On Line Trading in Equtiy Market

A
SUMMER PROJECT ON
ONLINE TRADING IN EQUITY MARKET

AT
SUBMITTED TO:
AES Post Graduate Institute of Business Management
SUBMITTED BY:
Doli Tandel
Harish Chauhan
Viraj Sisodia
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ACKNOWLEDGMENT
An acknowledgment is something which is so often over looked by people
who read a project but to us this is something very important, an integral
part of this project as this expresses our hearts feel gratitude towards all
those people who helped us during the course of this project. Hence, our
project bears the imprints of many people.
We wish to express our deep sense of gratitude towards Ms.Jignasha Sevak

and Hemant Chaudhari at IL&FS InvestSmart Ltd. for their immense help
and valuable guidance in conducting this summer industrial project from its
conception to its completion.
We are greatly indebted to Mr.A.H.Kalro, the director of AES Post Graduate

Institute of Business Management, who gave us the valuable opportunity of
involving ourselves in such project assignments.
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PREFACE
Being Management students, we need to understand how industry analysis

is done. Therefore, we are required to identify the industry of our interest to
conduct a thorough analysis of the selected Industry. This helps us as the
students to develop a sense of awareness around us to keep the details of
the industry. Such an analysis helps to understand the industry and is highly
useful for career development
Today as we all know that the share market field is full of stiff competition.
And days all the stock broking company has began to offer one or other type
of services to its account holder. Share market has been my interest of field
from the beginning. So at this moment we have got this opportunity to
prepare this report on the IL&FS INVESTSMART.
Stock broking company charges have been of much important from account
holders point of view. It is difficult to cover up all the fields so we had taken
into accounts the field of our interest. For each and every stock broking
company, whether it is small or big, the brokerage charges are very
important. The stock broking company follows that charges as per the
boundaries given by SEBI.
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INDEX
TOPICS
PAGE NO
Company Profile
Il&FS InvestSmart Ltd.
07
Stock Market
Stock
16
History of stock Market-Global Scenario
16
Indian Stock Market

Introduction
20
Bombay Stock Exchange (BSE)
20
National Stock Exchange of India Limited (NSE)
22
Primary & Secondary Market
24
Depository Exchanges and their Participants
27
Rematerialization and Dematarialization
29
Trading Online & Offline

Online Trading
Introduction
33
History Global Scenario & Indian Context
34
Basic Requirements
36
Procedure
36
Working of On-Line Trading
37
Advantages & Disadvantages
38
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Offline Trading
Introduction
43
Purchase
43
Selling
44
Advantages & Disadvantages
45
Online Products at IL&FS InvestSmart

SmartInvest
47
SmartTrade
48
SmartStart
49
Methodology of Reserch Design
50
Process of Project Work
51
Comparision
54
Findings
58
Conclusion
78
Bibliography
79
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WHY SHOULD INVEST IN SHARE ?
Historically shares have outperformed all the other investment instruments and
given the maximum returns in the long run. In the twenty- five- year period of
1980-2005 while the other instruments have barely managed to generate returns
at a rate higher than the inflation rate (7.10%), on an average shares has given
returns of about 17% in a year and that does not even take into account the
dividend income from them. Were we to factor in the dividend income as well, the
shares would have given even higher returns during the same period.
RETURNS ON DIFFERENT TYPES OF INVESTMENT BETWEEN 1980 AND 2005
Stock Market
17.00% p.a.
Bank Fixed Deposits
09.00% p.a.
Gold
05.70% p.a.
Inflation Grew
07.10% p.a.
*Sources: RBI Handbook of Statistics, BSE India
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COMPANY PROFILE
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IL&FS Investsmart Limited (IIL), formally Investsmart India Ltd. was

incorporated in the year 1997 as a wholly owned subsidiary of Infrastructure
Leasing and Financial Services Ltd. later name of the company was changed
to the present name as IL&FS Investsmart Ltd. from 25th March 2003. IIL is
a financial services company mainly engaged in the intermediation of
financial products and financial advisory services for retail institutional
investors and corporate. The company is promoted by IL&FS which is one of
the Indias leading non-banking finance companies and it holds 51.33% of
the equity stake.
The company has amalgamated IL&FS Merchant Banking Services Ltd.
(IMBSL), a wholly owned subsidiary and DebtonNet India Ltd. with itself with
effect from 1st January 2002. Consequently the name of the company was
changed to IL&FS Investsmart Ltd. The company made an Initial Public Offer
of 8,800,000 equity shares.
The company was incorporate on 1st September 1997 and received the
Certificate of Commencement of Business on 7th October 1997. IL&FS has
set up a financial center in Bandra Kurla Complex in Mumbai with a view to
house all its subsidiaries, ventures etc. at the same place for administrative
convenience and to pursue group synergy. Pursuant to this, on June 14,
2000 the register office of the Company was changed from Mahindra
Towers, 4th Floor, B1 Wing, Dr. G.M. Bhosale Marg, Worli, Mumbai to The
IL&FS Financial Centre, Plot C-22, G Block, Bandra-Kurla Complex, Bandra
(E), Mumbai-400 051.
IL&FS registered with SEBI as a Category merchant banker since the
inception of the SEBI (Merchant Banking Regulations) 1992. Consequent to
changes in SEBI regulations on segregating merchant banking from fund
based activities, IL&FS set up IL&FS Merchant Banking Services Limited
(IMBSL) as a wholly owned subsidiary. IMBSL was set-up to provide fullfledged merchant banking services and was registered as a Category I
merchant banker with SEBI.
IL&FS has a 50% stake in DebtonNet India Limited (OIL), which was set up
alone with, National Stock Exchange of India Limited. DIL was set up to
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provide an automated and transparent platform, using the Internet, for book
built debt issuances. Over a period of time DIL had enhanced the scope of
the platform to provide a wide range of information, news and analytics
relevant to the debt market.
Infrastructure Leasing & Financial Services Limited (IL&FS) is one of India's
leading infrastructure development and finance companies.
IL&FS has a distinct mandate - catalyzing the development of infrastructure
in the country. The organization has focused on the commercialization and
development of infrastructure projects and creation of value added financial
services.
From concept to execution, IL&FS houses the expertise to provide the
complete array of services necessary for successful project completion:
visioning, documentation, development, finance, management, technology
and execution.
Business Operations
Infrastructure and Development Services: Sectors such as
Surface Transport and Transportation Systems, Water Supply,
Hydro Power, Special Economic Zone, Port and Environment &
Social Management Group.
Investment Banking: Strategy, Asset Financing, Corporate
Advisory, Capital Markets, Project Financing.
Made contribution to the following trusts: IL&FS Infrastructure
Equity Funds, IL&FS Investment Trust I, II, IV.
The Indian Innovation Award-2005: Awarded to IL&FS by president of India.
HSBC, through Group subsidiaries, is to acquire 73.21 per cent of IL&FS
Investsmart Limited (Investsmart), a leading retail brokerage house in
India.
Under the terms of the agreements, HSBC proposes to acquire a 43.85 per
cent stake from E*TRADE Mauritius Limited, an indirectly wholly-owned
subsidiary of E*TRADE Financial Corporation, and an additional 29.36 per
cent from Infrastructure Leasing and Financial Services Limited (IL&FS).
Both shareholders will receive a price of INR200 per share for their
respective stakes, making a total consideration of INR10,225.5 million
(approximately US$241.6 million). In addition, IL&FS will be paid, as part of
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a threeyear non-compete agreement, INR820.1 million (approximately

US$19.4 million).
Board of Directors
Chairman
Mr. Ravi Parthasarathy
Managing Director & CEO
Mr. James Leslie Whiteford
Executive Director-Finance & Operation
Mr. Sachin Joshi
Executive Director-Retail Business
Mr. Deepak Sharma
Head-Reserch
Mr. R. Sreesankar
Chief Technology Officer
Mr. Kersi Tavadia
Registered Office
The IL&FS Financial Centre Plot C-22, G Block
Bandra Kurla Complex,
Mumbai 400 051
E-mail iilipo@InvestSmartindia.com
Web site www.InvestSmartindia.com
Financial Results
Annual Result for the year ended 31 March, 2008
Net Income up 83% at 383.64 Crores
Net Profit up 109% at 193.11 Crores as against Rs. 89.54 Crores
Quarterly Result (Q4, 2008) compared with (Q4, 2007)
Net Income up 87% at 139.76 Crores as against Rs. 92.89 Crores
Net Profit up 66% at Rs. 87.34 Crores as against Rs. 37.33 Crores
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Table A.1 Financial Results

Rs. In Crores
Particulars
Income
Net Profit
EPS
Book Value
2005-06
212.8
69.3
10.4
66.9
2006-07
289.11
89.54
12.89
93.31
2007-08
383.64
193.11
14.22
159.89
Auditors
S B Billimoria & Co
Bankers
Centurian Bank
Citibank
HDFC Bank Ltd.
IDBI Bank
UTI Bank Ltd.
Corporation Bank
Group Companies
IL&FS
IL&FS
IL&FS
IL&FS
IL&FS
IL&FS
IL&FS
Investsmart Ltd.
Investsmart Securities Ltd.
Investsmart Commodities Ltd.
Investsmart Insurance & Risk Management Services Ltd.
Academy for Insurance & Finance Ltd.
Investsmart Asia-Pacific Pvt. Ltd.
Investment Financial Services Ltd.
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IL&FS InvestSmart Limited (IIL) is an initiative in the field of

Financial Services stated by Infrastructure Leasing & Financial
Services (IL&FS), an institution known for its innovative and
pioneering initiatives in the areas of Infrastructure, Corporate
Finance and Investment Banking. IIL was set up in October 1997
and began its retail operations in September 1998.
IL&FS InvestSmart Limited (IIL) set up with the objective of
becoming one of the leading full service brokerage houses in the
country with a strong expertise in web-based technology as well as
strengths in physical distribution. Today with a presence in more
than 90 cities across India through more than 200 outlets, IIL has
become one of the most prominent players in the Financial Services
Industry with service offerings across different categories.
IL&FS InvestSmart Limited (IIL) is an initiative in the field of

Financial Services started by Infrastructure Leasing & Financial
Services (IL&FS), an institution known for its innovation and
pioneering initiatives in the areas of Infrastructure, Corporate
Finance and Investment Banking. We would like to take this
opportunity to inform you that IL&FS InvestSmart Ltd is now comeup with its On-line Trading Portal.
Strategic partnerships with global majors E*TRADE and Soft
Bank.
IPO in July 2005. Stupendous success and post listing.
Pan-India presence; Over 211 branches/franchisees across 90
cities.
FY 2008 PAT: Rs 489.38 mn
FY 2008 Total Income: Rs 1427.23 mn
FY 2008 EPS: Rs 14.87
Book Value Per Share: Rs 32.67
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Compliance and Regulation When dealing with Investsmart,

you are dealing in fully regulated and reliable environment. We are
subject to stringent financial reporting and specific regulations
regarding client treatment.
Transparency InvestSmart is a leading direct access brokerdealer committed to giving the trading tools and services necessary
to help you own the trade.
Innovative Continually enhancing our features, products,
partnerships and alliance, Investsmart strives to give you the best
opportunities while keeping you ahead in a changing market place.
All in one Whether youre looking for a brokerage specializing in
derivatives, capital markets, mutual funds, IPOs, we understand
you have unique requirements and we tailor our products and
services to meet them.
Service oriented Our goal is to provide a superior level of
service to you that will support a long-term relationship and enable
us to respond more efficiently and proactively to your changing
needs.
Customer oriented services
Accessibility with an Investsmart online trading account you can
buy and sell shares in an instant anytime you like and from
anywhere,
Choice - you can choose the online trading account that suits your
trading habits and preferences the SmartInvest account for
serious investors and SmartTrade for active day traders. Both
these accounts also come with a TeleTrade facility free* (*for the
first 1 month), which is an exclusive service for trading using your
telephone.
Flexibility Investsmart constantly strives to offer the capability
to trade in a manner that meets each customers needs.
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Trading Online Access the InvestSmart secure Internet trading

site 24 hours a day. InvestSmart online offers SmartInvest for the
Serious Investor and SmartTrade for the Active Trader. Use the
platforms to trade with unique features.
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STOCK MARKET
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STOCK
Stock symbolizes ownership in a company. The more stock investors in a particular
company means larger the % of the company they own.
Experts identify a number of stock types that people can acquire.

PENNY STOCK
Stock offered by small companies with limited growth potential. Such stocks
tend to be worth very little.
GROWTH STOCK
Stock offered by relatively new companies that are high on potential but low
on stability.
BLUCHIP STOCK
Stock offered by established and successful company. These stocks are
relatively safe investment.
STOCK MARKET
Essentially a market is a place which introduces a buyer to a seller. In the
case of stocks the buyer and seller are dealing in small ownership portions of
companies or shares.
A stock exchange, share market or bourse is a corporation or mutual
organization which provides facilities for stock brokers and traders, to trade
company stocks and other securities. Stock exchanges also provide facilities
for the issue and redemption of securities, as well as, other financial
instruments and capital events including the payment of income and
dividends. The securities traded on a stock exchange include: shares issued
by companies, unit trusts and other pooled investment products and bonds.
To be able to trade a security on a certain stock exchange, it has to be listed
there. Usually there is a local & central location at least for record keeping,
but trade is less and less linked to such a physical place, as modern markets
are electronic networks, which gives those advantages of speed and cost of
transactions. Trade on an exchange is by members only & stock & share
holders. The initial offering of stocks and bonds to investors is by definition
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done in the primary market and subsequent trading is done in the

secondary market. A stock exchange is often the most important
component of a stock market. Supply and demand in stock markets is driven
by various factors which, as in all free markets, affect the price of stock
There is usually no compulsion to issue stock via the stock
nor must stock be subsequently traded on the exchange.
said to be off exchange or over-the-counter. This is the
bonds are traded. Increasingly, stock exchanges are part of
for securities.
exchange itself,
Such trading is
usual way that
a global market
Overtime Stock Markets have become the very symbol of commerce in the
modern world. They are truly unique in their scope and in the complexity of
the number of transactions they handle each day. The economy of the world
relies on the stock exchanges to facilitate even trade in the stocks of
companies.
HISTORY OF STOCK MARKET-GLOBAL SCENARIO
When people talk about the Stock Market, it's no always immediately clear
what they're referring to. Is the Stock Market a place? Or is it something
different? To many people it is an abstract idea. They buy stocks in "the
stock market" without ever leaving the comfort of their computer terminal.
But the stock market is indeed a physical place with buildings and
addresses, a place you can go and visit.
In 12th century France the courratiers de change were concerned with
managing and regulating the debts of agricultural communities on behalf of
the banks. As these men also traded in debts, they could be called the first
brokers.
Some stories suggest that the origins of the term "bourse" come from the
Latin bursa meaning a bag because, in 13th century Bruges, the sign of a
purse (or perhaps three purses), hung on the front of the house where
merchants met.
However, it is more likely that in the late 13th century commodity traders in
Bruges gathered inside the house of a man called Van der Burse, and in
1309 they institutionalized this until now informal meeting and became the
"Bruges Bourse". The idea spread quickly around Flanders and neighboring
counties and "Bourses" soon opened in Ghent and Amsterdam.
In the middle of the 13th century Venetian bankers began to trade in
government securities. In 1351 the Venetian Government outlawed
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spreading rumors intended to lower the price of government funds. There

were people in Pisa, Verona, Genoa and Florence who also began trading in
government securities during the 14th century. This was only possible
because these were independent city states ruled by a council of influential
citizens, not by a duke.
The Dutch later started joint stock companies, which let shareholders invest
in business ventures and get a share of their profits - or losses. In 1602, the
Dutch East India Company issued the first shares on the Amsterdam Stock
Exchange. It was the first company to issue stocks and bonds.
WALL STREET
Many folks think of Wall Street and the Stock Market as one in the same,
and that view isn't really far from the truth. Wall Street is the place where it
all started and where the world's largest financial market was born and
prospered. From Wall Street a new industry sprang with its own language
and terminology.
Wall Street can trace its name back to 1653. Originally it was set up for
defense and not for commerce. Settlers of Dutch descent, who were always
on the lookout from attacks by Native Americans and the British built a 12
foot stockade fence. Little did they know that this fence would go on to
become the center of financial activity in the world. The wall lasted a good
while, until 1685. At that point the wall was torn down and a new street was
built. The British called it Wall Street.
Factors which affect stock market
Actions of investors
Business conditions
Government actions
Economic Indicators
International events
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INDIAN STOCK MARKET
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INTRODUCTION
Security market has essentially three categories of participants, namely the issuer
of the securities, investor of the securities and the intermediaries; and two
categories of product, namely the service of the intermediaries and the securities
including derivatives.
The security market has two interdependent and inseparable segments, the new
issues (primary market) and the stock (secondary market). The primary market
provides the channel for sale of new securities while the secondary market deals in
securities previously issued.
THE BOMBAY STOCK EXCHANGE (BSE)

The Bombay Stock Exchange Limited (formerly, The Stock Exchange,
Mumbai; popularly called The Bombay Stock Exchange, or BSE) is the oldest
stock exchange in Asia. It is located at Dalal Street, Mumbai, India.
Bombay Stock Exchange was established in 1875. There are around 3,500
Indian companies listed with the stock exchange, and has a significant
trading volume. As of October 2006, the market capitalization of the BSE
was about Rs. 33.4 trillion (US $ 730 billion). The BSE SENSEX (SENSitive
indEX), also called the BSE 30, is a widely used market index in India and
Asia. As of 2005, it is among the 5 biggest stock exchanges in the world in
terms of transactions volume.
An informal group of 22 stockbrokers began trading under a banyan tree
opposite the Town Hall of Bombay from the mid-1850s, each investing a
(then) princely amount of Rupee 1. This banyan tree still stands in the
Horniman Circle Park, Mumbai.
In 1875, Brokers organized an association known as the Native share Brokers
Association, and the countrys first stock exchange the Bombay Stock Exchange
(BSE), set up in Mumbai with 318 members. The membership fee gradually
increased from Re. 1 in 1887 to Rs. 1000 in 1896 and Rs. 48,000 in 1920.
In 1986, The BSE came out with 30-share Sensitivity Index (a.k.a. the Sensex)
that subsequently became the barometer of the Indian stock market which is
updated every two minutes.
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In 1995, BSE has launched an electronic (e-Trading) system named BOLT,

the BSE Online Trading system.
In 2005, the status of the exchange changed from an Association of
Persons (AOP) to a full-fledged corporation under the BSE (Corporatization
and Demutualization) Scheme, 2005 (and its name was changed to The
Bombay Stock Exchange Limited).
How BSE works?
The scripts traded on BSE have been classified into the following;
A - Large capitalization, profitable, reliable, high-liquid companies
B1 - Mid-capitalization, reliable, high-liquid companies
B2 - Mid- capitalization, moderate liquid companies
T - Trade to trade companies (compulsory delivery of trade within a
day), low liquid companies
S - Not reliable, low liquid companies
Z - Blacklist companies
Jobbers play an important role on the BSE. A jobber or a broker who trades
on his own account and hence offers a two-way quote or a bid-ask quote.
The bid price reflects the price at which the jobber is willing to buy and the
ask price represents the price at which the jobber is willing o sell.
Investors have to transact via jobber/ broker. The jobber / broker feed his
buy/sell quotes in his terminal, which is linked to the main server at the BSE.
Since both jobbers and brokers feed their orders, the NSE has adopted a
quote-driven system and an order driven system.
BSE SENSEX
The BSE SENSEX (also known as the BSE 30) is a value-weighted index
composed of 30 scripts. The base year of SENSEX is 1978-79 and the base
value is 100.
SENSEX is not only scientifically designed but also globally accepted
construction and review methodology. First compiled in 1986, SENSEX is a
basket of 30 constituent stocks representing a sample of large, liquid and
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representative companies. The set of companies which make up the index

has been changed only a few times in the last 20 years. These companies
account for around one-fifth of the market capitalization of the BSE. The
index is widely reported in both domestic and international market through
print as well as electronic media.
The Index was initially calculated based on the Full Market
Capitalization methodology but was shifted to the Free float methodology
with effect from September 1, 2003. The Free Float Market
Capitalization methodology of index construction is regarded as an
industry best practice globally. Due to its wide acceptance amongst the
Indian investors, SENSEX is regarded to be the pulse of the Indian stock
market.
NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)
National Stock Exchange (NSE), established in the mid 1990s as a demutualised

electronic exchange by leading Indian financial institutions, offers trading, clearing
and settlement services in a range of products covering equity, debt and equity
derivatives. It is India's largest exchange and ranks third globally by number of
trades in the equities market. NSE provides a modern, fully automated screenbased trading system, named NEAT (National Exchange Automated Trading
system) with nearly 40,000 trading terminals giving it extensive reach. Its flagship
index, the NIFTY 50, is used extensively by investors in India and around the world
to take exposure to the Indian equities market.
In the fast growing Indian financial market, there are 23 stock exchanges
trading securities. The National Stock Exchange of India (NSE) is the largest
and most advanced exchange with 1016 companies listed and 726 trading
members.
NSE is mutually-owned by a set of leading financial institutions, banks,
insurance companies and other financial intermediaries in India but its
ownership and management operate as separate entities. The National Stock
Exchange of India Ltd. provides its clients with a single, fully electronic
trading platform that is operated through a VSAT network. Unlike most world
exchanges, the NSE uses the satellite communication system that connects
traders from 345 Indian cities. The advanced technologies enable up to 6
million trades to be operated daily on the NSE trading platform.
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In 1998, the National Stock Exchange of India launched its web-site and was the
first exchange in India that started trading stock on the Internet in 2000. The NSE
has also proved its leadership in the Indian financial market by gaining many
awards such as 'Best IT Usage Award' by Computer Society in India (in 1996 and
1997) and CHIP Web Award by CHIP magazine (1999).
How NSE works?
The NSE has opted for an order-driven system. When an order is placed by a
trading member, an order confirmation slip is generated.
When a trade takes place, a trading confirmation slip is printed at the trading
members workstation. It gives details like quantity, price, code number of
counterparty, and so on.
The identity of the trading member is not revealed to other when he places
an order or when his pending orders are displayed. Hence, large orders can
be placed on the NSE.
On the eighth day of trading, each member gets a statement showing his net
position, the amount which he has to transfer to the clearing bank, and the
security he has to deliver to the clearing house.
Members are required to deliver securities and cash by the thirteenth and
fourteenth day respectively. The fifteenth day is the payout day.
All trades on NSE are guaranteed by the National Securities Clearing
Corporation (NSCC). This means that when A buys from B, NSCC becomes
the counterparty to both the legs of the transaction. In effect, NSCC becomes
the seller to a and the buyer from B. This eliminates counterparty risk.
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PRIMARY &
SECONDARY MARKET
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PRIMARY MARKET AND SECONDARY MARKET

A stock market may be thought of in terms of two separate functions. The
stock market consists of a two segment namely primary segment and
secondary segment.
PRIMARY MARKET
Where companies can raise long-term funds for their operations by issuing
shares (and other securities) to investors.
The primary market deals with newly issued shares. The companies can
raise the capital from issuing new shares in this market.
The securities Act 1933 govern the issuance of securities. This act requires that a
registration statement must be filled with the SEC (security exchange commission)
by the issuer of a security. The registration statement includes the information
regarding the nature of business, key features of security, the nature of risk
associated with the security, and background of management. Financial statement
must be included in the registration statement and they must be certified by an
independent public accountant.
Initial Public Offering - IPO
Corporation's first offering of stock to the public. An initial public offering (IPO) is
the process through which a privately held company issues shares of stock to the
public for the first time. Also known as "going public," an IPO transforms a small
business from a privately owned and operated entity into one that is owned by
public stockholders. An IPO is a significant stage in the growth of many small
businesses, as it provides them with access to the public capital market and also
increases their credibility and exposure. The primary advantage a small business
stands to gain through an initial public stock offering is access to capital. Becoming
a public entity involves significant changes for a small business, though, including a
loss of flexibility and control for management. In many cases, however, an IPO may
be the only means left of financing growth and expansion. The decision to go public
is sometimes influenced by venture capitalists or founders who wish to cash in on
their early investment.
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Staging an IPO is also a very time-consuming and expensive process. A small

business interested in going public must apply to the Securities and Exchange
Commission (SEC) for permission to sell stock to the public. The SEC registration
process is quite complex and requires the company to disclose a variety of
information to potential investors. The IPO process can take as little as six months
or as long as two years, during which time management's attention is distracted
away from day-to-day operations.
Overall, going public is a complex decision that requires careful consideration and
planning. Experts recommend that small business owners consider all the
alternatives first (such as securing venture capital, forming a limited partnership or
joint venture, or selling shares through private placement, self-underwriting, or a
direct public offering), examine their current and future capital needs, and be aware
of how an IPO will affect the availability of future financing.
SECONDARY MARKET
Where investors can buy and sell those shares at current prices as
determined by other investors in the market. The key distinction between a
primary market and secondary market is that in secondary market the issuer
of the asset does not receive funds from the buyer rather the existing
issues changes hands in the secondary market and funds flow from buyer of
the asset to the seller.
Function of secondary market
1. Secondary market provides to an issuer of securities, whether the issuer is a
corporation or a governmental unit, regular information about the value of the
security. The periodic trading of the asset reveals to the issuer the consensus
price that, the asset commands in an open market. Thus, firm can discover what
value investors attach to their stocks, and firm & non corporate issuers can
observe the prices of their bonds and the implied interest rates investors expect
& demand for them. Such information helps issuers assess how well they are
using the funds acquired from earlier primary market activities, and it also
indicates how receptive investors would be to new offering.
2. Secondary market offers issuer is that it provides the opportunity for the original
buyers of asset to reverse their investment by selling it for cash. Unless
investors feel confident that they can shift from one financial asset to another as
they may deem necessary, they would naturally be reluctant to buy any financial
asset. Such reluctance would harm potential issuers in one of two ways: either
issuer would be unable to sell new securities at all or their would have to pay a
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high rate of return, because investors would demand greater compensation for
the expected illiquidity of the securities.
3. Investors in financial assets receive several benefits from a secondary market.
Such a market obviously offers them liquidity for their assets as well as
information about the assets fair or consensus values.
4. Secondary market brings together many interested parties and so can reduce
the cost of searching for likely buyers and sellers of assets.
5. Moreover, by accommodating many traders. Secondary markets keep the cost of
transactions low. By keeping the costs of both searching and transacting low,
secondary market encourage investors to purchase financial assets.
Many Secondary markets are continuous markets, which mean that prices are
determined continuously throughout the trading day as buyers and sellers submit
orders. For examples, Given the order flowc at 10 A.M., the market clearing price of
a stock on some organized stock exchange may be Rs.70; at 11 a.m. of the same
trading day, the market clearing price of the same stock, but with different order
flows, may be Rs.70.75.Thus, in a continuous market, prices may vary with the
patterns of orders reaching the market and not because of any change in the basic
situation of supply and demand.
A contrasting market structure is the call market, in which orders are batched or
grouped together for simultaneous execution at the same price. That is, at certain
times in the trading day (or possibly more then once in a day), a market maker
holds an auction for a stock. The auction may be oral or written.
DEPOSITORY EXCHANGES AND THEIR PARTICIPANTS
DEPOSITORY EXCHANGES
Depository exchanges are organizations that hold shares of investors, on request,
in electronic form through a registered depository participant (DP). It can be
compared with a bank as it holds securities in an account , transfers securities
between accounts on the instruction of the account holder, facilitates the transfer of
ownership without the account holder needing to handle securities and makes the
safe keeping of shares easy.
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DEPOSITORY PARTICIPANT
The agent through which a depository exchange interfaces with the investor is
known as the Depository Participant. You can create a demat account with a DP,
who will keep an account of all the shares you own.
This is much like the banking system, where you just create an account and have a
passbook which updates you on the money you own and the transactions you have
made. In your demat account you own shares in an electronic format and your
account gets updated as you buy and sell shares.
As per SEBI regulation DP could be organization involved in the business of

providing financial services like banks, custodians and financial institution.
You can select your DP to open a demat account just like you select a bank for
opening a savings account. Some of the important factors for selection of a DP can
be:
Convenience: proximity to the office/residence, business hours.
Comfort: Reputation of the DP, past association, range of services etc. Find out
if the DP is in a position to give the specific service you may need.
Cost: The service charges levied by DP and the service standard.
NSDL/CDSL : The National Securities Depository Ltd (NSDL) and the Central
Depository Securities Ltd (CDSL) are like the Reserve Bank of India in the sense
that they are the clearing and holding house for all the demat transaction.
DPs : Depository Participants are like banks who are agents of NSDL or CDSL in
providing depository services.
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REMATERIALIZATION
&
DEMATARIALIZATION
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REMATERIALIZATION
Rematerialization is the process by which a client can get his electronic holdings
converted into physical certificates. The client has to submit the rematerialization
request to the DP with whom he has an account along with a Remat request form.
The physical shares will be posted by the company directly to the clients.
DEMATERIALIZATION
Dematerialization called as Demat is the process by which an investor can get
physical certificates converted into electronic form maintained in a account with the
depository participant. The investors can dematerialize only those share certificates
that are already registered in their name and belong to the list of securities
admitted for dematerialization at the depositories.
Dematerialization and trading in the demat mode is the safer and faster alternative
to the physical existence of securities. Demat as a parallel solution offers freedom
from delays, thefts, forgeries, settlement risks and paper work. This system works
through depository participants (DPs) who offer demat services and the securities
are held in the electronic form for the investor directly by the Depository.
IL&FS Depository Services offers dematerialization services to individual and

corporate investors.
In order to promote dematerialization of securities, NSE joined hands with leading

financial institutions to establish the National securities Depository limited (NSDL),
the first depositors in the country. CDSL (central depositorys service limited) was
set up in February, 1999 to provide depository services.
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PROCEDURE FOR DEMATERIALIZATION

1
INVESTOR
DEPOSITORY
PARTICIPANTS
2A
R&T
AGENT
3
NSDL
4
STEPS :
1. Clients or investor submits the DRF (Demat Request form) and physical
certificates to DP. DP checks whether the securities are available for Demat.
Client defaces the certificate by stamping surrendered for Dematerialization.
DP punches two holes on the name of the company and draws two parallel
lines across the face of the certificate.
2. DP enters the Demat request in his system to be sent to NSDL. Do dispatch
the physical certificates along with the DRF to the R & T Agent.
3. NSDL records the details of the electronic request in the system and forwards
the request to the R &T Agent.
4. R&T Agent, on receiving the physical documents and the electronic request,
verifies and checks them. Once the R&T Agent is satisfied, dematerialization
of the concerned securities is electronically confirmed to NSDL.
5. NSDL credits the dematerialized securities to the beneficiary account of the
investor and intimates of the DP electronically. The DP issues a statement of
transaction to the client.
The DP checks the DRF for validity, completeness and correctness.
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TRADING
OFFLINE & ONLINE
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ONLINE TRADING
INTRODUCTION
On-line trading is buying and selling securities through electronic medium. Online
trading is the way of buying/selling securities through internet.
In off-line, we place orders on your stockbroker either verbally or in written form,

while in online you will access a stockbrokers websites through the brokers
internet based order routing and trading engine. These orders routed to stock
exchange without manual intervention and executed thereon.
There are certain inherent characteristics of this market , which make it more
vulnerable to risks associated with e-commerce. The market requires knowledge,
information and ability to analyze and quick decision making. This requires utmost
care while trading on the net. A single click can make or destroy investors wealth.
Since the coming age is of online trading, more people have been investing their
money in stocks than ever before because of the advantages it offers. Online
trading allows people to trade stocks quickly without the help of a broker, letting
the investors have more control over their transactions. In addition to that, an
ordinary person now has access to the information that could only be seen by
brokers. Overall, online trading serves time, money and gives power to the investor
rather than the broker.
HISTORY Global Scenario
The history of E-Trading began in 1983, when a doctor in Michigan placed the first
online trade using E-trading, technology. What began with a single click over 24
years ago has now taken the world by storm. One BILL PORTER, a physicist and
inventor more than a dozen patents to his credit, who provided online quotes and
trading services to fidelity, Charles Schwab, and Quich Reilly, visualized the
concept. This led Bill to wonder why, as an individual investor, he had to pay a
broker hundreds of dollars for stock transactions with incredible foresight, he saw
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the solution at hand. Someday everyone would own computers and invest through
them with unprecedented efficiency and control.
Today online trading has become a way of investing in the developed world and is
soon catching on in developing countries too. Since that time, online trading has
increased dramatically. According to recent estimate there are more than 10 million
individuals trading online, making more than 10 lakh trades per day. Currently,
there are over 250 broker dealers providing retail investors with the ability to trade
online. Along with the growth in online trading, there has been a surge in investor
complaints related to online trading.
The downfall of a few international websites like Value America Inc, Net Inoperative
Ltd., Toysmart.com, boo.com, has not diminished the opportunities thrown open by
Internet trading. There are investment banking firms which offer a suit of services
such as online trading, research reports, real-time market commentary, java based
charts, analysis and other professional services. E-Trade, which has presence in
around 119 countries, it is one of the renowned players in the international market.
e-Trade securities Inc was floated in 1992 to offer online investing services through
America Online and CompuServe and launched www.etrude.com in 1996. Recently,
it announced Strategic Wit sound wise the online banking subsidiary of Wit Capital
Group Inc, to capitalize on the complementary care strengths of the two groups.
TD water house, the second largest global brokerage house has over 2.9 million
customer accounts worldwide and more than $150 billion in customers assets
under administration. In addition to securities trading services, it also provides
banking, mutual funds, and other financial products services to its customers.
HISTORY - Indian Context
India ranks amongst the top 10 countries in terms of the market capitalization of its
stock market.
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Online trading began in India on Jan 31, 2000, the Securities Exchange Board of
India (SEBI) formally notified all the stock exchanges, giving them a green signal
for online trading. The various players of the securities marked which includes NSE,
BSE, other regional stock exchanges and the brokers, had been waiting long for the
go ahead sign. Trading via the net is expected to generate greater volumes than
ever before, and this has attracted a large number of players. The chairman of the
Securities and Exchange Board of India (SEBI) also announced that foreign
companies and individual could now trade on Indian stock Exchange.
One day after, SEBI announced its regulations for net trading, Kerala based Geojit
Securities took the lead and started online trading in Mumbai. The first net
transaction was a trade for 100 shares 07 Reliance executed by D.R. Mehta,
chairman of SEBI.
ICICI is the first Indian financial entity to make available Internet trading by a click
of mouse. Its internet trading facility, christened as ICICI Direct e-invest, is
provided by seamless unification of two pirating units. E-invest is a combo account
consisting of trading bank and one and more demat accounts. It is pre condition
that the account should be maintained only with ICICIs operating units. This
enables an e-invest investor to buy & sell securities over the net transfer securities
through the demat account and funds through bank account automatically. As ICICI
Ltd. is a depository participant, the demat account is required to be opened with it
and the bank account with ICICI Bank Ltd.
Today there are many big companys are in the market like Angel Broking Ltd.,
Share Khan Ltd., India Bulls, Kotak securities, Reliance Money, Motilal Oswal, 5
paisa.com, indiainfoline.com, HDFC securities, and other players.
The Indian stock market has the potential of becoming one of the most active in the
world primarily on account of its retail investor base, listed and traded companies, if
an efficient and inexpensive infrastructure is make available. At this juncture, we
should look at Indias potential because this aspect of trading is in its nascent stage
an estimate of which can be made by the projecting population of its neitzens. We
have, therefore, looked at the various projections of Indian netizens.
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BASIC REQUIREMENTS FOR ONLINE TRADING
Bank Account
Bank should be having an alliance with the online trading service
provider. Bank account will facilitate as a payment and receipts
gateway.
Demat Account
The depository account also should be having an alliance with the
online trading service provider. This account will act as a bank for the
shares we hold.
Online Service Provider Account

This can be opened with any of the major service providers like
depository Participants, the custodian etc.
Once these three accounts are opened, the money and shares are transferred to
your bank and Demat account automatically electronically and without any paper
work.
PROCEDURE
Sitting in ones own home or office or even from your car, as long as, you can trade
on the market.
The first step is to pen Saving account which link with particular bank which help in
purchasing securities , mutual funds, IPOs, Future & Option, and commodities then
after open the Demat a/c which is the account where securities are debited and
credited. One can open multiple accounts with himself or herself as the first name
in the account. (One can open up to 5 demat accounts with Sharekhan.)
Then
it is necessary to determine the type of account that you want and how you
want to pay for the trades your make. Joint accounts are allowed but for that you
will need to have certain infrastructure about those people. Accounts can be
Individual, Joint, Sole proprietorship, corporate partnership etc. The form filling
requires simple personal details like full legal name, Citizenship Status, Residency
status, employers name and address, your passport/PAN number, date of birth etc.
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After
that we will get three things such as User ID, Membership password and
Trading password. These three things are unique to an individual and ensure
security of transactions and for activation online trading account.
After
getting User ID and Password, your account has been set up, you can access
the website and login using the same.
Then
after you are supposed to transfer money from bank account to Trading
account. In order to start trading online its important that you deposit money in
your bank account before placing a buy order. In order to place a sell order you
must have shares in your demat account. You can sell your shares anytime as long
as shares are these in your demat account. In order to place a buy order you need
to fund your account. You can do this by depositing money in your bank account or
else you can sell same-shares existing in your demat account and use the proceeds
of sale to fund your purchase transaction. The amount of money required before
placing a buy order would depend on the value of order and the type of e-invest
account you have enrolled for whether cash or margin.
The
account opening charge commission rates and the minimum limit of
transaction vary from site to site. Other charges can include annual services
charges, custody charges; demat account maintenance charges, etc. Also most
online traders offer a host of other tools to aid the investment decision. A full
research back up in terms of repairs, articles, opinions, etc. live time quotes latest
news on the script, technical charts to see how the stocks prices has changes over
time.
So
sitting at home one can take an investment decision at ease after having
researched and read up fully about the stock. With the advent of online trading it
world seem that the markets are just a click away.
WORKING OF ON-LINE TRADING

The procedure for trading dematerialized securities in stock exchanges is similar to
the procedure for trading physical securities. Instead of delivering physical
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securities to the broker, you instruct your DP to debit your account with the number
of securities sold by you and credit your broker's clearing account. This delivery
instruction has to be given to your DP using the delivery instruction booklet
received from the DP at the time of opening the account. The procedure for selling
securities is to be like:
Investor sells securities in any of the stock exchanges linked to NSDL

through a broker.
Investor gives instruction to DP to debit his account and credit the broker's
(clearing member pool) account.
Before the pay-in day, investor's broker gives instruction to his DP for
delivery to clearing corporation.
The broker receives payment from the stock exchange (clearing corporation).
The investor receives payment from the broker for the sale in the same
manner payment is received for a sale in the physical mode.
ADVANTAGES
Online trading has shifted the trading power from stock brokers to individual
investors. Online trading system has changed the environment for retail investor
community. Online trading allows you to buy & sell shares on the exchanges
through INTERNET. It is a truly powerful medium to be in direct control of your
investments.
INDEPENDENT
Because online trading greatly diminishes the role of brokers, investors have
more freedom of making investment decisions and entering an order. Investors
have not to relay brokers. Online promotes self empowerment.
ENSURES THE BEST PRICE FOR INVESORS
Online trading offers the best price for the buy and sell orders of the investors
and traders. Also due to high level of transparency with regard to display of
information relating to the specific stocks and company profiles, investors will be
able to get the best quote for buy orders. This leads to a reduction in the
transaction cost for the investors.
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FLEXIBILITY
Flexibility is the greatest advantage of online trading. Want to cancel our
order or do it in seconds. If we want to modify the order, can do easily.
For example, if we have placed an order to buy stock called B at
Rs.1,000.We keep tracking the movement of the stock for and in a couple
of minutes we find that the prices are heading to downwards. What will
be our decision Modify our order immediately and put a buy at Rs.900.We
can cash on the market opportunities.
OFFERS LIQUIDITY TO THE INVESORS
Online trading offers 24 hours trading facilities or trading for longer hours
compared to the traditional stock exchanges. This provides added liquidity to the
investors.
OFFERS GREATER TRANSPARENCY
Online trading offers you greater transparency by providing you with an audit
trail. This involves a complete integrated electronic chain starting from order
placement, to clearing and settlement and finally ending with a credit into your
depository account. All these stages are subject to inspection, thus bringing in
transparency into the system and greater transparency helps ij reducing the
systematic risk for the investor.
ENABLES HASSLE FREE TRADING
Online trading integrates the bank, the brokerage from and the demat accounts,
which leads to easy and paperless trading for the client.
PERSONAL ADVICE STILL AVAILABLE

The service providers have combined off-line as well online services. They
give the personal touch added to e-trading thus combining structured
advice and fast trades.
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FREEDOM OF INFORMATION
Investor can know the price of any stock at any time. He can review the price
history of any stock in chart format and also follow market events in-depth. He
can also conduct extensive financial research on any company.
RESEARCH INFORMATION
Service providers carry stock analysis for our reference. This helps in
making the right choices. One cannot afford to hire analysts to review the
stocks and companies with given our indent and situation, the sites that
provide research reports could be useful.
ALLOW INSTANT TRADE EXECUTION
Online customer will be able to execute the online trading transaction, right from
logging on to our site, to the execution and settlement of your bank account, in
a very short period of time.
VALUE ADDED SERVICES

Service providers offer a variety of trading options like Buy Today Sell
Tomorrow (BTST) gives the advantage to take short-term positions in the
market and take advantage of price fluctuations. This is very useful when
we want to cash in on new specific developments.
BANK STATEMENTS
Bank Statements and transactions that we have made for stocks online
can be viewed at the click of a button on our computer. We do not have
to run behind the bank executives to get the Bank Statements.
TIME SAVING
Time is like money. Most of us dont find time in our hectic work
schedules to go to stock broker and asking him to do market research.
Through internet, it gives not only the advantage to save time; it also
enables us to trade from anywhere. Imagine a person sitting in a remote
village having to contact his broker in a city to get a trade through. In
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present times a person can conveniently trade from anywhere using the
tool of the internet.
AVAILABILITY
By business trading online they can have access to real-time market data,
news and charting Traders can trades 24 hours a day and seven days a
week, this is most beneficial to the trades and even the buyers.
DISADVANTAGES
LESS KNOWLEDGE
Elimination of a stock broker could also be a trouble. Without proper advice of
stocking trade persons, it could prove risky to enter the stock game. Expertise
and experience will helps a lot. In a boom of stock market phase, money making
is not a difficult task. If we see plenty of money & start feeling like a stock
market genius. We get carried away and make some mistakes that could be
more chances of risk.
RESTRICTED FINANCIAL GUIDANCE
Individuals are restricted for first hand financial guidance. This simply means
that the individual is himself/herself alone to make the decision.
OUT DATED INFORMATION

Many sites let we have the Added Advantage of research reports, may
be outdated and not updated to the changes of fast trends. But take a
look at one of the four corners on the web page and see the date of the
analysis.
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HIGHER BROKERAGE
Sometimes on the online trading depository participants charging high
brokerage. For examples, if we buy stocks on 1st day of the month for
Rs.500 and sell it for Rs.700 on 5th day, we have made profit of 40% in 5
days. We have also to think about the Depository Participant charging the
brokerage. If we calculate the same, our return could be below 40%.
TRADING ERRORS
Trading errors are also consideration for the trading online, but the main
errors are made by humans so firms have to take precaution to prevent
this type of human error, because it could cost the firm large amounts of
money when trading online, this is what firms do not want to deal with it
because it time consuming and in business time is money.
STABILITY
The internet is unpredictable and unstable. One can never know when a
web site will fail. In a situation where, there is a problem like this,
investors can usually call their brokerage firm and the problem is fixed
right away. However, the problem with online trading companies is that
they are too large and are not easily reaches by E-mail or phone.
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OFFLINE TRADING
INTRODUCTION
The internet has not spared trading in shares and still the conventional system of
offline trading continues in todays world.
In offline trading system, two parties i.e. an individual and a broker come into
contact with each other and the transactions takes place. The investor goes to the
broker for the purpose of buying or selling of securities for that he has to make a
payment to settle the transactions.
PURCHASE
For receiving demat securities you may give a one time standing instruction to your
DP. This standing instruction can be given at the time of account opening or later.
The transactions relating to purchase of securities are summarized below;
You purchase securities through broker.
You make payment to your broker who arranges payment to clearing

corporation on the pay-in day.
Your broker receives credit of securities in its clearing account (clearing

member pool accounts) on the play out day.
Your broker gives instruction to its DP to debit clearing account and credit
your account.
You receive shares into your account. However if standing instruction are not given
at the time of opening the account, you will have to give Receipt instructions to
your DP. For receiving credit, you should ensure that your broker transfers the
securities from its clearing account to your depository account, before the book
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closure. If the securities remain in the clearing account of the broker, the company
will give corporate benefits (dividends or bonus) to the broker.
SELLING
The procedure for selling dematerialized securities is very simple. After you have
sold the securities, you would instruct your DP. To debit your account with the
number of securities sold by you and credit your brokers clearing account. This
delivery instruction has to be given to your DP using the delivery instruction slips
given to you by your DP at the time of opening the account. Procedure for selling
the securities is given below;
You sell securities in any of the stock exchanges limited company NSDL through
broker.
You give instruction to your DP to debit your account and credit the brokers
account.
Before the pay in day, your brokerage gives instruction to its DP for delivery to
clearing corporation.
Your broker receives payment from the stock exchange (clearing corporation)
You receive the payment from the broker for the sale of securities.
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ADVANTAGES
1. Low brokerage
In case of offline trading, brokerage charged by the broker is quite low

because of personal relation. It also provides benefit of low cost of
installation as compared to online trading. He has authority to
customize brokerage according to customers.
2. Less margin
Generally online trading company charges atleast 25% margin while the
broker charges nearly 10% margin to the investor in case of trading on
derivatives. Sometimes broker charges negligible amt & he allows trading up
to his limit.
3. Flexibility in credit period

Local brokers allow their customers to trade in shares with longer credit
periods which facilitate the payments for the investors. Whereas in online
trading a customer is required to make the payment in less than two days
which is not the case in offline trading. Sometimes broker also allow to delay
in settlement of payment as per the relation with customers.
4. Customized advice
Normally, investor would like to take the advice before taking an investment
decision. Online trading is not provide such kind of personal touch. In off-line
there is a person to whom you ask about your investment problem and also
you can make trust on him because of personal relation.
DISADVANTAGES
Blindly trust on broker makes investment at risk.

Problem of attention from broker due to load.
Problem in getting in touch with the broker.
Reliance on the brokers information.
Reconciliation of accounts of cash settlement.
Geographical restriction and lots of paperwork.
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ONLINE PRODUCTS
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Trading Platform for Serious Investors
Instant Loading
Works behind a Proxy
Live streaming quotes
Multiple Watch lists
NSE & BSE Access
Single order from for Cash and FnO
Point and Click order entry
Hot Key Functions
Market Depth Windows
Back Office Access
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Trading Platform for Active Trader.
Fully customizable display

Dynamic Charts with Indicators
EOD Charts
Real-Time Market Data
Advanced Alerts capabilities
Live order status
Real time position updates
Dynamic buying power
Derivative chain
Lock terminal option
Message window docking
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Smart start is a powerful browser based trading system for those who are
relatively new to online investing. Smart Start is a unique integrated
account, which integrated your banking, broking and Demat account. It is a
comprehensive trading service, which allows you to invest in equities and
derivatives.
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METHODOLOGY OF RESEARCH DESIGN
Sample Techniques
Non Random Sampling Technique will be used to draw the sample of

about 200 sublets who are active traders in trading sector, who do have
their DPs with any of the existing trading firms.
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The type of sampling going to be used is Judgment Sampling or Purpose

Sampling, it because the focus is on the specific clients who are High Net
worth individual for the company and the definition of the HNI is changing
form one firm to another, producing the amount of brokerage beyond some
extent. And again the study is going to cover all the firms of same industry
with different definitions of the terms HNIs and Average clients.
PROCESS OF PROJECT WORK

The project work is mainly focusing on the competitive analysis of the
business strategies adopted by the various players in an online trading
industry. The main focus is on the product features and product offerings.
As mentioned and described in the SIP and project proposal sample of 200
people or clients will be selected from various DPs available in the market.
The sample will be judgmental and non random. Its a specific in the nature.
Questionnaires with the combination of both open and close ended questions
are administered to all the subjects of the sample. As per schedule from 18th
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May to 26th June, the data collection activity is already started. For few initial
days, references were collected from all known and company people. Tele
calling was done to them to seek an appointment and started proceeding for
the same. In total 190 questionnaires were get filled up.
LIMITATIONS
IL&FS as brand is not that much known in the market of Ahmedabad.
So brand awareness is also one of the biggest constrain to pitch the
product in to the market.
As IL&FS do not believe in any promotional activities, its really
difficult to convince the customer about the brand name, as rest all
Online Trading Competitors promote their brand in one or other way
around.
ICICI, Kotak
- Banking business
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Sharekhan, 5 Paisa
Promotional activities
Smart Invest and Smart Trade is good package as whole but still
lacking in few very essential features which are provided by rest
of the market players in an industry which most of the customer would
like to seek.
Lack of support from IL&FS for sharing customer references and other
guidance.
The Product Offering from IL&FS is not competitive enough with

other market players, major of them are:
Limit Option
Learning Centers
Company Information
Research Report
SMS Alerts etc.
No potential leads were provided from company side to achieve the
targets in a short time span.
Sticking to only one brand not allowed us to offer a wide range of
schemes of company.
For the new OJT the small constrains were there like:
People were not ready to disclose their identity and contact no
as they were carrying the fear they might receive a call for some
selling purpose.
Perception of people regarding investment activities also affects
their attitude.
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COMPARISON
Followings are the comparisons of IL&FS InvestSmart Ltd. with other stockbroking companies as:
Emkay Share and Stock Brokers Limited
Geojit Financial Services Limited
Indiabulls Services Limited
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ICICIdirect.com
Indiainfoline (5Paisa)
Kotak Securities
Table 1a Comparison With Respect to Financial Earnings

Basis
IL&FS
Equity*
66.90
Income*
212.80
Net Profit* 69.30
OPM
51.10
Promoters 12.63%
Holding
* Figures in Crores
Geojit
15.20
87.97
18.44
40.90
51.03%
Emkay
24.10
47.53
15.45
43.20
97.76%
Indiabulls
32.50
610.30
253.40
65.30
30.34%
Indiainfoline
45.10
44.70
26.50
87.60
36.10%
Table 1b Comparison With Respect to Valuation Ratio

Basis
EPS
IL&FS
10.40
Geojit
12.12
Emkay
6.40
Indiabulls Indiainfoline
15.60
5.89
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P/E
Book
Value
13.00
32.40
15.60
32.40
10.30
46.40
16.80
8.80
19.40
20.50
Table 1c Comparison With Respect to Operating Ratio*

Company
ROE (%)
IL&FS
18.54
Geojit
38.3
Indiabulls
11.14
Indiainfoline 23.93
Emkay
52.28
Source: Capital Market
OPM (%)
7.25
26.71
81.92
87.68
51.26
NPM (%)
4.68
17.03
35.10
53.45
32.52
ROCE (%)
26.63
43.52
12.25
27.49
75.04
Table 1d Comparison With Respect to Customer Database

Share Broking Company
IL&FS
Icicidirect.com
Geojit
Indiabulls
Kotak Securities
HDFC Securities
Sharekhan
Customer Database (More Than)

4,90,000
8,50,000
2,50,000
2,90,000
4,00,000
1,85,000
1,75,000
Table 1e Comparison with Respect to The Financial Charges

(excluding tax)
Share Broking
Opening
Annual
Brokerage
Brokerage
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Page 56
Company
IL&FS
Icicidirect.com
Geojit
Angel Broking
Indiabulls
Indiainfoline
Motilal Oswal
Kotak
Securities
Karvy
Share Khan
HDFC
Securities
Charges
750
750
200
500
250
555
550
550
Maintenance
Charges
300
375
280
375
200
Nil
Nil
270
(intra-day)
(delivery)
0.10%
0.10%
0.06%
0.10%
0.10%
0.10%
0.10%
0.10%
0.50%
0.75%
0.30%
0.50%
0.50%
0.50%
0.50%
0.50%
500
750
799
375
300
500
0.05%
0.10%
0.10%
0.35%
0.50%
0.50%
Table 1f Comparison with Respect to Stock Market Data

Basis
Face Value
Share Price
Year High
Year Low
Market*
Capitalization
Dividend
IL&FS
10
110
260
103
897.40
Geojit
10
164
263
93
288.60
Emkay
10
63
163
54
159.60
Indiabulls
02
198
369
141
4,244.10
Indiainfoline
10
99
227
84
512.30
30%
40%
10%
Nil
30%
Terms Used in Comparison

Financial Year is 2007-08
Book value shows ration of Equity Capital plus Reserve to the number
of Equity shares
Sales includes sales from there business for the year 2007-08
Net Profit are the Profit for the year 2007-08 after tax
OPM (Operating Profit Margin) this ration indicates the operating
efficiency of the company. The OPM is calculated as
Operating Income Operating Expenses
Operating Income
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Page 57
Dividend shows in percent of dividend declared by the company for the

FY 08
EPS means earning per shares, is the ratio of Net Profit less Preference
dividend to the number of Equity Shares.
P/E ratio means price-earning ration calculated as Market Price
dividend by EPS
Market Capital shows the current price of share multiply by the
number of equity shares
Promoters holding indicates the percentage of equity holding with the
promoters of the company
Face Value Value of per share
OPM Operating Profit Margin and it is calculated as operating profit
divided by net sales or profit before interest and tax divided by Net
Income/ Net Sales
ROE Return of Equity and it is calculated as net profit after tax
divided by equity capital plus reserves and surplus
ROCE Return on Capital Employed
NOM Net Profit Margin, it is calculated as net profit divided by net
sales
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Page 58
Findings
QUESTIONNAIRE
Q-1 As per your view, which are the market players in trading industry?
Rank them.
ICICI DIRECT
Emkay
5 PAISE
KOTAK
Indiabulls
IL&FS
Geojit
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Page 59
Q-2 Which On-line product offering are preferred most by you?

EQUITY
MUTUAL FUND
IPO
FNO
PORTFOLIO MANAGEMENT
COMMODITIES
POSTAL SERVICES
Q-3 for you which are the 4 unique features offered by current on-line
product?
ICICI DIRECT.COM_________________________________________
KOTAK __________________________________________________
Emkay __________________________________________________
SHAREKHAN______________________________________________
IL&FS ___________________________________________________
Q-4 Kindly suggests few trading features you seek to have in your product?
ICICI DIRECT.COM_________________________________________
KOTAK __________________________________________________
Emkay __________________________________________________
SHAREKHAN______________________________________________
IL&FS ___________________________________________________
Q-5 After market hours, do you specify the Limit Option for your trade
orders?
ONCE IN A WHILE
SOMETIMES
MOST OF THE TIMES
ALWAYS
NEVER
Q-6 Would you prefer SMS alert?
YES
NO
Q-7 Are you industry specific investor?
YES
NO
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Page 60
Q-8 Which are the source of information availed by your existing online
trading product?
NEWS
TIPS
ALERT MESSAGES
ANY OTHER
Q-9 As an investor do you consider tips provided by your product? Following
given tips, how many times you get desired results?
ONCE IN A WHILE
SOMETIMES
MOST OF THE TIMES
ALWAYS
NEVER
Q-10 As an investor would you like to evaluate the company information? If
yes then which information would you like to seek?
COMPANY BACKGROUND
FINANCIAL RATIO
QUARTERLY RESULT
RECENT DEVELOPMENTS
BALANCE SHEET & P/L A/C
Q-11 In general in market the minimum brokerage slot is Rs. 500000, so as

a trader what minimum slot you expect from the company?
1
2
3
4
5
Q-12 As a regular trader how many time of exposure you seek from your
DP?
___________
Q-13 As a customer which kind of extra benefits you seek out of product?
VARIOUS SCHEME
DISCOUNTS
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Page 61
OTHERS
Q-14 Would you like to have online registration in your product?
YES
NO
Q-15 Are you satisfied with your back office access?
YES
NO
Q-16 Being fast profit generating industry, what will be growth of the online
trading industry?
LIMITED
MODERATE
TREMENDUOUS
CAN NOT SAY
Q-1 As per your view, which are the market players in trading industry?
BRAND AWARENESS OF VARIOUS ON-LINE TRADING PRODUCTS
PARTICULA
ICICI
Emk
5
KOT Indiabu IL&F Geoj TOT
R
DIRECT
ay
PAISE
AK
lls
S
it
AL
RESPONDE
46
27
25
36
32
24
10
200
NTS
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Page 62
ICICI Direct.com is the most well known online trading platform followed by
Kotak securities; the lowest awareness is for IL&FS Invesmart as its well
known for its infrastructure projects and not for online trading.
Q-2 Which On-line product offering are preferred most by you?

PREFERRED WAYS TO MULTIPLY MONEY BY THE TRADERS
PORTFOLI
POSTAL
EQ
MUTUAL
FN
O
COMMO
RESPON
SERVICE
UIT
IPO
FUND
O
MANAGEM
DITIES
SE ID
S
Y
ENT
TOTAL
73
31
51
22
8
9
6
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TOTA
L
200
Page 63
Q-3 for you which are the 4 unique features offered by current on-line
product?
FOUR UNIQUE FEATURES OFFERED
PRODUCTS
ICICI
COMPANY RESEARCH
DIRECT.COM
COMFORT
SPEED
ONLINE BANK ACCOUNT
LINKS
BY ON-LINE TRADING
NO PAPER WORK
OFFLINE ORDERS
AUTOALLOCATION OF MONEY
BY SELF
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Page 64
FULL FACILITY FOR

PORTFOLIO
MUTUAL FUND
NEW IPO
3 IN 1 PACK
POSTAL SAVINGS
BANK/DMAT COMBINED AT
ICICI
NO DELAY IN TELEPHONIC
INTIMATION
MARGIN TRADING
PORTFOLIO MANAGEMENT
KOTAK
RESEARCH DATA, OFFLINE

ORDERS
ONLINE VIEW OF 25
SCRIPTS
2 LEVEL PASSWORDS
Emkay
OFFLINE ORDERS
TERMINAL
BUY AGAINST SELL
SHAREKHAN
LIMIT OPTION
DAILY TIPS
ACTIVE PAY-IN PAY-OUT
EASY OF CASH TRANSFER

FAST & TRANSPERENT
IL&FS
DIRECT MONEY TRANSFER

TECHNICAL CHARTS
LIVE QUOTES
OFFLINE ORDERS
TERMINAL FACILITY
Important features which are making the product unique are the most over
the commonly available features which add convenience in the usage and
capturing less time of the traders.
Q-4 Kindly suggests few trading features you seek to have in your product?
SUGGESTED TRADING FEATURES
ICICI
DAILY TIPS
DIRECT.COM INTERNATIONAL MARKET UPDATE
ONLINE INTRADAY CHARTS
UNLIMITED SCRIPTS
LATE SQUARE OFF
TERMINAL
PRINTED INTIMATION THROUGH
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Page 65
POST OR COURIER
OPPOSITE OF STOPLOSS
KOTAK
TECHNICAL CHARTS
WEEKLY STATEMENT
AUTO REFRESH
EASY FUND TRANSFER
Emkay
ONLINE INTRADAY CHARTS

UNLIMITED SCRIPTS
PORTFOLIO TRADING
ONLINE TIPS
BEING REAL TIME

TERMINAL
MUTUAL FUND
SHAREKHAN
INSURANCE
NSE-BSE
52 WEEK HIGH-LOW
IL&FS
PAST CLOSING ORDERS &

PLACEMENTS
SHORT SELLING
Products which are lacking in the genuine features and which are directly
affecting the profit margin of the customer are the expected ones by the
customers.
Q-5 After market hours, do you specify the Limit Option for your trade
orders?
PREFERENCE OF THE LIMIT OPTION
PARTICULAR
RESPONDENTS
YES
134
NO
66
TOTAL
200
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Page 66
RESPONDE
NT ID
TOTAL
PREFERENCE OF THE LIMIT OPTION

ONCE IN A
SOMETI
MOST OF THE ALWA
WHILE
MES
TIMES
YS
71
27
45
53
NEV
ER
4
TOT
AL
200
Limit option is preferred by most of the customers to have convenience to

put trade orders after market hours, to have flexibility in the absence of the
online terminals during market hours.
Q-6 Would you prefer SMS alert?
PARTICULA
R
YES
NO
TOTAL
PREFERENCE FOR THE SMS ALERT

RESPONDENT
REASON
S
Inability to stay online all the time, lack of
138
time
62
no tips, please
200
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Page 67
SMS alerts are preferred by majority of the customers to get them updated
irrespective of time and place which help the traders to make the meaningful
trading decisions.
Q-7 Are you industry specific investor?

PERCENTAGE OF THE INDUSTRY SPECIFIC INVESTORS
PARTICULAR
RESPONDENTS
YES
154
NO
46
TOTAL
200
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Page 68
Majority of the traders is making their investment in various industries to

diversify their portfolio and minimizing their risk.
Q-8 Which are the source of information availed by your existing online
trading product?
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Page 69
Tips are the most preferred source of information provided by the Dps as its
a precise and directly related to profit and loss of the trader, followed by the
descriptive and detailed source of information like news.
Q-9 As an investor do you consider tips provided by your product? Following

given tips, how many times you get desired results?
PERCENTAGE OF TIPS CONSIDERATION

PARTICULAR
RESPONDENTS
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Page 70
YES
NO
TOTAL
136
64
200
FREQUENCY OF OBTAINING DESIRED RESULTS

PARTICULAR
RESPONDENTS
ONCE IN A WHILE
112
MOST OF THE TIMES
30
SOMETIMES
14
ALWAYS
34
NEVER
10
TOTAL
200
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Page 71
Majority of the traders consider the tips provided by the DPs before making
the trading decision and the frequency of getting desired result out of it is
about 50% to 70%.
Q-10 As an investor would you like to evaluate the company information? If

yes then which information would you like to seek?
PREFERENCE FOR COMPANY INFORMATION
PARTICULAR
RESPONDENTS
YES
106
NO
94
TOTAL
200
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Page 72
TYPE OF INFORMATION
PARTICULAR
RESPONDENTS
COMPANY BACKGROUND
28
FINANCIAL RATION
19
QUATERLY RESULTS
21
RECENT DEVELOPMENTS
22
BALANCE SHEET & P/L A/C
16
TOTAL
106
Q-11 In general in market the minimum brokerage slot is Rs. 500000, so as

a trader what minimum slot you expect from the company?
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Page 73
For normal persons trading slab of 500000 is very high but for hard core
traders is less. On and average 250000 is the desirable turn over to seek
discount from the DPs.
Q-12 As a regular trader how many time of exposure you seek from your
DP?
CUSTOMER PREFERENCE FOR THE EXPOSURE OR MARGIN MONEY
PARTICULAR
1 2 3
4
5
6
7 8 9 10
>10
RESPONDENTS
0 7 9 42
46
16 8 6 7 23
36
For majority of the players 4 times exposure is sufficient to play intraday or

delivery. But trader whose turnover is higher than certain extent is seeking
for more than 10 times.
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Page 74
Q-13 As a customer which kind of extra benefits you seek out of product?
PREFERENCE FOR EXTRA PRODUCT BENEFITS
PARTICULAR
RESPONDENTS
VARIOUS SCHEMES
93
DISCOUNTS
96
ANY OTHER
11
TOTAL
200
Q-14 Would you like to have online registration in your product?

PREFERENCE FOR ONLINE REGISTRATION
PARTICULAR
RESPONDENTS
YES
154
NO
46
TOTAL
200
www.techshristi.com
Page 75
More than 75% of the respondents are seeking the facility of an online
registration to reduce the tedious process of filling up long form and to cut
down time consumption on the same.
Q-15 Are you satisfied with your back office access?

SATISFACTION LEVEL WITH BACK OFFICE ACCESS
PARTICULAR
YES
NO
TOTAL
ICICI DIRECT.COM
35
11
46
KOTAK
29
7
36
Emkay
19
8
27
SHAREKHAN
28
4
32
IL&FS
16
8
24
OTHERS
21
14
35
TOTAL
149
51
200
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Page 76
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Page 77
Majority of the customers are satisfied with the back office access and timely
updation of the various accounts and statement and along with the
generation of the various reports.
Q-16 Being fast profit generating industry, what will be growth of the online
trading industry?
POTENTIAL GROATH OF THE ONLINE TRADING INDUSTRY
PARTICULAR
RESPONDENTS
LIMITED
26
MODERATE
59
TREMENDOUS
98
CAN NOT SAY
17
TOTAL
200
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Page 78
CONCLUSION
Each and every beginning has an end in the same ways, each and every
introduction has conclusion. We are thankful and express our gratitude who
have directly or indirectly co-operated us in preparation of our project report
and suggested some New ideas.
We did our summer industrial project in the IL&FS Investsmart Ltd. as

partial fulfillment of our course curriculum. We have worked on Online
trading in equity market with IL&FS Investsmart.
During our course of training, we interacted with many people of

Ahmedabad city and outside. We also learned the basic fundamentals of
online trading; demat accounts and transactions in stock market.
This training has been the first time practical exposure to us to the corporate
world and thats why this training has been the immense professional value
to us.
www.techshristi.com
Page 79
BIBLIOGRAPHY
Financial Management
By Prasanna Chandra
NCFM-Capital market (Dealers) module
WEBOGRAPHY
www.investsmartindia.com
HT
TH
www.ilfsindia.com
www.bseindia.com
HT
TH
www.nseindia.com
HT
HT
www.sebi.gov.in
TH
www.google.com
HT
TH
TH
www.wikipedia.com
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A

ONLINE TRADING IN EQUITY MARKET

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

We wish to express our deep sense of gratitude towards Ms.Jignasha Sevak

We are greatly indebted to Mr.A.H.Kalro, the director of AES Post Graduate

AES Post Graduate Institute of Business Management

Being Management students, we need to understand how industry analysis

AES Post Graduate Institute of Business Management

History of stock Market-Global Scenario

Indian Stock Market

Bombay Stock Exchange (BSE)

National Stock Exchange of India Limited (NSE)

Primary & Secondary Market

Depository Exchanges and their Participants

Rematerialization and Dematarialization

Trading Online & Offline

History Global Scenario & Indian Context

Working of On-Line Trading

Advantages & Disadvantages

AES Post Graduate Institute of Business Management

Advantages & Disadvantages

Online Products at IL&FS InvestSmart

Methodology of Reserch Design

Process of Project Work

AES Post Graduate Institute of Business Management

WHY SHOULD INVEST IN SHARE ?

RETURNS ON DIFFERENT TYPES OF INVESTMENT BETWEEN 1980 AND 2005

Bank Fixed Deposits

*Sources: RBI Handbook of Statistics, BSE India

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

IL&FS Investsmart Limited (IIL), formally Investsmart India Ltd. was

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

a threeyear non-compete agreement, INR820.1 million (approximately

Mr. Ravi Parthasarathy

Managing Director & CEO

Mr. James Leslie Whiteford

Executive Director-Finance & Operation

Mr. Sachin Joshi

Executive Director-Retail Business

Mr. Deepak Sharma

Chief Technology Officer

Mr. Kersi Tavadia

AES Post Graduate Institute of Business Management

Table A.1 Financial Results

AES Post Graduate Institute of Business Management

IL&FS InvestSmart Limited (IIL) is an initiative in the field of

IL&FS InvestSmart Limited (IIL) is an initiative in the field of

AES Post Graduate Institute of Business Management

Compliance and Regulation When dealing with Investsmart,

AES Post Graduate Institute of Business Management

Trading Online Access the InvestSmart secure Internet trading

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

Experts identify a number of stock types that people can acquire.

AES Post Graduate Institute of Business Management

done in the primary market and subsequent trading is done in the

AES Post Graduate Institute of Business Management

spreading rumors intended to lower the price of government funds. There

AES Post Graduate Institute of Business Management

INDIAN STOCK MARKET

AES Post Graduate Institute of Business Management