You are on page 1of 78

A RESEARCH STUDY PROJECT REPORT

ON

SHARE MARKET & FINANCIAL SYSTEM

[ SH ARE K H AN LI M I TED]

IS SUBMITTED BY

ANIL KUMAR THAKUR

PGCP (FINANCE +MARKETING)

TO

SURYADATTA INSTITUTE OF MANAGEMENT

& MASS COMMUNICATION

TOWARDS PARTIAL FULFILLMENT OF THE PAPER OF THE

INTERNSHIP PROJECT

(2007-2009)

1
PREFACE

THE CORPORATE PROGRAM of MBA course is a well


structured and integrated programme. The course of management
gives a practical knowledge in our study course. Industries give
us much information about the different product and services we
use in our day to day life.

It is highly said that “practice makes a man perfect” the summer


project training which is a part of M.B.A to get a practical
understanding and training of the business management. Thus
the industrial training which is a part of M.B.A course helps the
student to get the knowledge about the actual environment of an
organization.

Share khan securities ltd. is one of such company dealing in


Share market Derivatives, Commodities, Mutual fund IPO
distribution with almost branches in overall India.

It involved the study of finance activities of the organization. I


have under taken industrial training in Share khan securities ltd.
at Pune crossing from 1-june2008 to 31-july-2008 as a part of
my PGCP course curriculum and I thus, present a project report
on it at the best of my ability knowledge and work done.

2
ACKNOWLEDGEMENT

I feel pleasure for making a report which I visited at Pune


named Share khan securities Ltd. this year.

The main objective of this practical training is to get


information about the real environment of the firm.

I hereby acknowledge my sincere thanks and grateful to our


director MR SANJAY.B.CHORDIYA. I also thanks to our
faculties, our office superiors and my friend partner which gave
full response to us.

As a part of MBA programme I have taken training in stock


market in Share khan securities Ltd at Pune for a period of 2
months and 25 days
.
Success cannot come without inspiration, motivation &
innovation. We the projectors ascribe our success in this venture
to our guide Asmita Joshi .Without her guidance our project
completion is a distance dream.

I wish to express to humble gratitude to Mr. DURGA PARSAD


for his diligent efforts in providing particle tips to tackle
complicated situation with limited sources, whose ever presence
in mind with helping attitude to encourage me to complete this
study and for his untiring help and valuable guidance

ANIL KUMAR THAKUR

3
CONTENTS
1. Introduction

Stock market
History
Trading
Market participants
Importance of stock market
The behaviour of the stock market
Bombay stock exchange
BSE indices
National stock exchange
Derivatives
Financial system
Flow of fund
Main function of financial system
Financial market
Capital market
Stock exchange
Relation of the stock market with financial system
The stock market, individual investors, and financial risk
Function of stock exchange
Service of stock exchange

2. Profile of the broking house in the stock market

Kotak securities
Share khan
India infoline
Bonanza
Reliance money
Karvy
Religare securities
India bulls
Anand rathi

3. Research objective

Statement of problem
Objective of the research project

4. Research methodology objective and limitation

Problem definition
Justification of study
Objective of study
Research design

4
Source of data
Limitation of study
5. Conclusions and suggestions
6. Questionnaire

5
INTRODUCTION

The Bombay Stock Exchange in India

Type Stock Exchange


Location Mumbai, India
Bombay Stock Exchange
Owner
Limited
Key people Rajnikant Patel (CEO)
Currency INR
No. of listings ~6,000
MarketCap US$ 1.61 trillion (2006)
Volume US$ 980 billion (2006)
Indexes BSE Sensex
Website http://www.bseindia.com/

STOCK MARKET

A stock market, or (equity market), is a private or public market


for the trading of company stock and derivatives of company
stock at an agreed price; these are securities listed on a stock
exchange as well as those only traded privately.

The size of the world stock market is estimated at about $51


trillion. The world derivatives market has been estimated at
about $480 trillion face or nominal value, 12 times the size of
the entire world economy. It must be noted though that the value
of the derivatives market, because it is stated in terms of

6
notional values, and cannot be directly compared to a stock or a
fixed income security, which traditionally refers to an actual

value. Many such relatively illiquid securities are valued as


marked to model, rather than an actual market price.

The stocks are listed and traded on stock exchanges which are
entities a corporation or mutual organization specialized in the
business of bringing buyers and sellers of stocks and securities
together. The stock market in the United States includes the
trading of all securities listed on the NYSE, the NASDAQ, the
Amex, as well as on the many regional exchanges, e.g. OTCBB
and Pink Sheets. European examples of stock exchanges include
the London Stock Exchange, the Deutsche Borse and the Paris
Bourse.
HISTORY

Historian Fernand Braudel suggests that in Cairo in the 11th


century Muslim and Jewish merchants had already set up every
form of trade association and had knowledge of many methods of
credit and payment, disproving the belief that these were
invented later by Italians. In 12th century France the courratiers
de change were concerned with managing and regulating the
debts of agricultural communities on behalf of the banks.
Because these men also traded with debts, they could be called
the first brokers. In late 13th century Bruges commodity traders
gathered inside the house of a man called Van der Beurse, and in
1309 they became the "Brugse Beurse", institutionalizing what
had been, until then, an informal meeting. The idea quickly
spread around Flanders and neighboring counties and "Beurzen"
soon opened in Ghent Antwerp and Amsterdam.

In the middle of the 13th century Venetian bankers began to


trade in government securities. In 1351 the Venetian government
outlawed spreading rumors intended to lower the price of
government funds. Bankers in Pisa, Verona, Genoa and Florence
also began trading in government securities during the 14th
century. This was only possible because these were independent
city states not ruled by a duke but a council of influential
citizens. 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.

The Amsterdam Stock Exchange (or Amsterdam Beurs) is also


said to have been the first stock exchange to introduce
continuous trade in the early 17th century. The Dutch "pioneered
short selling, option trading, debt-equity swaps, merchant
banking, unit trusts and other speculative instruments, much as
we know them" (Murray Sayle, "Japan Goes Dutch", London
Review of Books XXIII.7, April 5, 2001). There are now stock
markets in virtually every developed and most developing
7
economies, with the world's biggest markets being in the United
States, Canada, China (Hong Kong), India, UK, Germany, France
and Japan.[1]

TRADING

Participants in the stock market range from small individual


stock investors to large hedge fund traders, who can be based
anywhere. Their orders usually end up with a professional at a
stock exchange, who executes the order.

Some exchanges are physical locations where transactions are


carried out on a trading floor, by a method known as open
outcry. This type of auction is used in stock exchanges and
commodity exchanges where traders may enter "verbal" bids and
offers simultaneously. The other type of exchange is a virtual
kind, composed of a network of computers where trades are
made electronically via traders.

Actual trades are based on an auction market paradigm where a


potential buyer bids a specific price for a stock and a potential
seller asks a specific price for the stock. (Buying or selling at
market means you will accept any ask price or bid price for the
stock, respectively.) When the bid and ask prices match, a sale
takes place on a first come first served basis if there are
multiple bidders or askers at a given price.

The purpose of a stock exchange is to facilitate the exchange of


securities between buyers and sellers, thus providing a
marketplace (virtual or real). The exchanges provide real-time
trading information on the listed securities, facilitating price
discovery.

The New York Stock Exchange is a physical exchange, also


referred to as a listed exchange — only stocks listed with the
exchange may be traded. Orders enter by way of exchange
members and flow down to a specialist, who goes to the floor
trading post to trade stock. The specialist's job is to match buy
and sell orders using open outcry. If a spread exists, no trade
immediately takes place--in this case the specialist should use
his/her own resources (money or stock) to close the difference
after his/her judged time. Once a trade has been made the details
are reported on the "tape" and sent back to the brokerage firm,
which then notifies the investor who placed the order. Although
there is a significant amount of human contact in this process,
computers play an important role, especially for so-called
"program trading".

The NASDAQ is a virtual listed exchange, where all of the


trading is done over a computer network. The process is similar
to the New York Stock Exchange. However, buyers and sellers
are electronically matched. One or more NASDAQ market makers
8
will always provide a bid and ask price at which they will
always purchase or sell 'their' stock.

The Paris Bourse, now part of Euronext, is an order-driven,


electronic stock exchange. It was automated in the late 1980s.
Prior to the 1980s, it consisted of an open outcry exchange.
Stockbrokers met on the trading floor or the Palais Brongniart.
In 1986, the CATS trading system was introduced, and the order
matching process was fully automated.

From time to time, active trading (especially in large blocks of


securities) have moved away from the 'active' exchanges.
Securities firms, led by UBS AG, Goldman Sachs Group Inc. and
Credit Suisse Group, already steer 12 percent of U.S. security
trades away from the exchanges to their internal systems. That
share probably will increase to 18 percent by 2010 as more
investment banks bypass the NYSE and NASDAQ and pair buyers
and sellers of securities themselves, according to data compiled
by Boston-based Aite Group LLC, a brokerage-industry
consultant [citation needed].

Now that computers have eliminated the need for trading floors
like the Big Board's, the balance of power in equity markets is
shifting. By bringing more orders in-house, where clients can
move big blocks of stock anonymously, brokers pay the
exchanges less in fees and capture a bigger share of the $11
billion a year that institutional investors pay in trading
commissions

MARKET PARTICIPANTS

Many years ago, worldwide, buyers and sellers were individual


investors, such as wealthy businessmen, with long family
histories (and emotional ties) to particular corporations. Over
time, markets have become more "institutionalized"; buyers and
sellers are largely institutions (e.g., pension funds, insurance
companies, mutual funds, hedge funds, investor groups, and
banks). The rise of the institutional investor has brought with it
some improvements in market operations. Thus, the government
was responsible for "fixed" (and exorbitant) fees being markedly
reduced for the 'small' investor, but only after the large
institutions had managed to break the brokers' solid front on
fees they then went to 'negotiated' fees, but only for large
institutions)[citation needed].

However, corporate governance (at least in the West) has been


very much adversely affected by the rise of (largely 'absentee')
institutional 'owners'

9
IMPORTANCE OF STOCK MARKET

The stock market is one of the most important sources for


companies to raise money. This allows businesses to be publicly
traded, or raise additional capital for expansion by selling
shares of ownership of the company in a public market. The
liquidity that an exchange provides affords investors the ability
to quickly and easily sell securities. This is an attractive
feature of investing in stocks, compared to other less liquid
investments such as real estate.

History has shown that the price of shares and other assets is an
important part of the dynamics of economic activity, and can
influence or be an indicator of social mood. Rising share prices,
for instance, tend to be associated with increased business
investment and vice versa. Share prices also affect the wealth of
households and their consumption. Therefore, central banks tend
to keep an eye on the control and behavior of the stock market
and, in general, on the smooth operation of financial system
functions. Financial stability is the raison d'être of central
banks.

Exchanges also act as the clearinghouse for each transaction,


meaning that they collect and deliver the shares, and guarantee
payment to the seller of a security. This eliminates the risk to
an individual buyer or seller that the counterparty could default
on the transaction.

The smooth functioning of all these activities facilitates


economic growth in that lower costs and enterprise risks
promote the production of goods and services as well as
employment. In this way the financial system contributes to
increased prosperity.

10
THE BEHAVIOR OF THE STOCK MARKET

From experience we know that investors may temporarily pull


financial prices away from their long term trend level. Over-
reactions may occur—so that excessive optimism (euphoria) may
drive prices unduly high or excessive pessimism may drive
prices unduly low. New theoretical and empirical arguments
have been put forward against the notion that financial markets
are efficient.

According to the efficient market hypothesis (EMH), only


changes in fundamental factors, such as profits or dividends,
ought to affect share prices. (But this largely theoretic academic
viewpoint also predicts that little or no trading should take
place—contrary to fact—since prices are already at or near
equilibrium, having priced in all public knowledge.) But the
efficient-market hypothesis is sorely tested by such events as
the stock market crash in 1987, when the Dow Jones index
plummeted 22.6 percent—the largest-ever one-day fall in the
United States. This event demonstrated that share prices can fall
dramatically even though, to this day, it is impossible to fix a
definite cause: a thorough search failed to detect any specific or
unexpected development that might account for the crash. It also
seems to be the case more generally that many price movements
are not occasioned by new information; a study of the fifty
largest one-day share price movements in the United States in
the post-war period confirms this.[3] Moreover, while the EMH
predicts that all price movement (in the absence of change in
fundamental information) is random (i.e., non-trending), many
studies have shown a marked tendency for the stock market to
trend over time periods of weeks or longer.

Various explanations for large price movements have been


promulgated. For instance, some research has shown that
changes in estimated risk, and the use of certain strategies, such
as stop-loss limits and Value at Risk limits, theoretically could
cause financial markets to overreact.

Other research has shown that psychological factors may result


in exaggerated stock price movements. Psychological research
has demonstrated that people are predisposed to 'seeing'
patterns, and often will perceive a pattern in what is, in fact,
just noise. (Something like seeing familiar shapes in clouds or
ink blots.) In the present context this means that a succession of
good news items about a company may lead investors to
overreact positively (unjustifiably driving the price up). A

11
period of good returns also boosts the investor's self-
confidence, reducing his (psychological) risk threshold.[4].

In one paper the authors draw an analogy with gambling.[5] In


normal times the market behaves like a game of roulette; the
probabilities are known and largely independent of the
investment decisions of the different players. In times of market
stress, however, the game becomes more like poker (herding
behavior takes over). The players now must give heavy weight to
the psychology of other investors and how they are likely to
react psychologically.

The stock market, as any other business, is quite unforgiving of


amateurs. Inexperienced investors rarely get the assistance and
support they need. In the period running up to the recent Nasdaq
crash, less than 1 per cent of the analyst's recommendations had
been to sell (and even during the 2000 - 2002 crash, the average
did not rise above 5%). The media amplified the general
euphoria, with reports of rapidly rising share prices and the
notion that large sums of money could be quickly earned in the
so-called new economy stock market. (And later amplified the
gloom which descended during the 2000 - 2002 crash, so that by
summer of 2002, predictions of a DOW average below 5000 were
quite common.

IRRATIONAL BEHAVIOR

Sometimes the market tends to react irrationally to economic


news, even if that news has no real effect on the technical value
of securities itself. Therefore, the stock market can be swayed
tremendously in either direction by press releases, rumors,
euphoria and mass panic.

Over the short-term, stocks and other securities can be battered


or buoyed by any number of fast market-changing events,
making the stock market difficult to predict.

Bombay Stock Exchange

T h e B o m b a y S t o c k E x c h a n g e L i m i t e d ( H i n d i : म ुं ब ई श े य र ब ा ज ा र
Mumbaī Śeyar Bājār) (formerly, The Stock Exchange, Mumbai;
popularly called The Bombay Stock Exchange, or BSE) is the
oldest stock exchange in Asia. It is also the biggest stock
exchange in the world in terms of listed companies with 6,000
listed companies as of August 2007.[1] It is located at Dalal
Street, Mumbai, India. On 31 December 2007, the equity market
capitalization of the companies listed on the BSE was US$ 1.79
trillion, making it the largest stock exchange in South Asia and
the tenth largest in the world.[2]

The Bombay Stock Exchange was established in 1875. Around


6,000 Indian companies list on the stock exchange,[3] and it has
a significant trading volume. The BSE SENSEX (SENSitive
12
indEX), also called the "BSE 30", is a widely used market index
in India and Asia. Though many other exchanges exist, BSE and
the National Stock Exchange of India account for most of the
trading in shares in India

BSE INDICES

The BSE SENSEX (also known as the BSE 30 index) is a value-


weighted index composed of thirty scrips, with the base April
1979 = 100. The set of companies which make up the index has
been changed only a few times in the last twenty years. These
companies account for around one-fifth of the market
capitalization of the BSE.

Apart from BSE SENSEX, which is the most popular stock index
in India, BSE uses other stock indices as well:

• BSE 500
• BSE 100
• BSE 200
• BSE PSU
• BSE MIDCAP
• BSE SMLCAP
• BSE BANKEX
• BSE Teck
• BSE Auto
• BSE Pharma
• BSE Fast Moving Consumer Goods (FMCG)
• BSE Consumer Durables

13
BSE BROADCAST

The BSE Broadcast is a large ticker on the wall of the BSE,


which continuously displays the latest stock quotes from the
market. It also displays – on what is described as India's and
South Asia's largest video screen –one of the leading business-
news channels in India: NDTV Profit.

This new system was unveiled on December 15, 2006, when Dr


Prannoy Roy, the Managing Director of New Delhi Television
(NDTV) Ltd, struck the BSE's opening bell. Mr Damodaran, the
Chairman of the Securities and Exchange Board of India (SEBI),
said that the ticker would provide information and analysis of
the financial world.

Following is the timeline on the rise and rise of the Sensex


through Indian stock market history.

1000, July 25, 1990 On July 25, 1990, the Sensex touched the
magical four-digit figure for the first time and closed at 1,001
in the wake of a good monsoon season and excellent corporate
results.

14
2000, January 15, 1992 On January 15, 1992, the Sensex crossed
the 2,000-mark and closed at 2,020 followed by the liberal
economic policy initiatives undertaken by the then finance
minister and current Prime Minister Dr Manmohan Singh.

3000, February 29, 1992 On February 29, 1992, the Sensex


surged past the 3000 mark in the wake of the market-friendly

Budget announced by the then Finance Minister, Dr Manmohan


Singh.

4000, March 30, 1992 On March 30, 1992, the Sensex crossed
the 4,000-mark and closed at 4,091 on the expectations of a
liberal export-import policy. It was then that the Harshad Mehta
scam hit the markets and Sensex witnessed unabated selling.

5000, October 8, 1999 On October 8, 1999, the Sensex crossed


the 5,000-mark as the BJP-led coalition won the majority in the
13th Lok Sabha election.

6000, February 11, 2000 On February 11, 2000, the infotech


boom helped the Sensex to cross the 6,000-mark and hit and all
time high of 6,006.

7000, June 20, 2005 On June 20, 2005, the news of the
settlement between the Ambani brothers boosted investor
sentiments and the scrips of RIL, Reliance Energy, Reliance
Capital, and IPCL made huge gains. This helped the Sensex
crossed 7,000 points for the first time.

8000, September 8, 2005 On September 8, 2005, the Bombay


Stock Exchange's benchmark 30-share index -- the Sensex --
crossed the 8000 level following brisk buying by foreign and
domestic funds in early trading.

9000, November 28, 2005 The Sensex on November 28, 2005


crossed the magical figure of 9000 to touch 9000.32 points
during mid-session at the Bombay Stock Exchange on the back
of frantic buying spree by foreign institutional investors and
well supported by local operators as well as retail investors.

10,000, February 6, 2006 The Sensex on February 6, 2006


touched 10,003 points during mid-session. The Sensex finally
closed above the 10K-mark on February 7, 2006.

11,000, March 21, 2006 The Sensex on March 21, 2006 crossed
the magical figure of 11,000 and touched a life-time peak of
11,001 points during mid-session at the Bombay Stock Exchange
for the first time. However, it was on March 27, 2006 that the
Sensex first closed at over 11,000 points.

15
12,000, April 20, 2006 The Sensex on April 20, 2006 crossed the
12,000-mark and closed at a peak of 12,040 points for the first
time.

13,000, October 30, 2006 The Sensex on October 30, 2006


crossed the magical figure of 13,000 and closed at 13,024.26
points, up 117.45 points or 0.9%. It took 135 days for the
Sensex to move from 12,000 to 13,000 and 123 days to move
from 12,500 to 13,000.

14,000, December 5, 2006 The Sensex on December 5, 2006


crossed the 14,000-mark to touch 14,028 points. It took 36 days
for the Sensex to move from 13,000 to the 14,000 mark.

15,000, July 6, 2007 The Sensex on July 6, 2007 crossed the


magical figure of 15,000 to touch 15,005 points in afternoon
trade. It took seven months for the Sensex to move from 14,000
to 15,000 points.

16,000, September 19, 2007 The Sensex scaled yet another


milestone during early morning trade on September 19, 2007.
Within minutes after trading began, the Sensex crossed 16,000,
rising by 450 points from the previous close. The 30-share
Bombay Stock Exchange's sensitive index took 53 days to reach
16,000 from 15,000. Nifty also touched a new high at 4659, up
113 points.

The Sensex finally ended with a gain of 654 points at 16,323.


The NSE Nifty gained 186 points to close at 4,732.

17,000, September 26, 2007 The Sensex scaled yet another


height during early morning trade on September 26, 2007.
Within minutes after trading began, the Sensex crossed the
17,000-mark . Some profit taking towards the end, saw the index
slip into red to 16,887 - down 187 points from the day's high.
The Sensex ended with a gain of 22 points at 16,921.

18,000, October 09, 2007 The BSE Sensex crossed the 18,000-
mark on October 09, 2007. It took just 8 days to cross 18,000
points from the 17,000 mark. The index zoomed to a new all-
time intra-day high of 18,327. It finally gained 789 points to
close at an all-time high of 18,280. The market set several new
records including the biggest single day gain of 789 points at
close, as well as the largest intra-day gains of 993 points in
absolute term backed by frenzied buying after the news of the
UPA and Left meeting on October 22 put an end to the worries
of an impending election.

19,000, October 15, 2007 The Sensex crossed the 19,000-mark


backed by revival of funds-based buying in blue chip stocks in
metal, capital goods and refinery sectors. The index gained the
16
last 1,000 points in just four trading days. The index touched a
fresh all-time intra-day high of 19,096, and finally ended with a
smart gain of 640 points at 19,059.The Nifty gained 242 points
to close at 5,670.

20,000, October 29, 2007 The Sensex crossed the 20,000 mark
on the back of aggressive buying by funds ahead of the US
Federal Reserve meeting. The index took only 10 trading days to
gain 1,000 points after the index crossed the 19,000-mark on
October 15. The major drivers of today's rally were index

Heavyweights Larsen and Toubro, Reliance Industries, ICICI


Bank, HDFC Bank and SBI among others. The 30-share index
spurted in the last five minutes of trade to fly-past the crucial
level and scaled a new intra-day peak at 20,024.87 points before
ending at its fresh closing high of 19,977.67, a gain of 734.50
points. The NSE Nifty rose to a record high 5,922.50 points
before ending at 5,905.90, showing a hefty gain of 203.60
points.

21,000, January 8, 2008 The sensex crossed the 21,000 mark in


intra-day trading after 49 trading sessions. This was backed by
high market confidence of increased FII investment and strong
corporate results for the third quarter. However, it later fell
back due to profit booking.

15,200, June 13, 2008 The sensex closed below 15,200 mark,
Indian market suffer with major downfall from January 21,2008

14,220, June 25, 2008 The sensex touched an intra day low of
13,731 during the early trades, then pulled back and ended up at
14,220 amidst a negative sentiment generated on the Reserve
Bank of India hiking CRR by 50 bps. FII outflow continued in
this week.

12,822, July 2, 2008 The sensex hit an intra day low of


12,822.70 on July 2nd, 2008. This is the lowest that it has ever
been in the past year. Six months ago, on January 10th, 2008,
the market had hit an all time high of 21206.70. This is a bad
time for the Indian markets, although Reliance and Infosys
continue to lead the way with mostly positive results.
Bloomberg lists them as the top two gainers for the Sensex,
closely followed by ICICI Bank and ITC Ltd

17
NATIONAL STOCK EXCHANGE LIMITED

Type Stock Exchange


Location Mumbai, India
Coordinates 19°3′37″N, 72°51′35″E
Owner National Stock Exchange of India Limited
Key people Mr. Ravi Narain Managing Director
Currency INR
No. of listings 1587
MarketCap US$ 1.46 trillion (2006)
S&P CNX Nifty
Indexes CNX Nifty Junior
S&P CNX 500
Website http://www.nse-india.com/

The National Stock Exchange of India Limited (NSE), is a


Mumbai-based stock exchange. It is the largest stock exchange
in India in terms of daily turnover and number of trades, for
both equities and derivative trading.[1]. Though a number of
other exchanges exist, NSE and the Bombay Stock Exchange are
the two most significant stock exchanges in India, and between
them are responsible for the vast majority of share transactions.
The NSE's key index is the S&P CNX Nifty, known as the Nifty,
an index of fifty major stocks weighted by market capitalisation.

18
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[2]. As of 2006, the NSE VSAT
terminals, 2799 in total, cover more than 1500 cities across
India [3]. In October 2007, the equity market capitalization
of the companies listed on the NSE was US$ 1.46 trillion,
making it the second largest stock exchange in South Asia.
NSE is the third largest Stock Exchange in the world in
terms of the number of trades in equities.[4]It is the second
fastest growing stock exchange in the world with a recorded
growth of 16.6%. Origins

NSE building at BKC

The National Stock Exchange of India 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. In April 1993, it was recognized as a stock exchange
under the Securities Contracts (Regulation) Act, 1956. NSE
commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment of
the NSE commenced operations in November 1994, while
operations in the Derivatives segment commenced in June 2000.
[[Image:National Stock exchange Kolkata.

INNOVATIONS

NSE has remained in the forefront of modernization of India's


capital and financial markets, and its pioneering efforts include:

• Being the first national, anonymous, electronic limit order


book (LOB) exchange to trade securities in India. Since the
success of the NSE, existent market and new market
structures have followed the "NSE" model.
• Setting up the first clearing corporation "National
Securities Clearing Corporation Ltd." in India. NSCCL was
a landmark in providing innovation on all spot equity
market (and later, derivatives market) trades in India.
19
• Co-promoting and setting up of National Securities
Depository Limited, first depository in India[2].
• Setting up of S&P CNX Nifty.
• NSE pioneered commencement of Internet Trading in
February 2000, which led to the wide popularization of the
NSE in the broker community.
• Being the first exchange that, in 1996, proposed exchange
traded derivatives, particularly on an equity index, in
India. After four years of policy and regulatory debate and
formulation, the NSE was permitted to start trading equity
derivatives
• Being the first and the only exchange to trade GOLD ETFs
(exchange traded funds) in India.
• NSE has also launched the NSE-CNBC-TV18 media centre
in association with CNBC-TV18

MARKETS

Currently, NSE has the following major segments of the capital


market:

• Equity
• Futures and Options
• Retail Debt Market
• Wholesale Debt Market

INDICES

NSE also set up as index services firm known as India Index


Services & Products Limited (IISL) and has launched several
stock indices, including:

• S&P CNX Nifty


• CNX Nifty Junior
• CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)
• S&P CNX 500 (= CNX 100 + 400 major players across 72
industries)
• CNX Midcap (introduced on 18 July 2005 replacing CNX
Midcap 200)

20
CERTIFICATIONS

NSE also conducts online examination and awards certification,


under its programmes of NSE's Certification in Financial
Markets (NCFM)[3]. Currently, certifications are available in 19
modules, covering different sectors of financial and capital
markets. Branches of the NSE are located throughout India.

DERIVATIVE

In finance, a security whose price is dependent upon or derived


from one or more is underlying assets. The derivative itself
is merely a contract between two or more parties. Its value
is determined by fluctuations in the underlying asset. The
most common underlying assets include stocks,
bonds, commodities, currencies, interest rates and market
indexes. Most derivatives are characterized by high
leverage.

Futures contracts, forward contracts, options and swaps are the


most common types of derivatives. Because derivatives are just
contracts, just about anything can be used as an underlying
asset. There are even derivatives based on weather data, such as
the amount of rain or the number of sunny days in a particular
region.

Derivatives are generally used to hedge risk, but can also be


used for speculative purposes. For example, a European investor
purchasing shares of an American company off of an American
exchange (using American dollars to do so) would be exposed to

exchange-rate risk while holding that stock. To hedge this risk,


the investor could purchase currency futures to lock in a
specified exchange rate for the future stock sale and currency
conversion back into euros.

TYPES OF TRADERS IN A DERIVATIVES MARKET

Hedgers, speculators and arbitrators are the types of traders in


derivatives market.

HEDGERS:

Hedgers are those who protect themselves from the risk


associated with the price of an asset by using derivatives. A
person keeps a close watch upon the prices discovered in trading
and when the comfortable price is reflected according to his
wants, he sells futures contracts. In this way he gets an assured
fixed price of his produce.

21
In general, hedgers use futures for protection against adverse
future price movements in the underlying cash commodity.
Hedgers are often businesses, or individuals, who at one point
or another deal in the underlying cash commodity.

Take an example: A Hedger pay more to the farmer or dealer of


a produce if its prices go up. For protection against higher
prices of the produce, he hedge the risk exposure by buying
enough future contracts of the produce to cover the amount of
produce he expects to buy. Since cash and futures prices do tend
to move in tandem, the futures position will profit if the price
of the produce rise enough to offset cash loss on the produce.

SPECULATORS:
Speculators are some what like a middle man. They are never
interested in actual owing the commodity. They will just buy
from one end and sell it to the other in anticipation of future
price movements. They actually bet on the future movement in
the price of an asset.

They are the second major group of futures players. These


participants include independent floor traders and investors.
They handle trades for their personal clients or brokerage firms.

Buying a futures contract in anticipation of price increases is


known as ‘going long’. Selling a futures contract in anticipation
of a price decrease is known as ‘going short’. Speculative
participation in futures trading has increased with the
availability of alternative methods of participation.

Speculators have certain advantages over other investments they


are as follows:

• If the trader’s judgment is good, he can make more money


in the futures market faster because prices tend, on
average, to change more quickly than real estate or stock
prices.

• Futures are highly leveraged investments. The trader puts


up a small fraction of the value of the underlying contract
as margin, yet he can ride on the full value of the contract
as it moves up and down. The money he puts up is not a
down payment on the underlying contract, but a
performance bond. The actual value of the contract is only
exchanged on those rare occasions when delivery takes
place.
22
ARBITRATORS:

According to dictionary definition, a person who has been


officially chosen to make a decision between two people or
groups who do not agree is known as Arbitrator. In commodity
market Arbitrators are the person who takes the advantage of a
discrepancy between prices in two different markets. If he finds
future prices of a commodity edging out with the cash price, he
will take offsetting positions in both the markets to lock in a
profit. Move over the commodity futures investor is not charged
interest on the difference between margin and the full contract
value

FINANCIAL SYSTEM

The financial system is one of the most important inventions of


the modern society. The phenomenon of imbalance in the
distribution of capital of funds exists in every economy system.
There are areas or people with surplus funds as also those with a
deficit. A financial system functions as an intermediary and a
facilitates the flow of funds from the areas of surplus to those
of deficit. A financial system is a composition of various
institutions, markets, regulations and laws, practices, money,
managers, analysts, transactions and claims and liabilities.

The financial system helps to determine both the cost and the
volume of credit. The system can affect a rise in the cost of
funds which adversely affects consumption, productions,
employment and growth of the economy .similarly, lower ring
the cost positive directions. Thus we find that a financial
system has an impact on the basic existence of an economy and
its citizens.

`The four main functions performed by a financial system are


given below:

The saving function

Liquidity function

Payment function

Risk function

23
FLOW OF FUNDS

Seekers of Flow of funds


Suppliers of
funds (mainly
funds
business Flow of financial (mainly
firms and service household)
government) Income and financial
claims

1: THE SAVING FUNCTION:

The public saving finds their way into the hands of those in
production through the financial system. Financial claims are
issued in the money and capital markets, which promise future
income flows. The funds in the hands of the producers result in
production of better goods and services, increasing society’s
standard of living when saving flows decline. However the
growth of the investment and living standard begins to fall

2: LIQUIDITY FUNCTIONS:

Of all financial instruments, money is the form of deposits


offers the least risk, but its value is almost eroded by
inflations. That is why one always prefers to store the funds in
financial instruments like stocks, bonds, debentures, etc. the
compromise one makes in such investment is (1) that the risk
involved is more and (2) the degree of liquidity conversion of
the claims into money is less. The financial markets provide the
investor the opportunity to liquidate the investments.

3: PAYMENT FUNCTION:

The financial system offers a very convenient mode of payment


for goods and services.
The cheque system and credit card system are the easiest
methods of payment in the economy .the cost and time for
transaction are drastically reduced .in India ,while the cheque
system of payment is widely practiced , the credit card system
24
has entered only recently into urban India and is widely used in
these areas for payments of consumption expenditure.

4: RISK FUNCTION:

The financial markets provide protection against life, health and


income risks. These guarantees are accomplished through the
sale of life and health insurance, and properly insurance
policies .the financial markets provide immense opportunities
for the investor to hedge himself against of reduce the possible
risk involved in various investments.

FINANCIAL MARKETS
A financial market can be defined as the market in which
financial assets are created or transferred in which financial
assets represented a claim of the payment of a sum of money
sometime in the future and periodic payment in the form of
interest or dividend. Definition.

Financial markets could mean:

1. organizations that facilitate the trade in financial securities.


i.e. Stock exchanges facilitate the trade in stocks, bonds and
warrants.

2. the coming together of buyers and sellers to trade financial


securities. i.e. stocks and shares are traded between buyers and
sellers in a number of ways including: the use of stock
exchanges; directly between buyers and sellers etc.

In academia, students of finance will use both meanings but


students of economics will only use the second meaning.

Financial markets can be domestic or they can be international.

TYPES OF FINANCIAL MARKETS

The financial markets can be divided into different subtypes:

Capital markets which consist of: Stock markets, which provide


financing through the issuance of shares or common stock, and
enable the subsequent trading thereof.

25
Bond markets, which provide financing through the issuance of
Bonds, and enable the subsequent trading thereof.

Commodity markets, which facilitate the trading of


commodities.

Money markets, which provide short term debt financing and


investment.

Derivatives markets, which provide instruments for the


management of financial risk.

Futures markets, which provide standardized forward contracts


for trading products at some future date; see also forward
market.

Insurance markets, which facilitate the redistribution of various


risks.

Foreign exchange markets, which facilitate the trading of


foreign exchange.

The capital markets consist of primary markets and secondary


markets. Newly formed (issued) securities are bought or sold in
primary markets. Secondary markets allow investors to sell
securities that they hold or buy existing securities.

RAISING CAPITAL

To understand financial markets, let us look at what they are


used for, i.e. what is their purpose?

Without financial markets, borrowers would have difficulty


finding lenders themselves. Intermediaries such as banks help in
this process. Banks take deposits from those who have money to
save. They can then lend money from this pool of deposited
money to those who seek to borrow. Banks popularly lend money
in the form of loans and mortgages.

More complex transactions than a simple bank deposit require


markets where lenders and their agents can meet borrowers and
their agents, and where existing borrowing or lending
commitments can be sold on to other parties. A good example of
a financial market is a stock exchange. A company can raise
money by selling shares to investors and its existing shares can
be bought or sold.

The following table illustrates where financial markets fit in the


relationship between lenders and borrowers:

26
Relationship between lenders and borrowers

Financial Financial
Lenders Borrowers
Intermediaries Markets

Interbank Individuals
Stock Companies
Banks
Exchange Central
Individuals Insurance Companies
Money Market Government
Companies Pension Funds
Bond Market Municipalities
Mutual Funds
Foreign Public
Exchange Corporations

LENDERS

Many individuals are not aware that they are lenders, but almost
everybody does lend money in many ways. A person lends money
when he or she:

• puts money in a savings account at a bank;


• contributes to a pension plan;
• pays premiums to an insurance company;
• invests in government bonds; or
• invests in company shares.

Companies tend to be borrowers of capital. When companies


have surplus cash that is not needed for a short period of time,
they may seek to make money from their cash surplus by lending
it via short term markets called money markets.

There are a few companies that have very strong cash flows.
These companies tend to be lenders rather than borrowers. Such
companies may decide to return cash to lenders (e.g. via a share
buyback.) Alternatively, they may seek to make more money on
their cash by lending it (e.g. investing in bonds and stocks.)

BORROWERS

Individuals borrow money via bankers' loans for short term


needs or longer term mortgages to help finance a house
purchase.

Companies borrow money to aid short term or long term cash


flows. They also borrow to fund modernisation or future
business expansion.

27
Governments often find their spending requirements exceed their
tax revenues. To make up this difference, they need to borrow.
Governments also borrow on behalf of nationalised industries,
municipalities, local authorities and other public sector bodies.
In the UK, the total borrowing requirement is often referred to
as the public sector borrowing requirement (PSBR).

Governments borrow by issuing bonds. In the UK, the


government also borrows from individuals by offering bank
accounts and Premium Bonds. Government debt seems to be
permanent. Indeed the debt seemingly expands rather than being
paid off. One strategy used by governments to reduce the value
of the debt is to influence inflation.

Municipalities and local authorities may borrow in their own


name as well as receiving funding from national governments. In
the UK, this would cover an authority like Hampshire County
Council.

Public Corporations typically include nationalised industries.


These may include the postal services, railway companies and
utility companies.

Many borrowers have difficulty raising money locally. They


need to borrow internationally with the aid of Foreign exchange
markets.

DERIVATIVE PRODUCTS

During the 1980s and 1990s, a major growth sector in financial


markets is the trade in so called derivative products, or
derivatives for short.

In the financial markets, stock prices, bond prices, currency


rates, interest rates and dividends go up and down, creating
risk. Derivative products are financial products which are used
to control risk or paradoxically exploit risk. It is also called
financial economics.

CURRENCY MARKETS

Main article: Foreign exchange market

Seemingly, the most obvious buyers and sellers of foreign


exchange are importers/exporters. While this may have been true
in the distant past, whereby importers/exporters created the
initial demand for currency markets, importers and exporters

28
now represent only 1/32 of foreign exchange dealing, according
to BIS.[1]

The picture of foreign currency transactions today shows:

• Banks and Institutions


• Speculators
• Government spending (for example, military bases abroad)
• Importers/Exporters
• Tourists

ANALYSIS OF FINANCIAL MARKETS

Much effort has gone into the study of financial markets and
how prices vary with time. Charles Dow, one of the founders of
Dow Jones & Company and The Wall Street Journal, enunciated
a set of ideas on the subject which are now called Dow Theory.
This is the basis of the so-called technical analysis method of
attempting to predict future changes. One of the tenets of
"technical analysis" is that market trends give an indication of
the future, at least in the short term. The claims of the technical
analysts are disputed by many academics, who claim that the
evidence points rather to the random walk hypothesis, which
states that the next change is not correlated to the last change.

The scale of changes in price over some unit of time is called


the volatility. It was discovered by Benoît Mandelbrot that
changes in prices do not follow a Gaussian distribution, but are
rather modeled better by Lévy stable distributions. The scale of
change, or volatiliy, depends on the length of the time unit to a
power a bit more than 1/2. Large changes

CAPITAL MARKET

Capital market is an organized market for long term funds


required , to meet the long term needs of business enterprises .

The capital market is the market for securities, where


companies and governments can raise longterm funds. The
capital market includes the stock market and the bond market.
Financial regulators, such as the U.S. Securities and Exchange
29
Commission, oversee the capital markets in their designated
countries to ensure that investors are protected against fraud.
The capital markets consist of the primary market, where new
issues are distributed to investors, and the secondary market,
where existing securities are traded.

STOCK EXCHANGE

Stock exchange is an organized market for industrial, financial


and government market for industrial, financial and government
securities.
Stock exchange also helps the public sector undertaking and the
government in raising long term loans. In brief, a stock market
or stock exchange is a place where stocks and shares and other
term securities are bought and sold as per certain rules and
regulations.

FEATURES

 It is an organized market for buying, selling and dealing in


securities.
 It is privately owned by individuals.
 It facilitates marketing in securities and also controls the
trading activities.
 It operates as per well defined rules and regulation.
 It is a recognized association and is controlled by the state
under a special act.

FUNCTIONS OF STOCK EXCHANGE

 Ready and continuous market


 Evaluation of securities
 Encouraging capital formation
 Providing safety and securities in dealings
 Encouraging public borrowing
 Helps speculations
 Regulating company management

SERVICE OF THE STOCK EXCHANGE

Stock exchange provides various services to companies’ investor


and the society at large in the following manner:

30
SERVICE TO COMPANIES

Companies raising their capital through stock exchange will find


better response to their security issues.
• Stock exchange provides a large marker for the listed
securities. They enable the companies to collect
adequate capital for formation, expansion,
modernization or rationalization.

• Stock exchange increases the credit standing and


goodwill of the companies whose securities are listed.

• Listed securities get quicker and better response are


from investors.

• Market value of the securities is slightly more in


relation to earning and property values. This enhances
the financial status and increase the bargaining power
of the company in the collective ventures,merger,etc

SERVICES TO INVESTORS

Stock exchange, in fact, is a gift to the investors, who gain


confidence by providing continuous marketing facilities.

• Stock exchange guides the investors regarding the


choice of securities to be bought.

• Stock exchange maintains liquidity of securities by


enabling the holders to sell them whenever they need
liquid fund.

• Stock exchange provides information about the value of


securities to the investors through daily quotations of
listed securities.

• Stock exchange authorities properly evaluated the listed


secutities.therefore purchasing of listed securities
because less risky.

• Stock exchange provides capital for industrial growth.

LISTING OF SECURITIES:

Listing of securities means including the name of the company


security in the official list of the stock exchange for the
purpose of trading.

31
A stock exchange does not deal in the securities of all the
companies .it selects certain securities for transaction; such
securities are called listed securities.

REQUIREMENT FOR LISTING:

• Certificate copies of M/A and A/A (Memorandum of


association and Article of Association)
• Consent of SEBI
• Director report
• Balance sheets
• Agreement with the managing director
• Agreement with underwriters
• Statement showing distribution of shares

RELATION OF THE STOCK MARKET TO THE


MODERN FINANCIAL SYSTEM

The financial system in most western countries has undergone a


remarkable transformation. One feature of this development is
disintermediation. A portion of the funds involved in saving and
financing flows directly to the financial markets instead of
being routed via banks' traditional lending and deposit
operations. The general public's heightened interest in investing
in the stock market, either directly or through mutual funds, has
been an important component of this process. Statistics show
that in recent decades shares have made up an increasingly large
proportion of households' financial assets in many countries. In
the 1970s, in Sweden, deposit accounts and other very liquid
assets with little risk made up almost 60 per cent of households'
financial wealth, compared to less than 20 per cent in the 2000s.
The major part of this adjustment in financial portfolios has
gone directly to shares but a good deal now takes the form of
various kinds of institutional investment for groups of
individuals, e.g., pension funds, mutual funds, hedge funds,
insurance investment of premiums, etc. The trend towards forms
of saving with a higher risk has been accentuated by new rules
for most funds and insurance, permitting a higher proportion of
shares to bonds. Similar tendencies are to be found in other
industrialized countries. In all developed economic systems,
such as the European Union, the United States, Japan and other
developed nations, the trend has been the same: saving has
moved away from traditional (government insured) bank deposits
to more risky securities of one sort or another

32
THE STOCK MARKET, INDIVIDUAL INVESTORS,
AND FINANCIAL RISK

Riskier long-term saving requires that an individual possess the


ability to manage the associated increased risks. Stock prices
fluctuate widely, in marked contrast to the stability of
(government insured) bank deposits or bonds. This is something
that could affect not only the individual investor or household,
but also the economy on a large scale. The following deals with
some of the risks of the financial sector in general and the stock
market in particular. This is certainly more important now that
so many newcomers have entered the stock market, or have
acquired other 'risky' investments (such as 'investment'
property, i.e., real estate and collectables).

With each passing year, the noise level in the stock market
rises. Television commentators, financial writers, analysts, and
market strategists are all overtalking each other to get investors'
attention. At the same time, individual investors, immersed in
chat rooms and message boards, are exchanging questionable and
often misleading tips. Yet, despite all this available
information, investors find it increasingly difficult to profit.
Stock prices skyrocket with little reason, then plummet just as
quickly, and people who have turned to investing for their
children's education and their own retirement become
frightened. Sometimes there appears to be no rhyme or reason to
the market, only folly.

33
This is a quote from the preface to a published biography about
the long-term value-oriented stock investor Warren Buffett.[2]
Buffett began his career with $100, and $105,000 from seven
limited partners consisting of Buffett's family and friends. Over
the years he has built himself a multi-billion-dollar fortune. The
quote illustrates some of what has been happening in the stock
market during the end of the 20th century and the beginning of
the 21st.

34
PROFILE OF BROKING HOUSE IN THE STOCK
MARKET

KOTAK SECURITIES:

Kotak securities ltd is India leading stock broking house with a


market share of close to 9% as on 31 march 2007. kotak
securities ltd has been the largest in IPO distribution.
The company has a full fledged research division involved in
macro economic studies sect oral research and company specific
equity research combined with a strong and well networked sales
force which helps deliver current and up to date market
information and news

Kotak securities ltd is also a depository participant with


national securities depository limited and central depository
35
service limited .providing dual benefits services where in the
investor can use the brokerage services of the company for
executing the transactions and the depository service for
settling them.

Kotak securities have 813 outlets servicing more than 315000


customers and a coverage of 277 cities. Kotak securities com the
online division of kotak securities limited offers internet
broking services and also online IPO and mutual fund
investment

A Kotak security limited manages assets around 2300 crores of


assets under management. The portfolio management service
provides top class service catering to the high end of the
market. Portfolio management from kotak securities comes as an
answer to those who would like to grow from exponentially on
the crest of the stock market, with the backing of an expert.

Sharekhan, the retail broking arm of SSKI group and one of the
largest stock broking house in the country has won the
prestigious awaaz consumer vote awards 2005 for the most
preferred stock broking brand in India, in the investment
advisors category

Share khan equity related services include trade execution on


BSE,NSE derivatives commodities depository services online
trading and investment advice ,.sharekhan online trading and
investment site www.sharekhan.com was launched in 2000 .

36
Sharekhan Bag round network includes over 250 centres across
123 cities in India and having around 120000 customers and
equal number of demat customers.

Sharekhan won the award by vote of customer around the


country, as part of India largest consumer study cover 7000
respondents 21 product and service across 21 major cities. the
study initiated by awaaz India first dedicated consumer channel
and member of the world wide CNBC network and ac Nielsen org
marg was aimed at understanding the brand preference of the
consumer and to decipher what are the most important loyalty
criteria for the consumer in each vertical

In order to select the award recipient spontaneous responses


rather than prompted responses were garnered with an intention
to glean unbiased preferences.

The reason behind the preferences for brands were unveiled by


examines the following:

• Tangible features of product /service

• Softer, intangible features like imagery, equity driving


preference

• Tactical measures such as promotional /pricing schemes

ABOUT THE COMPANY

Share Khan Limited, a flagship broking firm in the share


market, is structured into strategic businesses —Equities, Share,
Commodities and Mutual funds are in this firm. The head office
of Share Khan is in the Mumbai, this is one of the branches in
the Pune. This is only Share and Equity broking firm in India.
This is not only Share but bulk of the commodities, Mutual
funds. Share khan give to more information how to invest in the
share market, which types more earn money in the through the
share market.

Established in 1958, Share Khan commissioned its shares and


equities at Satara Road, Pune in 1962 and has today grown to
become the country’s largest integrated share transfer and ranks
37
among the top quartile of low broking intra day and delivery
charges in the world.

With a strategic intent to achieve vertical integration in the


share business, Share Khan acquired two captive markets in
Nifty, BSE and NSE.

MEANS OF FINANCING

Financing a company through the sale of stock in a


company is known as equity financing. Alternatively, debt
financing (for example issuing bonds) can be done to avoid
giving up shares of ownership of the company. Unofficial
financing known as trade financing usually provides the major
part of a company's working capital (day-to-day operational
needs). Trade financing is provided by vendors and suppliers
who sell their products to the company at short-term, unsecured
credit terms, usually 30 days. Equity and debt financing are
usually used for longer-term investment projects such as
investments in a new factory or a new foreign market. Customer
provided financing exists when a customer pays for services
before they are delivered, e.g. subscriptions and insurance

MARKET SHARE ANALYSIS

38
OTHER BENEFITS OF INVESTING IN SHARES?

Because they can make big money on it. Compared to your


investments in fixed deposits in banks it makes more profits, but
the bad news is that you are also expected to bear the losses, if
any.

 1) Possibility of high returns


 2) Easy liquidity
 3) Unbeatable tax benefits
 4) Income from dividends

SO HOW DOES ONE BUY SHARES?

. There are basically two ways in which you can invest in


shares:

 Purchase shares from


The primary market
(I.e. IPO's)

 Trade in the
Secondary
Market, i.e.
Stock exchanges

39
They are selected by the Index committee.

Some of the criteria they follow include:

1) Market capitalization.

2) Liquidity.

3) Continuity.

4) Industry representation.

5) Listed history

40
COMPUTATION OF STOCK INDEX:

A stock market may either be a price index or a wealth


index. In India most of the indices are using wealth index for
computation of stock market.

Company No. of Market M a r k e t c a pM a r k e t Market cap


shares Price on (Rs.) Price on (Rs.)
09/02/06 18/02/06
TATA 10 20/- 200/- 30/- 300/-

INFOSYS 20 30/- 600/- 40/- 800/-

IBM 20 100/- 2000/- 150/- 3000/-

TOTAL 2800/- 4100/-


MARKET
CAP

Face value=Rs.10/-
Base value=100/-

Index present value=


(100*4100)/2800= 146.428

41
The India Infoline group, comprising the holding company, India
Infoline Limited and its wholly-owned subsidiaries, straddle the
entire financial services space with offerings ranging from
Equity research, Equities and derivatives trading, Commodities
trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, GoI bonds and other small savings
instruments to loan products and Investment banking. India
Infoline also owns and manages the websites
http://www.indiainfoline.com/and http://www.5paisa.com/

The company has a network of 758 business locations (branches


and sub-brokers) spread across 346 cities and towns. It has more
than 800,000 customers

India Infoline Limited is listed on both the leading stock


exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and
the National Stock Exchange (NSE) and is also a member of both
the exchanges. It is engaged in the businesses of Equities
broking, Wealth Advisory Services and Portfolio Management
Services. It offers broking services in the Cash and Derivatives
segments of the NSE as well as the Cash segment of the BSE. It
is registered with NSDL as well as CDSL as a depository
participant, providing a one-stop solution for clients trading in
the equities market. It has recently launched its Investment
banking and Institutional Broking business.

42
Bonanza is a leading Financial Services & Brokerage House with
acknowledged industry Leadership in execution and clearing
services on Exchange Traded Derivatives and cash market
products.

Key elements that place Bonanza amongst the leading Brokerage


Houses and make it the preferred service provider for value
based financial services are:

• A Client-driven foundation and strategy committed to


client-specific investment needs and objectives.
• Integrated and innovative use of Technology enabling
clients to trade offline,online and Strategic tie-ups with
latest technology partners to facilitate trading access and
direct processing across more than 900 Branches spread
over 310 cities .
• Client-focused philosophy backed by memberships of all
principal Indian Stock and Commodity Exchanges makes
Bonanza a preferred service provider in the Industry for
value based services.

Bonanza confidently steers you through a challenging Financial


and Trade Market every moment, whether you are present or not!

EQUITY

Being a member of the National Stock Exchange (NSE), Bombay


Stock Exchange (BSE) and dealer with Over the Counter
Exchange of India (OTCEI) we handle your trading needs,
through a network of experienced dealers across the country,
and through our comprehensive website.

43
US The Karvy group was formed in 1983 at Hyderabad, India.
Karvy ranks among the top player in almost all the fields it
operates. Karvy Computershare Limited is India’s largest
Registrar and Transfer Agent with a client base of nearly 500
blue chip corporates, managing over 2 crore accounts. Karvy
Stock Brokers Limited, member of National Stock Exchange of
India and the Bombay Stock Exchange, ranks among the top 5
stock brokers in India. With over 6,00,000 active accounts, it
ranks among the top 5 Depositary Participant in India,
registered with NSDL and CDSL. Karvy Comtrade, Member of
NCDEX and MCX ranks among the top 3 commodity brokers in
the country. Karvy Insurance Brokers is registered as a Broker
with IRDA and ranks among the top 5 insurance agent in the
country. Registered with AMFI as a corporate Agent, Karvy is
also among the top Mutual Fund mobilizer with over Rs. 5,000
crores under management. Karvy Realty Services, which started
in 2006, has quickly established itself as a broker who adds
value, in the realty sector. Karvy Global offers niche off
shoring services to clients in the US.

Karvy has 575 offices over 375 locations across India and
overseas at Dubai and New York. Over 9,000 highly qualified
people staff Karvy.

44
ABOUT EMKAY

Emkay offers futures trading through "Emkay Corporate Services


(P) Ltd.". We have membership with two of the major
Commodity exchanges of the country.

Multi Commodity Exchange of India Ltd, Mumbai (MCX


National Commodity and Derivative Exchange, Mumbai (NCDEX

Large numbers across the country participate in the futures


market through Emkay's rapidly expanding online trading
terminal network extending to even remote areas. Local,
national and international agri-information is disseminated
through the company's large branch network. Seminars, free in
house literature and interactive site sessions raise awareness
levels on the futures market. Consequently, large numbers of
informed participants enter the trading process resulting in
increased volumes and market efficiency.

OUR MISSION

To provide research driven, unbiased investment advise with the


objective of achieving sustainable superior investment returns
for our clients

To provide flawless execution support to meet diverse client


needs on a platform of professionalism and integrity.

45
OUR VALUES
To be fair, empathetic and responsive in serving our customers

To respect and reinforce our fellow employees and the power of


teamwork

To strive relentlessly to improve what we do and how we do it.

To always earn and be worthy of our customer's trust

THE JOURNEY

Emkay’s institutional clientele includes some of the largest


players in the Fund Management business. A partial list is
provided below.

1. Birla Sun life Mutual Fund


2. Deutsche Asset Mgt (India) Pvt. Ltd
3. Franklin Templeton Mutual Fund
4. HDFC Standard Life Mutual Fund
5. Prudential ICICI Mutual Fund
6. TATA Mutual Fund

Emkay has considerable strength and Domain Knowledge in the


booming Derivatives market

1. The first Sensex Futures Contract was executed by Emkay on


June 09, 2000.
2. Mr... Prakash Kacholia, Director of Emkay was a member of
the first Governing council on derivatives segment of BSE.
3. He has been the moving spirit behind India’s first
EXCHANGE TRADED FUND named SPICE based on the BSE
SENSEX launched by Prudential ICICI MF

46
COMMODITY FUTURES TRADING
THROUGH:

COMMODITY MARKET

India has a deep ingrained knowledge in commodity


trading (and particularly forward trading in
commodities), especially in the interior heartland.
For last 40 years or so, such forward (futures)
trading was banned in the country for a variety of
reasons and it is being revived now. The ban has
meant that two generations have lost touch with the
trading skills and the related knowledge levels in
the commodity space. Fortunately much of the skill
sets have migrated to stock exchanges.

In these intervening years, some regional


exchanges specializing in specific commodities,
where the bans were lifted, have carried on the
baton. Also large informal trading, primarily by
the speculative segment of the universe of market
participants has remained. This has led to a
mindset in the common man in the country that
commodity exchanges are purely speculative in
nature. The hedging and price discovery functions
that they perform are largely ignored today by the
cross section of the population.

Our endeavor is to reach to the producers, end-


users, and even the retail investors, at a grassroots
level. Education and awareness has a key role to
play in achieving this vision

WHY COMMODITY MARKET?

Commodity derivatives records high volumes in the


markets the world over compared to equity
derivatives. In an era where risks to investments
are on the rise and India being predominantly an
agrarian economy, needs to switch to commodity
derivatives to top the list of developed nations.

47
24 hrs GOLD Spot Price
UNDERSTANDING THE
COMMODITIES MARKETS

Indian markets have recently


thrown open a new avenue for
retail investors and traders to
participate: c o m m o d i t y2 4 h r s S I L V E R S p o t P r i c e
derivatives. For those who want
to diversify their portfolios
beyond shares, bonds and real
estate, commodities is one of the
best options.

Commodities actually offer


i m m e n s e p o t e n t i a l t o b e c o m e aL i v e Q u o t e s
s e p a r a t e a s s e t c l a s s f o r m a r k e t -G o l d a n d S i l v e r ( c u r r e n t b i d ,
s a v v y i n v e s t o r s , a r b i t r a g e u r s a n d$ c h a n g e , h i g h , l o w )
speculators. Commodities are
easy to understand and are based
on the fundamentals of demand
and supply. Retail investors
should understand the risks and
advantages of trading in
commodities futures before
taking a leap. Historically, prices
in commodities futures have been
less volatile compared with
equity and bonds, thus providing
an efficient portfolio
diversification option.

Like any other market, the one


for commodity futures plays a
valuable role in information
pooling and risk sharing. The
market mediates between buyers
and sellers of commodities thus
making the underlying market
more liquid.

48
Motilal Oswal Securities Ltd. was founded in 1987 as a small
sub-broking unit, with just two people running the show. Focus
on customer-first-attitude, ethical and transparent business
practices, respect for professionalism, research-based value
investing and implementation of cutting-edge technology has
enabled us to blossom into an almost 2000 member team.

Today we are a well diversified financial services firm offering


a range of financial products and services such as

• Wealth Management
• Broking & Distribution
• Commodity Broking
• Portfolio Management Services
• Institutional Equities
• Private Equity
• Investment Banking Services and
• Principal Strategies

We have a diversified client base that includes retail customers


(including High Net worth Individuals), mutual funds, foreign
institutional investors, financial institutions and corporate
clients. We are headquartered in Mumbai and as of June 30,
2008, had a network spread over 450 cities and towns
comprising 1,496 Business Locations operated by our Business
Partners and us. As at June 30, 2008, we had 486,648 registered
customers.

In 2006, the Company placed 9.48% of its equity with two


leading private equity investors based out of the US – New
Vernon Private Equity Limited and Bessemer Venture Partners.

The company got listed on BSE and NSE on September 9, 2007.


The issue which was priced at Rs.825 per share (face value Rs.5
per share) got a overwhelming response and was subscribed
27.18 times in turbulent market conditions. The issue gave a
return of 21% on the date of listing.

As of end of financial year 2008, the group networth was Rs.7


bn and market capitalization as of March 31, 2008 was Rs.19 bn.

For year ended March 2008, the company showed a strong top
line growth of 91% to Rs.7 bn as compared to Rs.3.68 bn, last
year. New businesses like investment banking, asset management
and fund based activities have contributed to this growth.

49
FY Growth
Rs. Crores
2007- 08 (YoY)
Total
701 91%
Revenues
EBIDTA 270 97%
PAT 156 100%

Credit rating agency Crisil has assigned the highest rating of


P1+ to the Company’s short-term debt program.

Shareholding Pattern at on June 30, 2008

As of 30th June, 2008; the total shareholding of the Promoter


and Promoter Group stood at 70.37%. The shareholding of
institutions stood at 9.78% and non-institutions at 12.26%.

OUR BUSINESS STREAMS

Our businesses and primary products and services are:

WEALTH MANAGEMENT

Financial planning for individual, family and business wealth


creation and management needs. These are provided to customers
through our Wealth Management service called ‘Purple’

BROKING & DISTRIBUTION SERVICES

• Equity (cash and derivatives)


• Commodity broking
• Portfolio Management Services
• Distribution of financial products
• Financing
• Depository Services
• IPO distribution

We offer these services through our branches, Business Partner


locations, the internet and mobile channels. We also have
strategic tie-ups with State Bank of India and IDBI Bank to
offer our online trading platform to its customers.

COMMODITY BROKING

50
Through Motilal Oswal Commodities Broker (P) Ltd our fully
owned subsidiary; we provide commodity trading facilities and
related products and services on MCX and NCDEX. Besides
access to the best of research in the form of Daily Fundamentals
& Technical Reports on highly traded commodities, our clients
also get access to our exclusive Customized Trading Advice on
both the trading platforms. We offer these services through our
branches, Business Partner locations, the internet and mobile
channels

PORTFOLIO MANAGEMENT SERVICES

Motilal Oswal Portfolio Management Services offer a range of


investments solutions through discretionary services. We at
Motilal Oswal have helped create wealth for our customers
through our Portfolio Management Services. Our knowledge of
the markets together with our understanding of our customers
and their risk profiles has helped us design a range of portfolio
offerings for our clients. These include the Value PMS, Bulls
Eye PMS, Trillion Dollar Opportunity and Focused Portfolio
Series I. As of June 30th, 2008, the assets under management of
our various portfolio schemes stood at Rs.6.92 bn.

Motilal Oswal group has applied to the regulatory bodies for a


license to operate as a Domestic Asset Management Company
(Mutual Fund) and we expect to begin operations soon.

INSTITUTIONAL EQUITIES

We offer equity broking services in the cash and derivative


segments to institutional clients in India and overseas. These
clients include companies, mutual funds, banks, financial
institutions, insurance companies, and FIIs. As at March 31,
2008, we were empanelled with over 300 institutional clients
including 191 FIIs. We service these clients through dedicated
sales teams across different time zones.

INVESTMENT BANKING

51
We offer financial advisory services relating to mergers and
acquisitions (domestic and cross-border), divestitures,
restructurings and spin-offs through Motilal Oswal Investment
Advisors Private Ltd. (MOIAPL)

We also offer capital raising and other investment banking


services such as the management of public offerings, private
placements (including qualified institutional placements), rights
issues, share buybacks, open offers/delistings and syndication of
debt and equity.

MOIAPL has closed 23 transactions in 2007-08 worth US$ 1.8


billion and had 18 mandates in hand as at March 31, 2008.

PRIVATE EQUITY

In 2006, our private equity subsidiary, Motilal Oswal Venture


Capital Advisors Private Ltd (MOVCAPL) was appointed as the
investment manager and advisor to a private equity fund, India
Business Excellence Fund, which was launched with a target of
raising US$100 mn. The fund is aimed at providing growth
capital to small and medium enterprises in India, with
investments typically in the range of US$3 mn to US$7 mn.

MOVCAPL will manage and advise the fund and other private
equity funds, which may be raised in the future. In its final
closing, in December 2007, the fund obtained commitments of
US$125 mn (Rs.4,875 mn) from investors in India and overseas.
The Fund has deployed/ committed $ 58 mn across 8 deals.

MOVCAPL has recently launched an INR 750 crores domestic


Real Estate Private Equity Fund called “India Realty Excellence
Fund” sponsored by Motilal Oswal Financial Services Ltd.

PRINCIPAL STRATEGIES GROUP

For effective management of treasury operations and to


capitalize on market opportunities, the Group has set up a 30
member team which would be responsible for effective
deployment of funds into different trading and arbitrage
strategies.

FOCUS ON RESEARCH
52
Research is the solid foundation on which Motilal Oswal
Securities advice is based. Almost 10% of revenue is invested
on equity research and we hire and train the best resources to
become advisors. At present we have 28 equity analysts
researching over 27 sectors. From a fundamental, technical and
derivatives research perspective; Motilal Oswal's research
reports have received wide coverage in the media (over a 1000
mentions last year). Our consistent efforts towards quality
equity research has reflected in an increase in the ratings and
rankings across various categories in the AsiaMoney Brokers
Poll over the years

Our unique Wealth Creation Study, authored by Mr. Raamdeo


Agrawal, Managing Director, is now in its 13th year. Investors
keenly await this annual study for the wealth of information it
has on the companies that created wealth during the preceding
five years.

STRONG MANAGEMENT TEAM

The organization finds its strength in its team of young, talented


and confident individuals. Qualified professionals carry out
different functions under the able leadership of its promoters,
Mr. Motilal Oswal and Mr. Raamdeo Agrawal. Our talented pool
of people comprises qualified and experienced professionals
with an established track record. We believe that our
management's entrepreneurial spirit, strong technical expertise,
leadership skills, insight into market/customer needs provide us
with a competitive strength which will help us implement our
business

53
Religare Enterprises Limited (REL), is one of the leading
integrated financial services groups of India. REL’s businesses
are broadly clubbed across three key verticals, the Retail,
Institutional and Wealth spectrums, catering to a diverse and
wide base of clients.
REL offers a multitude of investment options and a diverse
bouquet of financial services and has a pan India reach in more
than 1550 locations across more than 460 cities and towns.
As part of its recent initiatives, the group has also started
expanding globally and has acquired London’s oldest brokerage
& investment firm, Hichens, Harrison & Co. plc. Following this
acquisition Religare now proposes to operate out of 10
countries. With a view to expand, diversify and introduce
offerings benchmarked against global best practices, Religare
has entered into joint ventures with the global major- Aegon for
its Asset Management and Life Insurance businesses in India.
Religare’s wealth management subsidiary is now rechristened as
Religare Macquarie Wealth Management Limited, following a
joint venture with the Australia based financial services major,
Macquarie Bank. Religare has also partnered with Vistaar
Entertainment to launch India’s first Film Fund.
The vision is to build Religare as a globally trusted brand in the
financial services domain and present it as the ‘Investment
Gateway of India’. All employees of the group guided by an
experienced and professional management team are committed to
providing financial care, backed by the core values of diligence
and transparency.

54
OUR GROUP STRUCTURE

Religare Enterprises Limited

Religare Securities Limited -

• Equity Broking
• Portfolio Management Services
• Depository
• Online Investment Portal
• Institutional Equity Broking

Religare Finevest Limited-

• Lending and Distribution business

Religare Commodities Limited –

• Commodity Business

Religare Insurance Broking Limited -

• Life and Non Life Insurance


• Reinsurance

Religare Capital Markets Limited

• Investment Banking
• SEBI Registered Merchant Banker
• Acquisition in UK through an international arm

Religare Arts Initiative Limited

• Art Fund and other businesses of Art


• Gallery to be launched soon

Religare Realty Limited –

• Real Estate Management Company

Religare Venture Capital Private Limited

• Private Equity and Investment Manager

55
Religare Macquarie Wealth Management Limited

• 50: 50 joint ventures with Macquarie for wealth


management business

Religare AEGON AMC -

• 50:50 Joint Venture between REL and Aegon for Asset


Management business in India

AEGON Religare Life Insurance -

• Life Insurance Company, Joint Venture between REL,


Aegon and BCCL for Life insurance business in India

EQUITY & DERIVATIVES

Trading in Equities with Religare truly empowers you for your


investment needs. We ensure you have a superlative trading
experience through -

• A highly process driven, diligent approach


• Powerful Research & Analytics and
• One of the “best in class” dealing rooms

Further, Religare also has one of the largest retail networks,


with its presence in more than 1300 locations across more than
400 towns & cities. This means, you can walk into any of these
branches and connect to our highly skilled and dedicated
relationship managers to get the best services.

How will we make trading easier and better?


Personal Assistance

• Dedicated Relationship Managers


• Dedicated dealers who facilitate trading and serve your
post trade needs
56
INVESTMENT PHILOSOPHY

We believe that our investors are better served by a disciplined


investment approach, which combines an understanding of the
goals and objectives of the investor with a fine tuned strategy
backed by research.

• Stock specific selection procedure based on fundamental


research for making sound investment decisions.
• Focus on minimizing investment risk by following rigorous
valuation disciplines.
• Capital preservation.
• Selling discipline and use of Derivatives to control
volatility.
• Overall to enhance absolute return for investors.

OUR SCHEMES

PANTHER

The Panther portfolio aims to achieve higher returns by taking


aggressive positions across sectors and market capitalizations.
It is suitable for the “High Risk High Return” investor with a
strategy to invest across sectors and take advantage of various
market conditions.

TORTOISE

The Tortoise portfolio aims to achieve growth in the portfolio


value over a period of time by way of careful and judicious
investment in fundamentally sound companies having good
prospects. The scheme is suitable for the “Medium Risk Medium
Return” investor with a strategy to invest in companies which
have consistency in earnings, growth and financial performance.

ELEPHANT

The Elephant portfolio aims to generate steady returns over a


longer period by investing in Securities selected only from BSE
100 and NSE 100 index. This plan is suitable for the “Low Risk
Low Return” investor with a strategy to invest in blue chip
companies, as these companies have steady performance and
reduce liquidity risk in the market.

57
CATERPILLAR

The Caterpillar portfolio aims to achieve capital appreciation


over a long period of time by investing in a diversified
portfolio. This scheme is suitable for investors with a high risk
appetite. The investment strategy would be to invest in scrips
which are poised to get a re-rating either because of change in
business, potential fancy for a particular sector in the coming
years/months, business diversification leading to a better
operating performance, stocks in their early stages of an upturn
or for those which are in sectors currently ignored by the
market.

LEO

Leo is aimed at retail customers and structured to provide


medium to long-term capital appreciation by investing in stocks
across the market capitalization range. This scheme is a mix of
moderate and aggressive investment strategies. Its aim is to
have a balanced portfolio comprising selected investments from
both Tortoise and Panther. Exposure to Derivatives is taken
within permissible regulatory limits.

INVESTMENT BANKING

We provide innovative, integrated and best-fit solutions to our


corporate customers. It is our continuous endeavor to provide
value enhancement through diverse financial solutions on an
ongoing basis, through offerings like Corporate Debt, Private
Equity, IPO, ECB, FCCB, GDR/ADR etc.
Investment Banking with Religare offers the following services:

CORPORATE FINANCE

We focus on finding right and relevant partners for our clients,


who not only help in adding value but also improve the future
valuation of the organization. We specialize in structured
financing and providing advisory services related to financial
planning, modeling and advising on financial requirements.

MERCHANT BANKING

• IPO/FPO/RIGHTS
• Mergers & Acquisitions
• Corporate Advisory Services
• ADR/GDR/FCCB
58
• BUY BACK OF SHARE

ABOUT INDIABULLS

Indiabulls is India’s leading Financial Services and Real Estate


company having over 640 branches all over India. Indiabulls
serves the financial needs of more than 4,50,000 customers with
its wide range of financial services and products from
securities, derivatives trading, depositary services, research &
advisory services, consumer secured & unsecured credit, loan
against shares and mortgage & housing finance. With around
4000 Relationship Managers, Indiabulls helps its clients to
satisfy their customized financial goals. Indiabulls through its
group companies has entered Indian Real Estate business in
2005. It is currently evaluating several large-scale projects
worth several hundred million dollars.

“Indiabulls Financial Services Ltd is listed on the National


Stock Exchange, Bombay Stock Exchange and Luxembourg Stock
Exchange. The market capitalization of Indiabulls is around
USD 6,300 million (31st December, 2007). Consolidated net
worth of the group is around USD 905 million (31st December,
2007). Indiabulls and its group companies have attracted more
than USD 800 million of equity capital in Foreign Direct
Investment (FDI) since March 2000. Some of the large
shareholders of Indiabulls are the largest financial institutions
of the world such as Fidelity Funds, Goldman Sachs, Merrill
Lynch, Morgan Stanley and Farallon Capital.

Business of the company has grown in leaps and bounds since its
inception. Revenue of the company grew at a CAGR of 159%
from FY03 to FY07. During the same period, profits of the
company grew at a CAGR of 184%.

Indiabulls became the first company to bring FDI in Indian Real


Estate through a JV with Farallon Capital Management LLC, a
respected US based investment firm. Indiabulls has demonstrated
deep understanding and commitment to Indian Real Estate
market by winning competitive bids for landmark properties in
Mumbai and Delhi.”
Indiabulls Financial Services Ltd

59
Last traded 250.00 Change 18.55 (8.01%)

Time 29 Aug, 16:01 Volume 3300365


Day
Prev Close 231.45 255.50 - 238.00
's H/L (Rs)
Mkt Cap (Rs Cr) 6337.50 52wk H/L (Rs) 1028.00 - 213.00

HOW HOT IS THIS STOCK?


Price*
Volume*
MF holdings
Sales
Net profit margin

*
Computed on last 15 days' trading figures.

INDIABULLS FINANCIAL SERVICES LTD. VS...

Action Company Close (Rs)


+
Compare 2,293.05
HDFC (Sensex)
+
Compare 520.90
Bajaj Finserv Ltd. (A)
+
Compare 543.85
Edelweiss Capital Lt (A)
+
Compare 92.45
IDFC (A)
+
Compare 44.30
IFCI Ltd. (A)
+
Compare 128.75
India Infoline (A)
+
Compare 68.10
Indiabulls Securitie (A)
+
Compare 326.65
LIC Housing Fi (A)
+
Compare 130.65
Power Finance Co (A)
+
Compare 1,278.25
Reliance Capital (A)

60
MUTUAL FUND

Assets Under management as on 31st July 2008

Assets Under management as on 31st July 2008

The Indian mutual fund industry saw an increase in growth with


assets under management (AUM) rising to Rs.18,724 crore. As
per the numbers released by the Association of Mutual Funds in
India, the industry asset base for July 2008 stood at Rs.
5,40,623 crore, an increase of 3.59% over Rs. 5,21,899 crore in
June 2008. On a year-on-year basis, the industry’s growth in
assets has been 11%, up from Rs. 4, 86,513.71 crore as of July
2007. In the month of July 2008, the top three funds witnessed a
rise in the AUM including ABN Canara Robeco Mutual Fund
(16.36%), JP Morgan Mutual Fund (15.02%) and ABN AMRO
Mutual Fund (14.9%).Net inflow in Mutual Fund is Rs. 9,699
crore.

61
ABOUT US

AnandRathi is a leading full service securities firm providing


the entire gamut of financial services. The firm, founded in
1994 by Mr. AnandRathi, today has a pan India presence as well
as an international presence through offices in Dubai and
Bangkok. AR provides a breadth of financial and advisory
services including wealth management, investment banking,
corporate advisory, brokerage & distribution of equities,
commodities, mutual funds and insurance, structured products -
all of which are supported by powerful research teams.
The firm's philosophy is entirely client centric, with a clear
focus on providing long term value addition to clients, while
maintaining the highest standards of excellence, ethics and
professionalism. The entire firm activities are divided across
distinct client groups: Individuals, Private Clients, Corporates
and Institutions and was recently ranked by Asia Money 2006
poll amongst South Asia's top 5 wealth managers for the ultra-
rich.
In year 2007 Citigroup Venture Capital International joined the
group as a financial partner

BROKERAGE & DISTRIBUTION

Equity & Derivatives Brokerage


AnandRathi provides end-to-end equity solutions to institutional
and individual investors. Consistent delivery of high quality
advice on individual stocks, sector trends and investment
strategy has established us a competent and reliable research
unit across the country.

Clients can trade through us online on BSE and NSE for both
equities and derivatives. They are supported by dedicated sales
& trading teams in our trading desks across the country.
Research and investment ideas can be accessed by clients either
through their designated dealers, email, web or SMS.

62
MUTUAL FUNDS

AR is one of India's top mutual fund distribution houses. Our


success lies in our philosophy of providing consistently
superior, independent and unbiased advice to our clients backed
by in-depth research. We firmly believe in the importance of
selecting appropriate asset allocations based on the client's risk
profile.

We have a dedicated mutual fund research cell for mutual funds


that consistently churns out superior investment ideas, picking
best performing funds across asset classes and providing
insights into performances of select funds.

DEPOSITORY SERVICES

AR Depository Services provides you with a secure and


convenient way for holding your securities on both CDSL and
NSDL.

Our depository services include settlement, clearing and custody


of securities, registration of shares and dematerialization. We
offer you daily updated internet access to your holding
statement and transaction summary.
CDSL Depository
NSDL Depository

COMMODITIES

Commodities broking- A whole new opportunity to hedge


business risk and an attractive investment opportunity to deliver
superior returns for investors .

Our commodities broking services include online futures trading


through NCDEX and MCX and depository services through
CDSL. Commodities broking is supported by a dedicated
research cell that provides both technical as well as fundamental
research. Our research covers a broad range of traded
commodities including precious and base metals, Oils and
Oilseeds, agri-commodities such as wheat, chana, guar, guar
gum and spices such as sugar, jeera and cotton.

In addition to transaction execution, we provide our clients


customized advice on hedging strategies, investment ideas and
arbitrage opportunities.

63
INSURANCE BROKING

As an insurance broker, we provide to our clients comprehensive


risk management techniques, both within the business as well as
on the personal front. Risk management includes identification,
measurement and assessment of the risk and handling of the
risk, of which insurance is an integral part. The firm deals with
both life insurance and general insurance products across all
insurance companies.

Our guiding philosophy is to manage the clients' entire risk set


by providing the optimal level of cover at the least possible
cost. The entire sales process and product selection is research
oriented and customized to the client's needs. We lay strong
emphasis on timely claim settlement and post sales services.
Our services

• Risk Management
• Due diligence and research on policies available
• Recommendation on a comprehensive insurance cover based
on clients needs
• Maintain proper records of client policies
• Assist client in paying premiums
• Continuous monitoring of client account

Assist client in claim negotiation and settlement

IPO’s

We are a leading primary market distributor across the country.


Our strong performance in IPOs has been a result of our vast
experience in the Primary Market, a wide network of branches
across India, strong distribution capabilities and a dedicated
research team

We have been consistently ranked among the top 10 distributors


of IPOs on all major offerings. Our IPO research team provides
clients with indepth overviews of forthcoming IPOs as well as
investment recommendations. Online filling of forms is also
available.

64
INVESTMENT BANKING

AR Investment Banking provides comprehensive services to


clients including raising money in the equity capital markets to
identifying strategic alliances, mergers and acquisition
opportunities and debt financing & restructuring advisory.
Corporate Finance
The AR Corporate Finance team helps clients manage their debt-
financing needs by profiling business and cash-flow risks,
defining the alternative sources of funding , building in multiple
variables such as currencies, fixed-floating, tenure, collateral
etc. in a comprehensive manner and finally negotiating with the
prospective lenders / buyers.

The team has also built an impressive track-record in debt


restructuring based on its superior understanding of business
needs and relationships with key lenders.

The Corporate Finance team has handled assignments in


businesses like paper, hospitality, telecom, textiles and sugar.

65
RESEARCH OBJECTIVE

STATEMENT OF PROBLEM

Are people really getting benefits from the various predictions


being made by the analysis?

Objective of the research project

• To understand the importance of economic analysis of firm


as a producing unit
• To learn the role of money, and banking system.
• To understand the function of financial system.
• To understand the financial, money and capital market.
• To explain stock exchange.
• To explain analysis of equity data.
• To review the concept and technique of price and trend
analysis
66
• To asses the advantage and disadvantage of stock
prediction
• If possible to design how stock prediction technique.
• To make the people move aware about market

67
RESEARCH METHODOLOGY AND LIMITATION

RESEARCH DESIGN

Problem is complex and real in nature, lot of efforts have


undergone for the research by meeting various people and asking
them about their experience .various people have undergone
huge losses in the stock market lot of material has been
collected from the internet.

The research methodology consisted following steps:

1. DEFINING THE OBJECTIVES:

The aim of this project as has already been mentioned was to


“sales and analysis of mutual funds.” For this our research
contains two parts-

68
a. To sale the products we have to first generate database on the basis of marketing
research.

b. Analysis of different schemes of share market.

2. DEVELOPING THE RESEARCH PLAN:

This step called for decision on the data sources, sampling plan
and contact methods.

 DATA SOURCES

Data was collected from primary and secondary data. The


various sources are:

i. PRIMARY DATA

This type of data does not exist; it is originated by primary


sources like personal interaction or field back forms,
questionnaires that act as tools for collecting data.

ii. SECONDARY DATA

This type of data already exists, and used to generate


information as required. We collect the secondary data through
Internet, books, journals and magazines of the company, various
company broachers, talking with people.

 RESEARCH APPROACH

The research approach adopted here was the survey method. But
other approaches also used such as observation research.

3. COLLECTING THE INFORMATION

With respect to primary and secondary data, the information is


collected. Primary data tells us present scenario of financial
market. Secondary data means that to get the data from the
internet, company magazines, talking with people and convince.

DATA COLLECTION:

Base on the above questionnaire data are collected by survey


methods.

1. SAMPLING METHOD:

69
 The sampling method, which is adopted, is Random Sampling.

2. DATA ANALYSIS:

3. The Analysis of survey has been done on % basis.

DATA COLLECTION

PRIMARY DATA

The primary data to be selected was based upon the response of


the respondents to the questionnaire designed. The questionnaire
designed was given to us from our immediate boss... The
questionnaire consists of closed ended questions.

A part of Questionnaire was targeted to know the personal


details of the respondents. Another part comprised of the self-
designed questionnaire and will consist of closed ended
questions with every question having its own importance and
meaning.

SECONDARY DATA

The secondary data was collected by referring through web sites,


and the final data was analyzed systematically to achieve the
desired result.

DATA ANALYSIS

For analyzing the data obtained after conducting the survey,


percentage method was used. All the views and data obtained
were also interpreted as clearly as possible.

 STUDY

The present investigation is a descriptive and marketing type of


study undertaken to estimate the comparative study of share
market analysis. The present study identifies views of
customers & analysis of share market along with the self-
analysis.

70
 SAMPLE SIZE

For the purpose of analysis a sample size of respondents was


selected. The target group of the respondent was job holders and
an earning person whatever his/her age may be. The sample size
taken was 60.

 SAMPLING METHOD

The sampling method chosen for the project was “Random


Sampling”. This type of sampling is also known as chance
sampling or probability sampling where each and every item in
the population has an equal chance of inclusion in the sample
and each one of the possible samples. This procedure gives each
item an equal probability of being selected.

COMPARATIVE ANALYSIS AND INTERPRETATIONS

ANALYSIS OF MALES AND FEMALES SURVEYED:

71
27%

male
female

73%

male and female

50
45
40
35
30 male
25
female
20
15
10
5
0
male female

BRIEF ANALYSIS

The diagram helped us in judging the number and percentage of


males and females after conducting the survey; it was found that
out of customers were males and was females. Thus, we came to
know that 73% of the users were males and the remaining 27%
were females.

LIMITATION OF STUDY

1. lot of efforts have been undergone to improve the

predication techniques .like earlier there was only

72
fundamental analysis being used but now technical analysis

has come into existence

2. Once the people who are involved in it. They play it like

gambling and they think that its same it is difficult to

change their mindset.

3. It’s difficult to make people aware about the market

knowledge it is very vast.

4. Last of technical thing are involved in it difficult for

everyone to go through it.

73
CONCLUSION AND SUGGESTIONS

Today various people are investing in stock without having


proper knowledge about it , they only listen to their broker
sayings and in the end face huge losses , stock predication is
very difficult or say impossible no one can predict the future as
has been brilliant shown in the Hollywood movie paycheck

If people know the truth and have knowledge about the market
than can take some risks. Stock cant be predicted no one is sure
what going to happen the next movement it’s a much volatile
market. If someone is sure about the up trepanned than why the
stop loss being set if because there is no surety

Therefore, people should have knowledge about the market than


they should enter it as it would lead in minimizing the losses
and playing a more safe game of investing money. More reliable
techniques should come to facilitate people and it should be
simple also.

74
QUESTIONNAIRE

1. What is a commodity?

ANS: The term 'commodity' includes all kinds of goods. FCRA


defines 'goods' as 'every kind of movable property other than
actionable claims, money and securities'

2. What are commodity futures?

ANS: Commodity Futures are contracts to buy specific


quantity of a particular commodity at a future date. It is
similar to the Index futures and Stock futures but the
underlying happens to be commodities instead of Stocks and
Indices

3. Why Trade in Commodity Exchanges?

75
ANS: 1. Hedgers
2. No counter party risks
3. Higher Leverage: Get high exposures for the margin
provided
4. Prices are pegged to international markets of NYMEX,
CBOT, CME, LME etc

4. Who are the players in the Commodity Market

ANS: Hedgers: Hedgers enter into commodity contracts to be


assured access to a commodity, or the ability to sell it, at a
guaranteed price
Speculator: Speculators are participants who wish to bet on
future movements in the price of an asset. Individuals, willing
to absorb risk
Arbitrageur: A type of investor who attempts to profit from
price inefficiencies in the market by making simultaneous trades
that offset each other and capture risk-free profits

5. How do commodity prices move?

Natural Factors: Soil and climatic conditions, natural calamities


etc
Government Policies - e.g. EXIM Policies like tariff rates,
minimum support prices

Annual production, consumption and carry-over quantity of


stocks
Economic policies and conditions
Interest Rates - e.g. hike in federal rates bring down the dollar,
thereby increasing lucrative-ness of investment in precious
metals

5. Who regulates the commodity exchanges?

Just as SEBI regulates the stock exchanges, commodity


exchanges are regulated by the Forwards Market Commission
(FMC), which comes under the purview of the Ministry of Food,
Agriculture and Public Distribution

7. What are the major commodity exchanges

A. Multi-Commodity Exchange of India Ltd, Mumbai (MCX

B. National Commodity and Derivatives Exchange of India,


Mumbai (NCDEX

C. National Multi Commodity Exchange, Ahemdabad (NMCE

76
8. What are the commodity derivatives market
timings?

The commodity derivatives timings are: NCDEX & MCX


Monday to Friday: 10 am to 11.30 pm (Agri-commodities up to 5
p.m. only
Saturday: 10 am to 2 pm

9. How risky are these markets compared to stock &


bond markets?

Commodity prices are generally less volatile than the stocks and
this has been statistically proven. Therefore it's relatively safer
to trade in commodities. Also the regulatory authorities ensure
through continuous vigil that the commodity prices are market-
driven and free from manipulations. However all investments are
subject to market risk and depend on the individual’s decision

10. What are the charges involved in trading on


the exchanges

Brokerage

Service Tax

Transaction Charges: Rs.4 per lakh on both NCDEX and MCX

On NCDEX it is always on 20th of every month

On MCX it differs from commodity to commodity


All open contracts, which are not intended for delivery, are
settled in cash

BIBLIOGRAPHY

Websites:

 www.google.com
 www.wikipedia.com
 www.sharekhan.com
 www.religare.com
 www.karvay.com
 www.indiabulls.com
 Indiainfoline.com

77
Books, magazines& newspaper

 Business times
 Research methodology(c.s kothari)
 Economic times
 Financial management (paresh shah)

78