated.9% of the total market turnover. the FII investment was negative at Rs 477 billion. The net FII investment was at an all-time high of Rs 662 billion during FY08. the Indian markets currently are witnessing some FII outflow due to global recession and a depression worse than the Great Depression that hit the developed countries in 1920s. as the world’s financial woes widened and so did the credit crunch. an abrupt reversal in trend was observed in 2008. when the surge in net foreign investment in the equity market reached a record Rs 458 billion as compared with just Rs 27 billion in FY03.635 and the number of registered sub-accounts increased by 1. whereas the number of registered FIIs increased by 316 (24%) to 1. The failure of large banks worldwide prompted large outflows from almost all emerging markets including India. to reach a cumulative investment of Rs 2.FIIs sell equity worth Rs 477 billion during FY09 Foreign institutional investments (FII) increased significantly during FY03 and FY08.4%) to 5. In FY09. the FII turnover on the capital market segment of NSE was close to 17.

Investors poorer by Rs 167.011 billion in Jan 2007.As the FIIs shied away from the Indian markets. The financial markets were on an upswing and the premier stock exchanges recorded a total turnover of Rs 25. the domestic institutional investors comprising banks. The FII turnover on the capital market segment of NSE was close to 17.123 billion in Oct 2007 as compared with a turnover of Rs 9. 38 . domestic financial institutions.9% of the total market turnover. insurance and mutual funds came into the picture and purchased huge amount of shares sold by FIIs throughout 2008.4 billion on each trading day The Indian markets witnessed a fantastic year of business in 2007 when the market was at its bullish best and cash counters were ringing across the emerging markets. The data on the investor category-wise turnover shows that the domestic financial institutions bought aggressively in 2008 when the FIIs were selling heavily.

923 in Feb 2009 as compared with 1. 39 . on an average. the markets were characterised by high volatility following a decline in volumes and consequent decrease in liquidity. The number of illiquid securities rose to 1. there was a reversal in trend in 2008. which made investors poorer by Rs 167. as they mirrored the global trend. when the markets entered one of the worst bearish modes seen in recent times. Consequently. The ripple effects of this loss were seen in the rising numbers of illiquid securities and the sharply decreasing traded turnover.8 million for every trading minute in 2008. The financial markets in India lost nearly Rs 41.However.4 billion on each trading day of 2008.190. During this year. Even though the crises had originated in the US and other European countries the slowdown did mar the Indian markets. The rise in the number of illiquid securities is a concern as it mirrors the fact that more than half of the securities are illiquid. the financial markets in India lost close to Rs 499.641 in July 2008.1 billion in 2008.

8 billion in Jan 2008. The volatility index generally starts rising during times of financial stress and decreases as investors become complacent. as increase and decrease in volatility is always a signal of extent of fear within the sentiment. The NSE not only garnered almost the entire market share in equity derivatives but also increased its market share in the cash market segment.726 million as compared with 2007. Investors are bound to trade in markets that are more liquid and exit the illiquid markets during liquidity crisis. and the investor behaviour in the derivative segment of BSE probably follows this reason.The volume of shares traded declined by 25% and to a certain extent this decline could be attributed to the fall in stock prices. there is 40 . A closer scrutiny of the equity cash and equity derivative segments of the stock exchanges indicate that in Dec 2008 the derivative market of BSE was almost deserted as the exchange witnessed a total traded turnover of just Rs 0.1% on the BSE and it climbed up by 3. The volume of shares traded fell by 12. therefore.83% to 222.4% in the National Stock Exchange (NSE).3 billion as compared with a traded turnover of Rs 222. the number of shares traded declined by just 2. The volatility in stock markets is high when fear is high.5% during Dec 2008. The rise in volatility index also reflects the panic demand for puts as a hedge against decline in stock portfolios. the market share of the BSE fell from 29. In the cash market segment also. Volatility of international stock market indices during 2007-08 The movement of stock indices to a certain extent depends on market sentiments — one of the indicators of volatility.3% in Jan 2008 to 27. In 2008.

less need for portfolio managers to buy puts during a bull run. In fact for almost all the countries. The stock markets across the world remained turbulent during the whole of 2008 and closed the year with significant declines. and high volatility. volatility almost doubled during the second half of FY08 as compared with the start of the year. China recorded high volatility as compared with other BRIC countries (See table below). 41 . During FY08. The volatility increased sharply in the second half of FY08 (Oct–Mar).

which comprises of temporary margin.Brokers cautious about client funding The dismal performance at the stock markets and the steep fall in trading volumes was a result of liquidity issues. 42 . revenue from related businesses in equity broking is also expected to have taken a huge hit. A margin trading agreement allows the traders to borrow up to 50% of the total money required for a stock purchase from the broker at a pre-agreed rate of interest (18-20%). and the credit crunch coupled with the most severe bear market in recent history. and credit crunch had caused a ripple effect and resulted in a decline in client funding. According to the data on the NSE. The total amount funded in Dec 2008 was Rs12. the institutional clients accounted for a major chunk of the amount funded during CY08. declined since Jan 2008.829. low market volumes. The phasing in of the bear market from Jan 2008 suggests that the declining trading activity. deleveraging of markets. The amount funded through margin funding accounts formed close to 20% of the total client funding.5 million. Client funding by brokers on the NSE. down by about 55% as compared with the amount funded in Jan 2008. liquidity issues. The uncertain events and rise in uncovered debits have turned brokers extra cautious in terms of lending without security. Due to the current bearish phase. and funding for institutional and non-institutional clients. margin trading.

43 . NSE was incorporated as a national stock exchange. Despite passing through a number of changes in the post liberalization period. 1956 [SCRA] defines ‘Stock Exchange’ as anybody of individuals. Stock exchange could be a regional stock exchange whose area of operation/jurisdiction is specified at the time of its recognition or national exchanges. constituted for the purpose of assisting. which are permitted to have nationwide trading since inception. The holders of such shares are members of the company and have voting rights. ‘Mean of equity share’ Total equity capital of a company is divided into equal units of small denominations. the industry has found its way towards sustainable growth. selling or dealing in securities. In this section our purpose will be of gaining a deeper understanding about the role of the Indian stock broking industry in the country’s economy. each called a share. whether incorporated or not. regulating or controlling the business of buying. ‘Mean of stock exchange’ The Securities Contract (Regulation) Act.STOCK BROKING SECTOR IN INDIA The Indian broking industry is one of the oldest trading industries that have been around even before the establishment of the BSE in 1875.

commodity or any other asset. repayment of principal amount by the borrower to the lender. The financial derivatives came into spotlight in post-1970 period due to growing instability in the financial markets. foreign exchange (forex). index. In the Indian securities markets.‘Debt Instrument’ Debt instrument represents a contract whereby one party lends money to another on predetermined terms with regards to rate and periodicity of interest. The underlying asset can be equity. the term ‘bond’ is used for debt instruments issued by the Central and State governments and public sector organizations and the term ‘debenture’ is used for instruments issued by private corporate sector. 44 . Derivative products initially emerged as hedging devices against fluctuations in commodity prices and commodity-linked derivatives remained the sole form of such products for almost three hundred years. called underlying. ‘ Derivative’ Derivative is a product whose value is derived from the value of one or more basic variables.

which are declared periodically by the mutual fund. 45 . others are a mix of equity and bonds. Some are pure equity schemes. bonds. or to participate only in the capital appreciation of the scheme. Mutual funds issue units to the investors. The investment objectives specify the class of securities a Mutual Fund can invest in. commercial paper and government securities. The schemes offered by mutual funds vary from fund to fund. Mutual Funds invest in various asset classes like equity. The investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. debentures etc. debentures. Bonds. Investors are also given the option of getting dividends. Mutual funds can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors. Government securities.‘ Mutual Fund’ A Mutual Fund is a body corporate registered with SEBI (Securities Exchange Board of India) that pools money from individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as equity shares. The appreciation of the portfolio or securities in which the mutual fund has invested the money leads to an appreciation in the value of the units held by investors.

‘ Dematerialization’ Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited to the investor’s account with his Depository Participant (DP). scrips. whether upwards or downwards. It is a basket of securities and the average price movement of the basket of securities indicates the index movement. stocks or other marketable securities of similar nature in or of any incorporate company or body corporate. includes instruments such as shares. shares.‘ Index’ An Index shows how a specified portfolio of share prices is moving in order to give an indication of market trends. 1956. ‘ A Depository’ A depository is like a bank wherein the deposits are securities (viz. ‘Securities’ The definition of ‘Securities’ as per the Securities Contracts Regulation Act (SCRA). ‘Function of Securities Market’ 46 . debentures. derivatives of securities. units etc.) in electronic form. government securities. interest and rights in securities. security receipt or any other instruments so declared by the Central Government. bonds. government securities. units of collective investment scheme. bonds.

bonds. through a range of financial products. debentures etc. entrepreneurs to raise resources for their companies and business ventures through public issues. securities markets provide channels for reallocation of savings to investments and entrepreneurship. Transfer of resources from those having idle resources (investors) to others who have a need for them (corporate) is most efficiently achieved through the securities market. 47 . Savings are linked to investments by a variety of intermediaries. ‘Securities one can invest in’ ● Shares ● Government Securities ● Derivative products ● Units of Mutual Funds etc.Securities Markets is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares. Stated formally. Further. it performs an important role of enabling corporate. called ‘Securities’.

in addition to all intermediaries and persons associated with securities market. The regulator ensures that the market participants behave in a desired manner so that securities market continues to be a major source of finance for corporate and government and the interest of investors are protected. Department of Company Affairs (DCA). ‘Regulates the Securities Market’ The responsibility for regulating the securities market is shared by Department of Economic Affairs (DEA). it has powers for: 48 . ‘ SEBI & role of SEBI’ The Securities and Exchange Board of India (SEBI) is the regulatory authority in India established under Section 3 of SEBI Act. 1992. 1992 provides for establishment of Securities and Exchange Board of India (SEBI) with statutory powers for (a) protecting the interests of investors in securities (b) promoting the development of the securities market and (c ) regulating the securities market.‘ Securities Market need Regulators’ The absence of conditions of perfect competition in the securities market makes the role of the Regulator extremely important. SEBI Act. Its regulatory juridiction extends over corporates in the issuance of capital and transfer of securities. Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI). SEBI has been obligated to perform the aforesaid functions by such measures as it thinks fit. In particular.

regulatory organizations. intermediaries. 49 .● Regulating the business in stock exchanges and any other securities markets ● Registering and regulating the working of stock brokers. self. ● Promoting and regulating self-regulatory organizations ● Prohibiting fraudulent and unfair trade practice. ● Calling for information from. undertaking inspection. conducting inquiries and audits of the stock exchanges. mutual funds and other persons associated with the securities market. sub–brokers etc.

forward looking. The scope 50 . Large and fixed commissions have been replaced by wafer thin margins. There have also been major changes in the way business is conducted. In the last decade. well conversant. highly innovative and even adaptable. the broking industry today is one of the most transparent and compliance oriented businesses. dynamic. and many more.Broking Houses In India India is a country having a big list of Broking Houses. Technology has emerged as the key driver of business and investment advice has become research based. At the same time. adherence to regulation and compliance has vastly increased. The Equity Broking Industry in India has several unique features like it is more than a century old. The regulations and reforms been laid down in the Equity Market has resulted in rapid growth and development. in some cases. The Broking Houses not only act as an intermediate link for the Equity Market but also for the Commodity Market. with competition driving down the brokerage fee. the growth in the equity market is largely due to the effective intermediaries. to a few basis points. Foreign Currency Exchange Market. and good service providers. Long settlement cycles and large scale bad deliveries are a thing of the past with the advent of T+2 settlement cycle and dematerialization. Basically. the Indian brokerage industry has undergone a dramatic transformation. The Broking Houses has also made an impact on the Foreign Investors to invest in India to certain extent. From being made of close groups.

51 .of services have enhanced from being equity products to a wide range of financial services. Investor protection has assumed significance..

● Read and understand such documents. This is called Investment. The cost of living is simply what it costs to buy the goods and services you need to live. 52 .SOME BASICS OF STOCK AND CAPITAL MARKET Investment The money we earn is partly spent and the rest saved for meeting future expenses. ● Verify the legitimacy of the investment. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future as it does now or did in the past. Inflation is the rate at which the cost of living increases. may like to use savings in order to get return on it in the future. ● Assess the risk-return profile of the investment. Instead of keeping the savings idle . ● Find out the costs and benefits associated with the investment. Why should one invest? ● Earn return on your idle resources ● Generate a specified sum of money for a specific goal in life ● Make a provision for an uncertain future One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Takes these care for investing ● Obtain written documents explaining the investment.

we are expected to pay for using it – this is known as Interest. Interest is an amount charged to the borrower for the privilege of using the lender’s money. ● Seek all clarifications about the intermediary and the investment.● Know the liquidity and safety aspects of the investment. ‘Interest’ When we borrow money. depending on the terms of the loan. ● Compare these details with other investment opportunities available. ● Ascertain if it is appropriate for your specific goals. ● Examine if it fits in with other investments you are considering. or it may be variable. The percentage rate may be fixed for the life of the loan. 53 . ● Deal only through an authorized intermediary. ● Explore the options available . Interest is usually calculated as a percentage of the principal balance (the amount of money borrowed).

PPF. rates at which companies issue fixed deposits etc. Some of these factors are: ● Demand for money. bonds. debentures etc. insurance/provident/pension fund etc. The factors which govern these interest rates are mostly economy related and are commonly referred to as macroeconomic factors. ● Level of Government borrowings. commodities etc. rates offered to investors in small savings schemes like NSC.rates that banks offer to their depositors. there are different types of interest rates . securities market related or instruments like shares. rates that they lend to their borrowers. ● The Reserve Bank of India and the Government policies. Financial assets such as fixed deposits with banks. small saving instruments with post offices. ● Inflation rate. gold/jewellery. 54 . ● Supply of money.Factors determine interest rates When we talk of interest rates. Various options available for investment One may invest in: Physical assets like real estate. the rate at which the Government borrows in the Bond/Government Securities market.

and may be considered for 6-12 months investment period as normally 55 .a. Fixed Deposits with banks are for investors with low risk appetite. savings bank account.Various Short-term financial options available for investment Broadly speaking. Money Market or Liquid Funds are a specialized form of mutual funds that invest in extremely short-term fixed income instruments and thereby provide easy liquidity.). aim to maximize returns Fixed Deposits with Banks are also referred to as term deposits and minimum investment period for bank FDs is 30 days. Unlike most mutual funds. which offers low interest (4%-5% p. money market funds are primarily oriented towards protecting your capital and then. making them only marginally better than fixed deposits. money market/liquid funds and fixed deposits with banks may be considered as short-term financial investment options: Savings Bank Account is often the first banking product people use.

Various Long-term financial options available for investment Post Office Savings Schemes. Company Fixed Deposits: These are short-term (six months) to medium-term (three to five years) borrowings by companies at a fixed rate of interest which is payable monthly. Mutual Funds etc. Company Fixed Deposits. semi10 annually or annually. Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per annum compounded annually. They can also be cumulative fixed deposits where the entire principal along with the interest is paid at the end of the loan period. Bonds and Debentures. The central or state government. A PPF account can be opened through a nationalized bank at anytime during the year and is open all through the year for depositing money. corporations and 56 . which can be availed through any post office. Bonds: It is a fixed income (debt) instrument issued for a period of more than one year with the purpose of raising capital. Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument. Tax benefits can be availed for the amount invested and interest accrued is tax-free. A withdrawal is permissible every year from the seventh financial year of the date of opening of the account and the amount of withdrawal will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower the amount of loan if any. Public Provident Fund. quarterly.

called the Maturity Date. time or knowledge constraints 57 . debentures etc.). Mutual Funds: These are funds operated by an investment company which raises money from the public and invests in a group of assets (shares.similar institutions sell bonds. in accordance with a stated set of objectives. A bond is generally a promise to repay the principal along with a fixed rate of interest on a specified date. It is a substitute for those who are unable to invest directly in equities or debt because of resource.

STOCK EXCHANGE AND TRADING 58 .

and the latest technology they are offering for hassle free service for their customers etc. These firms are providing online as well as offline facilities to their customers. 59 . those usually have major influence in the various economic aspects of India. DxDollars. New Zealand and African countries as a whole. Online Broker List . online share broking firms.This section contains a comprehensive list of brokers that will allow you to trade online. the United States of America. Australia. Xdrive. We have considered those particular continents.INTERNATIONAL STOCK EXCHANGE AND TRADING International Online Trading Scenario Here we will have a comprehensive look taking the international share-trading scenario as a whole. The salient features the organizations are offering are as: 1. Saxo Bank etc. Make sure to investigate them thoroughly before choosing an online share-trading firm. The prominent online share broking firms are The Wall Street Journal. UNITED STATES OF AMERICA Let us start with the United States. A brief set of information consisting of Stock Exchanges functioning. Power Pointers Page. United Kingdom and the entire European Union. So. nations.

8. 4.In this section to get information about how and where to trade stocks after the markets have closed for the day. or just want another opinion. The benefits of trading with an ECN include after hours trading. After Hours Online Trading . Scripophily . use the sites in this section to trade stocks around the world.Electronic Communications Networks (ECNs) represent orders in Nasdaq stocks. 3. 6. and anonymity (which is often important for large trades). After Hours Resources. 5.This listing contain sites that will allow you to trade stocks after hours. Exchanges . Broker Ranking Resources .Thanks to the Internet.2. ECNs . internally matching buy and sell orders or representing the highest bid prices and lowest ask prices on the open market.We have their own broker performance data and rankings. if you're looking for info on a single specific broker. Once you have thoroughly researched global opportunities.This section contain links to sites that specialize in old stock certificates and collectibles. The sites can often be used to investigate stocks that are traded on a given exchange. 7. avoiding market makers (which charge a spread). 60 .This section contains a listing of stock exchanges throughout the US and around the world. International Online Trading . it has become much simpler to analyze and participate in international investment opportunities. This can be especially useful for international stocks that may be difficult to research due to a lack of readily available information. This section contains a listing of ECNs that are available for your trading needs.

Daytradingstocks. Free registration is required for some of the site's features. Day Trader . book reviews. The ATTAIN ECN allows its subscribers immediate and direct posting of orders to the ATTN book. or so-called "trade blotters" of an experienced Day Trader. free trial is available. Day Traders Online . diaries.com . 11. This is all shown to you via the actual trading journals. 10. and access to their news desk. access to their real-time trading room. and innovative thinking to investors looking to trade the financial markets. 12.An order display alternative to the traditional market making price quote system on the Nasdaq. trading techniques. and newsletters on the financial markets for subscribers. AFRICAN SCENARIO 61 . and brokerage reviews. software.Offers articles.Brings insight. 13. ideas.Fee-based site offering a morning stock market report.9.A virtual community for day traders that offers message boards. Domestic Securities ATTAIN System . Traders World .

Introduction and Background The presence of bid –ask spreads. The design. there has been increased speculation in Europe and elsewhere as to the benefits or otherwise of merging a number of national and international financial exchanges. low capitalization and low liquidity. it is unlikely that a financial exchange will be able to efficiently meet its strategic objectives. However the vast majority of these exchanges have a small number of listed securities. The field of market microstructure attempts to examine issues or friction in markets which might influence the outcomes of those markets. In the main. scope. serial correlation patterns in security and index returns and unresolved issues regarding the returns of small firms seems to suggest that securities markets prices are not set via Walrasian auction and that trading does not take place at equilibrium prices. These include inter alia questions such as. size. As electronic trading has grown. liquidity. institutional and regulatory framework of a financial exchange determines its relative costs and benefits.Strategic Alliances and Mergers of Financial Exchanges: The Case of the SADCs Over the last year or so. This research suggests that there is a strong economic case for establishing an SADC financial exchange and the most efficient and least costly way of accomplishing this is for the national exchanges in the SADC region to merge with the Johannesburg Securities Exchange (JSE). prior to the development of market microstructure analysis. Several countries in the SADC region have a financial exchange. financial economists assumed a frictionless trading process. Seen in this light. are auction markets 62 . the debate has centered on number of broad questions . without the appropriate scale. social and technological infrastructure.

there has been some debate as to the most appropriate design of exchanges for the trading of equities. However this is an issue which other regions of the world need to examine carefully. to what extent does the design of financial exchanges influence liquidity and other variables? A survey by economist Madhavan indicates most of the answers to the above questions have been based on studies in the United States. An estimate from the European Securities Forum indicates that the costs of cross border trading in the European Union are ten times higher than the costs in the United States.cheaper than dealer markets? Is screen based trading cheaper and more efficient than an open cry system? Is the cost of trading on certain exchanges influenced by the size of the company? Does the cost of trading influence the liquidity of the stock and vice versa? And as a corollary. clearing and settlement platforms. Settlement and clearing is a significant component of the total cost in dealing in equities. the large exchanges in Europe are still planning to merge their trading. INDIAN SCENARIO 63 . This has been compounded by the increase in online share trading and the perception that the trend is likely to increase. Although very few mergers have actually taken place relative to the amount of time and effort that has been put into the discussions. In Europe.

One of the most common forms of securities fraud on the Internet involves an imposter who attempts to manipulate the price of a stock by disseminating phony press releases or information. or buy or hold. PairGain Technologies. we will usually advise to buy share which he has bought and plans to dump when price goes up. or creating phony websites. Today lot of investor’s depending on TV channel for recommendation about stocks to sell. We have seen enough of PUMP and DUMP even without help of internet in cases of Harshad Mehta boom of 1992 and Ketan Parekh boom of 2000 (he even had cult following with Index of 10 shares called K-10). Most of these people have vested interest in stocks they recommend and promote. Channels like CNBS offer array of experts from economist to brokers to analyst. A recent example of this scheme is the hoax perpetrated against US based.HURDLES FOR ONLINE SHARE TRADING 1. Internet fraud In India. Volatility of India’s Stock Markets 64 . Here when we talk to broker's staff while buying or selling. we see this kind of frauds happening in different way due to nature of our society. 2.

5 billion respectively in 2003 and 2004. In sum. This shallowness would also mean that the effects of FII activity would be exaggerated by the influence their behaviour has on other retail investors. in herd-like fashion tend to follow the FIIs when making their investment decisions.6 and $8. trading in whose shares is seen as indicative of market activity. the BSE Sensex incorporates just 30 companies. Given the presence of foreign institutional investors in Sensex companies and their active trading behaviour. These figures compare with a peak level of net purchases of $3. Indian stock markets are known to be narrow and shallow in the sense that there are few companies whose shares are actively traded. Rampant Speculation 65 . Movements in the Sensex during the two years have clearly been driven by the behaviour of foreign institutional investors (FIIs). the sudden FII interest in Indian markets in the last two years account for the two bouts of medium-term buoyancy that the Sensex recently displayed. who.Recent market developments have once more focused attention on the volatility that has come to characterise India’s stock markets. their role in determining share price movements must be considerable.1 billion as far back as 1996 and net investments by FIIs of just $753 million in 2002. who were responsible for net equity purchases of as much as $6. 3. although there are more than 4700 companies listed on the stock exchange. Thus.

66 . A similar situation had occurred on Tuesday. This extraordinary situation has facilitated rampant speculation by all sorts of operators – the indigenous variety. advanced capitalism does know how to intervene "politically" in the markets when fundamental interests are in danger of violation by short sellers. So. when the stock markets were made to collapse by a record 800-plus points on May 17 under the pretext that the Left is opposed to divestment. Thereafter when trading resumed and the markets fell further to another stipulated lower level. So. the profits reaped by short sellers were astronomical and incalculable. At the end of the day the stock exchange authorities of both the New York Stock Exchange and the heavily-weighted software exchange called NASDAQ suspended all trading for the remainder three working days during that fateful week to safeguard investor interests. the electronic system automatically stopped all trading again for another two hours. The electronic monitoring system in both the Bombay Stock Exchange and the bigger National Stock Exchange automatically stopped trading for half-an-hour when the two markets respectively collapsed by 10 percentage points. FIIs and even our own native financial institutions (FIs) as the massive UTI scandal of recent years has demonstrated. `Could this situation have been avoided? As aforesaid. 2001. the day of the terrorist attacks in New York City. September 11. the answer is yes.The Indian stock markets are perhaps the only place in the world where you can buy shares without having to put money on the table and sell shares you do not own.

PRODUCT PROFILE 67 .

we can walk into any of these branches and connect to our highly skilled and dedicated relationship managers to get the best services. RCL is a trade facilitator providing the platform to trade in commodities. with its presence in more than 900 locations across more than 320 towns & cities. Religare also has one of the largest retail networks. Grounded in the Religare philosophy. 68 - . COMMODITIES Religare Commodities Limited (RCL) was initiated to spearhead Exchange based Commodity Trading. Further. MCX and NMCE. We could also choose to enjoy the freedom to execute own trades through our online mechanism. A highly process driven. As a member of NCDEX.PRODUCTS PROFILE EQUITIES Trading in Equities with Religare truly empowers our investment needs. highly skilled and dedicated professionals strive to offer the clients "best-fit" investment solutions in the country. diligent approach backed by powerful Research & Analytics and one of the “best in class” dealing rooms ensures that we have a superlative experience. This means.

69 - . RCL is also present in close to 40 Mandi locations across the country and also caters to the Corporate / Institutional business through one of the “best in class” Corporate Desks. Company is propelled by group vision and desire to strive tirelessly and aim to be the best within this category.The Operating Fabric-Commodities Business In terms of the business structure. Company’s business philosophy is to treat each client situation as unique. it has a structured arbitrage desk which focuses on spot futures arbitrage. Company list of corporate clients reads like a Who’s one of the Indian Industry and company has been successful in providing customer with practical customized solutions for customer requirements. requiring customized solutions. RCL caters to retail clients.

also get trade rewards each time investment. 70 - .com Now customer can not just invest online in Equities. IPOs. Interest on cash margin. Mutual Funds.Online Investment Portal Investing online will never be the same again with companies 360 degree portal www.religareonline. Company also offers customer a host of other revolutionary features such as Zero Percent Brokerage. exposure upto 20 times cash margin etc.. Besides this. depends upon the select product schemes available through customer highly sophisticated and customized platform R-ACE (Religare Advanced Client Engine). So get empowered.. enrich customer experience of investing online and open to a whole new world of possibilities. Commodities and much more but.

India infoline Personal financial advisors. 71 - . Some of the issues that planners address are general investments.Personal Financial Services India Infoline has recently entered into personal financial advisory services. and insurance to recommend financial options to individuals in accordance with the individual’s short-term and long-term goals. It caters to the financial needs of individuals by advising on various financial plans. use their knowledge of investments. retirement and tax planning. also called financial planners or financial consultants. tax laws.

PROCESS 72 - .

RESEARCH METHODOLOGY 73 - .

“research comprises of defining and redefining problem. formulating hypothesis or suggested solutions. 1 . Genernalisation And Interpretation And 11 .Developing The Hypothesis 4 . reaching conclusions. Determining The Sample Design 6 . collecting. Execution Of The Report 8 . 3 .Extensive Literature Survey. Hypothesis Testing 10 .RESEARCH METHODOLOGY. Analysis Of Data 9 . testing conclusions to determine whether they fit the formulated hypothesis” Process Of Research There are many steps of Research process.Formulating The Research Problem 2 . Research is a systematic method of finding solutions to problems. Preparing The Research Design 5 . Preparation The Report 74 - . organizing and evaluating data. It is essentially an investigation. According to Clifford Woody. a recording and an analysis of evidence for the purpose of gaining knowledge. Collecting The Data 7 .

Make a sample frame. Simple random sampling is used for this study. There are many steps of sampling procedure. 4.The sample size should be neither too large nor too small Universe. Under this sampling design. Number of the sampling units selected from the population is called the size of the sample. 1. The universe chooses for the research study is the employees of India Info line Ltd. Define the universe. Specifying the sampling unit. .The number of group & subgroup should be analyzed . 2. Selection of sample design. Sample Size. every item of the frame has an equal chance of inclusion in the sample. A sample design is a finite plan for obtaining a sample from a given population. 75 - . The procedure adopted in the present study is probability sampling. Sample should be acceptable error. Sample of 50 respondents were obtained from the population. 3. Sampling Procedure.Sampling Design. It should be cost effective. which is also known as chance sampling.

Select the sample. data’s collected through questionnaire. Determination of sample size. Primary Data Primary data are in the form of “raw material” to which statistical methods are applied for the purpose of analysis and interpretations. The primary sources are discussion with employees. Interview Method 3. The data’s were collected through Primary and secondary sources. Methods of Data Collection. Observation Method 2. Questionnaire 4. 6. Schedule Method Secondary Data 76 - .5. 1. Primary data recorded by the researcher for the first time to their knowledge Methods Of Primary Data Collection.

Secondary data’s are in the form of finished products as they have already been treated statistically in some form or other. The secondary data mainly consists of data and information collected from records, company websites and also discussion with the management of the organization. Secondary data was also collected from journals, magazines and books.

Methods Of Secondary Data Collection
1 . Books 2 . Internet 3 . Journals 4 . Research Association

Nature of Research.
Descriptive research, also known as statistical research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how.

Although the data description is factual, accurate and systematic, the research cannot describe what caused a situation. Thus, descriptive research cannot be used to create a causal relationship, where one variable affects another. In other words, descriptive research can be said to have a low requirement for internal validity.

77 -

Questionnaire A well defined questionnaire that is used effectively can gather
information on both overall performance of the test system as well as information on specific components of the system. A defeated questionnaire was carefully prepared and specially numbered. The questions were arranged in proper order, in accordance with the relevance.

Nature of Questions Asked.
The questions are following types. 1. Open ended Questions 2. Dichotomous, 3. Rating and Ranking Questions.

4. Multiple Choice Question

Sample
A finite subset of population, selected from it with the objective of investigating its properties called a sample. A sample is a representative part of the population. A sample of 50 respondents in total has been randomly selected. The response to various elements under each questions were totaled for the purpose of various statistical testing.

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Variables of the Study.
The direct variable of the study is the employee motivation & Indirect variables are the incentives, interpersonal relations, career development opportunities and performance appraisal system.

Presentation of Data
The data are presented through charts and tables. Data should be under the limit Data presentation should be clear in charts We can use Bar Chart, Bar Diagram Table etc

Tools and Techniques for Analysis
Correlation is used to test the hypothesis and draw inferences.There are some requirement for data analysis. 1.Editng , 2. Coding , 3. Tabulation So,These are the technical term for analyzing the data.

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DATA ANALYSIS 80 - .

DATA ANALYSIS 1. HDFC Securities Indiabulls Reliance Money Sharekhan Securities 81 - Yes No Yes Yes Yes Yes No Mutual Yes Yes No No Yes Ye No Insurance Yes Yes Yes Yes No No Yes PMS Yes Yes Yes Yes Yes Ye Yes Back office Yes Yes Yes Yes Yes Ye Yes Advisory E-Broking Yes Yes Yes Yes Yes Yes Yes Investment Yes No No No No No No M-Connect No Yes No Yes No No No Loans Funding Yes Yes Yes Yes Yes Yes Yes Personal Yes Yes Yes Yes Yes Yes Yes Software - Yes No No No No No No E-Choupapa .Are you offering these products \ services to your existing customer? Fund Services Religare Securities ICICI Direct India Infoline Security Pvt. Ltd.

How many clients are you having active? 82 - .Motilal Oswal Anand Rathi No No Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No No No Yes No No Yes Yes Yes No No No Securities Hem Securities Yes 2.

Showing the activeness of client 20% Active Client Non active client 80% In . 83 - . But.India Infoline Ltd 80% client are active . who do the online trading regular bases. 20% client are not and they do not active for the trading.

3. India Info line Ltd 10% brokers are sub –broker and 90% are not Sub Broker. How many sub Broker is your company having? Showing The Presence of Sub Broker 10% Sub Broker Non Sub Broker 90% In. 84 - .

Kotak Securities. Religare Securities charges Rs. Reliance Money ICICI Direct Kotak Securities Anand Rathi Securities Religare Securities C o m p any N am e -India infoline Ltd.ICICI Direct charge Rs.1. India Bulls.What is the Brokerage on intraday of different companies? B r o k e r a g e o n In t r a d a y 7 .5 5 2 0 .Motilal Oswal Securities.7. Anand Securities charges Rs.Hem Securities charges Rs.2 brokerage on Intraday.5 3 3 3 3 3 2 1 . .5 brokerage on Intraday .4.3 brokerage on Intraday.Angel Broking Ltd.5 Sharekhan Securities Motilal Oswal Securities India Infoline Angel Broking Ltd.5 brokerage on Intraday -Sharekhan Securities charges Rs.5 brokerage on Intraday India Bulls Hem Securities - 85 - . .

999.What is the Charges the opening of DEMAT Account of different companies? Value in Rs. India bulls Securities charges Rs.350.865. 1200 1000 800 600 400 200 0 Angel Broking Ltd. Religare Securities charges Rs. Hem Securities charges Rs.700. India Infoline Ltd charges Rs.900. ICICI Direct charges Rs.460. 86 - .560.5. Sharekhan Securities charges Rs. for opening the DMAT Account. Indiabulls Securities 560 Account opening Charges 999 900 750 865 700 460 350 Religare Securities ICICI Direct Sharekhan Securities Comapny Name Anand Rahti Securtites India Infoline Hem Securities -Angel Broking charges Rs. Anand Rathi Securities charges Rs.750.

What is the Market share of different companies? Market Share Of Companies 11% 26% Angel Broking Ltd Religare Indiabulls 28% 19% 16% Anand Rathi Others .6.Angel Broking Ltd have the 26% Market Share of total -Religare have the 19% Share of total Market Share -India info line have the 11% Share -Indiabulls have the 16% Share -28% have the others 87 - .

In this. I take the sample size 50.that customer properly aware to the company scheme and company also contact to the new client knowning the detail through survey. Are you organizing any event or survey for customer awareness ? Customer Awareness 90 80 70 60 Value 50 40 30 20 10 0 Aware Awareness of people Not Aware Yes. Company regularly contact the customers . 88 - .7.

Some company kit . which have some prizes . These are as followed :Some special and confidential scheme which access only through company data. Customer Awareness of extra Services 60 50 40 Value (%) 30 20 10 0 Not Aware to the Service Slightly Aware to the Service Customer Awareness Full Aware to the Service Yes .8. 89 - . Any special service which you provide makes different your company in market. Some time company provide offer related to the Intraday Brokerage etc.

FINDINGS 90 - .

Company is providing M-connect software whereas other companies are not having this service. This is because Angel has the highest number of sub-brokers.FINDINGS • • India infoline is the second in charging lowest brokerage. • • India info line is providing free of cost softwares for online clients. • India info line has the highest market coverage with respect to channel sales. • Despite three branches India infoline has 10000 clients whereas Hem Securities has 70 branches and only 12000 clients. Reliance Money is having 32% market share in Meerut (Market Leader) because of lowest brokerage whereas Angel Broking is performing best on country level. 91 - . • Company is having 75 Sub-brokership in Meerut which provides a major part of revenue. There are 140 subbrokers in Meerut.

RECOMMENDATION 92 - .

000. 3000 it attracts more new clients and for sub-brokership company should decrease its security up to Rs.RECOMMENDATIONS • India infoline has to decrease it’s margin money up to Rs. • There should be more public awareness programmed and advertisement related to company’s product and services so that people should be more aware about India info line. • Company should organise customer happiness survey for both active and inactive clients . • There should be two more branches of India Info Line Limited in Meerut as well as in Rajasthan so that clients will get its services easily. 50. • Company should provide demo version of software and its training for each clients. 93 - . • Company has to more aggressive toward its existing client’s feedback and for their services after giving them products because it can increase company loyalty as well its brand name.

SUGGESTION 94 - .

SUGGESTIONS ● Commitment should be equalized for every person. 95 - . which will attract a large number of customers. ● Company should have a limited number of clients under the relationship manger. Company must me be in co-operation with other department and other branches . ● The number of branches it has at present should be increased all over the country. ● Give the complete information about products and services offered by the company to the customers. ● Company should make more promotional activities by giving advertisements and publicity. ● Provide the facility of free demonstrations for all. ● In the organization. ● Improvement in the opening of De-mat & contract notice procedure is required. ● Give more demonstration to customers so that they can get complete knowledge about online trading. So that they can handle new as well as old customer properly. ● Some promotional activities are required for the awareness of the customer. ● People at young age should be encouraged to invest in stock market. ● Seminars should be more held for providing information to prospective and present customers.

RESULT 96 - .

different companies .different Intra day Brokerage as. This is the result after analyzing the data.5. In this all companies have different market share as. According to the third 10% are company sub-Broker. Loan Advisory. funds etc. Reliance Securities.India Info Line-11%.different amount for opening the DMAT Account. ICICI provides many of facilities as-Banking. According to the second problem 80% are active and 20% are inactive client.RESULT According to the first problem many of the companies as – India Info Line. In this company different. There are different. 97 - . Software. In this we analyse that 20% customer are aware to the extra services . 7. 2. which provides different .5.

CONCLUSION 98 - .

As the share market value goes on increasing day by day the investor who wants to invest in shares also increasing. From the above survey and observation it is found that most of the people who are trading in share market belongs to the employee group.CONCLUSION On the basis of the study it is found that India infoline is better services provider than the other stockbrokers because of their timely research and personalized advice on what stocks to buy and sell. But investing in shares is as risky as earning yield. Study also concludes that people are not much aware of commodity market and while it’s going to be biggest market in India. next comes the business men and other class of income people. 99 - . Company also provides the information through the internet and mobile alerts that what IPO’s are coming in the market and it also provides its research on the future prospect of the IPO. India infoline provides the facility of Trade tiger as well as relationship manager facility for encouragement and protects the interest of the investors.

100 - . highly returns and better service level without delay. Hence trading in share market is increasing day by day and investors are ready to invest their investment in share market only. I got the knowledge about the customer’s needs and their references for having a particular product. area. locality and occupation. less brokerages.Trading in online trading firm is easy as it all delivered with internet and within a few minutes the customer can buy and sell shares which save time as well as reduction of paper work. Company expect all the information such less rates. Customer always wants more service by paying less. The need of customers differs from person to person.

BIBLIOGRAPHY 101 - .

BIBLIOGRAPHY Websites ● www.indianshareshistory. II Edition.com News Papers ● Times of India ● Business Standard ● Market Express ● Business Standard Books ● Kothari C. India infoline.nseindia.com ● www.2004) ● Brochures and Pamphlets of India infoline ● Pandey I M – Financial Management ( Vikas.angeltrade.com ● www.com ● www. R –Research Methodology ( New Age International( P) .usectrade. IX Edition 2004) 102 - .com ● www.com ● www.bseindia.

● Prasanna Chandra.Fundamentals of Financial Management (TMH. 2004) 103 - .

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