You are on page 1of 97

ROLE OF RETAIL INVESTORS IN THE CAPITAL MARKET

WITH SPECIAL REFERENCE TO INDIA BULLS, CHENNAI
By
K. SENTHIL KUMAR
Reg. No. 90706631033
Of
MOHAMED SATHAK ENGINEERING COLLEGE
KILAKARAI – 623 806

A Project Report
Submitted to the
FACULTY OF MANAGEMENT SCIENCES

In partial fulfillment of the requirements
For the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
JUNE – 2008

DEPARTMENT OF MANAGEMENT STUDIES
MOHAMED SATHAK ENGINEERING COLLEGE
KILAKARAI – 623 806
TAMIL NADU
Date:

BONAFIDE CERTIFICATE
Certified that this project report titled “ROLE OF
RETAIL INVESTORS IN THE CAPITAL MARKET WITH SPECIAL
REFERENCE TO INDIA BULLS, CHENNAI” is the bonafide work of

K.

SENTHIL KUMAR who carried this project work under my
supervision. Certified further that to the best of any knowledge the work
reported herein does not form part of my other project report or
dissertation on the basis of which a degree or award was conferred on an
earlier occasion to this or any other candidate.

Mr.A.Ahamed Ansari M.A., MBA.,

Head of the Department,
Department of Management Studies,
Mohamed Sathak Engineering College,
Kilakarai –623 806.

Mr. S. Dhinesh Babu, MBA,M.Phil.,
Asst. Professor,
Department of Management Studies,
Mohamed Sathak Engineering College,
Kilakarai –623 806.

i

ABSTRACT
Financial markets are extremely volatile and hence the risk factor is an
important concern for financial agents. To eliminate this risk, the concept of
derivatives comes into the picture. During 2008 month of January to April, stock
market saw a heavy crash, and investors lost heavily because most of these investors
did not hedge their risks by using equity derivatives.
Given the importance of derivatives in an emerging market like India it is not
wonder that share broking firms are investing heavily in building up infrastructure and
mining up cliental base to increase market share. The latest trend in the market shows
retail investors are responding in line with the institutional investors which requires
efficient traders to make them to understand about the F&O strategies. Indian stock
market is also in line with performance of the overseas markets; recent market trend
clearly gives an indication, where proper derivative strategies could have saved
investors from huge losses. Now, as the market is showing a growth trend there is an
ample opportunity to the investors to take proper strategies to play in the market and
adhere to the popular saying BE FEARFUL WHEN OTHERS ARE GREEDY, AND
BE GREEDY WHEN OTHERS ARE FEARFUL i.e. take proper hedging positions
even when the market is in uptrend,

Nowadays traders are aware of these popular strategies but they are not aware
of
Which situations they can apply these derivatives strategies in the market.
Primary data are the responses collected from the retail investors, personnel
from Asset management companies-Financial Institutions (Broking Houses / subbrokers) and also from experts who do financial planning like Tax planning and
investment advises

Relationship Manager without whom this project wouldn’t be a grand success. Next I would like to thank all the clients of India bulls Securities Private Limited who gave their valuable time and their insights on the research topic without which it would be impossible. I got to learn a lot about the retail investors trading and the way they handle their clients and projects. Dhinesh Babu.K .K. Finally I like to thank God whose grace and mercy was with me throughout this project report preparation. SENTHILKUMAR . Assistant Professor for approving this topic and guiding me throughout the project. Foremost I would like to thank my internal guide Mr. Then I would like to thank my external guide Mr. This project also helped me to improve my report making skills and the true understanding of trading practices.M. He helped me at each and every stage of this project.ii ACKNOWLEDGEMENT This project has given me immense insights about the practical aspects of retail investors and its working. S. Rajarajan.

II INDUSTRY PROFILE 7. VI SUGGESTIONS AND RECOMMENDATION . 1. V FINDINGS OF THE STUDY 10. List of Tables IV 4.No CHAPTER TITLE PAGE No.iii TABLE OF CONTENTS Sl.6 Chapter scheme 7. List of Figures V 5.5 Limitations of study 1.2 Objectives of the study 1. I INTRODUCTION 1.4 Research Methodology 1.3 Scope of the study 1. III COMPANY PROFILE 8. Acknowledgement II 3. Abstract I 2. IV DATA ANALYSIS AND INTERPRETATIONS 9.1 Statement of the problem 1.

2 4.16 Exposure 4.No.4 Portfolio size 4.17 4.14 Trading product with respect to returns and risk 4.3 Annual income Trading experience 4.18 Safe sources of funds Regular margin calls 4.1 Respondents’ age 4.15 Sources of funds 4.9 Selection of funds 4.12 Execution per day 4.5 System trading 4.7 Share purchase 4. v .22 Stop loss orders Safe order by SEBI regulation 4.11 Corporate actions 4.24 Hedging positions 4.6 Parameters 4.13 Products in trade 4.23 Broker advice 4.25 Impact of media Page No.10 Share price in portfolio 4.20 Constantly leverage in margin 4.8 Hearing prospects 4.iv LIST OF TABLES Sl.21 4.19 Contract notes issued 4. Title 4.

LIST OF FIGURES S.17 Safe Sources of funds 4.19 Contract notes issued 4.24 Hedging positions 4.3 4.21 Stop loss orders 4.7 4.16 Sources of funds Exposure 4.4 4.15 4.6 4.18 Regular margin calls 4.1 Respondents’ age 4.11 Corporate actions 4.NO.9 4.2 4.8 4.14 Trading product with respect to returns and risk 4.13 Products in trade 4.25 Impact of media CHAPTER I Page No.22 Safe order by SEBI regulation 4. .20 Constantly leverage in margin 4.5 4.12 Execution per day 4.10 Annual income Trading experience Portfolio size System trading Parameters Share purchase Hearing prospects Selection the funds Share price in portfolio 4.23 Broker advice 4. Title 4.

The Indian capital market is undergoing several systematic changes since the economic and financial reforms which started in 1991. which led to a compulsory sale of shares or issuance of fresh stock. who applied for these shares. it still failed to . Multinational companies. Very large institutional investors are able to mitigate their risk through expert management.INTRODUCTION The Indian capital markets are witnessing a longest bull run scaling new highs. The Capital Markets plays a crucial role in the growth of an economy for a developing country like India.  The setting up of Security and Exchange Board (SEBI) in 1992  The setting up of National Stock Exchange in 1984  Introduction of online trading in 1995 and the establishment of the Depositories in 1996 and  Trade guarantee funds and Derivatives trading in the year 2000 Introduction of important acts like the Fraudulent Trade practices Act. There was no free pricing and their formula was very conservative. but still remains to be highly volatile. but the retail investors remain unsecured due to lack of knowledge and information availability. Investors are required to work harder and think differently – aggressive.Some of the important milestones in the history of the capital markets were. were forced to reduce foreign share holding to below a certain percentage. with operations in India. made them more speculative. unconventional stances and healthy practices could yield better benefits to them in a long run. Indian retail investors. Despite of the abovementioned reforms. Prevention of Insider Trading Act and take over code and corporate governance norms were recent developments that made the market more attractive. Retail investors began participating in the stock markets in a small way with the dilution of the FERA in 1978. encountered a real lottery because those were the days when the CCI decided the price at which the shares could be issued. which took place in the Indian capital market.

Hence the investors are needed to be empowered in planning their finance and understanding the markets. Those who participate in secondary markets are only 2 to 3 million.2 Objectives of the study: 1.3 Scope of the study: Primary data will be the responses collected from the retail investors. to bring improvement and better practices. personnel from Asset management companies-Financial Institutions (Broking Houses / sub-brokers) and also to experts who do financial planning like Tax . Investors who hold shares of limited companies and mutual fund units are about 20 to 30 million. thereby spreading the market wisdom. which may lead to prosperity of Indian retail investors. Trading refers to buying and selling of shares in cash and Derivative (Futures and Options) markets. Retail participation in India is very less considering the overall savings of the households. 1. and these investors are also exposed to high risk and tend to loose out their money due to some unhealthy investing and trading practices that lead to their relinquishment from the markets. 1.engross the retail investors in a big level. Therefore this is like to conduct a study on the present investing and trading practices adopted by the Indian retail investors and to suggest suitable recommendations.1 Statement of the problem: To collect and consider the present investing and trading practices adopted by the retail investors and to make suitable recommendations and improvements on the prescribed practices in the market. Investing refers to investments made in Mutual funds and IPO’s.

Secondary data will be data and statistics available through Internet and other relevant books and journals. 1.4 Research Methodology: Primary data would consist of well structured questionnaire administered to retail investors who actively take part in capital markets and separate questionnaires will be administered to Personnel of various AMC”s – Financial institutions (Broking houses/Sub-brokers) and experts who do financial planning like Tax planning and investment advises. the research may not fulfill 20% acceptance. books and journals. 1.planning and investment advises. Sampling Size: Sample size includes 250 responses from retail investors and 50 responses from asset management companies-Financial Institutions (Broking Houses / sub-brokers) and also to experts who do financial planning like Tax planning and investment advises.5 Limitation of the Study 1) The respondents are reluctant to express their views freely and openly. 2) Due to the lack of technical knowledge of respondents. Secondary data will be collected from websites. Responses will be evaluated and proper solutions will be recommended.6 Chapter Scheme . Analysis and interpretation will be made based on collected data. 1. Sampling Scheme: Simple Random Sampling.

Chapter .II Contains Industry profile.V Consists of Findings of the study. Chapter . Methodology and Limitations of the study.III Consists of Company profile. Chapter . Chapter – VI Consists of suggestions and recommendations. Chapter . which states about the promoter of the company and a brief history about the company and product profile of the company. Objectives of the study.This project is summarized into five different chapters.IV Consists of analysis and interpretations of the collected data. CHAPTER-II INDUSTRY PROFILE . Chapter . Statement of the problem.I Consists of an introduction. A copy of the questionnaire is included as appendix at the end of this report.

India has a large and rapidly growing middle class of 300 million people with increasing levels of discretionary income available for consumption and investment purposes. Over this period. This is particularly evident in the non-banking financial services sector. This has given a strong impetus to the development and modernization of the financial services sector. India is the world’s 12th largest economy in dollar terms and the 4th largest in PPP terms.Overview of the Indian Economy: India is a large and growing economy with rapidly expanding financial services sector.66Trillion at Purchasing Power Parity (“PPP”). there has been a considerable broadening and deepening of the Indian financial markets. Existing sectors have been opened to new private players. Foreign portfolio and direct investment inflows have risen significantly since economic liberalization reforms began in FY1991 and have contributed to healthy foreign currency reserves ($103 billion in December 2003) and a moderate current account deficit of about 1% in FY 2003. where innovative products combined with new delivery methods have helped the sector achieve high growth rates. The combined average daily turnover at BSE and NSE for different market segments has increased from approximately Rs. such as brokerage industry. 232. With a GDP of $550 billion and $2. During the last decade. The entry of new players has resulted in a more sophisticated range of financial services being offered to corporate and retail customers which has compelled the existing players to upgrade their product offerings and distribution channels. there has also been a substantial growth in the market for other financial products like insurance.094 million in April 2004. The Indian markets have witnessed introduction of newer financial instruments and products over the years. Indian Financial Sector: History and Development: Post economic liberalization in 1991 the Indian financial services industry has experienced significant growth. The projected growth rate of real GDP is greater than 7% per annum with higher growth in many sectors such as financial services. 4800 million in 1995-96 to approximately Rs. .

These people are willing to use advanced communication tools. screen-based nation-wide trading. Indian Capital Market: The Indian capital markets have witnessed a transformation over the last decade. the capital markets have also witnessed substantial reforms in regulation and supervision. Reforms. dematerialization and electronic transfer of securities. . Key initiatives in recent years include:  Depository and share de-materialization process have enhanced the efficiency of the transaction cycle. volume of trading and its tremendous growth potential. also witnessed setting up of the NCDEX. India has the third largest investor base in the world after the USA and Japan. With over 20 million shareholders. India now finds its place amongst some of the most sophisticated and largest markets of the world. During 2002-03 the NSE and the BSE were ranked third and sixth respectively amongst all exchanges in the world with respect to the number of transactions. The year 2003. including the OTCEI for small and new companies and the NSE. rolling settlement and derivatives trading have greatly improved both the regulatory framework and efficiency of trading and settlement. Over the past few years. particularly the establishment and empowerment of SEBI. The Indian capital market is significant in terms of the degree of development. Over 9. such as computers and telephones.000 companies are listed on Indian stock exchanges. market-determined prices and allocation of resources. an online multi-commodity exchange for trading of various commodities. which was set up as a model exchange to provide nation-wide services to investors. There are 23 recognized stock exchanges in India. and want to take charge of their personal investment decisions.mutual funds etc. The financial services marketplace is experiencing a profound change as thirty million people in the middle class are entering their prime saving and investing years.

 Replacing the flexible. to bring about transparency. but Often exploited. including index futures. Foreign majors have entered the country and announced joint ventures in both life and non-life areas. Some key features of the Indian insurance sector are stated below:  The presence of a host of new players in the sector has resulted in a shift in approach and the launch of innovative products. derivatives and options and futures in select stocks.  Empowering SEBI with powers to impose higher penalties and establish itself as an independent regulator with adequate statutory powers.  NSE. index options. Insurance Sector: With the opening up of the market for private players. which in the recent past has accounted for the largest trading volumes. services and value-added benefits. long settlement cycles with rolling settlement.  IT driven stock exchanges (NSE and BSE) with a national presence (for the benefit of investors across locations) and other initiatives to enhance the quality of financial disclosures by the listed companies. various foreign and Indian private players have targeted the untapped market potential by providing tailor-made products. Major foreign . has a fully automated screen based system that operates in the wholesale debt market segment as well as the capital market segment  Many new instruments have been introduced in the markets.

This has the potential to reach US$ 9 billion in the next five years.  The market’s potential has been estimated to have a premium income of US$ 80 billion with a potential size of over 300 million people. As a result of falling interest rates. marketing and distribution.players include New York Life. sold close to 20 million new policies with a turnover of approximately US$ 5 billion. bank deposits. The General Insurance Corporation (GIC) (which covers the non-life sector) had a total premium income of US$ 2 billion in 2001-02. other traditional investment opportunities are . Standard Life.  There are four public sector and nine private sector insurance companies operating in general/ non-life insurance business with a premium income of over US$ 2. India has a large pool of retail investor base spread throughout the country with a huge pool of untapped surplus funds. the largest life insurer in 2000. Aviva. AIG.58 billion. increasing affordability of credit and rising income levels have led to a growing demand for retail financial products. and the tightening of regulatory systems. AMP and Sun Life among others.  The Insurance Regulatory and Development Authority (IRDA) have played a proactive role as a regulator and a facilitator in the sector’s development. As a result of competition. Allianz. Tokio Marine. Existing low penetration levels. Industry Outlook: Indian financial sector presents a huge retail finance opportunity. the erstwhile state sector companies have become aggressive in terms of product offerings. Lombard General.  The state sector Life Insurance Corporation (LIC). The confidence of small investors has increased with the growing levels of education and financial awareness. Exposure to global practices has made the Indian customer more discerning and demanding.

In future. The financial sector will need to adopt a customer-centric business focus. while maintaining cost-efficiency. markets are now in T+2 regimes for the last year. they are undergoing rapid consolidation spurred primarily due to continuous increase in capital requirements.losing their attraction. Indian investors are getting attracted towards alternate investments such as the equity markets and are looking for newer financial products. competing for the capital necessary to fund growth as well as for customer market share. availability of technology to provide high quality service to a large customer base and increased back-office requirements. From T+5 settlement regime till 2000. it is expected that the players who can offer a complete bouquet of financial products and services will capture the market share. customer sophistication. The financial services industry is undergoing a consolidation with the large number of small players turning into few large players. The sector requires extremely effective distribution systems that are capable of offering flexibility and convenience to the customer. and it will soon be changed to T+1 regime. It will also have to create value for its shareholders as well as its customers. Thus. These changes in regulatory framework have enhanced the capabilities required to stay in the business in terms of capital . Huge opportunities offered in the retail financial services sector are coupled with several challenges. The margin requirements for exposure and mark to market have increased as the regulator and major exchanges enhance the risk management processes and systems in order to be in line with global practices. Moreover the shorter settlement cycle has required stronger back office capabilities thus necessitating heavy capital investments. Consolidation in the Indian Equity Trading Markets: As the Indian capital markets are evolving. There has been a clear shift towards those entities that are able to offer products and services in the most innovative and cost efficient manner. increased regulatory oversight.

with FI/FII business having 15% share. the development of the US markets from 1970s to 1990s. where the market share for the top 5 brokers has gone up from 7% to about 13%. The retail participation is stated to grow more than 25% per annum for the next 10 years. The market shares of the top 5 brokers on NSE has increased from less than 5. India top 5 bulls brokers market. and proprietary trading by brokers & related parties accounting for the remaining 20% share. The market share of the top 10 players on NSE has grown from 10% in 1996-97 to 16.7% in 1996-97 to 29. due to the impact of regulatory changes. introduction of new technologies and increased customer sophistication. This development parallels. where the top 5 brokers. countrywide presence. Dean Witter. The current retail business has a 65% share of total exchange volumes. 50% Volumes done by top brokers Trading Volumes (Rs.4% in 2002-03. These companies’ strengths lie in their strong balance sheets. This consolidation has markedly accelerated in the last 2 years. Crores) Top Brokers 5 10 25 50 100 NSE Total Avg.and infrastructure and have resulted in the smaller players getting driven out of the system. and the share of the top 25 players on NSE has grown from 19. on an accelerated timeline.1% in 2002-03. like Charles Schwab. CHAPTER-III . strong brand awareness and highly trained sales force delivering world-class service levels to the retail investor. Merrill Lynch. 2003. The retail presence in the stock markets has been growing steadily with the advent of dematerialization and the recent acceleration in opening of demats accounts. and Smith Barney rapidly expanded their market share and gained control of close to 50% of retail trading volumes.9 % in 1996-97 to about 13% in the previous quarter ended December 31. Etrade.

Consolidated net worth of the group is around USD 950 million (30th September 2007). Morgan Stanley and Farallon Capital.000 customers with its wide range of financial services and products from securities. Goldman Sachs. Indiabulls Financial Services Ltd is listed on the National Stock Exchange. Indiabulls helps its clients to satisfy their customized financial goals. research & advisory services.330 million (30th September 2007). consumer secured & unsecured credit. derivatives trading. Merrill Lynch. Indiabulls became the first company to bring FDI in Indian Real Estate through a JV with Farallon Capital Management LLC. Indiabulls through its group companies has entered Indian Real Estate business in 2005.50. a respected US based investment firm. The market capitalization of Indiabulls is around USD 3. Some of the large shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds. Indiabulls and its group companies have attracted more than USD 800 million of equity capital in Foreign Direct Investment (FDI) since March 2000. Indiabulls has demonstrated deep understanding and commitment to Indian Real Estate market by winning competitive bids for landmark properties in Mumbai and Delhi Growth Story: Indiabulls has emerged as one of the leading and fastest growing financial company in less than two year. Bombay Stock Exchange and Luxembourg Stock Exchange.COMPANY PROFILE Indiabulls is India’s leading Financial Services and Real Estate Company having over 640 branches all over India. It is currently evaluating several large-scale projects worth several hundred million dollars. Indiabulls serves the financial needs of more than 4. loan against shares and mortgage & housing finance. depositary services. Revenue of the company grew at a CAGR of 159% from FY03 to FY07. Business of the company has grown in leaps and bounds since its inception. since its initial public offering . With around 4000 Relationship Managers.

IPO distribution and Equity Research. Indiabulls came out with its initial public offer (IPO) in September 2004. established India’s one of the first 2000-01 trading platforms with the development of an in house team Indiabulls expands its service offerings to include Equity. Indiabulls won bids for landmark properties in Mumbai. Indiabulls started its consumer finance business. Indiabulls entered the Indian Real Estate market and became the first company to bring FDI in Indian Real Estate. Mutual fund. Company focused on brand building and franchise model. 2004-05 Indiabulls started its consumer finance business. and 2001-03 Wholesale Debt. Indiabulls won bids for landmark properties in Mumbai.330 million (30th September 2007) and consolidated net worth of the group is around USD 950 million. Indiabulls Financial Services Ltd. It has a market capitalization of around 3. Indiabulls came out with its initial public offer (IPO) in September 2004. 2005-06 Indiabulls entered the Indian Real Estate market and became the first company to bring FDI in Indian Real Estate. Indiabulls ventured into Insurance distribution and commodities 2003-04 trading. .in September 2004. F&O.

What differentiates them is the quality . KBD has acquired 35. Board resolves to Amalgamate Indiabulls Credit Services Limited and demerges Indiabulls Securities Limited Wide scope. Indiabulls Financial Services Ltd. all aiming to give information on every aspect of finance. from securities to credit cards. Indiabulls has received an “in principle approval” from Government of India for development of multi product SEZ in the state of Maharashtra.440 million in Indiabulls 2006-07 Financial Services Ltd. The Internet has the advantage of real time and gives you an opportunity to follow the market at every turn. sketchy analysis: THE BOOM in the market and the rush for that hidden pot of gold has led to a mushrooming of financial dotcoms. 6. Farallon Capital has agreed to invest Rs. Has subscribed to new shares and has also acquired a minority shareholding from the Company.Indiabulls entered in a 50/50 joint venture with DLF. Indiabulls ventured into commodity brokerage business. Kenneth Builders & Developers (KBD). is included in the prestigious Morgan Stanley Capital International Index (MSCI).8 acres of land from Delhi Development Authority through a competitive bidding process for rs 450 crore to develop residential apartments. Indiabulls Financial Services Ltd. Everyone wants a share of the pie. and what better way to get it than through the medium that is all the rage. Dev Property Development plc. There are a number of financial web sites to choose from.

Portfolio.and short-term outlooks for the market. where one can find the top funds. The second module relates to equity market investing and contains market reports.com is similar to most other financial web sites. clicking on the company links to the Reuters data fact-sheet on the company's price history. On this real-time ticker. each on a specific investment area -. Indiabulls. the prospectus and analysis were unavailable for certain funds. according to one's specifications. information on board meetings and an IPO corner. and an investor might be inclined to use a web-site dedicated to mutual funds rather than just a module that gives an overview. mails out forms for individual IPO’s. It also offers news reports and newsbreaks. The page provides a fact-sheet on the fund background. in response to requests via e-mail. equity market. a test-search for the top five open-ended and balanced funds resulted in a fact-sheet on the top five funds in that category. background and charts. in an innovative service. The IPO corner.mutual funds. depth of analysis and accuracy of facts. free of cost. Market commentary provides reports on key stocks. Layout and review: The home page of indiabulls. personal finance and trading. The home page features six main modules. research. Analysis of the funds is in itself not extensive. It also has an extensive search facility that works on a keyword model. market statistics. the research module. prospectuses and brief analysis. The third module. In a test search.and quantity of information provided. however. For instance. is well organized and comprises a considerable volume of information on individual companies.com wants to be a gateway to the world of finance. and the long. The mutual fund module provides useful information on individual funds. . as it gives an updated view of the main market indices. The module home-page has an overall fund ranking system. both Indian and selects foreign ones. A real-time ticker (also available on most other sites) lists live quotes of stock exchange scrip’s.

Links are well coordinated and lay out. as there is no detailed analysis on the companies or the industries they operate in. which allows the client to trade phantom shares and try his hand at the stock market without making any investment except your time. information on the company's background. aiming to give as much financial information as possible. An interesting tool. the website is well organized. Finally.000 listed companies. The site's main problem is that it lacks depth in analysis. The client’s portfolio is updated on a real-time basis and the module has a number of tools that can help him to manage and track the shares the owners. which would be more useful.com covers a wide range of areas. While indiabulls. Perhaps the most attractive feature of the site is the Stock Game. It is yet to include mutual fund investments. Other features include a chat room. credit cards and fixed deposits. however. the tax calculator. message board and an area related to technical analysis. helps calculate personal tax liabilities. such as bonus issues and price history. it is missing out on the fine details of analysis. The portfolio module helps one keep track of personal securities portfolio. It is. It is also a good way for an amateur to practice analytical skills without running the risk of losing money.with a database of over 2. The site details company results. immensely useful for the investor who is a keen trader but does not want the hassle of an investment manager or costly portfolio-management software. The research might not. this site is useful only for the amateur investor who is surfing the market but does not plan to . be enough for a seasoned investor. Site idea: On the whole. as there is still no facility for updating them on a real-time basis. including the profit and loss accounts and balance sheets. the personal finance module. ratios and investor issues. and the search facilities are good. which is packed with information on taxation issues. There are more specialized sites for such information. It also gives the company's history and a comparative fact-sheet on firms in its peer group. however. At present.

any of the associates of the group companies. PROHIBITION BY SEBI: The subsidiaries. The site has taken the first few steps by developing a phantom trading site. The site could be far more useful if it builds on the current volume of information. other companies /entities promoted by the Promoters. the Promoters. especially mutual funds and individual companies. 2004. the Directors. passed at Extraordinary General Meeting held on April 12. and companies/entities with which the Directors are associated with as directors or promoters. Therefore. it already has the advantage of a framework within which shares can be traded on-line.make any firm decisions. None of the Directors or in the persons in control of the Promoter companies have been prohibited from accessing the capital markets or restrained from buying/selling/dealing in securities under any order or direction passed by SEBI. This is the only way it can compete with the numerous other financial web sites. The concept of trading shares on-line is still catching on in India. ELIGIBILITY FOR THE ISSUE: The Company is eligible for the Issue in accordance with Clause of the SEBI Guidelines as explained under with eligibility criteria calculated in accordance with financial statements under Indian GAAP . This could be further developed to cater to real trading. GENERAL INFORMATION: AUTHORITY FOR THE ISSUE: The current Issue has been authorized by shareholders vide a special resolution adopted pursuant to Section 81 (1A) of the Companies Act. and provides more analysis on the different areas. have not been prohibited from accessing the capital markets under any order or direction passed by SEBI.

10 million in each of the three preceding full years. obligations.  The Company has a track record of distributable profits in accordance with Section 205 of Companies Act.  The proposed Issue size is not expected to exceed five times the pre-Issue net worth of the Company and incompliant with Clause 2. for at least three of the immediately preceding five years and is compliant with Clause 2.  Although the Company changed its name within the last one year (from Indiabulls Financial Services Private Limited to Indiabulls Financial Services Limited on February 27. mortgages. 2004) more than 50% of the revenue for the preceding full year is earned from the activity suggested by the new name and is compliant with Clause 2. debentures. bonds. net tangible assets and monetary assets derived from the Auditor’s Report included in this Red Herring Prospectus under the section “Financial MAIN OBJECTS OF THE COMPANY: The main objects to be pursued by the Company on its incorporation are: 1.  The Company has a net worth of at least Rs. and is compliant with Clause 2.2. .2.1(a) of the SEBI Guidelines. dividend.2. To hold investments in various step-down subsidiaries for investing.2.1(e) of the SEBI Guidelines The net profit. net worth. 30 million in each of the preceding three full years of which not more than 50% is held in monetary assets and is compliant with Clause 2.1(c) of the SEBI Guidelines. securities of any kind issued or guaranteed by the Company. holding.2.1(b) of the SEBI Guidelines.1(d) of the SEBI Guidelines. The Company has net tangible assets of at least Rs. acquiring. purchasing or procuring equity shares.

To carry on the business of financing. equity or debt instrument research activity instrument indebt and/or equity instruments. investment advisory services. grant advances and loans. receive funds from investors. To receive funds. fund management and activities related to money market operations. deposits and investments from the public. to conduct de-materialization and re-materialization of shares. 7. provide lease and hire purchase services. incidental. funding of mergers and acquisition activities. 8. 3. 6. 5. mutual fund services and to act as brokers of real estate and financial instruments. instruments and hybrid financial instruments and to perform all related. set up depository participant centers at various regions in India and to perform all related. To provide financial consultancy services. to provide investment advisory services on the internet or otherwise. To operate mutual funds. Project financing. conduct advisory services related to banking activities. debts. provide financial consultancy in the area of personal and corporate finance. asset management services. 4. To conduct the business of sale. ancillary and allied services. To carry on the business of portfolio management services. RISK FACTORS: . distribution and transfer of shares. To conduct depository participant services. incidental. ancillary and allied services. to provide consultancy in the area of lease and hire purchase financing.2. custodial services. purchase. leasing and hire purchase. publish books and CD ROMs and information related to the above. financial institutions and corporate bodies. Government agencies.

communication/networking. rapid increases in client demand may strain the ability to enhance the technology and expand the operating capacity. The Business is dependent on relationships formed by the relationship managers with the clients.An investment in equity shares involves a high degree of risk. INTERNAL RISK FACTORS: The business is dependent on systems and operations availability. The client should carefully consider all of the information in this Red Herring Prospectus. Additionally. any events that harm these relationships . financial condition and results of operations could suffer. the business. To the extent. processing and communicating information efficiently. errors or downtime (which could result from a variety of causes. technological failure. The Company and the subsidiaries have installed back-up facilities including hardware systems. including the risks and uncertainties described below. and power failures). in part. securely and without interruptions. linkages with third-party systems. changes to systems. the trading price of the Equity Shares could decline. including changes in client use patterns. the business and operations of the Company and the subsidiaries could be significantly impacted. The Company and the subsidiaries could face business risk due to failures in the control processes or technology systems that could constrain the ability to manage the business. and linkages with third party and software platform at the own offices. and the client may lose all or part of his investment. before making an investment in the Company’s Equity Shares. the experience system interruptions. If any of the following risks actually occur. The Company and subsidiaries are dependent on the technology systems to perform the critical function of gathering. on the ability to make timely enhancements and additions to the technology in anticipation of client demands. The operations are highly dependent on the integrity of the technology systems and the success depends. any breakdowns in the transaction systems could lead to decline in the company’s sales and profits.

there can be no assurance that the Company and the subsidiaries will be able to execute the strategy of increasing the client base in the future as well as effectively service the clients’ requirements. It may need to raise additional capital from time . The business is rapidly growing. Such an event would be detrimental to the business and profits. which we may not be able to procure.97% over FY 2002 to FY 2004 during a severe downturn in overall industry volumes. Indiabulls is rapidly growing and may require further infusion of funds to satisfy the capital needs. The growth is dependent on having a strong balance sheet to support the activities. better cross-selling opportunities. Any future equity offerings by indiabulls may lead to dilution of equity and may affect the market price of its equity shares. The Company and the subsidiaries had 476relationship managers and 32. a trust based business environment and over time.359 clients as of April 30. 2004. any inability to manage this rapid growth could result in disruptions in its business and may result in reduced sales and profits. Any failure on the part to scale the infrastructure and management to meet the challenges of rapid growth could cause disruptions to the business and could be detrimental to the longterm business outlook. The business is dependent on the team of relationship managers who directly manage client relationships. However. the business would suffer materially if a substantial number of relationship managers either become ineffective or leave the organization. while no relationship manager or operating group of relationship managers contributes a meaningful percentage of the business. The revenue grew at a CAGR of 132.including the loss of the company’s relationship managers will lead to decline in the company’s sales and profits. The Company and the subsidiaries encourage dedicated relationship managers to service specific clients since the Company and the subsidiaries believe that this leads to long-term client relationships.

Indiabulls intend to continue competing vigorously . The Company and the subsidiaries are rapidly expanding the business offerings and these additional products might expose the company to new business risks for which it may not have the capability or the systems to manage. and such issuance may not be done at terms and conditions. having wide presence and strong brand name. which are favorable to the then existing investors or indiabulls. If it is unable to manage the business it might impede its competitive position and profitability. additional capital requirements Imposed due to changes in regulatory regime or new guidelines. dependent on business conditions and it may not be able to procure such additional funds due to factors beyond its control. including traditional and online brokerage firms. mutual fund companies and institutional players. As the Company and the subsidiaries enter newer markets. it is likely to face additional competition from those who may be better capitalized.to time. The factors that would require its to raise additional capital could be business growth beyond what the current balance sheet can sustain. Any fresh issue of shares/convertible securities would dilute existing holders. and better management than indiabulls. and have acquired considerable market share. or significant depletion in the existing capital base due to unusual operating losses. have greater retail and brand presence. EXTERNAL RISK FACTORS: Competition: The Company and its subsidiaries face significant competition from companies seeking to attract clients’ financial assets. The strategy to enter into the sale of diversified financial services and products exposes indiabulls to additional risks. have longer operating history. The Company and the subsidiaries have competed successfully in the past with companies that were larger in sales and infrastructure than indiabulls.

In addition. employees or other third parties in the different jurisdictions in which we conduct the business. the NSE. Regional conflicts in South Asia could adversely affect the Indian economy. disrupt the operation and cause its business to suffer. not to have complied with an applicable legal or regulatory requirement. results in a loss of business confidence and adversely affect the business. could adversely affect Indian and worldwide financial markets. BSE. arbitration panel or regulatory authority. and IRDA another state and market regulators in India. Legal and Compliance Risk: Legal and compliance risk refers to the possibility that will be found.to capture more market share and adding more management personnel to manage the growth in an optimal way. . Indiabulls may be subject to lawsuits or arbitration claims by clients. Terrorist attacks and other acts of violence or war. the Company and the subsidiaries are subject to extensive regulation by the SEBI. including those involving India or other countries and other such acts. New laws/rules and changes in any law and application of current laws/rules could affect the manner of operations and profitability. Terrorist attacks and other acts of violence or war involving India and other countries could adversely affect the financial markets. Travel restriction as a result of such attacks or otherwise may have adverse impact on the ability to operate effectively. Increased volatility in the financial markets can have an adverse impact on the economics of India and other countries including economic recession. by a court. results of operations and financial condition. Indiabulls may incur substantial costs related to litigation if we are subject to significant legal action. results of operations and financial condition. NCDEX. RBI. Such acts may also result in a loss of business confidence and have other consequences that could adversely affect the business.

South Asia has from time to time experienced instances of civil unrest and hostilities among neighboring countries. The Government of India has pursued policies of economic liberalization. . including our equity shares and on the market for the services. There is no assurance that these liberalization policies will continue in the future. The performance is linked to the stability of policies and the political situation in India. and specific laws and policies affecting technology companies. A significant change in India’s economic liberalization and deregulation policies could disrupt our business and economic conditions in India. foreign investment. This. could have a material adverse effect on the market for Indian companies. After this Issue. the prices of the Company’s equity shares may be volatile. The role of the central and state governments in the Indian economy affecting producers. or an active trading market for the Company’s equity shares may not develop. The rate of economic liberalization could change. Any political instability could delay the Indian economic reforms and could have an adverse effect on the market for the Equity Shares and on the market for the services. Protests against privatization could slow down the Pace of liberalization and deregulation. currency exchange rates and other matters affecting investment in the securities could change as well. in turn. including relaxing restriction on the private sector. The current Government of India has announced policies and taken initiatives that support the continued economic liberalization policies that had been pursued by the previous government. Such regional tensions could create a greater perception that investments in Indian companies involve a higher degree of risk. Military activity or terrorist attacks in the future could influence the Indian economy by disrupting communications and making travel and transportation more difficult. consumers and regulators has remained significant over the years.

and  Significant development in India’s fiscal and environmental regulations. There has been no public market for the Company’s equity shares till now and the prices of the Company’s equity shares may fluctuate after this Issue. including:  Volatility in the Indian and global securities market  The results of operations and performance  Market for investment in the banking sector  Performance of the Indian Economy  Perceptions about our Company’s future performance or the performance of Indian financial services companies  Performance of the Company’s competitors in the Indian financial services and market perception of investments in the Indian financial services sector. There can be no assurance that an active trading market for the equity shares wills developer be sustained after this Issue.  Significant development in the regulation of financial services market / banking sector  Adverse media reports on the Company or on the Indian financial services industry  Change in the estimates of the Company’s performance or recommendations by financial analysts  Significant development in India’s economic liberalization and deregulation policies.The price of the Company’s equity shares on Indian stock exchanges may fluctuate after this Issue as a result of several factors. or that prices at which the Company’s equity shares are initially offered will correspond to the prices at which the Company’s equity shares will trade in .

The Company’s share price could be volatile and may also decline. including  Stocks.the market subsequent to this Issue. Indiabulls offers services across a broad array of products. with strong banking relationships and credit ratings  Ability to combine people and technology in unique ways . Options and Futures  Depository Services  Commodities  Insurance Products  Mutual Funds  Bonds and Debt Product The Competitive Strengths: It has a distinct set of competitive advantages that make it uniquely capable of winning in the marketplace which are as follows  Diverse Branch Network  Bouquet of financial products and services  Advanced technology team that delivers market leading product innovation  Strong sales and marketing teams with continuous reinvestment and training  Strong cross-selling opportunities  Strong and experienced promoters  Leading product innovation and marketing strategies  Well capitalized player.

Ltd. financial success means consistently achieving superior growth rates and consistent margins. Indiabulls operates through the three subsidiaries– India bulls Securities Limited. as the company is a holding company. Subsequently. India bulls Insurance Advisors Pvt. Annual Results: The consolidated revenues and net profits for FY 2004 were Rs. The liquidity and capital management reflect a growing balance sheet and financials interns of revenues and profits. The expense management is guided by an investment philosophy that continually balances long-term investment with short-term profitability. 194.49 million and Rs. 2004. consolidated revenues and net profits for FY 2003 were rs. the Company has also commenced the activity of providing credit facilities to retail customers. and depositary services. Ltd.26million respectively. with a presence in equity.07million respectively. 2001 the Company was registered as an NBFC under section 45-IA of RBI Act to carry on the business of NBFC. and related financial services. 719.69 million and Rs. not accepting public deposits. access to third party insurance products from Birla Sun life Insurance Company and mutual fund products of various asset management companies. BUSINESS OVERVIEW: They have emerged as a diversified financial services company that offers a wide range of financial products and services under the brand “Indiabulls”. With effect from April 1. On March 30. The Financial Performance: For indiabulls. Strong market presence and increased market share leading to a virtuous cycle of growth and profitability. . 51. debt and derivatives brokerage. 266. the Company has started investing and providing loans to the subsidiary companies engaged in different activities as mentioned in the above diagram. and India bulls Commodities Pvt.

4451. the Company and the subsidiaries are able to cross sell many financial products such as insurance and mutual funds. It has experienced substantial growth at a CAGR of 132.5 million for the FY 2004. people who are not on the rolls of the company’s has invested heavily in building a strong sales team and as on April 30. It is headquartered in New Delhi with a network of 70 offices spread across 55 cities. With the sales and marketing team. . The Company and its subsidiaries target the retail and the institutional segment of the market through direct and indirect channels. The direct channel for business is through the sales employees who operate out of the 70 offices in 55 cities. F&O and Debt market leading to a combined average daily turnover of Rs.The Company and the subsidiaries provide brokerage. 2004 it had over 476 relationship managers in its 70 offices spread all over the country.97% over FY 2002 to FY 2004 in revenues and achieved a substantial market share in the Equity. services and third party financial products and other services through a variety of channels to retail and institutional clients and operate nationally in India. The indirect channel for business is through the network of marketing associates.

The total number of employees grew from 110 as in FY 2002 to 178 as in FY 2003 and to 606 as on April 30. The net profits have increased from Rs.05 million in FY 2003 and to Rs.The consolidated revenues and net profits have grown at a CAGR of 132.97% and 118.61 million in FY 2002 to Rs. It offers the following products and services in the financial markets:  Stocks  Options and Futures25  Depository Services  Commodities  Insurance Products  Mutual Funds  Bonds and Debt Products . 40.719. The Company and the subsidiaries focus on a core client base of individual investors and the marketing associates who serve them. The revenues have grown from Rs.359 clients as on April 30. 193. 51. 266. which makes the business model a low risk model as compared to a business model which may be dependent on very few clients.69 million in FY 2003 and to Rs.54 million in FY 2004. The revenues are largely based on fee/commission income generated through providing securities brokerage & related financial services to individual investors and independent advisors.55 million in FY 2002 to Rs. 2004 spread allover India and it has been augmenting its client base across the country. BUSINESS MODEL: The Company and the subsidiaries have a vast client base of 32.31% respectively over last two years.48 million in FY 2004. 2004. 132.

Internet Trading Server setup: As explained above.871 clients spread all across the country. HDFC Bank. the Internet trading application developed by us is a system comprising a large number of components and interfaces to various entities like the NSE. This application has following features:  Supports for both Cash Market and Derivatives  Common Integrated Risk Management for both segments  A feature rich browser based terminal  Desktop based installable terminal for the highly active trader  Electronic Payment Interface to participating Retail Bank  Indiabulls Equity Research & Analysis  Support for Non-Resident Indian Customers  Multiple Tick by Tick Charts and Technical Analysis  Streaming Quote  Multiple and fully customizable market watches and multiple order books. At the core of the Internet based share trading system is an in-house developed application that interfaces with the NSE and allows users to carry the stock transactions online. This . Depository etc. TECHNOLOGY INFRASTRUCTURE: The Company and the subsidiaries have a high-end technical infrastructure to meet the demands of its growing business.Internet Based Share Trading System: ISL’s Internet Based Share trading system handles over 22.

Most of the larger offices have multiple connectivity to Internet to prevent any downtime in operations. . These leased lines are backed up by ISDN lines and dialup accounts.application has been co-located out of the Data center of Videsh Sanchar Nigam Limited in Mumbai. The decision to co-locate out of a World Class Level 3 data center stems from the fact that this set-up has to have the highest levels of reliability and uptime. All branches have 10/100 Mbps Local Area Networks with structured cabling and switches / hubs from well-known network equipment manufacturers. Each office has dedicated Internet connectivity through which employee’s arable to communicate with head office and customers for all servicing and operational matters. Leased lines have been taken from well-known ISPs. Network setup: The Company and the subsidiaries have more than 400 desktops all over the country being used by the employees at the branches. The Level 3 data centered VSNL provides the following infrastructure in the form of  Raised floors  HVAC temperature control systems  Air-Sense State of the art Aspirating smoke detection  FM 200 based Fire suppression systems  Video camera surveillance systems. Biometric access & sensors  Security breach alarms  Gigabit Local Area Network  On site Power Systems with multiple backup generators feeding a redundant UPS grid to offer the highest levels of reliability.

 Extension of Back office terminals to branches leading to improved customer service. . The wide area network planned shall be a mixed network of leased line. optical fiber and radio links depending upon the needs and infrastructure of each location.Inter Branch Connectivity: The Company and the subsidiaries have plans to implement a Virtual Private Network to connect all the branches in the country. The wide area network thus created shall provide the following immediate benefits  Better inter branch communication leading to better efficiency and reduced costs.  Centralized order entry leading to central risk management and greater control.

CHAPTER IV
DATA ANALYSIS AND INTERPRETATIONS

Data analysis and interpretation is an attempt to organize and summaries data
in order to increase results in such a manner that enables the researcher to relate
critical points, with the study objectives.
The information collected may be illegible, incomplete, and inaccurate to a
certain extent.

Thus collected data is lying scattered in several data collection

formats. The data lying in such a crude form are not ready for analysis. The
researcher must take some measures, to bring the data a term where it can be easily
analyzed. Various steps, which are required for this purpose are editing, coding and
tabulating.
Editing refers to inspecting, correcting and modifying the collected data.
Coding refers to assigning number or other symbol, to each answer or placing them in
categories to prepare data for tabulation.
Tabulating refers to bringing together the similar data into rows and columns
and totaling them in an accurate and nearing to full form.

1. Age
The aim here is to categorize the respondents with respect to age.
Table No.4.1 Age
Sl. No
1
2
3
4

Age

No. of.

Percentage

25 – 35
36 – 45
46 – 55
56 and above

Respondents
120
132
30
18
300

40
44
10
06
100

Total

Source: Survey data
Inference:
It is observed from the above table that 44% of the respondents are in the age
group of 36 to 45. 40% are below 25 to 35 age group and 10% of the respondents are
in the age group 46 to 55. Besides this 6% of the respondents fall in the category of 56
and above.

Figure No.4.1 Age

No 1 2 3 4 Annual income No.4. of. Table No.2 Annual Income Sl. Annual Income It gives annual income of respondents.2. below 1 lakh (18%) and 5 lakhs and above. Percentage Below 1 lakh 1 lakh – 3 lakhs 3 lakhs – 5 lakhs 5 lakhs and above Respondents 54 102 114 30 300 18 34 38 10 100 Total Source: Survey data Inference: It is inferred from the above table that 38% of the respondents’ annual income is between 3 lakhs – 5 lakhs which is followed by 1 lakh – 3 lakhs (34%). .

3 Experience . Table No.2 Annual Income 3.4. Experience This question is asked to know the trading experience of respondents.Figure No.4.

15 years. No 1 2 3 Trading No. Percentage experience < 5 years 5 – 15 years > 15 years Respondents 60 138 102 300 20 36 34 100 Total Source: Survey data Inference: It is understood from the table that most of the respondents (46%) have trading experience of 5 . 34% and 20% of the respondents have the experiences of > 15 years and < 5 years respectively. of. .Sl.

No 1 Annual income No. Portfolio size The table below indicates portfolio size.4. of. which means that combination of various assets in share market invested by respondents.4 Portfolio size Sl. Percentage Less than 1 lakh Respondents 54 18 .3 Experience 4. Table No: 4.Figure No.

less than 1 lakh (18%) and more than 15 lakhs (16%). This is followed by 5 – 15 lakhs (30%).2 3 4 1 – 5 lakhs 5 – 15 lakhs More than 15 lakhs 108 90 48 300 36 30 16 100 Total Source: Survey data Inference: The above table reveals that. . out of 300 Respondents 36% have the portfolio size of 1 – 5 lakhs.

Table No: 4.4 Portfolio size .

5.4. Table No.5 Type of trading Self related as Trader Investor Total System trading involved in Day trading Delivery 184 156 26 124 210 280 Percentage Day trading Delivery 88 56 12 44 100 100 Source: Survey data Inference: It is inferred from the table that majority taken trader which is followed by investor trading. Type of trading This question is asked in order to find out what type of trading the respondents prefer. .

Table No. Parameters .4.5 System trading 6.

Table No.This question is asked to know traders involving based on the parameters.6 Parameters Traders Online Offline Intraday Delivery Total Parameters Safe & Risky Percentage Safe & Risky Reliable 105 78 52 62 63 43 102 34 Reliable 35 26 18 21 26 18 42 14 297 242 100 100 Source: survey data Inference: From the above table. it is understood that most of the respondents says to online trading which accounts to 35%.4. .

Share purchase Delivery .6 Parameters 7.120 105 102 100 78 80 63 60 52 43 62 34 40 20 0 Online Offline Intra day Safe & Reliable Risky Table No.4.

Percentage 1 Share price Respondents 113 38 2 3 movement Sector movement Studying the 98 54 32 18 4 fundamentals Recommendations 35 300 12 100 Total Source: Survey data Inference: It is inferred from the above table that the respondents used to buy share by studying share price movement (38%) which is followed by sector movement (32%.4. studying fundamentals (18%) and recommendations given by others (12%).This question is asked to find out parameters based on which the respondents buy a share.7 share purchase Sl. No Parameters No. Table No. . of.

read the IPO’s form and Red hearing prospectus before applying for an IPO’s by the respondents.7 share purchase 8.4.Table No. Table No.8. Red hearing prospectus It shows that the apply for IPO’s.4. Red hearing prospectus .

No Red hearing No. of. Percentage 1 2 prospectus Yes No Respondents 270 30 300 90 10 100 Total Source: Survey data Inference: From the above table. . it is inferred that most of the respondents (90%) are apply for IPO’s. read the IPO’s form and Red hearing prospectus before applying for an IPO’s.Sl.

9 Selection the funds Items No. Red hearing prospectus 9.4. Respondents Returns Risk Percentage Returns Risk . o. Selection the funds This question is asked to find out which type of funds the respondents want to invest. Table No.Table No.8.4.

.Small cap High 60 High 94 High 24 High 45 Mid cap Low 30 High 124 Low High 36 66 Low High 50 50 Low High 41 31 Large cap Low High Low High 27 51 Low High 25 26 Low High 31 24 Total Low 15 High 247 Low 24 High 211 Low 25 High 100 Low High 28 100 Low Low Low 100 Low 15 63 60 87 100 Source: Survey data Inference: It is evident from the above table that the majorities respondents prefer mid cap funds which is followed by small cap and large cap funds.

4. Share price in portfolio This question is asked to follow the share price in the portfolio.9 Select the funds 10. .Table No.

Table No. it is inferred that most of the respondents (54%) share price in your portfolio is sometime. Percentage portfolio Always Some time Never Respondents 126 162 12 300 42 54 04 100 Total Source: Survey data Inference: From the above table. .10 share price in portfolio Sl. Then 42% and 4% of the respondents were the ratio of share price in your portfolio to always and never respectively. of. No 1 2 3 Share price in the No.4.

Table No. Corporate actions This table shows that follow the corporate actions taken by companies that hold in the portfolio.4.11 Corporate Actions Sl.4. of. No Hold in the No. Percentage .10 share price in portfolio 11.Table No.

. it is inferred that most of the respondents (94%) are corporate actions taken by companies that hold in the portfolio.1 2 portfolio Yes No Respondents 282 18 300 94 06 100 Total Source: Survey data Inference: From the above table.

of. No 1 2 3 4 Execution per day No.4.11 Corporate Actions 12. Percentage <5 5 – 15 15 – 20 > 20 Respondents 42 108 132 18 18 36 44 06 .Table No.12 Execution per day Sl.4. Execution per day It shows that the many trades execution per day Table N0.

300 100 Total Source: Survey data Inference: From the above table. . it is inferred that most of the respondents (44%) trades execute on a day 15 – 20.

13 Products in trade .4. Products in trade It shows that products in trade Table No.12 Execution per day 13.4.Table N0.

No 1 2 3 Product in trade No.Sl. it is inferred that most of the respondents (42%) are products you trade on cash. Percentage Cash Future Options Respondents 126 90 84 300 42 30 28 100 Total Source: Survey data Inference: From the above table. . of.

Trading product with respect to returns and risk It shows that the appropriate with respect to returns and risk desired from trading products.4.Table No. Table No. o.13 Products in trade 14.14 Trading product with respect to returns and risk Items Cash No.4. Respondents Returns Risk High 36 High 121 Percentage Returns Risk High 16 High 49 .

.Future Low High 33 57 Low High 42 65 Low High 61 26 Low High 48 26 Options Low 09 High 125 Low High 21 60 Low High 17 58 Low High 24 25 Total Low 12 High 218 Low 24 High 246 Low 22 High 100 Low High 28 100 Low Low Low 100 Low 54 87 100 Source: Survey data Inference: From the above table. which trading products mostly desired by respondents that analyze result were high returns in options (125) and low returns in cash (33). as well as high risk in cash (121) and low risk in cash (42) respectively.

of. Respondents Percentage .4.Table No.15 Source of funds Sl. No Funds for trading No. Source of funds It shows that the source of funds for trading.14 Trading product with respect to returns and risk 15. Table No.4.

Then 30% and 23% of the ratio of respondents were exposure given by broker and own cash respectively. . respondents were mostly feeling for margin trading (47%) was good. which source of funds for trading involving the share market.1 2 Own ash Exposure given by 3 broker Margin trading 70 90 23 30 140 300 47 100 Total Source: Survey data Inference: It inferred above that the table.

4.4.16 Exposure .Table No. Table No.15 Source of funds 16. Exposure This question is asked to find out trade by taking exposure from broker.

but find out the answer yes (56%) in taking extra exposure from broker. . No 1 2 Exposure from broker No. Percentage Yes No Respondents 167 133 300 56 44 100 Total Source: Survey data Inference: This table was establish slightly different within yes and no (167&133) answered by respondents.Sl. of.

4.16 Exposure 17.Table No. Safe source of funds This question is asked to follow the based on safe source of funds .

Percentage 1 2 Own ash Exposure given by Respondents 102 43 34 14 3 broker Margin trading 155 300 52 100 Total Source: Survey data Inference: Most of the respondents are feeling for their funds safety in margin trading (52%).4. . Then 34% and 14% of the respondents were the ratio of safe source of funds in own cash and exposure given by broker respectively. of.17 Safe source of funds Sl. No Safe source of funds No.Table No.

17 Safe source of funds 18. Margin calls regularly This question is asked to find out get margin calls regularly from your broker whenever you are in margin.4. .Table No.

it is inferred that most of the respondents (92%) are get margin calls regularly from your broker whenever you are in margin. Percentage Yes No Respondents 276 24 300 92 08 100 Total Source: Survey data Inference: From the above table.Table No. .4.18 Margin calls regularly Sl. No 1 2 Margin calls regularly No. of.

18 Margin calls regularly 19.4. Contract notes issued This question is asked to verify the trades with contract notes issued by brokers.Table No. .

No Contract notes issued No. Percentage 1 2 Total Yes No Respondents 288 12 300 96 04 100 Source: survey data Inference: From the above table. it is inferred that most of the respondents (96%) are Trades with contract notes issued by brokers. .19 Contract notes issued Sl.Table No.4. of.

Table No. .4.19 Contract notes issued 20. Constantly leverage in margin This question is asked to know constantly leverage in margin to utilize the market movement.

.20 Constantly leverage in margin Sl. Percentage Always Sometime Respondents 168 132 300 56 44 100 Source: survey data Inference: From the above table. No 1 2 Total Margin to utilize No. most of the respondents (56%) are utilize in margin depend upon market movement.Table No.4. of.

4.Table No.20 Constantly leverage in margin .

21 Stop loss orders Sl.21.4. No Stop loss orders No. Stop loss orders This question is asked to follow stop loss orders while trading. Hugh respondents (70%) are follow stop loss orders while trading. Table No. . of. Percentage 1 2 Total Always Sometime Respondents 210 90 300 70 30 100 Source: survey data Inference: From the above table.

4.21 Stop loss orders .Table No.

. Percentage regulations Yes No Respondents 282 18 300 94 06 100 Source: survey data Inference: From the above data. No 1 2 Total Safe guarded by SEBI No. Table No.22 Safe guarded by SEBI regulations Sl. it is obvious that majority of the respondents (94%) are benefited or safe guarded by SEBI regulations. Safe guarded by SEBI regulations This question is asked to feel traders benefited or safe guarded by SEBI regulations.4.22. of.

4.Table No.22 Safe guarded by SEBI regulations .

of. . more number of respondents (62%) is taking broker advice while trading. No Broker advice No.4. Table No. Percentage 1 2 Total Yes No Respondents 186 114 300 62 38 100 Source: survey data Inference: From the above table. Broker advice This question is asked to take broker advice while trading.23.23 Broker advice Sl.

23 Broker advice .Table No.4.

. more number of respondents (90%) is used hedge positions while trading. No 1 2 Total Hedging positions No.24. Percentage Yes No Respondents 270 30 300 90 10 100 Source: survey data Inference: From the above table.4. of.24 Hedging positions Sl. Hedging positions This question is asked to find the hedge positions while trading. Table No.

4.24 Hedging positions 25.Table No. Impact of media .

No 1 2 Total Impact of media No. of. it is obvious that respondents (90%) are media affect your investment decision while trading .This question is asked to know the media affect the investment decision while trading Table No.25 Impact of media Sl.4. Percentage Yes No Respondents 270 30 300 90 10 100 Source: survey data Inference: This table reflects.

4.45 46 .I Table No.4.35 36 .55 56 and above Total . Chi-Square test .25 Impact of media 5.5 cross tabulation between portfolio size with age Age group 25 .Table No.

HA – There is a significant relationship between portfolio size and age.Portfolio size 1 – 5 lakhs 5 – 15 lakhs Less than 1 lakh More than 15 lakhs Total 53 42 18 41 34 29 8 9 5 6 5 2 108 90 54 7 28 8 5 48 120 132 30 18 300 Inference Ho –There is no significant relationship between portfolio size and age.6 calculation of chi – square test I O E (O-E) (O-E)2 (O-E)2/E .4. Table No.

648.4 0.494 1.24 2.895 34 39.84 0. 14. Chi-Square test .230 0.96 0. The table value of chi-square at 9 is 16.2 148.6 -5.919 the calculated value is more than table value.726 9 9 0 0 0 8 4.752 29 23.14 cross tabulation between products in trade and execution per day .51 0.6 31.8 7.88 47.48 0.538 0.52 -6.8 3.6 12.156 41 47.4 -0.475 6 6.48 -0.88 2.52 42.0296 5 2.16 0.560 Calculated value of chi – square test = 21.2 10.4 -0.8 -2.4 0.2 -12.0296 8 10. 4.12 6.24 27.2 9.04 2.223 42 36 6 36 1 7 19.II Table No.12 4.76 5.33 2.24 -1.241 5 5.792 28 21.6 53 43.8 96. hence the null hypothesis rejected.84 7.24 0.919 The calculated value of chi-square is 21.16 0.648 (O-E) 2 E Degree of Freedom = (c-1) (r-1) = (4-1) (4-1) = 9 Table value of chi – square test at 9 degrees of freedom = 16.036 5 5.6 -3.133 2 3.18 21.458 1.36 0.

4.Execution per day Products in trade Cash Future options Total <5 5 . HA – There is a significant relationship between products in trade and execution per day.15 15 . Table No.20 > 20 Total 21 13 8 42 46 33 29 108 54 40 38 132 5 4 9 18 54 108 90 300 Inference Ho –There is no significant relationship between products in trade and execution per day.14 calculation of chi – square test .II O E (O-E) (O-E)2 (O-E)2/E .

64 -3. A STUDY ON HEALTHY INVESTING AND TRADING PRACTICES FOR RETAIL INVESTORS IN INDIAN CAPITAL MARKET Name: .44 -1.0508 54 55.56 6.004 38 36.76 -3.4 0.0816 0.5536 0.4 -1.4 1.0293 5 7.2022 46 45.6 -0.24 -1.44 2.21 17.16 0.009 33 32.36 0.56 -2.3378.36 11.4096 0.64 13 12.3630 9 5.24 1.4 0.96 0.96 1.6 0.2896 0.16 0.96 15.0111 29 30.64 0.0736 0.1114 Calculated value of chi – square test = 6.4 0.04 1.04 3.1376 1.0374 40 39.0127 8 11.6 0.3378 (O-E) 2 E Degree of Freedom = (c-1) (r-1) = (4-1) (4-1) = 9 Table value of chi – square test at 6 degrees of freedom = 12.5376 0.592 The calculated value of chi-square is 6. The table value of chi-square at 6 is 12.592 the calculated value is less than table value.36 0.76 14.6861 3. hence the null hypothesis accepted.8669 4 5.

Age in years:
(a) 25-35

(b) 36-45

(c) 45 – 55

(d) 56 and above

Annual income:
(a) Below 1 Lakh
(b) 1 Lakh – 3 Lakhs
(d) 5 Lakhs and above

(c) 3 Lakhs – 5 Lakhs

1. How long have you been trading in the share market?
(a) < 5 Yrs

(b) 5 – 15 years

(c) > 15 years

2. Indicate your portfolio size
(a) Less than 1 lakh
lakhs

(b) 1 – 5 lakhs
(c) 5 – 15
(d) More than 15 lakhs

3. Indicate the appropriate (Tick)
4.

YOU RELATE YOURSELF AS

SYSTEM TRADING INVOLVED IN
DAY TRADING

DELIVERY

TRADER
INVESTOR
Tick the appropriate based on the parameters
Parameters

SAFE & RELIABLE

Traders
Online
Offline
Intra day
Delivery
5. What are the Parameters based on which you buy a share?
a. Based on Share price movement
b. Based on sector movement

RISKY

c. By studying the fundamentals
d. By recommendations given by others.

6. Do you apply for Ipo’s? If yes do you read the IPO form And Red hearing
prospectus before applying for an IPO?
(a) Yes

(b) No

7. Indicate the appropriate (Tick)
Small Cap
Mid Cap
Large Cap

Returns
O High
O Low

Risk
O High
O Low

O High
O Low
O High
O Low

O High
O Low
O High
O Low

8. What kind of Transaction is your investment based on?
(a) Short term
(b) Mid term
(c) Long term
9. Indicate the appropriate (Tick)
Short Term
Mid Term
Long Term

Returns
O High
O Low

Risk
O High
O Low

O High
O Low
O High
O Low

O High
O Low
O High
O Low

10. Do you follow the Share prices in your portfolio?
(a) Always

(b) Sometime

(c) Never

11. Do you follow up the corporate actions taken by companies that you hold in
your
portfolio?
(a) Yes

(b) No

12. How many trades do you execute on a day?

(a) < 5

(b) 5 –15

(c) 15 – 20

(b) future

(c) Options

(d) > 20

13. Products you trade on?
(a) Cash

14.Tick the appropriate with respect to returns and risk desired from trading
Products
Returns
Risk
Cash
O High
O High
O Low
O Low
Future

O High
O Low
O High
O Low

O High
O Low
O High
O Low

(b) Exposure given by broker

(c) Margin

Options
15. Source of funds for trading
(a) Own cash
trading

16. Do you trade by taking extra exposure from broker?
(a) Yes

(b) No

17. Rank the following based on safe source of funds?
Own Cash
Exposure given by broker
Margin Trading
18. Do you get margin calls regularly from your broker whenever you are in
margin?
(a) Yes

(b) No

19. Do you verify your Trades with contract notes issued by brokers?
(a) Yes

(b) No

20. Do you constantly leverage your margin to utilize the market movement?
(a) Always

(b) Sometime

21. Do you follow stop loss orders while trading?

(c) Never

Do you hedge you positions while trading? (a) Yes (b) No 25.(a) Always (b) Sometime (c) Never 22. Do your take you broker advice while trading? (a) Yes (b) No 24. Do you feel traders are benefited or safe guarded by SEBI regulations? (a) Yes (b) No 23.R Kothari 2) Personnel Management and . Do media affect your investment decision while trading? (a) Yes (b) No BIBLOGRAPHY 1) Organization Theory and Behavior : Rao P.S Narayana Industrial Management : Tripathi 3) Research Methodology : C.