CANARA BANK SECURITIES LTD

Study the process of online trading,

competitor
analysis and promotion of online trading
facility
(Canmoney.in)

Submitted in partial fulfillment of

Master of Business Administration

:-Submitted by:-

SWATI JAIN

MBA (II YR)

 Preface

For management career, it is important to experience the real life situations. In order to achieve

positive and concrete results, along with theoretical concepts, the exposure towards corporate

world is very much needed. To fulfill this need, this practical training is required.

This report documents the work done during the summer internship at Canara Bank Securities

Ltd, Mumbai from 23 April 2010 to 19 June 2010.The title of the project undertaken was

‘ Study the process of online trading, competitor analysis and promotion of online trading

platform of Canara bank (Canmoney)’.

Online trading in India is the internet based investment activity that involves no direct

involvement of the broker. There are many leading online trading portals in India along with the

online trading platforms of the biggest stock houses like the National stock exchange and the

Bombay stock exchange. The total portion of online share trading India has been found to have

grown from just 3 per cent of the total turnover in 2003-04 to 16 per cent in 2006-07.This

immense growth in online trading is compelled by benefits provided by it like reduced stock

broker commission, control over your decision to buy or sell can make use of all type of

information provided like stock charts etc, timeliness in trading which leads to quick decision

making.Understanding the process behind online trading and promoting it among the customers

provides immense opportunities to learn management tactics & nuances of capital market.

Swati Jain

Mumbai
28 June 2010

Executive Summary

The project on ‘Study the process of online trading , competitor analysis and promotion of
online trading platform of canara bank’ was undertaken during summer internship.The various
processes behind the execution of online trading were studied like how the transaction takes
place, various modes of placing the transaction, electronic settlement of trade, equity analysis for
the research reports to be sent to clients thrice a day. Competitor analysis was done comparing
the strengths and weakness of other online trading facilities as compared to canmoney .This led
to spotting of many USPs of ‘canmoney’. Promotion of online trading account was done
targeting the customers of CASA accounts .Bank branches were made the selling points where
potential customers can be spotted and made aware about the advantages of canmoney and
ultimately customers of canmoney.

During the project it was found that customers lack knowledge about online trading and are
afraid of using it .People fear losing money in absence of any personalized investment guidance.
Also not so internet savvy customers demand a personalized demo facility to be given to them so
that they can easily use the online facility .Such facilities are not available at selling points.

It is recommended that the company should hold stalls and seminars at various corporate
organizations in order to make people aware about the USPs and benefits of ‘Canmoney’. This
would help them increase their customer base. Also internet savvy customers of canara bank
should be spotted and converted into the customers of online trading accounts.
 List of tables graphs and figures

Tables

Table 3.1 Comparative study of various broking houses 21

Graphs

Graph 3.1 Comparison of Account opening charges 22

Graph 5.1 Preference of people towards different types of trading

Figures

Figure 2.1 Brokerage scheme of Canmoney 15

Figure 2.2 Brokerage scheme of ICICI DIRECT 20

Figure 4.1 Snapshot of Day trading report 24

Figure 4.2 Pivot point chart 26

Figure 4.3 Break out trade chart 27

Figure 4.4 Pull back trade chart 27

Figure 4.5 Break out of resistance chart 28

Figure 4.6 Advanced method chart 29

 Figure 5.1 Process of Online Trading 30

Figure 5.2 Mechanics of Online Trading 33

TABLE OF CONTENTS

Preface (i)

Acknowledgement (ii)

Executive Summary (iii)

List of graphs & figures (iv)

Table of Contents (v)

Chapter 1 Introduction & Research Methodology 1

1.1Introduction to online trading 1

1.1.1 Difference between online and offline trading 3

1.1.2 Electronic settlement of trade 4

1.2 Research Methodology

1.2.1 Research Objective 7

1.2.2 Primary Data 8

1.2.3 Secondary Data 9

1.2.4 Assumptions & Limitations 10

Chapter 2 Canara Bank securities Ltd and Canmoney 11

2.1 Canara Bank Securities Ltd 11

 2.2 Canmoney 13

Chapter 3 Comparison of Canmoney with other trading facility 19

3.1 Other Online Trading facilities in the market 19

3.2 Brokerage scheme of ICICI DIRECT 20

3.3 Comparison between major broking firms 21

Chapter 4 Introduction to Equity Research 23

Chapter 5 Process of Online trading and its advantages

5.1 Process of Online trading 30

5.2 Problems of online trading 36

5.3Why people are inclined towards Online Trading 33

Chapter 6 Findings & recommendations 41

Bibliography 42

Authors Profile 43
 Chapter 1

Introduction and Research Methods

1.1 Introduction to Online Trading

“Change is the law of nature”. There were times when man was a wanderer or a normal. He
himself had to go place to place in search of food, water and now everything is available at your
doorstep just at the click of the mouse. The growth of information technology has affected
almost all sectors of life. Internet has enabled us to get every information at our doorstep. When
Internet has affected all sectors how could “stock markets” the most important player of the
economy, can remained far behind. Like all other sectors Internet has set its foot in the stock
markets also.

Online trading commissions are clearly posted on the websites of the various services, and are
typically a fixed rate charge, depending upon the type of security being traded and the size of
trade. In theory, therefore, an Interest investor always knows what commission he is being
charged on each trade. Internet investors can take as much time as they would like to take prior
to placing a trade order. Similarly the online investor likely does not have to worry that his
broker is making unauthorized trades. Since there is no individual broker making a commission,
the only person who is authorized to trace in a the account is the actual investor. Furthermore,
the internet investor can never become a victim of excessive trading (where for the broker) since
the investor maintains total control over the number of transactions which take place in the
account.

All of these positive features of internet trading may lead the unwary investor to believe that
Internet trading is a way to take control of their finances and save more money in the process.
Unfortunately, this is not always the case. The advantages of Internet stock trading have also its
weaknesses and these weaknesses present significant drawbacks for the average investor.

First and foremost, the average investor is not an expert in the financial markets. There is a
danger for allowing the autonomy of online trading to hull you into the belief that you are an
expert investor. An online investor sitting at home at a personal computer also foregoes proper
investment advice and financial planning, perhaps among the most valuable services provided by
traditional brokers.

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There are, of course, additional risks relative to performing transactions over the Internet
especially on a shared computer. Those people whom investors have provided their account
number and password can freely trade that account while the investor will have little, if any,
resource against the brokerage firm for the breach of security.

When was online trading introduced in INDIA?

Online trading started in India in February 2000 when a couple of brokers started offering an
online trading platform for their customers.

Online trading by NSE & BSE

The central computer located at the Exchange is connected to the workstations of the
Brokers.through satellite using Very Small Aperture Terminals (VSATs). Orders placed at the
Brokers' workstations reach the central computer and are matched by the computer based on
price and time priority.

Both the exchanges have switched over from the open outcry trading system to a fully
automated computerized mode of trading known as BOLT (BSE On Line Trading) and NEAT
(National Exchange Automated Trading) System. It facilitates more efficient processing,
automatic order matching, faster execution of trades and transparency. The scrips traded on the
BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' group shares represent
those, which are in the carry forward system (Badla). The 'F' group represents the debt market
(fixed income securities) segment. The 'Z' group scrips are the blacklisted companies. The 'C'
group covers the odd lot securities in 'A', 'B1' & 'B2' groups and Rights renunciations. key
regulator governing Stock Exchanges, Brokers, Depositories, Depository participants, Mutual
Funds, FIIs and other participants in Indian secondary and primary market is the Securities and
Exchange Board of India (SEBI) Ltd.

2
1.1.1 Difference between online and offline trading

Nevertheless, with all the convenience of online trading there are still investors who
prefer the old fashion way of offline trading. Offline trading has lost some popularity but it is
still the main form of investing. Offline trading offers many benefits as well.

1. The one benefit that an investor appreciates the most is that they are not alone when making
investment decisions.

2. There are experienced and professional brokerage companies that handle their investments for
them.

3. Investors are not faced with the challenge of making these vital investment decisions;
especially, if they do not have the experience necessary to make the appropriate investments.

4. Also, there is someone there to answer any questions that may cause concerns. Not to
mention, with offline trading mistakes are less likely to take place. No one wants to throw their
money away or stand by and watch someone else throw their money away. It may be wise to hire
a professional to assist you in making the correct investment decisions if you feel you lack the
knowledge necessary.

Points of difference between online trading and ofline trading are as follows:
1. Online trading is very expensive as compare to manual trading or offline trading.

2. Online trading consumes less time as compare to manual trading.

3. Online trading has very helpful to finding the records easily but offline trading takes more
time to finding the records.

4. In the help of online trading, there is no chance of any errors while doing the trading. in
offline trading there are some errors exist like barriers of communication .

5. With the help of online trading, we know the international market rate of share very easily.

DEMATERIALISATION OF SHARES

Dematerialization is the process wherein shares certificates or other securities held in

physical form are converted into electronic form and credited to demat account of an investor
opened with a depository participant. SEBI has made compulsory trading of shares of all the
companies listed in stock exchanges in demat form with effect from 2nd January 2002.The
procedure of opening a demat account with DP is similar to opening an account with a bank.

3
 1.1.2 Electronic Settlement of Shares

A. Procedure for purchasing dematerialized securities

The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities.

1. Investor instructs DP to receive credits into his account in the prescribed form. There
may be one time standing instruction or separate instruction each time to receive credits.
2. Investor purchases securities in any of the stock exchanges linked to depository through a
broker.
3. Broker receives payment from investor and arranges payment to clearing corporation.
4. Broker receives credit to securities in clearing account on the payout day.
5. Broker gives instructions to DP to debit clearing account and credit client’s account.
Investor receives shares into his account by way of book entry.

B. Procedure of selling dematerialized securities

The procedure for selling dematerialized securities in stock exchanges is similar as selling
physical securities. The only major difference is that instead of delivering physical securities to
the broker, the investor instructs his DP to debit his demat account with the number of securities
sold by him and credit the brokers clearing account. The procedure for selling dematerialized
securities is given below:

1. Investor sells securities in any of the stock exchange linked to depository through a
broker.
2. Investor instructs his DP to debit his demat account with the number of securities sold
and credit the broker’s clearing account.

4
3. Before the pay-in-day, broker of the investor transfers the securities to clearing
corporation.
4. The broker receives payment from the stock exchange.
5. The investor receives payment from the broker for sale of securities in the same manner
as received in case of sale of physical securities.

REMATERILISATION OF SHARES

Rematerialization is the process of conversion of electronic holdings of securities into

physical certificate form. For rematerilisation of scrips, the investor has to fill up a remat request
form (RRF) and submit it to the DP. The DP forwards the request to depository after verifying
the investor’s balances. Depository in turn initiates the registrars and transfer agent or the issuer
company. RTA/ Company prints the certificates and dispatches the same to the investor.

Market timings:

Trading on the derivatives segment takes place on all days of the week (except Saturdays and
Sundays and holidays declared by the Exchange in advance). The market timings of the
derivatives segment are:

Normal Market / Exercise Market Open time : 09:00 hours

Normal market close : 15:30 hours
Set up cut of time for Position limit/Collateral value : till 15:30 hrs
Trade modification end time / Exercise Market : 16:15 hours

Advent of online trading

The history of e-trading goes back to 1983, when a doctor in Michigan placed the first online
trade using E*TRADE technology. what began with a single click over 16 years ago has now
taken the world by storm. The concept was visualized by one bill porter, a physicist and inventor

5
with more than dozen of patents to his credit, who provided online quotes and trading services to
fidelity, Charles Schwab, and quick and Reilly. 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 the solution at hand, some day everyone would own computers and invest
through them with unprecedented efficiency and control. And today his dream has become a
reality.

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1.2 Research Methodology

1.2.1 Research Objective

The basic task of research is to study the process behind online trading platform of

canara bank generate accurate information for use in competitor analysis and to promote

this facility among the customers. Research can be defined as the systematic and objective

process of gathering, recording and analyzing data for aid in making business decisions.

Studying the process relates to study of process of online trading i. e the different steps

involved in the execution of online trading like equity analysis for the daily reports sent to

customers,processing of the transaction placed by the customer sending of contract notes to

the customers.

Competitor analysis is an assessment of the strengths and weaknesses of current and potential

competitors. This analysis provides both an offensive and defensive strategic context through

which to identify opportunities and threats.The competitor for canmoney are ICICI DIRECT,

HDFC Online Trading, ShareKhan,Religare Online Trading Platform etc.To study their strength

and weakness with respect to Canmoney is one of the major task of the research.

Promoting the Online trading facility among the customers involves making the customers

aware about the facility and its USPs and advantages as compared to competitors and

selling the customers 3 in 1 Online trading Accounts.Exising customers were contacted in

the branches of canara bank and by telecalling.

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 1.2.2 Research Methodology

There are basically two techniques adopted for obtaining information:

Primary Data.

Secondary Data.

Primary Data is gathered specifically for the project at hand through personal interviews with clients

For this project the following questions were asked from the clients to know their needs of

online trading account and making them aware regarding the same.

1.)Whether they trade in shares and stocks?

2)If yes, what is the mode of trading , whether they trade through a broker or use online trading

3)If online trading which facility they are using?

4)If not Canmoney , then what are the brokerages charged by their broker?

5)What extra facilities customers want in their existinf online trading facility?

6)How much amount is invested in shares?

Through the above set of question we got to know the customer preferences and trend in online

trading.

8
Secondary data is previously collected and assembled for some project other than the one at

hand. It is gathered and recorded by someone else prior to current needs of the researcher. It is

less expensive than the primary data.

Secondary Data

For this project the secondary data collected was from websites of canmoney ,NSE, BSE

To study the process behind online trading.Also secondary data was required for equity

Analysis.

Data Collection:

Data is collected from secondary sources.

Sources of data collection are:

1) www.canmoney.in

2) www.nseindia.com

3) www.bseindia.com

4) www.chittorgarh.com
5) www.ibef.org
6) www.traderji.com

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 1.2.3 Assumptions & Limitations

Assumptions:-

1)The only assumption made in the research is all the clients have e-mail ids and are internet
savvy.This is because only an internet user will be able to use online trading facility.

2)The online trading facility is robust and secure.

Limitations
Following are the limitations that were observed during the project.
1)The advisory services being promised by the brokers would be of little use to investors looking
for an insight into the market.
2)Clients already having accounts with other online trading houses were not willing to change
their services as they have been used to it
3) Canmoney has made a late entry into the market.Other competitors are already providing this
service from last 10 yrs.
4)If one like to ask his broker which stocks to invest in today , he may not be able to do so. If he
want advice on a particular stock in his portfolio he may not even be able to get that.

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 Chapter 2
Canara Bank Securities ltd.& Canmoney (Canara bank Online Trading Portal)

2.1 Canara Bank Securities Ltd

Promoters/Activity

The Company, a Subsidiary of Canara Bank was incorporated and accredited as a Primary
Dealer (PD) in 1996 in the name of ‘Gilt Securities Trading Corporation Limited. (GSTCL)’
with a paid-up capital of Rs.100 Crores.

The Primary Dealer activity of the Company was taken over by the parent Bank in February,
2007 and the Company is focusing on capital market related activities mainly into equity broking
and distribution of Financial Products.

The name of the Company has been changed as ‘Canara Bank Securities Ltd. (CBSL)’ in 2009.

The On Line Trading (OLT) in Equity and FNO is a product added by CBSL to Financial Super
Market of Canara Bank.

This facilitates seamless trading in stock market by investor clients of the Bank at their comfort
and convenience.

Priciple Objectives

To provide a viable and efficient institutional platform for competitive trading in equities.

To develop a Retail Equity market with broader investor base by offering enhanced trading
facility to the equity instruments and hassle-free & speedy service using state of the art
technology in the market.

To create an active secondary market for Equities, assure prompt settlement, Liquidity to the
instrument and transparency in dealing.

To provide Trading Convenience by way of:-

1)Efficient and Speedy On-Line Service

2)Prompt Settlement

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 3)Transparency in operation

Organisational setup

As per SEBI guidelines the Company has functional separation for.

Trading (Front Office)

Settlement accounting and Reconciliation(Back Office and Accounting)and

Monitoring and Control (Middle Office)

Similarly, there is a separation of transactions relating to Proprietary trads, Institutional accounts

and Constituents’ accounts.

The Company is Board managed. Day to day affairs are overseen by the Managing Director,
assisted by the executives heading the departments and supported by competent and experienced
staff, who are on deputation from Canara Bank.

Bank Initiatives:-

1) Migration of branches to CBS platform.

2) Opening of sub DP CENTRES.

3.) Call to the branches to observe OLT fortnight from 17.11.2008 to 29.11.2008,
OLT festival from 15.01.2009 to 31.01.2009 and
OLT Campaign from 02.03.2009 to 14.03.2009

4) OLT / DEMAT contest was observed in June 2009.

5) Concessions and waivers in charges for demat account opened as a part of OLT account

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 2.2 Canmoney

At present CBSL (Canara Bank Securities Ltd) offers following products through its online

trading portal www.canmoney.in.

1.Cash and carry (C&C) Delivery

2.Intra Day trading(IDT)

3.Buy in today sell out tomorrow(BITSOT)

4.Futures &Options(F&O)

5.Currency Futures(CDS)

6.Online Subscription to Mutual Fund schemes

7.Online Subscription to IPO’s

Cash & Carry (CNC) (Delivery):

Simple cash and Carry product, where in the user will be allowed to Buy a stock only against
available cash. The user will be allowed to sell a stock only if the user has marked a hold from
his Demat account.

Intra Day trading (IDT):

This product will work on the principle of allowing the customer to Buy or Sell against the
available margin (exposure). The margin is calculated based upon a multiplier assigned to the
client by CBSL. At the end of each trading session / day, all the outstanding positions will be
squared off. The square off will be triggered on time-based call, which will be set globally in the
surveillance of the system.

Buy In Today Sell out Tomorrow (BITSOT):

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 BITSOT is a facility wherein the customer is able to sell the shares that he has purchased even
before he receives the delivery of the shares from the Exchange. He will not have to wait till the
time he receives the delivery from the Exchange thus increasing his liquidity. Sale in BITSOT is
permitted only on T+1 day (and not on T+2 i.e. pay-in/pay-out date of the Exchange). In other
words, BITSOT shall be permitted only up to the day prior to the scheduled payout of shares
from the Exchange.

Futures and Options (F&O):

Online trading in F & O made easy against adequate deposit of funds.

Currency Futures (CDS)

Trading in Currency Futures, a Standardised Currency Derivative product is offered to all the
registered clients. To begin with the product is offered offline i.e. orders can be placed only
through dedicated telephone. CBSL has plans to offer the product online shortly.

Online Subscription to MF Schemes

CBSL offers Online subscription to the clients in various schemes of Mutual Funds. The
facilities like purchase, additional purchase, redeem, SIP/SWP, Switch is offered online

Online Subscription to IPOs

CBSL ties up with various Lead Managers to offer Online subscription to Initial Public Offers
(IPO) coming to the market. As the facility is offered online, clients need not undergo the paper
work involved in applying for the IPOs.

AMO:-

After Market Orders (AMO) can be placed by the clients post market closure after the day end
process is completed at our office. Such orders are to be limit orders and to be placed after
allocating the fund / scrips in favour of the Company.

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 The Company’s day end process will be carried out during 6.00 p.m. to 8 p.m. every day.
AMOs will be queuing up in to the Exchange Order system at the start of the next trading
session. In case of insufficiency of funds / free stock, the orders will not be forwarded to the
Exchange. The success / failure of the order will be notified to the clients only on the next day
after commencement of trading hours."

Brokerage scheme provided by ‘Canmoney’

Figure 3.1

II. ACCOUNT OPENING CHARGES FOR OLT (On-Line Trading):

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Consolidated charges - Rs.500/- to be paid at the time of opening the account. (All-inclusive i.e.
charges towards BSE agreement, NSE agreement, DP agreement, Power of Attorney and other
expenses).

II. ACCOUNT OPENING CHARGES FOR OLT (On-Line Trading):

Consolidated charges - Rs.500/- to be paid at the time of opening the account. (All-inclusive i.e.
charges towards BSE agreement, NSE agreement,

DP agreement, Power of Attorney and other expenses).

III. OTHER INFORMATION:

1) Client to indicate option selected in the 3 in 1 application form. However, if no option is

exercised by the client, brokerage will be charged as per Option 1, by default.

2)Clients opting for Upfront brokerage have to necessarily remit applicable brokerage at the
beginning of each month. By opting any of the scheme under this option client authorizes the
Company to debit his account for the monthly upfront brokerage payable under respective
scheme. At the end of the validity period i.e. 1 month, minimum of the actual brokerage amount
collected during the month or the upfront brokerage collected shall be refunded to the client.

3) For Delivery and Non Delivery transactions under NBO & UBO, brokerage shall be charged
on both sides i.e. on purchase and sale side.

4)Under Turnover Based Brokerage Option (TBO), (option 3 above) Brokerage rate will be
same for both delivery and non delivery transactions and the brokerage will be charged on both
sides for Delivery & non delivery transactions.

5)Under TBO delivery and non delivery transactions will be clubbed together to determine the
turnover per day. Further, the turnover (both buy & sell) is reckoned segment wise, Exchange
wise.

6) Minimum brokerage per transaction day per segment shall be Rs.20/-.

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7)Minimum brokerage for ‘Option’ transactions made under F & O segment shall be Rs.50/- per
lot or the actual brokerage as per the applicable rate furnished above.

8)Further for F & O transactions, brokerage will be applied on single side i.e. sale side as
furnished above, where the trades are squared off on the same day.

9)For open positions carried forward, brokerage will be charged as stipulated above, on both
sides i.e. buy and sell side.

10)Special Brokerage scheme for Active Option Traders Cost to clients opting for this scheme:-
flat Brokerage at Rs.10/- per lot per leg of trade plus Rs.500/- per traded day towards software
charges Higher the lots traded per day, lower the effective cost per lot of option

11) For Currency Future transactions brokerage shall be charged at a flat rate of Rs.15/- per lot.
Brokerage shall be charged on both legs of the trade

12) Processing charges for change of Option / Scheme for brokerage shall be Rs.100 per request.

13)‘Month’ in the context of brokerage options/schemes shall refer to ‘calendar month’. Part of a
month shall be treated as a month.

14)Service Tax as applicable from time to time shall also be levied. (Current applicable rate is
10.30%).

15)All statutory levies like stamp duty, securities transaction tax, exchange turnover tax, SEBI
turnover fees etc., shall be charged on actual basis.

Canmoney Profit

Salient features of the Scheme:

a. Pay Rs.500/- towards Online Trading (OLT) application.

b. Eligible for refund of Rs.500/- in the brokerage expended within 3 months of opening the
account.

c. Refund is to the extent of actual brokerage collected or Rs.500/- whichever is lower.

17
d. Effectively, the OLT account comes FREE to clients as the amount paid is eligible for refund
from brokerage collected.

e. Refund will be done at the end of 3 months from the date of opening the account. (i.e. on the
last day of respective calendar month).

f. Scheme is effective from 01.07.2009.

g. Clients who have paid a sum of Rs.500/- towards application are only eligible for the refund.

h. This offer is valid for a limited period and Company may withdraw the offer at anytime at its
discretion.

i. Applicable DP charges are to be paid to Canara Bank.

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 Chapter 3

Comparison of Canmoney with other broking houses

3.1 Other online trading facilities available in the market :-

1.ICICI Direct

ICICI Web Trade Limited (IWTL) maintains www.icicidirect.com (herein after

referred to as the "Website") whereas IWTL is an affiliate of ICICI Bank Limited and
the Website is owned by ICICI Bank Limited. IWTL has launched and established an
online trading service on the Website

2.Sharekhan

Sharekhan Securities is one of the leading retail brokerage of Citi Venture which is
running successfully since 1922 in the country. Earlier it was the retail broking arm of
the Mumbai-based SSKI Group, which has over eight decades of experience in the
stock broking business. Sharekhan offers its customers a wide range of equity
related services including trade execution on BSE, NSE, Derivatives, depository
services, online trading, investment advice etc

3.HDFC Securities

HDFC security is the subsidiary of HDFC (Housing Development Financial

Corporation). www.hdfcsec.com would have an exclusive discretion to decide the
customers who would be entitled to its online investing services. www.hdfcsec.com
also reserves the right to decide on the criteria based on which customers would be
chosen to participate in these services .The present web site (www.hdfcsec.com)
contains features of services that they offer/propose to offer in due course. The
launch of new services is subject to the clearance of the regulators. i.e. SEBI, NSE,BSE.

4 Indiabulls

Indiabulls Securities Limited was incorporated as GPF Securities Private Limited on

June 9, 1995. The name of the company was changed to Orbis Securities Private
Limited on December 15, 1995 to change the profile of the company and
subsequently due to the conversion of the company into a public limited company;
the name was further changed to Orbis Securities Limited on January 5, 2004. The
name of the company was again changed to Indiabulls Securities Limited on
February 16, 2004 so as to capitalize on the brand image of the term “Indiabulls” in
the company name. ISL is a corporate member of capital market & derivative
segment of The National Stock Exchange of India Ltd.

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6.Religare Securities Ltd

Religare Securities Limited is a subsidiary company of Religare Enterprises Ltd

and involve in equity related services include online trading at BSE and NSE,
Derivatives, commodities, IPO, Mutual fund, Investment banking and institutional
broking services

Some other broking houses providing the online trading facilities are Reliance money,

Geojit Paribas, Motilal Oswal securities, Angel Broking etc

3.2 Brokerage Scheme of ICICI Direct

Figure 3. 2

20
3.2 Comparison between major brokerage firms

Table 3.1

21
 5 Paisa
ICICI HDFC
Canmoney (Indian Indiabulls
Securities Securities
Infoline)

Account
Opening Rs.750 Rs.799 Rs.500 Rs.750 Rs.900
Charges

Delive Intrad Delive Intrad Delive Intrad Delive Intrad Delive Intrad
Brokerage ry ay ry ay ry ay ry ay ry ay
(%)
0.75 0.15 0.75 0.15 .35 .05 0.25 0.07 0.5 0.10

Rs.20 or Rs.23 or Rs.23 or

Transactio 0.04% of 0.04% of 0.04% of
n Charges transaction, transaction, NIL transaction, Rs.17
(selling) whichever is whichever is whichever is
more more more

Exposure 4 4 5 2/4 12
NIL NIL NIL NIL NIL
on Cash times times times times times

Exposure
75% 0f the
on NIL NIL NIL NIL
Market Value
Securities

Minimum
- - - Rs.2,500 NIL
Margin

Annual
Maintenan
Rs.350 Rs.500 NIL Rs.300 NIL
ce
Charges

Banking
ICICI Bank HDFC Canara Bank - All Banks
facility

Net HDFC/ICICI/
Banking ICICI Bank HDFC Canara Bank -
facility Citibank

Thru Thru Thru

Charting NA NA
software software2 Software

22
Account Opening Charges

Graph 3.1

23
 900
800
700
600
500
400 Account opening fees
300
200
100
0
Canmoney ICICI Direct HDFC Indiabulls

3.3 Unique Selling Proposition of canmoney (USP)

1. Hold / Release functionality for both funds and stocks. No need to transfer funds / stock to the
company.

2. Exposure available upto 5 times the cash allocated under IDT.

3. Dial to trade facility.

4. After Market Orders (AMO).

5. Advantage of maintaining low cost CASA with CANARA BANK.

6. Canmoney Profit scheme.

7. Competitive brokerage rates.

8. Trade calls & Research Report.

9. “Pancharatna” account

Chapter 4

Introduction to equity Research

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 Securities research is a discipline within the financial services industry. Securities research
professionals are known most generally as "analysts," "research analysts," or "securities
analysts;" all the foregoing terms are synonymous. Securities analysts are commonly divided
between the two basic kinds of securities: equity analysts (researching stocks and their issuers)
and fixed income analysts (researching bond issuers). However, there are some analysts who
cover all of the securities of a particular issuer, stocks and bonds alike.

Securities analysts are usually further subdivided by industry specialization (or sectors) -- among
the industries with the most analyst coverage are biotechnology, financial services, energy, and
computer hardware, software and services

For Canmoney a team of researcher does a equity analysis and a report is sent to all the
customers thrice a day i.e morning, mid day and at the end of the day.

Value Picks are given for every fifteen days.

Fundamental studies are done for long term.They are done for the valuation of the company.

Technical studies are done for short time.This is done for speculation purposes.

The data for the stock price is taken from the data source Bloomberg.

Description

1) S1,S2,S3 are the support values i.e they indicate the three downside values in the stock price.

2) R1,R2,R3 are the resistance values i.e they indicate three upside values in the stock price

3) Pivot point is the predicted opening value of the stock for the day.This is calculated using

the pivot point formula.

4) RSI is therelative strength index.

5) If RSI is less than 25, it means stock is oversold i.e nobody is holding the stock.

6) If RSI is above 75 , it means stock is overbought i.e everyone is holding the sold

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Following is the snapshot of day trading report

Figure 4.1

Using pivot points as a trading strategy has been around for a long time and was originally used
by floor traders. This was a nice simple way for floor traders to have some idea of where the
market was heading during the course of the day with only a few simple calculations.

The pivot point is the level at which the market direction changes for the day. Using some simple
arithmetic and the previous days high, low and close, a series of points are derived. These points
can be critical support and resistance levels. The pivot level, support and resistance levels
calculated from that are collectively known as pivot levels.

Every day the market you are following has an open, high, low and a close for the day (some
markets like forex are 24 hours but generally use 5pm EST as the open and close). This
information basically contains all the data you need to use pivot points.

The reason pivot points are so popular is that they are predictive as opposed to lagging. You use
the information of the previous day to calculate potential turning points for the day you are about
to trade (present day).

Because so many traders follow pivot points you will often find that the market reacts at these
levels. This give you an opportunity to trade.

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The formulas for calculating pivot points are as follows:

Resistance3=High+2*(Pivot-Low)
Resistance2=Pivot+(R1-S1)
Resistance1=2*Pivot-Low
PivotPoint=(High+Close+Low)/3
Support1=2*Pivot-High
Support2=Pivot-(R1-S1)
Support 3 = Low - 2*(High - Pivot)

As you can see from the above formula, just by having the previous days high, low and close
you eventually finish up with 7 points, 3 resistance levels, 3 support levels and the actual pivot
point

If the market opens above the pivot point then the bias for the day is long trades. If the market
opens below the pivot point then the bias for the day is for short trades.

The three most important pivot points are R1, S1 and the actual pivot point.

The general idea behind trading pivot points are to look for a reversal or break of R1 or S1. By
the time the market reaches R2,R3 or S2,S3 the market will already be overbought or oversold
and these levels should be used for exits rather than entries.

A perfect set would be for the market to open above the pivot level and then stall slightly at R1
then go on to R2. You would enter on a break of R1 with a target of R2 and if the market was
really strong close half at R2 and target R3 with the remainder of your position.Unfortunately
life is not that simple and we have to deal with each trading day the best way we can. I have
picked a day at random from last week and what follows are some ideas on how you could
havetraded that day using pivot points.

On the 12th August 04 the Euro/Dollar (EUR/USD) had the following:

High-1.2297

Low-1.2213
Close - 1.2249

This gave us:

Resistance3=1.2377
Resistance2=1.2337
Resistance1=1.2293
PivotPoint=1.2253
Support1=1.2209

Support2=1.2169
Support 3 = 1.2125

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 Lets have a look at the 5 minute chart below

Figure 4.2

The green line is the pivot point. The blue lines are resistance levels R1,R2 and R3. The red lines
are support levels S1,S2 and S3

There are loads of ways to trade this day using pivot points but I shall walk you through a few of
them and discuss why some are good in certain situations and why some are bad

TheBreakoutTrade

At the beginning of the day we were below the pivot point, so our bias is for short trades. A
channel formed so you would be looking for a break out of the channel, preferably to the
downside. In this type of trade you would have your sell entry order just below the lower
channel line with a stop order just above the upper channel line and a target of S1. The problem
on this day was that, S1 was very close to the breakout level and there was just not enough meat
in the trade (13 pips).

Figure 4.3

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ThePullbackTrade

The market passes through S1 and then pulls back. An entry order is placed below support,
which in this case was the most recent low before the pullback. A stop is then placed above the
pullback (the most recent high - peak) and a target set for S2. The problem again, on this day
was that the target of S2 was to close, and the market never took out the previous support, which
tells us that, the market sentiment is beginning to change.

Figure 4.4

BreakoutofResistance

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As the day progressed, the market started heading back up to S1 and formed a channel
(congestion area). This is another good set up for a trade. An entry order is placed just above the
upper channel line, with a stop just below the lower channel line and the first target would be the
pivot line. If you where trading more than one position, then you would close out half your
position as the market approaches the pivot line, tighten your stop and then watch market action
at that level. As it happened, the market never stopped and your second target then became R1.
This was also easily achieved and I would have closed out the rest of the position at that level.

Figure 4.5

Advanced

As mentioned earlier, there are lots of ways to trade with pivot points. A more advanced method
is to use the cross of two moving averages as a confirmation of a breakout. We can even use
combinations of indicators to help you make a decision. It might be the cross of two averages
and also MACD must be in buy mode. Mess around with a few of your favorite indicators but
remember the signal is a break of a level and the indicators are just confirmation.

Figure 4.6

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31
 Chapter 5

Process of Online trading and its advantages

5.1 Process Of Online Trading

An investor interesting in trading through Internet shall have to, firstly register himself with an
Internet brokerage firm. Some formalities such as filling the account opening form of the e-
broker, copies of identity proof, copy of residence proof are made to register himself with the e-
trader. Secondly, the investor would be required to open a bank account with a scheduled bank
and sufficient balance should be kept in the account. Thirdly he would be required to open
account with a depository participant because only dematerialized shares can be traded on
Internet. Figure 5.1

The client places order via the net by logging on to his

account

The broker accepts and executes the order and places

it with the exchange

The exchange accepts the order after checking the share

limit for the day.

The broker makes the payment either directly via the client
bank account or pays through its own account and recovers
it later from the client.

The exchange receives money and completes the

The client is intimated about the settlement either

through the demat or via e-mail.

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So, generally following steps are followed while doing the trading through the Internet:

Step-I:

Those investors interested in doing the trading over Internet system, that is,NEAT - ISX (NSE),
should approach the brokers and register with the Stock Broker.

Step-2:

After registration, the broker will provide to them a login name, password and a personal
identification number (PIN).

Step-3:

Actual placement of an order, Using the place order window as under can then place an order:

(a) First by entering the symbol and series of stock and other parameters such as quantity and
price of the scrip on the place order window.

(b) Second, fill in the symbol, series and the default quantity.

Step-4:

It is the process of review. Thus, the investor has to review the order placed by clicking the
review option. He may also re-set to clear the values.

Step-5:

After the review has been satisfactory; the order has to be sent by clicking on the send option.

Step-6:

The investor will receive an "Order Confirmation" 'message along with the order number and the
value of the order.

Step- 7:

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In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as
invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a
time lag of about ten seconds is there in executing the trade.

Step-8:

It is regarding charging payment, for which there are different modes. Some brokers will take
some advance payment from the, investors and will fix their trading limits. When the trade is
executed, the broker will ask the investor for transfer of funds by the investor to his account.

34
 Mechanics of Online Trading

Figure 5.2

CLIENT BROKER STOCK EXCHANGE

Accepts the Accepts the order

Places an order on
order, Checks after checking the
the net on the
the client’s scrip limit of the
broker’s website
Identity and broker for the day
through the
places the
distinctive I.D.
order with the
code
stock exchange Executes the order

The settlement of
the deal (buy/sell
order) gets
reflected in his
Demat account.
Pays the

Exchange
The client is
though his owns
intimated about Receives the
account and
the execution of money and
receives it from
the deal by e-mail. completes the
the client
Pays the broker settlement
account.
pending physical
delivery.

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 BENEFITS OF ONLINE BROKING

1) Less Costly:

The most significant advantage of the Online broking is the cost reduction in the brokerage. Due
to the power of the Internet one has the privilege of becoming the clients of really large
brokerages with the benefits of enjoying the low charges hithelio before enjoyed only by the big
players. As the DP account has got linked to the trading account most players do not charge a
minimum transaction cost thus truly allowing one to buy a single share and achieve meaningful
rupee price averaging whatever be your buying power.

2) Peace of Mind:

One can never have complete peace of mind but online investing does away with the hassles of
filling up instruction slips, visits to the broker for handing over these slips and consequent costs.

3) Keeping Records:

The site one trades on keeps a record of all transactions down to unexecuted orders and
cancelled orders thus keeping one abreast of all your transactions 24 hours a day. No paperwork
means more time at one’s disposal for research and analysis.

4) Access to Information and investment Tools:

Most online investing sites have a wealth of information for their registered members. This
includes research reports, results, analysis and even gossip and the buzz in the market.

5.) Unparalleled Liquidity:

The. bank account linked with the trading account invariably has an A TM free. Most partner
banks offer Internet banking as well. This results in one’s money becoming available to him
whenever he like from his trading account. Conversely in case he spot an opportunity in the

36
market he can immediately allocate money from his savings account to his trading account and
make profits.

6.) Unparalleled Safety:

Most sites are secure using 128-bit algorithms -highest available commercially anywhere in the
world. Moreover even if somebody broke in and tampered with one’s account the money from
the stocks he sold or the stock bought from the money in his account is in his account only.

7.) Reduces the settlement risk:

This method of trading reduces the settlement risk for the investor, as in this case no Short sale is
possible i.e. the seller will not be able to sell the securities unless he has their actual possession.
In the case of a demat account (required for an online transaction), when a seller wants to sell the
securities, his demat account is checked by the Depository Participant before executing the sale
transaction. This reduces the settlement risk for the buyer, who is assured of the delivery of the
securities.

8.) Offers greater transparency:

Online trading gives greater transparency to the investors by providing them an audit trail. This
involves a complete integrated electronic chain starting from order placement, to clearing and
settlement and finally ending with a credit to the depository account of the investor. All these
stages are subject to inspection, thus bringing in transparency into the system.

9.) Ease of trade:

It is the ease of doing the trade through net, with a click of mouse, one can buy or sell any share
that is dematerialized.

Other than the above-mentioned advantages, Internet trading provides some additional
advantages to the investors, brokers and also helps the nation to channelize the resources. Net
trading would increase competition in the market hence increase in the bargaining power of the

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 investors. The entire communication between the investor, broker and exchange would take
place within milliseconds.

5.2 Problems of Online Trading

There is a flip side to everything and online trading is no exception.

Graph5.1

Source:- www.lse.co.in

27% Loyality is of traditional broker

23% people says that online trading is more costly than manual trading.

21% people not prefer online trading because of lack of knowledge.

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So, the main problems of online trading are as follows:

1.) "Server not found":

This may appear on one’s screens when he is desperately trying to get out of an unprofitable
position. Some of the online sites are providing a telephone number for use in case their sites are
overloaded or their server down.

2.) Connectivity of the Broker with NSE:

Many times online trading brokers have a connectivity problem with the NSE or BSE during
trading hours. This problem is rare but be alive to its possibility.

3.) Cyber attack:

In the event of a malicious attack on the systems of one’s broker he is protected only if the
company is taking proper precautions against such attacks and if proper backup is regularly been
taken. He may like to choose a brokerage that has a stated security policy and contingency plan
in place.

4.) Non-availability of a seamless interface:

As a client one will access the NSE through a server of the online brokerage and this may
involve queuing delays. If a number of client access the server the server takes its own time
sending the orders to the NSE server. He must check out the seamlessness of this interface
before selecting an online brokerage. The faster the orders are processed the more seamless is
the interface.

5.) Non- availability of personalized advice:

If one like to ask his broker ‘What is the pick of the day’ he may not be able to do so. If he want
advice on a particular stock in his portfolio he may not even be able to get that.

6.) Margin:

If Internet trading alone is not fast and furious enough; many people are trading on margin. That
is where the brokerage firm lends you money by leveraging his account, allowing him to buy a

39
large amount of securities by putting up only a small amount of money. He may have forgotten
what he read in the small print of his agreement, but the brokerage firm has the right to change
the maintenance margin requirements without any warning or notice to him. In fact, the firm has
the right to liquidate his securities holdings (and it can pick and choose which ones) without any
notice to one if he fail to meet the margin call. And there he was leveraged to the hilt, hoping to
hit a home run when he discovered that he is required to make a large deposit that he cannot
make. The next thing one know, the firm is selling off his securities at a point in time that is not
the best for him. These are the perils of trading on margin.

7.) Little use of advisory services:

The advisory services being promised by the brokers would be of little use to investors looking
for an insight into the market. Many would not like to rely on research reports, which are there
for all. So, net investors will have to do their own research and take their own decision, whether
wild or wise.

8.) Increased charges:

Some of the brokers are of the view that they would have to provide advisory services to the
customers. But with increased volumes, they will have to follow the international practice of
charging a little more than the normal charges from a customer looking for personal advice.

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5.3 Why People are bending towards online trading

If you are already comfortable trading with your regular broker, here are few reasons why you
may consider switching to trading online, or at least another avenue of trading. an obvious
advantage of online trading is that your transaction would be virtually paperless. Your trading
account would be linked to your demat and bank account, ensuring a smooth transaction process.
This is especially helpful in the extent T+2 settlement system, where you have just two days to
settle your transaction.

The normal process of issuing of delivery note, in case of a sale, or arranging for a payment in
case of purchaser of shares, is all taken care of the minute your order is executed online. The
absence of manual intervention ensures that you are completely in control of all transaction.

There is also little room for error, as your order is always confirmed before it is executed. You
can also make better decision as you have a clear record of all your previous transaction. When
you trade offline, a demat statement is normally sent to you only on a quarterly basis .keeping
track of your portfolio can be a hassle in such a case. The internet can provide a new sense of
control over your financial future. The amount of investment information available online is
truly astounding. Its one of the best aspect of being a wired investor for the first time in history,
any individual with an internet connection can:

• Know the price of any stock at any time

• Review the price history of any stock in chart format
• Follow market events in-depth
• Receive a wealth of free commentary and analysis about stock markets and globe
economy.
• Conduct extensive financial research on any company
• Talk with other investors around the world

41
At canmoney customer gets real-time stock quotes, daily roundups of the stock market, experts
commentary, and a deep community of fellow investors.

Convenience is probably the greatest advantage online trading offers investors. if don’t have
time to trade during market hours ,perhaps you are at work, you can log on the web-trading site
and place your order offline, during off market hours. Your order would join the queue and be
expected the next day. You would need to enjoy a good relationship with your broker, for you to
be able to reach him in the late hours. For non-resident Indians (NRI), trading online is perhaps
their easiest option to invest in the Indian stock markets.

What is more, the time difference, in some cases, can work to their advantage .Antony, an NRI-
based in New York, places his order in the evening after work, when it is day time India and the
markets are open. We also have access to considerable information online. By just logging on to
Canmoney.in, for instance, we can get the latest news, market information and company
research.

Moreover, if our connection is maddeningly slow and we want to get your order executed
immediately, most e-brokerages also provide a facility to trade offline by placing our order via
the phone.

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 Chapter 5

Findings & Recommendations

Findings

1)The no of people investing in shares and stock is very low.People prefer investing in
comparatively safer options like mutual funds, FD etc.

2) People have very less knowledge about the share market and are not aware about the
happenings in share market

3) Due to lack of knowledge , people are not able to invest in share market even if they have the
money and are interested in investing.

4)The roller coaster ride of share market indices has induced fear of losing money money in the
minds of the people.

5)People are afraid of adopting online trading as they fear losing money due to absence of
personal customized advice on portfolio management.

Recommendations

1)People should be educated about the benefits of investing in share market.They should be told
the huge profits they can make by investing in the right companies.

2) Canmoney should provide their clients with customized investment advice .

3) People should be made aware about the benefits of using the online trading platform of

canara bank as compared to other broking houses.

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4)The marketing team should hold stalls and seminars to educate people about canmoney in
various organizations in order to increase the customer base.

5)The internet savvy clients should be spotted for selling online trading accounts.

Bibliography

1)Websites

1) www.canmoney.in

2) www.nseindia.com

3) www.bseindia.com

4) www.chittorgarh.com
5) www.ibef.org
6) www.traderji.com
7) www.hdfcsec.com
8) www.indiabulls.com
9) www.icicidirect.com

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 Author’s Profile

1) Name of author-Swati jain

Nature of work -Student

Course MBA AS (II YR)

Roll no- 9

Institution NMIMS

Email ids swatijain_1185@yahoo.co.in

swati.jain@nmims.edu

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