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Submitted in partial fulfilment for the Award of degree of

Master of Business Administration

SUBMITTED BY: Virendra kumar MBA IIyear (III Sem)

SUBMITTED TO:Mrs. Anushruti Pareek





Talent and capabilities are of course necessary but opportunities and right guidance is two very important back-ups without which any person cannot climb the ladder to success.

I wish to express my most sincere thanks to Mr. Taj Mohammed (Cluster Manager) kotak securities, Vaishali Nagar, Jaipur, providing me the opportunity to work with renowned organization and enabling me to gain practical knowledge in the field of Finance and Operations. I also owed my profound gratitude to my field guide Mrs. Vartika (back office staff) and Mr. Naveen gupta (relationship manger) for their guidance during the duration of project.

Moreover I am also indebt to Dr Joytsana Dewan Mehta Director and my college mentor Mrs. Anushruti Pareek, SIMCS, Rambagh Campus, Jaipur for their kind help and co-operation for completing this project work.

I indeed thanks to kotak securities ltd. Vaishali nagar, Jaipur and Simcs Jaipur for giving me opportunity to have experience in a professionally run organization.

Indebted to my parents, friends and relatives for their physical, psychological and moral support extended by them at all time.

Virendra Kumar


Any kind of learning is incomplete till it is practically applied in the concerned field. Only then does a person understand and get hold of even the minutest details of what he/she has learnt in his stay at the institute doing his /her MBA. So, to practically apply what I had gained in the past one year in the MBA programme, I underwent two months summer training at Kotak Securities, Vaishali Nagar, Jaipur.

It has been a wonderful learning experience, which has given me an insight into Management of modern business which requires an appreciation of multidisciplinary concept and in-depth knowledge of specific analytical tools, geared to the solution of real life problems. No doubt every real situation is unique but a set of theoretical tools of knowledge, itself based on empirical foundation, can help in developing the mechanism for handling such situation. So the MBA curriculum has been desired to provide to the future managers ample practical exposure to the business world.

The summer training is essential for the fulfillment of MBA curriculum; it provides an opportunity to the student to understand the industry with special emphasis on the development of skills in analyzing interpreting practical problems through applications of management.

The whole study has been divided into various parts:

The First Chapter includes the introduction about derivatives and history of kotak securities ltd. Its award and recognitions and its business in online trading.

The Second chapter includes the objectives, significance, and research methodology and data collection.

The Third chapter has reported facts and information gathered by student in the course of study of topic.

The Fourth chapter is about online trading and the software KEAT used by the organization.

The Fifth chapter is about SWOT analysis, which can help the organization to solidify its position in the market.

The Sixth chapter includes the Suggestions and Recommendations for the further development and pointing out the weak points so that changes can be made.

Lastly, there is Bibliography of the books, which was used by the researcher.



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A derivative is a financial instrument whose value depends on the values of other underlying variables. As the name suggests it derives its value from an underlying asset. A feature common to all underlying assets is that they carry the risk of change in value. For ex-a derivative may be created for a share, or any material object. The most common underlying assets include stocks, bonds, commodities etc.


The Kotak Mahindra Group

Kotak Mahindra is one of India's leading banking and financial services organizations, offering a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporate sector.

The group has a net worth of over Rs. 100.6 billion and has a distribution network of branches, franchisees, representative offices and satellite offices across cities and towns in India, and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore servicing around 8 million customer accounts. The group specializes in offering top class financial services, catering to every segment of the industry. The various companies include : Kotak Mahindra Bank Ltd

Kotak Mahindra Old Mutual Life Insurance Ltd Kotak Securities Ltd Kotak Mahindra Capital Company (KMCC) Kotak Mahindra Prime Ltd (KMPL) Kotak International Business Kotak Mahindra Asset Management Company Ltd (KMAMC) Kotak Private Equity Group (KPEG) Kotak Realty Fund

Kotak Mahindra Bank Ltd

Kotak Mahindra Bank Ltd is a one stop shop for all banking needs. The bank offers personal finance solutions of every kind from savings accounts to credit cards, distribution of mutual funds to life insurance products. Kotak Mahindra Bank offers transaction banking, operates lending verticals, manages IPOs and provides working capital loans. Kotak has one of the largest and most respected Wealth Management teams in India, providing the widest range of solutions to high net worth individuals, entrepreneurs, business families and employed professionals.

Kotak Mahindra Old Mutual Life Insurance Ltd

Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. A Company that combines its international strengths and local advantages to offer its customers a wide range of innovative life insurance products, helping them take important financial decisions at every stage in life and stay financially independent. The company covers over 3 million lives and is one of the fastest growing insurance companies in India.

Kotak Securities Ltd

Kotak Securities is one of the largest broking houses in India with a wide geographical reach. Kotak Securities operations include stock broking and distribution of various financial products including private and secondary placement of debt, equity and mutual funds. Kotak Securities operate in five main areas of business: Stock Broking (retail and institutional) Depository Services Portfolio Management Services Distribution of Mutual Funds Distribution of Kotak Mahindra Old Mutual Life Insurance Ltd products For more information, please visit the Kotak Securities


Kotak Mahindra Capital Company (KMCC)

Kotak Investment Banking (KMCC) is a full-service investment bank in India offering a wide suite of capital market and advisory solutions to leading domestic and multinational corporations, banks, financial institutions and government companies. Our services encompass Equity & Debt Capital Markets, M&A Advisory, Private Equity Advisory, Restructuring and Recapitalization services, Structured Finance services and Infrastructure Advisory & Fund Mobilization. For more information, please visit the Kotak Investment Banking


Kotak Mahindra Prime Ltd (KMPL)

Kotak Mahindra Prime Ltd is among India's largest dedicated passenger vehicle finance companies. KMPL offers loans for the entire range of passenger cars, multi-utility vehicles and pre-owned cars. Also on offer are inventory funding and infrastructure funding to car dealers with strategic arrangements via various car manufacturers in India as their preferred financier. For more information, please visit the KMPL website

Kotak International Business






providing a range of services to overseas customers seeking to invest in India. For institutions and high net worth individuals outside India, Kotak International Business offers asset management through a range of offshore funds with specific advisory and discretionary investment management services. For more information, please visit the Kotak Mahindra International Business

Kotak Mahindra Asset Management Company Ltd (KMAMC)

Kotak Mahindra Asset Management Company offers a complete bouquet of asset management products and services that are designed to suit the diverse risk return profiles of each and every type of investor. KMAMC and Kotak Mahindra Bank are the sponsors of Kotak Mahindra Pension Fund Ltd, which has been appointed as one of six fund managers to manage pension funds under the New Pension Scheme (NPS). For more information, please visit the KMAMC


Kotak Private Equity Group (KPEG)

Kotak Private Equity Group helps nurture emerging businesses and mid-size enterprises to evolve into tomorrow's industry leaders. With a proven track record of helping build companies, KPEG also offers expertise with a combination of equity capital, strategic support and value added services. What differentiates KPEG is not merely funding companies, but also having a close involvement in their growth as board members, advisors, strategists and fund-raisers.










Kotak Realty Fund

Kotak Realty Fund deals with equity investments covering sectors such as hotels, IT parks, residential townships, shopping centres, industrial real estate, health care, retail, education and property management. The investment focus here is on development projects and enterprise level investments, both in real estate intensive businesses. For more information, please visit the Kotak Realty Fund


History of Kotak Mahindra Group

The Kotak Mahindra group was born in 1985 as kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak and company. Industrialists Harish Mahindra and Mahindra took a stake in 1986, and thats when the company changed its name to Kotak Mahindra Finance Limited. It has been a steady and confident journey leading to growth and success. The milestones of the group growth story are listed below year wise:


Kotak Mahindra Finance Ltd started the activity of Bill Discounting



Kotak Mahindra Finance Ltd entered the Lease and Hire Purchase market


The Auto Finance division was started


The Investment Banking Division was started. Took over FICOM, one of India's largest financial retail marketing networks


Entered the Funds Syndication sector


Brokerage and Distribution businesses incorporated into a separate company - Securities. Investment banking division incorporated into a separate company - Kotak Mahindra Capital Company


The Auto Finance Business is hived off into a separate company - Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Group's entry into information distribution.


Entered the mutual fund market with the launch of Kotak Mahindra Asset Management Company.


Kotak Mahindra tied up with Old Mutual plc. For the Life Insurance business. Kotak Securities launched its on-line broking site. Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund.


Matrix sold to Friday Corporation. Launched Insurance Services. Kotak Securities Ltd. was incorporated



Kotak Mahindra Finance Ltd. converted into a commercial bank - the first Indian company to do so.


Launched India Growth Fund, a private equity fund.


Kotak Group realigned joint venture in Ford Credit; their stake in Kotak Mahindra Prime was bought out (formerly known as Kotak Mahindra Primus Ltd) and Kotak groups stake in Ford credit Kotak Mahindra was sold. Launched a real estate fund.


Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak Securities.


Launched a Pension Fund under the New Pension System.

Kotak Mahindra Bank Ltd. opened a representative office in Dubai 2009 Entered Ahmadabad Commodity Exchange as anchor investor. Ahmadabad Derivatives and Commodities Exchange, a Kotak anchored enterprise, became operational as a national commodity exchange.



Originally established in 1994, Kotak Securities is a subsidiary of Kotak


Mahindra Bank, which services more than 7.4 lakh customers. The firm has a wide network of more than 1400 branches, franchisees representative offices, and satellite offices across 448 cities in India and offices in New York, London, Dubai, Mauritius and Singapore.

We process more than 400000 trades a day which is much higher than some of the renowned international brokers.

The company is a corporate member of both The Bombay Stock Exchange (BSE) and The National Stock Exchange of India (NSE). Our operations include stock broking services for trading in stock markets through branches & internet and distribution of various financial products including investments in IPOs, Mutual Funds and Currency Derivatives. Currently, Kotak Securities is one of the largest broking houses in India with substantial geographical reach to Asia Pacific, Europe, Middle East and America. Kotak Securities Limited has Rs. 1,202 crore of Assets Under Management (AUM) as of 31st Dec, 2011. Innovators: We have been the pioneers in providing many products and services which have now become industry standards for stock broking in India. Some of them include:

Mobile stock trading application to keep track of your investments even on the go

Facility of Margin Finance to the customers for online stock trading


Investing in IPOs and Mutual Funds on the phone

SMS alerts before execution of depository transactions

Auto Invest - A systematic investing plan in Equities and Mutual funds

Provision of margin against securities automatically against shares in your Demat account

Research Expertise: We specialize in Fundamental and Technical analysis backed by a team of highly trained and qualified individuals.

Our full-fledged research division is involved in Macro Economic studies, Sectorial research and Company Specific Equity Research which publishes indepth stock market analysis. This is combined with a strong and well networked sales force which helps deliver current and up to date market information and news.

We are also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). By being a stock broker and depositary participant, we provide dual benefit in our services wherein the investors can avail our stock broking services for executing the transactions and the depository services for settling them.

Our Portfolio Management Service comes as an answer to those who would like to grow exponentially on the crest of the stock market, with the backing of an expert.

Board of Directors of Kotak Securities Ltd :


Chairman: Managing Director: Directors:

Mr. Uday Kotak. Mr. Narayan S.A. Mr. C. Jayaram Mrs. Falguni Nayar. Mr. Vikram Sud.

Executive Director & Chief operating Officer: Mr. D. Kannan


Bank Life Insurance Mutual Fund Car Finance Securities Institutional Equities Investment Banking Kotak Mahindra International Kotak Private Equity Kotak Realty Fund


Awards Best Broker in India by Finance Asia for 2010 & 2009


UTI MF - CNBC TV18 Financial Advisor Awards - Best Performing Equity Broker (National) for the year 2009 Best Brokerage Firm in India by Asia money in 2009, 2008, 2007 & 2006 Best Performing Equity Broker in India - CNBC Financial Advisor Awards 2008 Avaya Customer Responsiveness Awards (2007 & 2006) in Financial Services Sector The Leading Equity House in India in Thomson Extel Surveys Awards for the year 2007 Euro money Award (2007 & 2006) - Best Provider of Portfolio Management: Equities Euro money Award (2005)-Best Equities House In India Finance Asia Award (2005)-Best Broker In India Finance Asia Award (2004)- India's best Equity House

We specialize in Fundamental and Technical analysis backed by a team of highly trained and qualified individuals.

Our full-fledged research division is involved in Macro Economic studies, Sectorial research and Company Specific Equity Research which publishes in-depth stock market analysis. This is combined with a strong and well networked sales force which helps deliver current and up to date market information and news.

We are also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). By being a stock broker and depositary participant, we provide dual benefit in our services wherein the investors can avail our stock broking services for

executing the transactions and the depository services for settling them.

Our Portfolio Management Service comes as an answer to those who would like to grow exponentially on the crest of the stock market, with the backing of an expert.


The title of the study undertaken by the researcher is operation and services offered by Kotak Securities Ltd. and the procedure involved in online equity trading with more emphasis on customer preference. The title given to the researcher found to be very interesting and learning in nature. Although researcher faced various problem seeking information from various source due to the competition of various bank, but due to co-operation from various friends, colleagues and specially the staff of Kotak Securities Ltd. she had completed the report.


To help the researcher in knowing out the various kinds of services provided by Kotak group. To study the different products of Kotak Securities Ltd. To maintain the database regarding various. To give an in depth knowledge about security, Derivatives; future and option, capital market; primary and secondary, NSE and BSE. To study how to determine various Pricing Strategies involved in online

trading. To study the software KEAT used by the company for trading.


Everyone put his or her time, money and efforts because to have some significance. My studies have some significance to:

The organization
As organization has got valuable data regarding customer preference and market share of Kotak Securities Ltd. in finance industry. Now the Organization can some significant actions in the direction of customer satisfaction so that the customer can avail more benefits and the organization can get good customer and more business.

The Student
It also has signification to me that I got the precious knowledge about various operations of different department, policies and data regarding various schemes provided by the Kotak Securities Ltd. It will help me in my future for the practical application in real life.

Research Methodology is way to systematically solve the research problem. It may be understood as a science of studying how researcher is done

scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them.

Entire data has been collected and calculated up to the accurate extent is from primary as well as secondary sources i.e. no previous data was available on the basis of which calculation for graphical presentation is done. As it was assured to the respondents that their response would be kept confidential so they were very free and frank while giving their response. It was descriptive research. The researcher collected data from personal interviewed with official of different banks, by filling questionnaires, surfing on Internet, articles published in magazines, literature available with Kotak Securities Ltd.


To make the report more authentic and valid, the collection of data should be through reliable sources and the approach is very important. For the purpose of his report, the data and information were collected in the following manner: Direct contact with the organization:The organization was visited daily to collect the information about their services and products offered. Their pamphlets were obtained and studied. Websites and search Engines :The internet, being the largest source of information and knowledge proved to be biggest help in data collection. The website of the Kotak Securities Ltd. gave the information regarding the industry in general. Books Available :The data was also collected from the book with us and the brochures also

proved very useful. The data so collected was then sorted and classified to make it suitable for analysis. Several questions proved to be reluctant and were dropped in final analysis. Conclusions were drawn on the basis of the majority opinion. Some points were the conclusions were ambiguous were also removed from analysis.









SEBI Introduction

In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government of India through an executive resolution, and was subsequently upgraded as a fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government Control, statutory and autonomous regulatory board with defined responsibilities, to cover both development & regulation of the market, and independent powers have been set up. Paradoxically this is a positive outcome of the Securities Scam of 1990-91. The basic objectives of the Board were identified as:

to protect the interests of investors in securities; to promote the development of Securities Market; to regulate the securities market and for matters connected therewith or incidental thereto.

Since its inception SEBI has been working targeting the securities and is

attending to the fulfilment of its objectives with commendable zeal and dexterity. The improvements in the securities markets like capitalization requirements, margining, establishment of clearing corporations etc. reduced the risk of credit and also reduced the market. SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and subbrokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws, risk identification and risk management systems for Clearing houses of stock exchanges, surveillance system etc. which has made dealing in securities both safe and transparent to the end investor. Another significant event is the approval of trading in stock indices (like S&P CNX Nifty & Sensex) in2000. A market Index is a convenient and effective product because of the following reasons:

It acts as a barometer for market behaviour; It is used to benchmark portfolio performance; It is used in derivative instruments like index futures and index options; It can be used for passive fund management as in case of Index Funds.

Two broad approaches of SEBI is to integrate the securities market at the national level, and also to diversify the trading products, so that there is an increase in number of traders including banks, financial institutions, insurance companies, mutual funds, primary dealers etc. to transact through the Exchanges. In this context the introduction of derivatives trading through Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark.SEBI appointed the L. C. Gupta Committee


in 1998 to recommend the regulatory framework for derivatives trading and suggest bye-laws for Regulation and Control of Trading and Settlement of Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998 accepted the recommendations of the committee and approved the phased introduction of derivatives trading in India beginning with Stock Index Futures. The Board also approved the "Suggestive Bye-laws" as recommended by the Dr LC Gupta Committee for Regulation and Control of Trading and Settlement of Derivatives Contracts.

SEBI then appointed the J. R. Verma Committee to recommend Risk Containment Measures (RCM) in the Indian Stock Index Futures Market. The report was submitted in November 1998.However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to include derivatives" in the definition of securities to enable SEBI to introduce trading in derivatives. The necessary amendment was then carried out by the Government in 1999. The Securities Laws(Amendment) Bill, 1999 was introduced. In December 1999 the new framework was approved. Derivatives have been accorded the status of `Securities'. The ban imposed on trading in derivatives in1969 under a notification issued by the Central Government was revoked. Thereafter SEBI formulated the necessary regulations/bye-laws and intimated the Stock Exchanges in the year 2000. The derivative trading started in India at NSE in 2000 and BSE started trading in the year 2001.

Introduction of BSE
BSE Limited is the oldest stock exchange in Asia What is now popularly known as the BSE was established as "The Native Share & Stock Brokers' Association" in 1875.


Over the past 135 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient capital raising platform.

Today, BSE is the world's number 1 exchange in the world in terms of the number of listed companies (over 4900). It is the world's 5th most active in terms of number of transactions handled through its electronic trading system. And it is in the top ten of global exchanges in terms of the market capitalization of its listed companies (as of December 31, 2009). The companies listed on BSE command a total market capitalization of USD Trillion 1.28 as of Feb, 2010.

BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification. It is also the first Exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2-2002 certification for its BSE On-Line trading System (BOLT). Presently, we are ISO 27001:2005 certified, which is a ISO version of BS 7799 for Information Security.

The BSE Index, SENSEX, is India's first and most popular Stock Market benchmark index. Exchange traded funds (ETF) on SENSEX, are listed on BSE and in Hong Kong. Futures and options on the index are also traded at BSE.

BSE continues to innovate:

Became the first national exchange to launch its website in Gujarati and Hindi and now Marathi

Purchased of Marketplace Technologies in 2009 to enhance the inhouse technology development capabilities of the BSE and allow faster

time-to-market for new products

Launched a reporting platform for corporate bonds christened the ICDM or Indian Corporate Debt Market

Acquired a 15% stake in United Stock Exchange (USE) to drive the development and growth of the currency and interest rate derivatives markets

Launched 'BSE Star MF' Mutual fund trading platform, which enables exchange members to use its existing infrastructure for transaction in MF schemes.

BSE now offers AMFI Certification for Mutual Fund Advisors through BSE Training Institute (BTI)

Co-location facilities for Algorithmic trading BSE also successfully launched the BSE IPO index and PSU website BSE revamped its website with wide range of new features like 'Live streaming quotes for SENSEX companies', 'Advanced Stock Reach', 'SENSEX View', 'Market Galaxy', and 'Members'


With its tradition of serving the community, BSE has been undertaking Corporate Social Responsibility (CSR) initiatives with a focus on Education, Health and Environment. BSE has been awarded by the World Council of Corporate Governance the Golden Peacock Global CSR Award for its initiatives in Corporate Social Responsibility (CSR).

Other Awards:

The Annual Reports and Accounts of BSE for the year ended March 31, 2006 and March 31, 2007 have been awarded the ICAI awards for excellence in financial reporting.

The Human Resource Management at BSE has won the Asia - Pacific HRM awards for its efforts in employer branding through talent management at work, health management at work and excellence in HR through technology

Drawing from its rich past and its equally robust performance in the recent

times, BSE will continue to remain an icon in the Indian capital market.

Introduction of NSE
The National Stock Exchange (NSE) is India's leading stock exchange covering various cities and towns across the country. NSE was set up by leading institutions to provide a modern, fully automated screen-based trading system with national reach. The Exchange has brought about unparalleled transparency, speed & efficiency, safety and market integrity. It has set up facilities that serve as a model for the securities industry in terms of systems, practices and procedures.

NSE has played a catalytic role in reforming the Indian securities market in terms of microstructure, market practices and trading volumes. The market today uses state-of-art information technology to provide an efficient and transparent trading, clearing and settlement mechanism, and has witnessed several innovations in products & services viz. demutualisation of stock exchange governance, screen based trading, compression of settlement cycles, dematerialisation and electronic transfer of securities, securities lending and borrowing, professionalisation of trading members, fine-tuned risk management systems, emergence of clearing corporations to assume counterparty risks, market of debt and derivative instruments and intensive use of information technology.

Getting Familiar with Market Related Concepts

Once you enter the Stock market, you will frequently come across terms like Market Capitalization, Small-Cap Stocks, Mid-Cap Stocks and Large-Cap Stocks. In this section you will get an understanding of what these terms mean in the context of stock markets.

Let us first understand MARKET CAPITALIZATION


A: "Cap" is short for capitalization, the market value of a stock, indicating the size of the stock available.

Calculating a stock's capitalization Market Capitalization = Market Price of the stock x The number of the stock's outstanding* shares

*Outstanding means the shares held by the public

For example, if Stock A has a Current Market Price of Rs 20 per share, and there are 1,00,000 shares in the hands of public investors, then Stock A has a capitalization of 20,00,000.

The company's capitalization is an effective parameter to group corporate stocks.

In the US, mid-cap shares are those stocks that have a market capitalization ranging from Rs 9,000 crore to Rs 45,000 crore. In India, these shares would be classified as large-cap shares. Thus, classification of shares into large-cap, mid-cap, small-cap is made on the basis of the relative size of the market in that particular country. The total market capitalization of US markets is $15 trillion. In India, the market capitalization of listed companies is around $600bn.


A: The stocks of small companies that have the potential to grow rapidly are classified as small-cap stocks. These stocks are the best option for an investor who wishes to generate significant gains in the long run; as long he does not require current dividends and can withstand price volatility. Generally companies that have a market Capitalization in the range of up to 250 Corores are small cap stocks As many of these companies are relatively new, it is difficult to predict how they will perform in the market. Being small enterprises, growth spurts dramatically affect their values and revenues, sending prices soaring.

On the other hand, the stocks of these companies tend to be volatile and may decline dramatically.

Most Initial Public Offerings are for small-cap companies, although these days large companies do tend to source the capital markets for expansion plans. Aggressive mutual funds are also enthusiastic about adding small-cap stocks in their portfolios. Because they have the advantage of being highly growth oriented, small-cap stocks can forego paying dividends to investors, which enables the profits earned to be reinvested for future growth.


A: Mid-cap stocks are typically stocks of medium-sized companies. These are stocks of well-known companies, recognized as seasoned players in the market. They offer you the twin advantages of acquiring stocks with good growth potential as well as the stability of a larger company. Generally companies that have a market Capitalization in the range of 250-4000 crores are mid cap stocks

Mid-cap stocks also include baby blue chips; companies that show steady growth backed by a good track record. They are like blue-chip stocks (which are large-cap stocks) but lack their size. These stocks tend to grow well over the long term.


A: Stocks of the largest companies (many being blue chip firms) in the market such as Tata, Reliance, ICICI are classified as large-cap stocks. Being established enterprises, they have at their disposal large reserves of cash to exploit new business opportunities.

The sheer volume of large-cap stocks does not let them grow as rapidly as smaller capitalized companies and the smaller stocks tend to outperform them over time. Investors, however gain the advantages of reaping relatively higher dividends compared to small- and mid-cap stocks while also ensuring the long-term preservation of their capital.

Futures Trading

What are Derivatives? A: A derivative is a financial instrument whose value depends on the values of other underlying variables. As the name suggests it derives its value from an underlying asset. For Ex-a derivative, may be created for a share, or any


material object. The most common underlying assets include stocks, bonds, commodities etc.

Let us try and understand a Derivatives contract with an example:

A: Anil buys a futures contract in the scrip "Satyam Computers". He will make a profit of Rs.500 if the price of Satyam Computers rises by Rs 500. If the price remains unchanged Anil will receive nothing. If the stock price of Satyam Computers falls by Rs 800 he will lose Rs 800.

As we can see, the above contract depends upon the price of the Satyam Computers scrip, which is the underlying security. Similarly, futures trading can be done on the indices also. Nifty futures is a very commonly traded derivatives contract in the stock markets. The underlying security in the case of a Nifty Futures contract would be the Index-Nifty.

What are the different types of Derivatives?

A: Derivatives are basically classified into the following:




What are Futures?


A: A futures contract is a type of derivative instrument, or financial contract where two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price.

The example stated below will simplify the concept of futures trading:


Ravi wants to buy a Laptop, which costs Rs 50,000 but owing to cash shortage at the moment, he decides to buy it at a later period say 2 months from today.However,he feels that after 2 months the prices of Lap tops may increase due to increase in input/Manufacturing costs .To be on the safer side, Ravi enters into a contract with the Laptop Manufacturer stating that 2 months from now he will buy the Laptop for Rs 50,000. In other words he is being cautious and agrees to buy the Laptop at today's price 2 months from now. The forward contract thus entered into will be settled at maturity. The manufacturer will deliver the asset to Ravi at the end of two months and Ravi in turn will pay cash delivery.

Thus a forward contract is the simplest mode of a derivative transaction. It is an agreement to buy or sell a specific quantity of an asset at a certain future time for a specified price. No cash is exchanged when the contract is entered into.

What are Index Futures?

A: As Stated above, Futures are derivatives where two parties agree to


transact a set of financial instruments or physical commodities for future delivery at a particular price. Index futures are futures contracts where the underlying is a stock index (Nifty or Sensex) and helps a trader to take a view on the market as a whole.

What is meant by Lot size?

A: Lot size refers to the quantity in which an investor in the markets can trade in a derivative of a particular scrip. For Ex-Nifty Futures have a lot size of 100 or multiples of 100.Hence if a person were to buy 1 lot of Nifty Futures , the value would be 100*Nifty Index Value at that point of time.

Similarly lots of other scrips such as Infosys, reliance etc can be bought and each may have a different lot size. NSE has fixed the minimum value as two lakhs for an Futures and Options contract. Lot sizes are fixed accordingly which will be the minimum shares on which a trader can hold positions.

What is meant by expiry period in Futures Trading?

A: Each contract entered into has an expiry period. This refers to the period within which the futures contract must be fulfilled. Futures contracts may have durations of 1 month,2 months or at the most 3 months. Each contract expires on the last Thursday of the expiry month and simultaneously a new contract is introduced for trading after expiry of a contract.

What are the uses of Derivatives? What are the various derivative strategies that I can use?

A: Derivatives have a multitude of uses namely:




Chapter 1:OPTIONS What are options?

A: Before you begin options trading it is critical to have a clear idea of what you hope to accomplish. Only then will you be able to narrow down on an options trading strategy. Let us first understand the concept of options.

An option is part of a class of securities called derivatives.

The concept of options can be explained with this example. For instance, when you are planning to buy some property you might have placed a nonrefundable deposit to hold it for a short time while you evaluate other options. That is an example of a type of option.

Similarly, you have probably heard about Bollywood buying an option on a novel. In 'optioning the novel,' the director has bought the right to make the novel into a movie before a specified date. In both cases, with the house and

the script, somebody put down some money for the right to buy a product at a specific price before a specific date.

Buying a stock option is quite similar. Options are contracts that give the holder the right to buy or sell a fixed amount of a certain stock at a specified price within a specified time. A put option gives the holder the right to sell the security, a call option gives the right to buy the security. However, this type of contract gives the holder the right, but not the obligation to trade stock at a specific price before a specific date. Several individual investors find options useful tools because they can be used either as:

A) A type of leverage or

B) A type of insurance.

Trading in options lets you benefit from a change in the price of the share without having to pay the full price of the share. They provide you with limited control over the shares of a stock with substantially less capital than would be required to buy the shares outright.

When used as insurance, options can partially protect you from the specific security's price fluctuations by granting you the right to buy or sell shares at a fixed price for a limited amount of time.

Options are inherently risky investment vehicles and are suitable only for experienced and knowledgeable investors who are prepared to closely monitor market conditions and are financially prepared to assume potentially substantial losses.


What are the different types of Options? How can Options be used as a strategic measure to make profits/reduce losses?

A: Options may be classified into the following types:

a)Call Option b)Put Option As mentioned before, there are two types of options, calls and puts. A call option gives the holder the right to buy the underlying stock at the strike price anytime before the expiration date. Generally Call options increase in value as the value of the underlying instrument increases.

By contrast, the put option gives the holder the right to sell shares of the underlying stock at the strike price on or before the expiry date. The put option gains in value as the value of the underlying instrument decreases. A put option is one where one can insure a stock against subsequent price fall. If the value of your stocks goes down, you can exercise your put option and sell it at the price level decided upon earlier. If in case the stock price moves higher, all you lose is just the premium amount that was paid.

Note that in newspaper and online quotes you will see calls abbreviated as C and puts abbreviated as P.

The examples stated below will explain the use of Put options clearly:

Case 1:

Rajesh purchases 1 lot of Infosys Technologies MAY 3000 Put and pays a premium of 250 This contract allows Rajesh to sell 100 shares of Infosys at Rs 3000 per share at any time between the current date and the end of May.Inorder to avail this privilege, all Rajesh has to do is pay a premium of Rs 25,000 (Rs 250 a share for 100 shares).

The buyer of a put has purchased a right to sell. The owner of a put option has the right to sell. Case 2:

If you are of the opinion that a particular stock say "Ray Technologies" is currently overpriced in the month of February and hence expect that there will be price corrections in the future. However you don't want to take a chance , just in case the prices rise. So here your best option would be to take a Put option on the stock. Lets assume the quotes for the stock are as under: Spot Rs 1040 May Put at 1050 Rs 10 May Put at 1070 Rs 30

So you purchase 1000 "Ray Technologies" Put at strike price 1070 and Put price of Rs 30/-. You pay Rs 30,000/- as Put premium.

Your position in two different scenarios have been discussed below:

1. May Spot price of Ray Technologies = 1020 2. May Spot price of Ray Technologies = 1080

In the first situation you have the right to sell 1000 "Ray Technologies" shares at Rs 1,070/- the price of which is Rs 1020/-. By exercising the option you earn Rs (1070-1020) = Rs 50 per Put, which amounts to Rs 50,000/-. Your net income in this case is Rs (50000-30000) = Rs 20,000.

In the second price situation, the price is more in the spot market, so you will not sell at a lower price by exercising the Put. You will have to allow the Put option to expire unexercised. In the process you only lose the premium paid which is Rs 30,000.

What is open interest?

A: The total number of option contracts and/or futures contracts that are not closed or delivered on a particular day and hence remain to be exercised, expired or fulfilled through delivery is called open interest.

What are Index Futures?

A: As Stated above, Futures are derivatives where two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price. Index futures are futures contracts where the underlying is a stock Index (Nifty or Sensex) and helps a trader to take a view on the market as a whole.

What is meant by the terms Option Premium, strike price and spot price? A: The price that a person pays for a call option/Put Option is called the Option Premium. It secures the right to buy/sell that particular stock at a

specified price called the strike price. In other words the strike price is the specified price at which the holder of a stock option may purchase the stock. If you decide not to use the option to buy the stock, and you are not obligated to, your only cost is the option premium. Premium of an option = Option's intrinsic value + Options time value The stated price per share for which underlying stock may be purchased (for a call) or sold (for a put) by the option holder upon exercise of the option contract is called the Strike price. Spot Price is the current price at which a particular commodity can be bought or sold at a specified time and place.

What is meant by settlement price?

A: The last price paid for a contract on any trading day. Settlement prices are used to determine open trade equity, margin calls and invoice prices for deliveries.

How does one determine the price of an option? A: A variety of factors determine the price of an option. The behavior of the underlying stock considerably affects the value of an option. Investors have different opinions about how a particular stock will behave in the future and hence may disagree about the value of any given option.

In addition, the value of an option decreases as its expiration date approaches. Thus, its value is also highly dependent on the amount of time left before the option expires. Intrinsic & Time Value An options price is composed of its intrinsic value and time value.

What a particular option contract is worth to a buyer or seller is measured by how likely it is to meet their expectations. In the language of options, that's

determined by whether or not the option is, or is likely to be, in the money or out-of-the-money at expiration. Intrinsic value is how far an option is 'in-themoney.' Thus, the phrase is an adjective used to describe an option with an intrinsic value. A call option is in- the-money if the spot price is above the strike price. A put option is in the money if the spot price is below the strike price.

It is calculated by subtracting the options strike price from the spot price. An out-of-the-money option has an intrinsic value of zero.

For example if XYZ is trading at Rs 58 and the June 55 call is trading at Rs 4, to calculate the intrinsic value subtracts Rs 55 from 58, leaving you with Rs 3 of intrinsic value. The remaining Rs 1 is known as extrinsic or time value.

Time value is the amount over intrinsic value that a buyer pays for the option. While buying time value, an options purchaser assumes that the option will increase in value before it expires. As the option nears expiration, its time value starts decreasing toward zero.

Theoretical Value

Theoretical value is the objective value of an option. It shows how much timevalue is left in an option. The most commonly used formula to calculate the theoretical value of an option is known as the Black-Scholes model.


This model considers the price of the stock, the options strike price, the time remaining before expiration, the volatility of the underlying stock, the stock's dividends and the current interest rate while arriving at the theoretical value of the option.

Although an option may trade for more or less than its theoretical value, the market views the theoretical value as the objective standard of an option's value. This makes the price of all options tilt toward their theoretical value over time.

The Components of Theoretical Value

The volatility of the underlying stock is one of the key factors in determining the value of an option. Often, the options price increases as the volatility of the stock increases. The difficulty in predicting the behavior of a volatile stock permits the option seller to command a higher price for the additional risk.

There are two types of volatility, historical and implied. As the term suggests, historical volatility is a measurement of the stocks movement based on its past behavior.

By contrast, implied volatility is calculated using option prices. It is a measurement of the stocks movement as implied by how the market is currently valuing options.


As an owner of a call option you can always exercise your right to the stock and receive any dividend it might pay.

Interest Rate If you buy an option rather than a stock, you invest less money upfront. Days Until Expiration An option, being a wasted asset; wastes a little as each day lapses. Thus its value is calculated in accordance to the amount of days left in its life. What are swaptions? A: A swaption is an option on an interest rate swap. Swaptions are options contracts, which give you the right to enter into a swap agreement at the option expiration, in return for a one-off premium payment. What is meant by Covered Call, Covered Put, In the Money, Out Of the Money, At the Money? A: In-the-money A call option is in the money if the strike price is less than the market price of the underlying security. A put option is in-the-money if the strike price is greater than the market price of the underlying security. Out of the money A call option is out-of-the-money if the price of the underlying instrument is lower than the exercise/strike price. A put option is out-of-the-money if the price of the underlying instrument is above the exercise/strike price.


At-the-money At the money is a condition in which the strike price of an option is equal to (or nearly equal to) the market price of the underlying security. Covered Call You can take a covered call if you take a long position in an asset combined with a short position in a call option on the same underlying asset. Covered Put The selling of a put option while being short for an equivalent amount in the underlying security.

Online Trading
Basic introduction about online trading Trading tools provided by KEAT Easy usage of the software


Online trading is a service offered on the internet for purchase and sale of equity, derivatives and commodities. In Online trading, you ill access stockbrokers website through your internet enabled PC and place orders through brokers internet-based trading engine. These orders are routed to the concerned Stock or commodity Exchange without manual intervention and execution thereon in a matter of a few seconds.


Trinity Account:

Trinity Account is a unique integrated account that helps you enjoy the benefits of a Online Trading Account, Bank Account,

Demat Account on a single platform for your securities transaction. This account gives you a convenience of fund transfer and

online trading with our multiple logins.

Benefits of Trinity Account: Single application to open three different account i.e. Bank Account, Demat A/c & Online Trading Account.


Get all the three different account with single entity. 2 in 1 Account 3 in 1 ( Trinity ) Account Banks to Link Kotak , Axis , HDFC , Kotak Mahindra Bank Citi, IndusInd, ICICI , SBI Fund transfer Manual transfer done No manual transfer facility Payment Gateway via payment gateway required

Fund transfer through Direct fund transfer payment gateway possible Unlimited transfer

Limits on fund Limited transfer transfer

How to open a Kotak Securities Ltd. Demat account:

Approach your nearest Kotak Securities Ltd. Branch. Fill up the Demat Account Opening Form. If your shares are held in joint names, be sure to open your account in the same order of names. If A, Band C jointly hold 100 shares in the company and have three share certificatesall named as ABC, one DP account will suffice. For different combinations of names, open separate accounts for each combination if the three certificates are held as ABC, BAC and CBA, three accounts are required. There is no limit to the number of accounts you can open. You can even open a multiple-sign Depository Participant - Client Agreement, which each investor must sign at the time of account opening.


You will receive an account number and a DP ID number with each account. Quote both these in all future correspondence with Kotak Securities Ltd. After opening the account, you can hold shares of any number of companies in your account, provided all such companies have entered the depository system.Submit a completely filled up Demat Request Form (DRF) in triplicate for each ISIN along with defaced physical securities. Kotak Securities Ltd. provides you with one blank Dematerialization Request Form (DRF). Additional forms are available at any of the Kotak Securities Ltd. branches offering Demat Services.

Documents Required:

statement etc.).



Delivery - Brokerage applicable both side


< 1lakh


Gateway A/C

1 - 5 lakh


5 - 10 lakh


10 - 20 lakh


20 - 60 lakh




- 2



> 2 crore


Privilege A/C

Intraday brokerages

< 25 lakhs

0.06% both sides

Gateway A/C

25 lakhs - 2 crores

0.05% both sides

2 crores - 5 crores

0.04% both sides


> 5 crores

0.03% both sides

Privilege A/C


Intraday brokerages Settlement

< 2 crores

0.07% both sides

0.09% both sides

Gateway A/C

2 - 5.5 crores

0.045% both sides

0.073% both sides

5.5 - 10 crores

0.036% both sides

0.046% both sides

10 - 25 crores

0.027% both sides

0.046% both sides

Privilege A/C

> 25 crores

0.023% both sides

0.032% both sides

Options - Brokerage applicable both side


Monthly Premium Volume

Minimum Intraday Settlement Brokerage

Minimum Brokerage Per

Brokerage% Brokerage% Per (Intraday)

Lot Lot (Settlement)

Upto 4Lacs






















< 50Lacs 1.15




Here Premium Volume is considered as (Premium x Lot Size x No. of Lots). As per this new structure you will be charged either a fixed minimum brokerage per lot or the new brokerage rate based on the monthly premium value slabs you achieve, whichever is higher. Kindly note that this new brokerage structure for option contracts will be applicable with effect from 23rd February 2007.


Note:1 Even if a client starts with a Gateway/ value trading account, it is possible that he may avail brokerages as low as 0.18%in the cash delivery segment (and 0.03% in the intraday cash square up segment)depending on his trading volumes.Kotak will regularly monitor client accounts on a frequent basis and upgrade accounts to the next higher level so that clients may be entitled to higher benefits . The minimum brokerage that is applicable in Kotak Gateway Account is 4 paise on delivery and 4 paise in the cash segment.

Note:2 Brokerage will be charged based on your account type at the start of the month. Based on the monthly volume your effective slab will be calculated and the brokerage difference will be debited or credited.

Note:3 Service Tax of 12.36 % of brokerage will be charged in addition. The brokerages charged are as per the volumes that are achieved. Based on these volumes a client can be either debited or credited an amount which is as per the volumes he/she may achieve at the end of the month.

Securities Transaction Tax (STT) @ 0.125% of turnover will be charged in addition to the brokerage on all delivery trades

STT @ 0.025% of turnover will be charged in addition to the brokerage on sell leg of all non delivery trades in the cash market

STT @ 0.017% of turnover will be charged in addition to the brokerage on sell leg of all non delivery trades in the derivative market

KEAT Software provides the best Terminal for the investors. With the help of

KEAT investor get profile of any company and see sensex, share prices, nifty and up and downmarket position. KEAT is a dynamic, trading terminal that facilities instant order placement and more. Things you can do with KEAT

View status of orders. Intraday alerts and exchange messages.


A free, easy-to-use web based tool for all our online trading customers, KEAT Pro X is a high speed trading tool that allows you to monitor what is happening in the market at real time speed. KEAT Pro X allows you to check live market rates of scrips on NSE, BSE & NSE Currency. You can create multiple watchlists and simultaneously place orders, view order reports etc.

This platform is powered with many features that make your trading experience faster and easier.


Real time streaming data :


Watch the market at real time with free streaming stock quotes from NSE, BSE & NSE Currency. Available information also has details of Market Lot, Top Gainers/Losers, Indices Update, Top Active Scrips, and Option Calculator.

Charting Tools :

With available charting facility you can study and understand the pattern of the stock of your choice. This gives you the option of viewing different kinds of charts like Area, Candlestick etc.

Live Account Information :

Track your account information live, view placed orders; get trade confirmation; view limits, positions, changing profit and loss etc. You can customize the reports as per your convenience.

Customizable :

KEAT Pro X allows you to create your own personalised view of the Indian share market so you can watch the data you want. You can create multiple watch lists that can have up to 50 scrips in each of them; these watch lists can be set in tabs.

Speed :

KEAT Pro X is a high speed trading platform which provides you real trading and reporting that helps you to take advantage of changing stock prices.

Stock Recommendations :


This share trading software i.e. KEAT Pro X also provides you recommendation on stocks which are researched by our research analysts on real-time basis as and when a call is made by the research analyst.

Watchlists :

It gives more control on your investment decisions by allwing you to create your personalised watchlists for tracking your favourite stocks on real-time basis. This share trading software also allows you to do in-depth research on any stock of your choice .

KEAT Pro X allows you to view NSE, BSE and currency prices all on a single watch list.

Highly Integrated :

KEAT Pro X is a highly integrated platform, this means you can access to different exchanges and instruments like, Equities, Derivatives and Currency Derivatives from this single platform. It also allows each of your created watch lists to be available on Website and Mobile Stock Trader as well and viceversa.


It comes free of charge with you online trading account


Set multiple watch lists Create tab-wise access to watch list View placed order and trade confirmation Select indices/sectors or business groups Trade long contracts Facility to sell from existing stocks Limits, Positions tabs available in the Risk Report View changing profit and loss Fast and convenient User Interface Customizable User Interface View live Market Depth Predefined watch list to create personalised watch list How to Download











on by using your User Id, Password & Security Key/Access Code. Click on the tab Trading Tools and Select KEAT Pro X. Click "Download" button to install it on your machine. Note: The Operating system supported is Windows. Version and Update If KEAT Pro X is installed on your computer, go to Help option and then go to

the link About Us to view the version of KEAT Pro X. You can also check the version on the top header of the main terminal screen.

Auto update: Since Kotak Securities constantly introduces new features in this online trading platform KEAT Pro X, we have provided our customers with an auto update facility in which every new feature will get updated automatically when it is started on the computer.

Strength Weakness Opportunities Threats

Kotak securities ltd is one of the largest players in distribution of IPOsIts brokerage charges are almost half of other Web trade. Highly co-operative and skilled staff. Sales oriented organization. Aggressiveness of sales force in selling products. The company has expertise in managing big business. Effective and wider distribution network. It has a wide network of more than 1400 branches, franchisees representative offices, and satellite offices across 448 cities in India and offices in New York, London, Dubai, Mauritius and Singapore. Process more than 400000 trades a day which is much higher than some of

the renowned international brokers. Product designed for every area of personal. The office hours of the company for the customers are 9am to 6pm. The company enjoys a very high brand loyalty and recall value among its customers . The company has a presence in all metros as well as in the most of the major cities in the country.


No presence in the rural and semi-urban segment. Lack in making follow-ups. Lack of corporate agents. Lack of customer services and promotional activities.

There is continuous growth in this sector. People have started turning towards the organization as they know that facilities are far better than the others. Market is fully vacant to capture because the branch has recently setup its business.

Competition in the sector is increasing in the entry of lots of private giants with the collaboration of foreign giants.

Selling attitude for the company always has to be maintained in order to compete with other companies. Continuous follow up of the clients and customers. As other organizations like Icici web trade, India Info line, etc are there in the city so is a little bit difficult for them to capture the market.


Some of the Suggestions and recommendations for improving the present image as well as the Services of kotak securities Ltd. are as follows:

More Branches:
Some more branches should be opened so it becomes more easy and approachable for the people to do their transaction. The branches should have well trained employees.

Customer awareness:
The people should be updated with the new issues and the schemes started by the organizations to the existing customers. The customers should be informed about the newly issued scrips as well as be given daily basis tips/news for profitable transactions. Regular contact with the customers through telephone can be maintained for smooth running of the business.

A proper feedback system should be designed to take care of the dissatisfied customers and solving their problem as their bad works of mouth publicity can make Kotak Securities Ltd loose its potential as well as existing customers.

Well Trained Customer Care Staff: For satisfactory handling queries to establish more good standards in trading can be done through outstanding performance , courteous services and a high ethical benchmark

Higher Penetration in the Untapped Market:

Approaching all the potential clients, making them aware that various instruments and convincing them.

Newspaper and Agents:

Newspaper and agents are most effective tools for awareness, so Kotak Securities Ltd should use these tools more for advertisement.





1. Are you aware of stock market?





2. Do you deal in share?

(a) Yes



3. Are you aware of Demat account?






4. How long have you been transacting in the stock exchange? (a)Less than 1 year (b)2 year (c) 1 year (d) More than 3 year

5. Do you transfer frequently or occasionally?

(a) Frequently

(b) Occasionally

6. In which securities do you trade frequently?


(b) Bonds (c) Debentures

(d)Future and Options (e) All

7. Do you like to convert your shares electronically?





8. On what basis you have taken your decisions of opening of demat account?

(a) Services

(b) Charges (c) Convenience

9. Are you satisfied with your demat service provider? (a) Yes (b) No


10. What type of problems do you centrally face when you trade in securities? (a) Non transfer of shares (c) Bad transfer of shares (b) Other type of options (d) No Problem

Research Methodology : C.R.Kothari Financial Management: Khan and Jain Investment management : Preeti Singh Annual report, Kotak securities Ltd. Pamphlets and Brochures of Kotak securities Ltd. Organizational Profile of Kotak Securities Ltd.