SUMMER INTERNSHIP REPORT ON

³COMPARATIVE STUDY OF BROKERAGE P LANS OF FULLERTON SECURITIES & WEALTH ADVISORS LTD. WITH VARIOUS BROKERAGE FIRMS´
SUBMITTED BY Navjot Singh Khurana Univ.Roll. No. ± 8100132030 UNDER THE GUIDANCE OF

Mr. Nipun Aggarwal Faculty of Research Methodology, GJ-IMT, Mohali

Mr. Amardeep Mahalwa Relationship Manager - Marketing, FULLERTON SECURITIES & WEALTH ADVISORS LTD, Chandigarh

Approved by All India Council for Technical Education, Govt. of India. Punjab Technical University, Jalandhar

Declaration
I hereby declare that this report on ³COMPARATIVE STUDY OF BROKERAGE PLANS OF

FULLERTON SECURITIES & WEALTH ADVISORS LTD. WITH VARIOUS BROKERAGE FIRMS´ has been written and prepared by me during the ³SUMMER INTERNSHIP
PROGRAM.´ This project was done under the able guidance and supervision of Prof. Nipun Aggarwal, Faculty, Gian Jyoti Institute of management and Technology and Mr. Amardeep Mahalwa, Relationship Manager, Fullerton Securities & Wealth Advisors Ltd., Chandigarh in partial fulfillment of the requirement for the Bachelor of Business Administration Degree course of the Gian Jyoti Institute of management and Technology (GJ-IMT). I also declare that this project is the result of my own effort and has not been submitted to any other institution for the award of any Degree or Diploma. Place: Chandigarh Navjot Singh 8100132030

My sincere gratitude Mr. . Nipun Aggarwal. Fullerton Securities & Wealth Advisors Ltd. Amardeep Mahalwa. overwhelmed me during the project.). whose constant support and blessings helped me throughout this project. (Relationship Manager.) and MR. (Faculty. the same happened with me during this project. Fullerton Securities & Wealth Advisors Ltd. for providing me with an opportunity to work with Fullerton Securities & Wealth Advisors Ltd. my heart felt love for my parents.Acknowledgements Sometimes words fall short to show gratitude. Last but not the least. I also thank Prof. Gian Jyoti Institute of management and Technology) who has sincerely supported me with the valuable insights into the completion of this project. The immense help and support received from Fullerton Securities & Wealth Advisors Ltd. MOHIT SINGLA (Regional Head.

Table of Content S.no Chapter-1 1. Chapter -2 2. iii. i. Topic Introduction to project Introduction to Industry Introduction to company Review of Literature Page number . ii. i.

no Topic Page number .List of Tables S.

List of Figures S.no Topic Page number .

.

for Fullerton Securities it is of utmost importance to have satisfied existing customers as well as to attract the other customers. or even trade with other investors via ECN's (electronic communication networks). investors can now enter orders directly online. Kotak Mahindra. Now the brokers are more concerned about their customers to improve their performance. Share khan. Hence. Most of the brokerage houses have started providing the facilities of online trading to their customers. Earlier Trading was confined in limited boundaries but now the scenario has been totally different after the entrance of online trading. Introduction to Project Globalization has proved to be a boon for the Indian economy. Also there have been a drastic increase in the volume of share traded on stock exchange and with that the online trading has shown Bull Run. the project is a step towards the same. The project was under taken as to study the Indian online trading. Every sector of the economy has shown an outstanding performance after globalization. ICICI Direct etc is rising Fullerton Securities intends to built up a loyal customer base . The sector is undergoing fundamental changes that have diluted its traditional role of protecting small deposits against capital and income risk and facilitating the conversion of Savings into investment. Today even the banks with the view of expansion and large number of customers has started providing the online trading terminal to the customers. In this era of competition it¶s becoming difficult for the organizations to acquire and retain the customers. The project in Fullerton Securities is to figure out the potential brokerage plans. As the competition from big players of online trading like Religare. ³Customer Relationship and Branch Operations´ believes that ³They would not remember what you did but they will always remember what you said´. After globalization there has been a tremendous growth in the Indian economy. There is a cut throat competition between the broking houses. . which can undertake the various products and services offered by the Fullerton Securities. With the advent of the internet.I. With the help of this project Fullerton Securities & Wealth Advisors Ltd. could tap the Customers potential in investment and which would provide them various opportunities of increasing the customer base. This project has been a great learning experience for me and at the same time it gave me enough scope to implement my analytical ability.

1) .Increasing Internet trading volume Online trading is the service offered on the internet for purchase and sales of shares. From the past two years the volume of the internet trading has increased largely. These orders are routed to the stock exchange without manual intervention and executed their own in the matter of a few seconds. In the real world you place orders on your stock broker either verbally or in a written form. In online trading you will access a stock broker¶s website through your internet enabled PC and place orders through the brokers internet based trading engine. (Figure no.

All the data for the study was collected through responses received directly from the broking firms. products and growth areas. At present apart of brokerage business industry is also offering wide range of financial services. . A majority of members have memberships in more than one stock exchange and across equities. Religare. Although there are more than 9000 brokers registered with SEBI 80% of the turnover in NSE and BSE is accounted by about 100 brokers. sub brokers. terminal. Post liberalization there have been number of changes. 2001). equity derivatives and commodities futures in domestic and International stock exchange. and Edelweiss) received huge response (Indian catalog. branches. Deepening financial system and economic growth has provided growth and expansion opportunities to broking firms. despite this the stock broking industry was at its pace and retained its sustainable growth. pertinent to the equity broking industry. market. Access to public equity markets and growing international investor¶s interest has enabled them to raise resources. we take the database of over 394 broking firms. To study the trend in the stock broking industry.Introduction to Brokerage Industry Post major reforms initiative in early 2000s brokerage industry in India is experiencing rapid growth and diversity. These developments have resulted in huge spurt in business and also growing market share of the large sized brokerage houses has led to surge in enterprise value. One of the oldest trading industries that have been around even before the establishment of BSE is the Indian Broking Industry. such as region. At the same time global and private equity firms have taken stake in brokerage firms. The insights have been arrived at through an analysis on various parameters. Industry Insight Majority of the broking firms entered the business post 1990. In the year 2007 IPOs of large firms (Motilal Oswal. On the back of growing equity culture broking activity is spreading in Tier II and Tier III cities in India. In India there are about 45 equity brokerage houses that are at present listed in the stock exchanges.

Some key characteristics of the sample 394 firms are: On the basis of geographical concentration. whereas in the debt market. 84% firms have expressed interest in expanding their institutional clients. 11% in North and 4% in East. 7% at BSE and 45% at both. In terms of sub-brokers. 13% in the South and 10% in the East. In the cash market. 65% between 1950-1995 and 32% post 1995. 24% are located in South and 5% in East. 66% firms intend to increase FII clients and 43% are interested in setting up JV in India and abroad. Around 24% firms are located in the North. around 34% firms¶ trade at NSE. 31% trade at NSE. West has 31%. 4% in Chennai and 29% are from other cities. i. 40% are located at Mumbai. 62% firms have provided their website and around 94% firms have email facility. 7% in Kolkata. 3% firms started broking operations before 1950. the West region has the maximum representation of 52%. 26% at BSE and 43% at both exchanges. In terms of IT penetration. Majority of branches are located in the North. 48% trade at NSE. 29% in West. In the derivative segment. 12% in Delhi. around 55% are located in the South. 14% at BSE and 52% trade at both exchanges.e. 8% in Ahmadabad. On the basis of terminals. around 40%. In terms of various areas of growth. (Graph 2) .

Branches & Sub-Brokers The maximum concentration of branches is in the North. followed by the Western region. with 31% branches. (Graph 3) . In case of sub-brokers. West and North follow. Around 24% branches are located in the South and East constitutes for 5% of the total branches of the total sample. with 30% and 11% sub-brokers respectively. with as many as 40% of all branches located there. whereas East has around 4% of total sub-brokers. almost 55% of them are based in the South.

In Bull Run they gain confidence to invest but in correction phase they lose confidence easily. Institutional and other high value high volume investors prefer to trade with so called blue chip brokers. High competition among Stock brokers has put significant pressure on the prices. Bulk of client base is made up of retail investors. . Market consolidation and merger are expected to keep the broking industry viable in the long run. Demanding customers asks for 24/7/365 access to information and transaction capability.Where one firm looses out to other Lack of well established branches put smaller brokers at a disadvantage when compared to larger Brick and Mortar players who have presence in every corner of the country. Providing it with minimum overheads is very challenging especially for newer firms who are yet to realize margin of scale. Retail investors are ³easy come easy go´ accompanied with inconsistent trading habits.

First compiled in 1986. 128 years of experience seems to be a proud milestone. The SENSEX captured all these events in the most judicial manner. the country's capital markets have passed through both good and bad periods. The Stock Exchange. BOMBAY STOCK EXCHANGE (BSE) Bombay stock exchange is the oldest stock exchange of India For the premier Stock Exchange that pioneered the stock broking activity in India. liquid and representative companies. Mumbai" by paying a princely amount of Re1.Stock Exchange . The growth of equity markets in India has been phenomenal in the decade gone by. Since then. . SENSEX SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. All major index providers like NIKKEI. including the Over the Counter Exchange of India (OTCEI) for small and new companies and the National Stock Exchange (NSE) which was set up as a model exchange to provide nation-wide services to investors. The base year of SENSEX is 1978-79 and the base value is 100. NASDAQ and DOW JONES use the free float methodology. One can identify the booms and busts of the Indian stock market through SENSEX. SENSEX is a basket of 30 constituent stocks representing a sample of large. The journey in the 20th century has not been an easy one. A lot has changed since 1875 when 318 persons became members of what today is called "The Stock Exchange. The "Free-float Market Capitalization" methodology of index construction is regarded as an industry best practice globally.Business Trends INDIAN STOCK MARKETS AND EXCHANGES There are 23 recognized stock exchanges in India. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. there was no scale to measure the ups and downs in the Indian stock market. The index is calculated on the ³Free-float Market Capitalization´ methodology. Mumbai (BSE) in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market. Till the decade of eighties. The index is widely reported in both domestic and international markets through print as well as electronic media.

which recommended promotion of a National Stock Exchange by financial institutions (FI¶s) to provide access to investors from all across the country on an equal footing. Based on the recommendations. NSE towers over all the other stock exchanges in the country. When India¶s National Stock Exchange (NSE) was started in 1994. arbitrary speculative trade. The Stock Exchange. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act. and lengthy trade settlements. savvy stockbrokers? Critics even went to the extent of warning that NSE¶s sophisticated systems would be a misfit in an Indian capital market dominated by physical deliveries. For a mass of investors across the country. NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. Before Nifty came into existence trading of index concept was not present it was introduced by Nifty and is present in it only.NATIONAL STOCK EXCHANGE (NSE) The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. Nifty is the focal point of investors. few believed it would survive. as it provides trading the shares as well as index in futures and options. Today. till date. (NSE) came out with a stock index that subsequently became another barometer of the Indian stock market known as NIFTY. 2004) the National Stock Exchange has tilted the market system in favour of investors and away from a significant bias in favour of intermediaries. the NSE is now the focal point for trading in stocks. with number of trades touching 2. and futures and options. 1956 The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. In a ten-year period (NSE completed a decade on June 30.5 million a day and turnover touching turnover touching Rs 100 billion in value terms. . How could a stock exchange run by a team of untested professionals headed by a former development banker succeed against existing stock exchanges run by third generation.

654 cr through 451 issues in 2006-07. These holdings are taken for 1 month. Investors while taking over these lots and coming under the contract takes the position of the shares by paying the 1/3rd amount of the total holdings. the investor has to pay:. 2 months and three months according to the investor¶s preference. In the call option investors is benefited if market drives up in future and in put will be benefited if it slips down. Total of Rs 42. This formula explains that as investor is interested in taking 2 lots of reliance of 100 shares of Rs.in just Rs.143 cr through 558 issues in 2007-08 against Rs 55. 500 etc.504 cr raised through 77 IPOs in 2006-07. Holdings of investors = (shares lot * price of the lot) / 3. (could be understood by a formula).(2*100*900) / 3 = 60000/Which shows the investor is taking the position of Rs.508 cr through 124 issues in 2006-07. 900 . 60000/.in future market which the area of attraction of this particular market. Derivatives are the future market where investors have the option of dealing in the price list of futures for which there a separate index is present known as NIFTY FUTURE. OPTIONS ± Option is a contract where the investor has two options to deal with CALL and PUT. Cash market is simply the equity market where investors have to pay the security amount which is done in BSE also but in NSE investors has the choice of dealing in derivatives.595 cr was raised through 85 IPOs in 2007. 200. 180000/.029 cr were raised through 124 public and right issues against Rs 33. In Derivatives there are two choices available for an investor FUTURES AND OPTIONS. 74. The beauty of this contract is that the remaining 2/3rd money of the holdings are paid by the broking house the investors dealing with. The concept of call and put is opposite to each other call is the contract where the investors believe that the market is going to be BULLISH in near future and put option is taken when he thinks that the market is going to be BEARISH in the future. Investor coming into this contract should know that by the time of contract he is in like of 1 or 2 months investor should clear its position before the last Thursday of the expiry month. .Cash market and derivatives National stock exchange gives the investors different option where an investor can deal the equities into different market situations like cash market and derivatives. Out of this Rs 87. Funds mobilized in primary market rose to Rs 1.08 against Rs 28. FUTURE ± In future market shares are deal in lots these lots could be of different numbers like 100.

26.2008 Stock exchanges (cash Market) Stock Exchanges (Derivative Market) Brokers (Cash Segment) Corporate Brokers (Cash Segment) Sub Brokers (Cash Segment) Brokers (Derivatives) FII Custodians Depositories Merchant Bankers Bankers to an Issue Underwriters Mutual Funds 19 2 9487 4183 44073 1442 1319 15 2 155 50 35 40 (Table 1) .05.292 in March2007.984 cr in 2006-07. Cumulative Assets under management rose to Rs 5. Institutional Structure of the Indian Stock Market Market Intermediaries Number of Intermediaries as on March 31.152 in March 2008 from Rs 3.53.801 cr in 2007-08 with a 63% rise from Rs 93.Net resource mobilization by mutual funds grew to Rs 1.

Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading.Stock Trading Traditionally stock trading is done through stock brokers.You cannot trade if you are not on the computer where you have installed trading terminal software.  It requires high speed internet connection. alerts. Installable software based Stock Trading Terminals These trading environments require software to be installed on investors¶ computer. There are two different type of trading environments available for online equity trading. personally or through telephones. Advantages:  Orders directly send to stock exchanges rather than stock broker. Online Stock Market Trading is an internet based stock trading facility.  It provide almost each and every information which is required to a trader on a single screen including stock market charts. some issues like location constrains. This software is provided by the stock broker. In this case these Online Stock Trading companies are stock broker for the investor. miss communication etc start growing in stock broker offices. Mostly Online Trading Websites in India trades in BSE and NSE. stock market news etc. This makes order execution very fast. busy phone lines. Disadvantages:  Location constrains . These kind of trading terminals are used by high volume intraday equity traders. As number of people trading in stock market increase enormously in last few years.  These trading terminals are not easily available for low volume share traders. . Investor can trade shares through a website without any manual intervention from Stock Broker. live data. They are registered with one or more Stock Exchanges. This software requires high speed internet connection.

. Below are few advantages and disadvantages of Online Stock Market Trading:Advantages of Online Stock Trading (Website based):         Real time stock trading without calling or visiting broker's office. Mutual Funds and Bonds. graphs etc. Customer service through Email or Chat. graphs and recommendations to do analysis of stocks.sometime the website is too slow or not enough user friendly.Web (Internet) based trading application This kind of trading environment doesn't require any additional software installation. historical data¶s. Display real time market watch.especially for people who don¶t know much about computer and internet. Disadvantages of Online Stock Trading (Website based):  Website performance .  Little long learning curve . Check the trading history. D-mat account balance and bank account balance at any time. Set alert to inform you certain activity on the stock through email or SMS. These are like other internet websites which investor can access from around the world through normal internet connection. Place offline orders for buying or selling stocks. Provide online tools like market watch. Investment in IPOs.

Fullerton Financial Holdings Pte Ltd .

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