A SUMMER PROJECT REPORT ON “STUDY ON TRANSACTIONS OF STOCK MARKET IN INDIA WITH SPECIAL REFERENCE TO SHAREKHAN Ltd.

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR MASTER IN MANAGEMENT STUDIES (MMS) 2009-2011 SUBMITTED BY: ROLL NO. P 12 SUBMITTED TO: Dr V.N. BEDEKAR INSTITUTE OF MANAGEMENT STUDIES THANE

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Table of Contents Chapter No.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Title
Declaration from student Certificate from Guide Acknowledgement Executive Summary Company Profile Scope of Project Nature of Project Introduction The Stock Exchange The Stock Exchanges in India Evolution of stock trading in India Types of transactions in stock trading Transaction Settlement System Factors affecting Indian stock market India in Global Markets Conclusion Recommendations Learning experience from the project Bibliography

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5 8 16 17 20 27 30 42 52 59 63 67 72 74 75 76

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DECLARATION
I wish to state that the work embodied in this Project titled “STUDY ON

TRANSACTIONS OF STOCK MARKET IN INDIA WITH SPECIAL REFERENCE TO SHAREKHAN” forms my own contribution to Management.

Wherever references have been made to intellectual properties of any individual / Institution / Government / Private / Public Bodies / Universities, research paper, text books, reference books, research monographs, archives of newspapers, corporates, individuals, business / Government and any other source of intellectual properties viz., speeches, quotations, conference proceedings, extracts from the website, working paper, seminal work et al, they have been clearly indicated, duly acknowledged and included in the Bibliography.

_________________________ Signature of Candidate

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EXECUTIVE SUMMARY
The capital market is important to a country’s economic and social system. It plays the crucial roles of capital raising for both public and private sectors, promoting balance and stability in the financial system, decreasing dependency on the banking sector, driving the economy forward and creating jobs, as well as being an alternative method for savings. A strong capital market will lessen the impact of economic fluctuations which can be compounded by the fast-flowing nature of capital. Since the early 1990s, India has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment. A Share market/stock markets is an open market for fiscal operations such as trading of a firm's share and derivatives at a fixed cost. These securities are further listed on a stock exchange. A Share market does not offer any corporeal service and is not a separately owned business entity. It was in 1875 that the Indian Share Market first started functioning. The first share trading association in India was known as the Native Share and Stock Broker's Association, only to become the Bombay Stock Exchange (BSE) later on. This trading association started off its operations with around 318 members. The Stock Exchanges have become a prominent player in this economic reform and has now become a key driver of India’s Economy. With this, Indian stock broking firms are on an expansion drive. One Such firm is Sharekhan Ltd. Main components of Indian Share Market Bombay Stock Exchange (BSE) Bombay Stock Exchange is known to be the oldest stock exchange in the entire Asian region. If someone wants to know about the history of the India share market, it becomes synonymous with the history of the Bombay Stock Exchange. It started functioning in 1875 with the name 'The Native Share and Stock Broker's Association'. Under the Securities Contracts (Regulation) Act, 1956, the association got its recognition as a stock exchange in 1956. When it started, it was just an association of persons but with the recognition it got transferred to a corporate and demutualised entity. Trading items in Bombay Stock Exchange • •

Equity or Shares Derivatives (Futures and Options)
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Debt Instruments

The main index of BSE is known as the BSE SENSEX or simply SENSEX (Sensitivity Index). It is an index which comprises of 30 financially sound company scrips, with an option to be reviewed and modified from time-to-time. The index calculation is based on the 'Free-float Market Capitalization' methodology. Leading bourses like the Dow-Jones also follow this methodology. Currently the Sensex is hovering around the 17,000 mark, all expected to touch 20K by 2011.But then volatility has its important role to spoil the entire game. National Stock Exchange (NSE) National Stock Exchange (NSE) is considered to be the leader in the stock exchange scenario in terms of the total volume traded. The market capitalisation the National Stock Exchange touched about $921.31 billion at the end of May 2009. The National Stock Exchange received the recognition of a stock exchange in July 1993 under Securities Contracts (Regulation) Act, 1956. The products that are traded in the National Stock Exchange are:• • • • •

Equity or Share Futures (both index and stock) Options (Call and Put) Wholesale Debt Market Retail Debt Market

NSE has a fully automated screen based trading system which is known as the NEAT system. The transactions are carried on with speed, efficiency, and are all transparent. The risk management system of the National Stock Exchange is world class and can be considered as the benchmark for other bourses. The leading index of NSE is known as Nifty 50 or just Nifty. It comprises of 50 diversified benchmark Indian company scrips and is constructed on the basis of weighted average market capitalization method. Regulatory Authority of Indian Share Market SEBI or Securities and Exchange Board of India is the market watchdog and has the responsibility of protecting the investors' interests, develops regulatory norms and helps in the development of the securities market in India. Why to invest in Indian share market ?

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• Update yourself on the prevailing market conditions • Whenever market witness an upward trend always purchase first and then sell the securities. • Essential rules of Indian Share Market Whenever share market is at its crest it is bound to dip at some point of time. it is advisable not to block your hard earned money in already flourishing Sensex and NIFTY. • It helps you to see 'fast' cash if the market is in robust mood and helps in fast liquidation. Stride carefully and invest in shares that you are comfortable investing in. • If the share market is down. • The excellent time for investment is when the market is low keeping the basics in consideration. • Unlike the common belief of investing in booming share market. Judge the firm by its past records and assess it personally. • Seek the advice of professionals who will not only provide you tips on best investment options but also on favorable market conditions. Even if they are not willing to offer you considerable gains then its time to get rid of them are invest your money in productive schemes. You can also consider a balanced or debt fund if you have restrained budget. • Do not consider the shares based on layman's advice. • 6 . and when the market dips always buy later and sell first. Do not surpass that pre-decided perimeter and believe in the performance of the market. then stick to your plan. • If you have allocated more than half of your investments in equity. Take the advice of the fund manager who manages that specific fund. National Savings Certificates and post office deposits. Public Provident Fund. Also consider investing in equity funds and to stabilize your equity investments invest a part in fixed income options like the bonds. • Diversify your shares buy investing in different sectors. It is better to wait for market bottom trend and then purchase shares at lower cost in order to trade it later. One can trade for a short period of time or even a lengthy span.An investor does not require a lot of money to start investing in India share market unlike buying property and paying off a monthly mortgage. • Tips on investing intelligently in Indian Share Market Consider selling the shares which you have bought long time back and are indicating gains. it will only increase if there are no external aspects influencing it. • Time of trading involved spans from small to big.

the SSKI group ventured into institutional broking and corporate finance 18 years ago.com . Sharekhan Ltd. 2002 Sharekhan launched Speed Trade. HSBC. The content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-ofbreed technology and superior market information. This was for the first time that a net-based trading station of this caliber was offered to the traders. which has over eight decades of experience in the stock broking business. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. SSKI’s institutional broking arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country.www. With a legacy of more than 80 years in the stock markets. 7 . 2000. depository services. Oracle. In the last six months Speed Trade has become a de facto standard for the Day Trading community over the net. Sharekhan offers its customers a wide range of equity related services including trade execution on BSE. online trading. Derivatives. like Sun Microsystems.COMPANY PROFILE Introduction to Sharekhan Ltd. Nexgenix. Vignette. The Morakhiya family holds a majority stake in the company. The site gives access to superior content and transaction facility to retail customers across the country. Known for its jargon-free. Verisign Financial Technologies India Ltd. Intel & Carlyle are the other investors. The firm’s online trading and investment site . NSE. to build its trading engine and content.sharekhan. investment advice etc. On April 17. Cambridge Technologies. The company has used some of the best-known names in the IT industry. Spider Software Pvt Ltd. Sharekhan has always believed in investing in technology to build its business.was launched on Feb 8. the site has a registered base of over one lakh customers. SSKI holds a sizeable portion of the market in each of these segments. is one of the leading retail stock broking house of SSKI Group which is running successfully since 1922 in the country. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks. a net-based executable application that emulates the broker terminals along with host of other information relevant to the Day Traders. investor friendly language and high quality research. It is the retail broking arm of the Mumbai-based SSKI Group. Microsoft. Share khan’s ground network includes over 1288 centers in 325 cities in India which provide a host of trading related services.

Some of the clients include BPL Cellular Holding. and Shopper’s Stop.sharekhan. The Corporate Finance section has a list of very prestigious clients and has many ‘firsts’ to its credit.  Efficiency and effectiveness built on ethical practices. sector tapped etc. Gujarat Pipavav. Essar. Far East.400013 Service Provider Depository Services. PROFILE OF THE COMPANY Name of the company: Year of Establishment: Headquarter : Sharekhan ltd. in terms of the size of deal.  Respond to progressive globalization and achieving international standard. with a daily turnover of over US$ 2 million. We believe that our growth depends on client satisfaction. while maintaining human values. Foreign Institutional Investors generate about 65% of the organization’s revenue.  Continuous up-gradation with changing technology. Online Services and Technical Research. CORE VALUE  Customer satisfaction through  Providing quality service effectively and efficiently  “Smile. Over 3500 Data Not Available www.com Your Guide to The Financial Jungle. Hutchison. Planetasia. INDIA. The group has placed over US$ 1 billion in private equity deals.It has 60 institutional clients spread over India.Maharashtra. MISSION  To provide the best customer service and product innovation tuned to diverse needs of clientele. 1925 Sharekhan SSKI A-206 Phoenix House Phoenix Mills Compound Lower Parel Mumbai . Nature of Business : Services : Number of Employees : Revenue : Website : Slogan : VISION To empower the investor with quality advice and superior service to help him take better investment decisions. UK and US. it enhances your face value ” is a service quality stressed on periodic customer service Audits 8 .

hassle free trading experience. in the investment process depending on his investing style and frequency.sharekhan. · Share khan offers its customers the convenience of a broker-DP. whether trading is done daily or occasionally. 2000 and named it as www. integrity and People SHAREKHAN LIMITED’S MANAGEMENT TEAM  Dinesh Murikya : Owner of the company  Tarun Shah : CEO of the company  Shankar Vailaya : Director (Operations)  Jaideep Arora : Director (Products & Technology)  Pathik Gandotra : Head of Research  Rishi Kohli : Vice President of Equity Derivatives  Nikhil Vora : Vice President of Research About Sharekhan · SSKI named its online division as SHARE KHAN and it is into retail Broking · The business of the company overhauled 4 years ago on February 8. and offers a suite of products and services. The customer will be entitled to a host of value added services. · It has $25m/trades every day. · Leading player today with 20% market share · Over 8000 online clients · The site was also launched on February 8. depository services · Ensures convenience in trading experience: Share Khan’s trading services are designed to offer an easy. for cash as well as derivatives.com · The SpeedTrade account of share khan is the next generation technology product launched on April 17. providing the customer with a multi-channel access to the stock markets. 103 Franchisees & 17 Branches across India. 2002 · SpeedTradePlus was launched on October 28. · It acts as a discount brokerage house to a full service investment solutions provider · It has a 150 member strong team. Maximization of stakeholder value  Success through Teamwork. · It helps the customer meet his pay-in obligations on time thereby reducing the 9 . · It has specialized research product for the small investors and day traders · Largest chain of share shops. 2000. 2002 for trading in Derivatives · It offers its customers with the trade execution facilities on the NSE. · It gives advice based on extensive research to its customers and provides them with relevant and updated information to help him make informed about his investment decisions.

updated live. Intra day charts.for retail investors · Speed Trade: for high net worth investors with large and active equity portfolio who need to monitor and action swiftly · Speed trade Plus. Pledge. PRODUCT OFFERING OF SHAREKHAN LTD. The site is user friendly allowing even a layman to easily operate without any hassles.for high net worth investors dealing in derivative market.possibility of auctions. Transmission facilities at any of the Share khan branches and business partners outlets. Back up Facility to place trades on Direct Phone Lines. · Sharekhan Depository Services offers demat services to individual and corporate investors. Sharekhan is infact• Among the top 3 branded retail service providers • No. 1 player in online business • Largest network of branded broking outlets in the country serving more than 7.com has been specially designed to facilitate its users to buy and sell shares in an instant at anytime and from anywhere they like. And execute the instruction immediately on receiving it and thereafter the customer can view his updated account statement on Internet.sharekhan. Design The website of Share khan namely www. Features: Share khan’s product comes with the following features: Trade execution in a fraction of a second! Single Screen Trading Terminal Real time streaming quotes. Customized Alerts based on Multiple Parameters. It has a team of professionals and the latest technological expertise dedicated exclusively to their demat department.000 clients. Price watch on any number of scripts. Hot keys similar to Brokers Terminal. A customer can avail of Demat \ Remat. Repurchase. The company believes in flexibility and therefore allows accepting late instructions without any extra charge. 10 . Quality User Friendly. tick-by-tick. attractive & colorful Website. Those 3 varieties are: · Classic. Product Variety Share khan offers 3 types of online trading accounts for its customers specially designed according to their volume in share trading. 00.

index stock information live. updated live.Instant Order\ Trade Confirmation in the same window Live margin. i. Online access to Customer Service. and Most Active. Dial-n-trade is also an exclusive service available to all Sharekhan customers for trading in shares via the telephone.bit super safe encryption. Index information. The Brand Name “SHARE KHAN” itself suggests the business in which the company is dealing so that the consumer could easily identify the product or service category. Last but not the least. derivatives and commodities backed with investment advice tempered by decades of broking experience. Competitive Brokerage. updated live for all scripts Online access to both accounts and DP. Services Share khan offers its customers. Flexibility to customize screen layout and setting. 128 . Facility to place after market orders Online fund transfer facility from leading Banks Online intra-day technical calls. Exhaustive database of over 2000 companies Historical charts and technical analysis tools. The company has preferred to name themselves under a Blanket Family Name. index chart. Facility to square off all transactions at one click. executed and rejected orders. the customer will be directed to a telebroker who will buy or sell shares for him. Facility to cancel all pending orders at one click. position. the company preferred to name itself as“SHARE KHAN”. On dialing the toll free number 1600-22-7050 and on entering the customers TPIN number.e. Live updated Order and Trade Book. Best 5 bids and offers. Details of pending. depository services and trade execution facilities for equities. Facility to customize any number of portfolios & watch lists. ideas that help you to make money!!! Brand Name The company as a whole in its offline business has named itself as SSKI Securities Pvt. Market depth. Ltd.  PRICE Annual Maintainence Plans* 11 . But in its online division started since 1997. Top Losers. marked to market profit & loss report. The teams of its dedicated analysts are constantly at work to track performance and trends. Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal Securities Pvt. Top Gainers.

12% (Total brokerage) On Delivery: 0. Each cluster represents a certain profile in terms of business fundamentals as well as the kind of returns you can expect over a certain time horizons and return objectives best.e. there are slabs in brokerage rates. 6000 0. the payment of the transaction taken place has to be made within five days of its occurrence. robust management credentials. · Discounts For investors with High Net worth. 1 per script held per month.4 delivery 0. · Turnover tax + Stamp duty -0. · Payment Period The transaction settlement date in the securities market is T+ 5days i.25 delivery *These AMC plans are subject to change · Brokerage Share khan in its online business charges brokerage as follows: .30% on Brokerage.e. Applegreen Potentially steady compounders. Emerging Star 12 . Could gallop at 25-30 per year over the next two to three years. 2000 Brokerage 0. by keeping 1/4th margin with them. SHAREKHAN’S STOCK CLUSTER Sharekhan categorize all the scrip’s that are under coverage into six clusters.In Derivative Market On Trading: 0. Evergreen Dominant players with strong brands.07 intraday 0.AMC Rs. but five to ten years graph bit unclear.015% (Rs.In equity Market: On Trading: 0. 100000) · Custody Charge Re.1% · Service Tax -10. · Credit terms Share khan allows its customers to trade up to 4 times i. Will steadily compound 18-20% per year for next five to ten years. 15 on every turnover of Rs.5 delivery 0.1 intraday 0. supernormal shareholder returns.05 intraday Rs. 750 Rs.1% On Delivery: 0.5% .

Presents our stock pick and discusses reasons for the same. cash in.   Contents Views on most important news reports of the day Stock Update reports 13 . Startlingly high returns possible.Young companies likely to rule chosen niches. Generally the research is based on the Fundamentals and Technical analysis of different companies and also taking into account various factors relating to the economy. But somtehing’s cooking. Fundamental Research: Stock Ideas Aimed at investors. Investors' Eye A daily fundamental newsletter to help you take right decisions. get out. could return 30-50% within six months. It comprises a team of experts who constantly keep an eye on the share market and do research on the various aspects of the share market. Publications of Sharekhan Sharekhan’s Valueline Derivatives Digest Eagle Eye High Noon Investor’s Eye Commodities Buzz Commodities Beat Commodity Trader’s Corner Sharekhan Xclusive RESEARCH SECTION IN SHAREKHAN LIMITED Sharekhan Limited has its own in-house Research Organisation which is known as Valueline. Even better. Get in. Sharekhan's trading calls in the month of November 2007 has given 89% strike rate. Vulture’s Pick Companies with valueable assets at throwaway prices. Sharekhan Limited’s research on the volatile market has been found accurate most of the time.Could double in two to three years time. Typically fast gainers in rising markets. Ugly Duckling Trading below fair value or at huge discount to peer group. Buy & await predators. Cannonball Season’s favourites. Potentially ten-baggers if you’re patient. the niches could balloon into full-blow markets. It comes with a price target and a time frame over which gains can be materialised.

30pm the day after. Upper Ganges) Market Outlook Bi-monthly Fundamental view on the market. Reports like . Monetary policy review. KCP Sugar Industries. Buy with a stop loss or square off by 3. Technical Research: Punter Calls A daily view on how the market and major indices are expected to trade for the day The closest support and resistance levels are provided to help traders take decisions. IPO Flash Report on forthcoming IPOs .Selectivity pays.only those IPOs which are covered by our research team Sector Reports View on various sectors and its constituents (eg sugar and Balrampur Chini. etc. Portfolio is updated with new stocks replacing existing stocks as and when required to optimize performance View Point Views on companies we don't track.  Special reports Other reports Sharekhan Top Picks A model portfolio comprising of 12 stocks for investors with a horizon of more than a year. Hurricane gains. policy changes and government initiatives Special Reports Specialised reports on unique market opportunities. Calls created for tomorrow These calls are for a one-day period and are created today to buy in cash or futures for selling tomorrow at the target price. Smart Chart 14 . Views on economy. Dividend yield stocks.

Momentum Swing Momentum Swing tries to capture the dynamic picture of price movements in stocks.It presents the best positional trading calls in the market.30. Day Traders Hit List It captures the trading ranges of all the stocks that are currently the market's flavour. This product can be used to gauge the sentiments in stocks at a future date as reflected in the charts. High Noon Toolkit for derivative traders Scope Of The Project Indian Financial Market Introduction Of Capital Market Introduction Of Stock Exchange Stock exchanges in India Evolution Of stock trading in India Types of Transactions or orders in stock market Transaction Settlement System Factors Affecting Indian Stock market The current Stock market scenario in India 15 . It is meant for day trading. Derivatives Calls It is toolkit for derivative traders. The list contains 20 liquid stocks. Pivot Tables Pivot Table is an intra-day product and it covers mainly mid-cap and small-cap companies. Eagle Eye Eagle Eye is a daily newsletter based on technical research. The Buy and Sell targets are given for each stock in this list. All positions need to be squared off by 3.

NATURE OF THE PROJECT SIGNIFICANCE TO THE INDUSTRY: This data can be explored to take in the trends across the industry. People are only beginning to wake up to it’s vast possibilities.  Method of Data collection. and thus happen to be original in character. Primary data are those which are collected afresh and for the first time. Methods for collecting primary data are:  Questionnaires Interviews Schedules etc. which can be helpful to make decision for investing money in right shares which is profitable to investors as well as brokers. The significance for the industry lies in studying these trends that emerge from the study.  Tools of analysis Source of Data: There are many sources which provide information regarding the research. 2) Secondary Data 1) Primary Data : Primary data is data which is not already available. The data may be of two types 1) Primary Data. RESEARCH DESIGN :  Source of Data. It is a rapidly changing and evolving sector. 2) Secondary Data : 16 . SIGNIFICANE FOR THE RESEARCHER : To facilitate and provide all the useful information of the study. A study like this can attempt to guide the future of the industry based on current trends.  Types of research. In this study the interview method have been used. Primary data is found in its original form.

why people think or do certain thing. Qualitative descriptive research also emphasizes on what is. Data Collection: 17 .Secondary data means data that are already available i. LIMITATIONS OF THE RESEARCH 1. We quite often talk of “Motivation Research” an important type of qualitative research. Case studies. Quantitative descriptive research emphasizes on what is. but makes use of nonquantitative research methods in describing the conditions of the present. they refer to the data which have already been collected and analyzed by others. ii. Web Sites. For observation in this study secondary data has been used. using the depth interview for the purpose. The methods involved range from the survey which describes the status quo.e. analyze and interpret the present conditions. Tool of Analysis: Qualitative: It is concerned with the qualitative phenomenon i. Descriptive research is used to obtain information concerning the current status of the phenomena to describe "what exists" with respect to variables or conditions in a situation. record. DISCRIPTIVE AS WELL AS ANALYTICAL RESEARCH The research is primarily descriptive as well as analytical in nature. when we are interested in investigating the reason for human behavior i.  Observation:Observation includes minute observation of activities take place in the field of research. Secondary data may be published or unpublished.e. For instance. The sources of secondary data are: Bulletin. books and magazines organized by organizations. Descriptive research can be of two types: i. and makes use of quantitative methods to describe. The sources of information are both primary & secondary. phenomenon related to or involves quality. to developmental studies which seek to determine changes over time.e. the correlation study which investigates the relationship between variables. This type of research aims at discovering the underlying motives and desires. Official records.

So. Reliability: The data collected in research work was secondary data. which a very important factor of this study as conclusion has been derived from this secondary data only. analysis on one day or in one segment can change very quickly. 2. they refer to the data which have already been collected and analysed by someone else. OBJECTIVE OF STUDY • To know the basic terminology of stock market. So. Accuracy: The facts and findings of the data cannot be accepted as accurate to some extent as firstly. Secondary data means data that are already available i. Time Period: Time period was one of the main factor as only two month was allotted and the topic covered in research has a wide scope. it was not possible to cover it in a short span of time. • To know about the latest and future development in the stock exchange trading system. 4.e. In a rapidly changing industry. this puts a question mark on the reliability of this data. secondary data was collected. 3.The most important constraint in this study was data collection as Secondary data was selected for study. • To make the investor aware about the factors which may affect their investment • It is to analyze the changes in trading after the exchange shifted from outcry to online trading system. The environmental changes are vital to be considered in order to assimilate the findings. 18 .

INTRODUCTION 19 .

Delhi. The market saw many new companies spanning across different industry segments and business began to flourish. Bangalore and Pune exchanges as well. In the India financial market there are various types of financial products whose prices are determined by the numerous buyers and sellers in the market.helping to adopt an effective channel to transmit various financial policies. It was only in 1991. The capital markets in India experienced turbulence after which the SEBI came into prominence. The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter Exchange of India) in the mid 1990s helped in regulating a smooth and transparent form of securities trading.mapsofindia. the number of securities exchanges in India became eight . Ahmedabad and Kolkata. The Indian stock markets till date have remained stagnant due to the rigid economic controls.Scope of Indian Financial Market1 The financial market in India at present is more advanced than many other sectors as it became organized as early as the 19th century with the securities exchanges in Mumbai. after the liberalization process that the India securities market witnessed a flurry of IPOs serially. there was the Madras. The market loopholes had to be bridged by taking drastic measures. competitive. Ahmedabad and Kolkata. In the early 1960s.including Mumbai. Today there are 23 regional securities exchanges in India. The other 1 http://business. efficient and integrated to face all shocks. Potential Of Indian Financial Market India Financial Market helps in promoting the savings of the economy .com/india-market/financial.html 20 . Apart from these three exchanges. Kanpur. The Indian financial sector is well-developed. The regulatory body for the Indian capital markets was the SEBI (Securities and Exchange Board of India).

Bombay Stock Exchange. Debt trading activities. Corporate Debt details. Features Of Financial Market in India India Financial Indices . various sector indexes.FX & Gold Chart Plotter.& World Bank.determinant factor of the prices of the financial products is the market forces of demand and supply. issues on market capitalization. company information. Sensex charts. IMF. J.Foreign Debt Database composed by BIS. S&P CNXNifty. 21 . BSE Sensex 30 index. and • It provides an effective channel for the transmission of policy impulses provided the financial markets are competitive.Dow Jones Global indexes. External Debt Service • Foreign Investment . • It allocates resources efficiently among the sectors. bond prices. Morgan Currency Indexes • National and Global Market Relations • Mutual Funds • Insurance • Loans • Forex and Bullion • A well-developed financial sector performs the following functions: • It promotes overall savings of the economy by providing alternative instruments. A typical competitive financial market has the following characteristics: • There should be large numbers of buyers and sellers of the financial product. corporate earning statements • Fixed Income .Corporate Bond Prices. OECD. foreign exchange. stock quotes. Morgan Stanley Equity Indexes • Currency Indexes . Money Market. Public Sector Debt.BSE 30 Index. Investments in India & Abroad • Global Equity Indexes . efficient & integrated. Rupee & Dollar Chart • Indian Financial market news • Stock News . The various other types of Indian markets help in the functioning of the wide India financial sector. Government Securities. Interest Rates. P.

The market where securities are traded known as Securities market. CD's etc.  Treasury bills. bonds. A market is said to be efficient if the rate prevailing at any point of time contains all existing information in the market. also known as new issue 22 . • Turnover of instruments in both primary and secondary markets should be fairly large. So it constitutes all long-term borrowings from banks and financial institutions. They are:  Money markets (short-term)  Capital markets (long-term) MONEY MARKET Money market is a place where we can raise short-term capital. It consists of two different segments namely primary and secondary market. commercial papers. If the realized rate contains all information. The money market is further classified into:  Inter bank call money market  Bill market and  Bank loan market Etc. CAPITAL MARKET Capital Market may be defined as a market dealing in medium and long-term funds. • There should be a secondary market for the instrument. It is an institutional arrangement for borrowing medium and long-term funds and which provides facilities for marketing and trading of securities.• The price of the product is determined by the market forces of demand and supply. The primary market deals with new or fresh issue of securities and is. In other words the future rates can adopt a path of random walk. the future rate reacts differently depending on the information that would be available at that point of time. According to functional basis financial markets are classified into two types. borrowings from foreign markets and raising of capital by issue various securities such as shares debentures. therefore. In fact. and • Agencies involved in the process of intermediation between buyers and sellers should provide intermediation services at a minimum spread. then the future rate cannot be appropriately predicted. etc.

Depository participant Investors’ protection in the primary market: To ensure healthy growth of primary market. The following are the market intermediaries associated with the market: 1. the investing public should be protected. The fresh issue of shares by the companies is called as Intial Public Offer. Banker to the issue 6. Depository 7. who form an integral part of the primary market. which facilitate the procurement of long term funds by companies by making fresh issue of shares and debentures. The principal ingredients of investors’ protection are:  Provision of all the relevant information  Provision of accurate information and  Transparent allotment procedures without any bias. The term investor protection has a wider meaning in the primary market. The primary market is regulated by the Securities and Exchange Board of India (SEBI a government regulated authority). Merchant banker/book building lead manager 2. if necessary. The Primary Market The Primary Market consists of arrangements. 23 . Origination deals with the origin of the new issue.The companies have to follow a well-established legal procedure and involve a number of intermediaries such as underwriters. etc. Adviser to the issue 5. Underwriter/broker to the issue 4. The companies make fresh issue of shares and/or debentures at their formation stage and.market. brokers. whereas the secondary market provides a place for purchase and sale of existing securities and is often termed as stock market or stock exchange. Function: The main services of the primary market are origination. Distribution refers to the sale of securities to the investors. Primary market is also referred to as New Issue Market. underwriting. subsequently for the expansion of business. and distribution. Underwriting contract make the shares predictable and remove the element of uncertainty in the subscription. Registrar and transfer agent 3.

Accurate share price allocates scarce capital more efficiently when new projects are financed through a new primary market offering. an investor can buy a security directly from another investor in lieu of the issuer. unlike the primary market. The securities initially are issued in the primary market. the secondary market should be liquid. secondary markets mesh the investor's preference for liquidity (i. It is also referred as "after market". the greater the number of investors that participate in a given marketplace. and 2) accurate share 24 . the only way to create this liquidity was for investors and speculators to meet at a fixed place regularly. then they enter into the secondary market.The Secondary Market Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. this is how stock exchanges originated.issued securities are traded amongst investors. in case the investor needs it to deal with unforeseen circumstances) with the capital user's preference to be able to use the capital for an extended period of time. Secondary market comprises of equity markets and the debt markets. Majority of the trading is done in the secondary market. that is. the more liquid the market. Secondary Market is the market where. It is therefore important that the secondary market be highly liquid (originally. As a general rule. securities are sold by and transferred from one investor or speculator to another..e. and make hostile takeover a less risky proposition and thus move capital into the hands of better managers. Function: Secondary marketing is vital to an efficient and modern capital market. So. In the secondary market shares are maneuvered from one investor to other. but accuracy may also matter in the secondary market because: 1) price accuracy can reduce the agency costs of management. Fundamentally. and the greater the centralization of that marketplace. In the secondary market. the investor's desire not to tie up his or her money for a long period of time. one investor buys an asset from another investor instead of an issuing corporation. Secondary market is an equity trading avenue in which already existing/pre.

For the management of the company. securities are offered to public for subscription for the purpose of raising capital or fund. For the general investor.price aids the efficient allocation of debt finance whether debt offerings or institutional borrowing. In the primary market. Secondary market is an equity trading venue in which already existing/pre-issued securities are traded among investors. enabling implementation of incentive-based management contracts. Broker/member of stock exchange – buyers broker and sellers broker 2. The following are the intermediaries in the secondary market: 1. While stock exchange is the part of an auction market. Over-the-Counter (OTC) is a part of the dealer market. Depository 6. Investment advisor 4. Secondary equity markets serve as a monitoring and control conduit-by facilitating value-enhancing control activities. 25 . Depository participants. Portfolio Manager 3. and aggregating information (via price discovery) that guides management decisions. Secondary market could be either auction or dealer market. Share transfer agent 5. the secondary market provides an efficient platform for trading of his securities.

governments. and statutory requirements that are binding on all listed and trading parties. municipalities. and (2) secondary markets where investors can sell their securities to other investors for cash. listing requirements. Trades in the older exchanges are conducted on the floor (called the 'trading floor') of the exchange itself. London Stock Exchange (LSE).com/definition/stock-exchange. trades are conducted over telephone or online. Some European exchanges. shares) are bought and sold at prices governed by the forces of demand and supply. by shouting orders and instructions(called open outcry system).html 26 . notes. On modern exchanges. the three largest exchanges in the world are (in the descending order) New York Stock Exchange (NYSE). and the Tokyo Stock Exchange (TSE). Almost all exchanges are 'auction exchanges' where buyers enter competitive bids and sellers enter competitive orders through a trading day. use 'periodic auction' method in which round-robin calls are made once a trading day. Stock exchanges impose stringent rules. The first stock exchange was opened in Amsterdam in 1602.businessdictionary. to trade stocks and other securities. The 2 http://www. Stock exchanges basically serve as (1) primary markets where corporations.2 A stock exchange is an entity which provides "trading" facilities for stock brokers and traders. however. and other incorporated bodies can raise capital by channeling savings of the investors into productive ventures. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends.THE STOCK EXCHANGE Organized and regulated financial market where securities (bonds. thus reducing the risk of investment and maintaining liquidity in the system.

as modern markets are electronic networks. 27 . This is the usual way that derivatives and bonds are traded. Usually there is a central location at least for recordkeeping. it has to be listed there. as in all free markets. Trade on an exchange is by members only. Supply and demand in stock markets are driven by various factors which. stock exchanges are part of a global market for securities. but trade is less and less linked to such a physical place. affect the price of stocks. Such trading is said to be off exchange or over-the-counter. A stock exchange is often the most important component of a stock market. which gives them advantages of speed and cost of transactions. To be able to trade a security on a certain stock exchange. Increasingly. unit trusts. nor must stock be subsequently traded on the exchange.securities traded on a stock exchange include shares issued by companies. pooled investment products and bonds. derivatives. There is usually no compulsion to issue stock via the stock exchange itself. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market.

This trend was akin to the rapid growth of securities markets in Europe and the North America in the background of expansion of railroads and exploration of natural resources and land development. In Jul 1865.000 to Rs 54. 20 insurance companies and 62 joint stock companies.000 at par to Rs 120. India had an active stock market for about 150 years that played a significant role in developing risk markets as also promoting enterprise and supporting the growth of industry. Reports on stock markets around that time indicate that an ordinary broker in 1864 earned about Rs 200 per day.The Stock Exchanges in India The equity brokerage industry in India is one of the oldest in the Asia region. The boom period came to an abrupt end in 1865. from day break till 9 am and from 7 pm to early hours of next morning at Bazargate. The roots of a stock market in India began in the 1860s during the American Civil War that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance.000 and that of Backbay Shares went up from Rs 2.000 brokers with the stock markets functioning from three places in Mumbai. between 9 am to 7 pm at the junction of Meadows Street and Rampart Row. Bombay. A share of Colaba Land Company during the boom period of the 1860s rose from Rs 10. a huge sum in those days. Share prices rose sharply even at that time. was a major financial centre having housed 31 banks. Historical records show that as early as 1864. what was then used to be called the share mania 28 . there were about 1. at that time.000.

who served as the Governor of Bombay at that time. unlike the banks which during the preindependence period were owned and run by the British. A group of about 300 brokers formed the stock exchange in Jul 1875. Following the establishment of the first stock exchange in Mumbai.ended with burst of the stock market bubble. An interesting aspect is that despite the collapse of the stock market. which led to the formation of a trust in 1887 known as the “Native Share and Stock Brokers Association”. it became imperative to strengthen the role of the capital markets that could play an important role in efficient mobilisation and allocation of financial resources to the real economy. Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). several measures were taken to streamline the processes and systems including setting up an efficient market infrastructure to enable Indian finance to grow further and mature. In the aftermath of the crash. Beginning of a new equity culture A new phase in the Indian stock markets began in the 1970s. A new set of economic and financial sector reforms that began in the early 1990s gave further impetus to the growth of the stock markets in India. As a part of the reform process. tea (1880s and 1890s). The early 1980s witnessed another surge in stock markets when major companies such as Reliance accessed equity markets for resource mobilisation that evinced huge interest from retail investors. which created a surge in retail investing. A unique feature of the stock market development in India was that that it was entirely driven by local enterprise. The importance of an efficient micro market infrastructure came into focus following the incidence of market abuses in securities and banking markets in 1991 and 2001 that led to extensive investigations by two respective Joint Parliamentary Committees. Madras (1937). which later turned into the Dalal Street. coal (1904 and 1908) etc. at different points of time. banks. Towards this end. other stock exchanges came into being in major cities in India. “Never I witnessed in any place a run so widely distributed nor such distress followed so quickly on the heels of such prosperity” thus wrote Richard Temple. on whose building steps share brokers used to gather to seek stock tips and share news. 29 . thus forcing them to find a place of their own. disallowed them to gather there. Calcutta (1908). namely Ahmedabad (1894). with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational companies. The stock markets gained from surge and boom in several industries such as jute (1870s). most of the brokers met their payment commitments.

which was set up in 1988 as an administrative arrangement. giving little scope for manual intervention that has been the source of market abuse in the past. The broad objectives of the SEBI include to protect the interests of the investors in securities • to promote the development of securities markets and to regulate the securities markets • The scope and functioning of the SEBI has greatly expanded with the rapid growth of securities markets in India in the last fifteen years. electronic contract notes. Electronic trading. These included • • • improving the investment climate by allowing foreign institutional investors to invest in equity and debt markets expanding the product range offered by the stock exchanges strengthening the role and scope of capital markets regulation 30 . straight through processing.The Securities and Exchange Board of India (SEBI). A series of measures announced in Union Budgets beginning FY92 laid the road map for the growth and resurgence of securities markets in India. Stock exchange reforms brought in professional management separating conflicts of interest between brokers as owners of the exchanges and traders/dealers. Foreign institutions took stake in India’s two leading domestic stock exchanges. digital certification. Rapid Growth The last decade has been exceptionally good for the stock markets in India. in addition to trading in equities. opportunities in trading of derivatives in futures and options in index and stocks. The demutualisation and corporatisation of all stock exchanges is nearing completion and the boards of the stock exchanges now have majority of independent directors. Risk management became robust reducing the recurrence of payment defaults. online broking have emerged as major trends in technology. In the back of wide ranging reforms in regulation and market practice as also the growing participation of foreign institutional investment. Indian equity markets now offer. Indian stock markets are transaction intensive and thus rank among the top five markets in this regard. Stock markets became intensely technology and process driven. 1992. Indian stock markets now are ranked first in stock futures and fourth in index futures. Within five years of introduction of derivatives. Product expansion took place in a speedy manner. was given statutory powers with the enactment of the SEBI Act. stock markets in India have showed phenomenal growth in the early 1990s. Capital market reforms are a major constituent of the overall economic reforms in India.

The securities and exchange board of India was constituted in 1988 under a resolution of government of India.  Registering and regulating the working of intermediaries associated with securities market as well as working of mutual funds. a choice of tax options in the form of choosing either long term gains tax or short term tax which ever they prefer and subscribe to strengthening of institutional framework in primary and secondary markets reform and restructuring of the state owned assets management companies allowing Indian companies and individuals to invest abroad allowing stronger banks to assume greater exposure in the securities markets Setting up a mechanism for promoting corporate bond trading in stock exchanges etc.  Performing such functions and exercising such powers under the provisions of capital issues (control) act.• • • • • • • • • revival of commodities futures markets allowing Indian companies to issues ADRs and GDRs in international exchanges and enable them to raise resources through Euro Commercial Borrowings divestment of government ownership in state owned companies and financial institutions tax reforms in the form of introduction of transaction tax that streamlined the tax mobilisation from securities markets operations and also facilitated investors.  Regulating substantial acquisition of shares and take over of companies. 1947and the securities to it by the central government. Over the period. the SEBI shall constitute of a chairman and four other members appointed by the central government. It was later made statutory body by the SEBI act 1992. the Board has brought in several changes in the way securities markets are organized and conducted in India. OBJECTIVES AND FUNCTIONS OF SEBI  To protect the interest of investors in securities.according to this act.  Prohibiting insider trading in securities. SEBI GUIDELINES TO SECONDARY MARKETS 31 . Regulation A new phase of securities market regulation in India began with the setting up of Securities and Exchange Board of India in 1992.  Promoting and regulating self-regulatory organizations.  Regulating the business in stock exchanges and any other securities market.

Major reforms that were brought in the Indian securities markets since 1992 are summarized below: • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Nation wide network of trading terminals Electronic Trading and abolition of Open Outcry systems Dematerialisation of Shares Foreign Participation in Domestic Brokerage Business Foreign Institutional Investment in Indian stocks Venture capital Book Building Process for IPOs Investor protection guidelines Dual Fungibility of ADRs/GDRs Delisting Guidelines Corporate Governance and Disclosure Standards Take Over Code Insider Trading VAR based margining T+2 Securities Settlement Straight Through Processing Screen based trading of Government Securities Introduction of Equity Derivatives Exchange Traded Market for Corporate Bonds Central Listing Authority Mutual Funds in the private sector Mutual Fund Investments Abroad Demutualization and Corporatisation of Stock Exchanges Margin Trading Exchange Traded Funds Anti-Money Laundering Guidelines Electronic Data Information Filing and Retrieval (EDIFAR) Integrated market surveillance Rating of IPOs Unique Client Identification The Stock Market Structure in India 32 . Capital adequacy norms have been laid down for the members of various stock exchanges depending upon their turnover of trade and other factors. public representatives and government representatives to the extent of 50% of total number of members.• • • Board of Directors of Stock Exchange has to be reconstituted so as to include non-members. All recognized stock exchanges will have to inform about transactions within 24hrs.

There are 22 stock exchanges in the country. Advanced technology and online-based transactions have modernized the stock exchanges. The usage of Information technology is to a large extent responsible for the outstanding performance of the stock markets in India. there has been a rapid change in the Indian securities market. The stock market of India has made considerable progress following its international peers and the modern market mechanisms have helped them create a niche for themselves. The market regular. the first being the Bombay Stock Exchange (BSE). There are 22 stock exchanges in India. Any minor developments in the economy might push the indexes on these exchanges down or vice versa. The two main players of the India stock market . trading mechanism. settlement cycles. which began formal trading in 1875.NSE and BSE have outshone all the other exchanges and majority of the stocks are listed on these two exchanges. the National Stock Exchange of India and the Bombay Stock Exchange Ltd. risk management.000 corporate brokers all across India. Meanwhile. The regional stock exchanges are in pursuit of business models that make them viable and vibrant. especially in the secondary market. making it one of the oldest in Asia. The number of listed companies increased from 5.968 in March 1990 to about 10.000 by May 1998 and market capitalization has grown almost 11 times during the same period.Indian securities market is fairly large as compared to several other emerging markets. derivative trading. The regulatory methods are sound . Bombay Stock Exchanges (BSE) and National Stock Exchange (NSE). The India stock market is steered on by the two exchanges viz. though the entire liquidity is shared between the country’s two national level exchanges namely. Over the last few years. the Indian equity market is considered large relative to the country’s stage of economic development.in terms of intermediaries. these exchanges have become members of the national level exchanges through formation of subsidiaries whose business is showing continuous growth and progress. 33 . the volume of securities has been growing. Securities and Exchange Board of India (SEBI) plays an important role in the management of the stock exchanges in India. provides a wide range of products. The market participants are ever increasing. It is an integrated platform to trade in both cash and derivatives and has a host of around 4. The India stock market boasts of a fully automated trading system on all stock exchanges. The trade and business of the entire country is dependant on the performance of these two main stock exchanges. In terms of the number of companies listed and total market capitalization.

notifications. prescribed there under and the byelaws. Indian Brokerage Industry The Indian broking industry has come a long way in the last decade and has also undergone a significant paradigm shift. The stock exchanges are free to stipulate stricter requirements for its members than those stipulated by SEBI. The standards for admission of members laid down by NSE stress on factors. The minimum standards stipulated by NSE for membership are in excess of the minimum norms laid down by SEBI. transparency and safety. has created a huge demand for talent at all levels. corporate structure. The broker enters into trades in exchanges either on his own account or on behalf of clients. Membership The trading platform of a stock exchange is accessible only to brokers. and there is significant improvement in efficiency. the rules. guidelines. The international standards are well complied with to maintain global standard of performance. coupled with professionalization of work cultures and demand for value-added services like investment advisory and portfolio management. circulars. No stockbroker or sub-broker is allowed to buy. The clients may place their order with them directly or a sub-broker indirectly. rules and regulations of the concerned exchange. A broker is admitted to the membership of an exchange in terms of the provisions of the SCRA. track record. sell or deal in securities. A broker/subbroker compiles with the code of conduct prescribed by SEBI. and reflect the conscious endeavors to ensure quality broking services. capital adequacy. etc. The industry has shed most of its negative trappings of the past and is now being considered a preferred sector for building long term careers by professionals from all disciplines. 34 . education.transaction costs are getting reduced. the SEBI act 1992. etc. unless he or she holds a certificate of registration granted by SEBI. such as. experience. Unprecedented growth of market volumes and growing participation by investors spread beyond the traditional geographical pockets.

have emerged as the new drivers of competitive advantage in this business. Listing of securities on Indian Stock Exchanges is essentially governed by the provisions in the companies act. have led to greater transparency in all transactions and minimized the systemic risks. Robust all round economic growth and favourable demographics are other important factors which are transforming India from a nation of savers to investors. The Indian Broking industry has indeed come of age & is attracting huge investments from large domestic corporate houses as well as from international players. 1956. Listing Listing means formal admission of a security to the trading platform of a stock exchange. The scope of services provided by domestic brokerages has also moved up the value chain from mere Execution & Settlement to cover the full range of financial products to meet the diverse needs of customers. bye-laws and regulations of the concerned stock exchange. State-of-the-art Technology & Business Analytics. The Indian Broking industry is now in a most exciting phase and is likely to grow at a much faster rate compared with many other sectors. Historically. NBFCs etc. invariably evidenced by a listing agreement between the issuer of the security and the stock exchange. However. Progressive HR Practices and CRM/Quality Management systems. the listing 35 . High quality Research & Advice. insurance companies. the Indian financial services industry has been dominated by the banking sector. as an important part of the financial services sector. SCRR. rules.This growth story is expected to be sustained for at least a decade or even more because of the steady increase in the investor penetration and wider acceptance of stock investments as a reliable option for long term wealth creation. This has led to the emergence of the broking industry. who are better educated and aware about Personal Financial Planning. competing for talent with banks. Improved quality of the Indian regulatory framework and high compliance standards. globalization & liberalization of Indian Equity Markets has led to rapid modernization and the professionalization of the financial sector. SCRA.

or a specified sector to measure the change in overall behavior of the markets or sector over a period of time. is the only specialized organization in the country to provide stock index services. 36 . India Index Services & Products Limited (IISL).agreement entered into by the issuer and the stock exchange and the circulars/ guidelines issued by central government and SEBI. promoted by NSE and CRISIL. Index services Stock index uses a set of stocks that are representative of the whole market.

the members and their authorized assistants have to wear a badge or carry with them an identity card given by the exchange to enter the trading ring. the broker or his authorized representatives goes to the stock exchange. he quotes his purchase or sale price. In the trading ring the space is provided for specified and non-specified sections.. Basically the brokers shout while buying or selling the securities. For making the necessary bargain. he may loose the bargain. If he is not satisfied with the quote price. MANUAL TRADING Trading procedure before introduction of online trading: Trading on stock exchanges is officially done in the trading ring. The dealer. the broker using ‘open outcry’ method makes an offer or bid price. On the close of the bargain. Such notes are made on some pad and on it the number of shares. speculation and mal practice is more. In the post pit or wing.  The scope of manipulation. For this. to whom the price is quoted. The floor of the stock exchange is divided into a number of markets also known as ‘post pit’ or wing based on particular securities dealt there. quotes his own price when the quotation of the dealer suits the broker. DISADVANTAGES OF OUTCRY SYSTEM:  It lacks transparency. what membership number etc. also known as offer or bid price. he may turn to some other dealer. the name of the party.The steps involved in this method of trading have given below: Choice of broker: 37 . This method is called the open outcry system. The stock exchanges operations are floor level are technical in nature . the dealer as well as the broker makes a brief note of the particulars of the deal. Hence various stages have to be completed in executing a transaction at a stock exchange .  In audibility was another disadvantage of the outcry system. They carry a sauda book or confirmation memos.Evolution Of Stock Trading In India OUTCRY SYSTEM The broker has to buy or sell securities for which he has received the orders.Non members are not permitted to enter in to stock market. the price agreed upon. duly authorized by the exchange and carry a pen with them. are noted.  Signal were more important in the outcry system any member who could not interpret the buy/sell signal correctly often landed himself in disaster situation.

once the shares are delivered to the client effects payment for the purchases and pays the stamp fees for transfer. an investor has to first open an account with a DP and then request for the Dematerialization Request Form. DEMATERLIZATION: Dematerialization is the process by which physical certificates of an investor are converted to an equipment number of securities in electronic from and credited in the investor account with his DP. They carry a sauda Block Book or conformation memos. From the sauda book. They can also appoint their bankers for this purpose as per the present regulations. The orders may take any one of the forms such as At Best Orders. The investor has to ensure that he marks “Submitted for Dematerialization” on the certificates before the shares are handed over to the DP for demat. the investor gets the option to dematerialize such shares. To avoid delay.30 P. Immediate or Cancel Order. and Open Order.sell shares and transact business. Most of the active scrip’s in the market including all the scrip’s of S&P CNX NIFTY and BSE SENSEX have already joined NSDL. who wants to placing order for the purchase or sale of securities with a broker. telephone. Limit Order.M on all working days Monday to Friday. The members or the authorized assistants have to wear a badge given by the exchange to enter into the trading ring. including other expenses incurred by the broker in the price itself. In order to dematerialize the certificates. Investor’s willing to exercise this option sends a Demat request along with the option letter sent by the company to his DP. both broker and jobber make a note in their sauda block books. Dematerialization can only be done to those certificates. Drawing Up and Bills: Both sale and purchase bills are prepared along with the contract note and it is posted on the same day or the next day. With this. A contract note is written agreement between the broker and his clients for the transaction executed. Placement of order: The next step is the prospective investor who wants to buy shares or the investors. 38 . it is placed generally over the phone. which is DP and submit the same along with the share certificates. which are already registered in your name and belong to the list of securities admitted for Dematerialization at NSDL. The order is usually placed by telegram. This works from 11:30 to 2. This in a purchase transaction. the contract notes are drawn up and posted to the client. a bill is made out giving the total cost of purchase. Execution of order or contract: Orders are executed in the trading ring of the BSE. and a special one-hour session on Saturday. have to act through member brokers only. the process is as follows: after completion of transfer. which are duly authorized by the exchange when the deal is struck. Limited Discretionary Order. Stop Loss Order. letter. the process ends. The company or its R&T agent would confirm the Demat request on its receipt from the DP to reduce risk of loss in transit. Briefly. This list is steadily increasing. fax etc or in person.

e-commerce and etc. Benefits of Demat:  It reduces the risk of bad deliveries. work study. trade. Net being an interactive two way medium. banking. Rematerialization is the process of converting electronic shares in to physical shares. thus the overheads of getting a duplicate copy in such circumstances is reduced.5% in stamp duty. to mega sources of information.  You can also expect a lower interest charge for loans taken against Demat shares as compared to loans against physical shares.  There is no lost in transit. It allows direct. accelerating the pace of business reforms and revolutionizing the way companies are managed. 1) What is Internet? Internet is a worldwide. in turn saving the cost and wastage of time associated with follow up for rectification. These shares are fungible-which means that 100 shares of a security are the same as any other 100 shares of the security. Internet or net is an interconnection of computer communication networks spanning the entire globe. crossing all geographical boundaries. health. ONLINE TRADING Before getting in to the online trading we should know some things about the internet. Dematerialization normally takes about fifteen to thirty days. called the Internet promises to bring unprecedented changes in our lives and business.com age. business.Dematerialized shares do not have any distinctive or certificate numbers. This has lead to reduction in brokerage to the extent of 0. leisure. through various websites. commerce and what not it is virtually changing every thing and we are living in dot. A combination of time and space. you save 0.  In case of transfer of electronic shares. request DP for Rematerialization of the same is made.5% by quite a few brokerage firms. education. Odd lot shares certificates can also be dematerialized. You avoid the cost of courier / notarization. To get back dematerialized securities in the physical form. self-governed network connecting several other smaller networks and millions of computers and persons. ubiquitous links to anyone anywhere and anytime to build up interactive relationships.  You can receive your bonuses and rights issues into your DA as a direct credit. It has redefined the methods of communication. This technology shrinks vast distances. enables participation by individuals in business to business and 39 . this eliminating risk of loss in transit.  RBI has also reduced the minimum margin to 25% for loans against dematerialized securities as against 50% for loans against physical securities.

downloaded and retransmitted.” In online trading. PC’s and networking attempts to introduce banks of the tools and technologies required for electronic commerce. Now information has become easily accessible to both retail as well as big investor. i. The computers are either workstations of individual office works or serves where large databases and information reside. The actual definition of “Online Trading” is as explained below: “Online trading is a service offered on the internet for purchase and sale of shares. 2. In the past. Network connects both categories of computers.  Brokers will offer online broking and relationship management by providing and offering analysis and information to investors during broking and non broking hours based on their profile and needs. Now we can enter in to the concept known as online trading. live quotes. It is expected to bring changes in every functional area of business activity including management and financial services. portfolio management. It not only reduces manual processes and paper transactions but also helps organization move to a fully electronic environment and change the way they operated. The net brings data to the investor on-line and net broking enables him to trade on a click of mouse. customized services. It helps conduct traditional commerce through new way of transferring and processing of information. Information is electronically transferred from computer to computer in an automated way. It offers stock trading at a lower cost. electronic technologies.  Brokers (now e-brokers) will offer value management or services like initial public offering online. E-commerce refers to the paperless exchange of business information using electronic data inter change. to attract more investors. investors had no option but to contact their broker to get real time access to market data. The use of Internet has grown 2000 percent in last decade and is currently growing at 10 percent per month. etc. growth of Internet is of recent times. in cyber space even the information can be copied. EVOLUTION OF BROKING IN INDIA: The evolution of a broking in India can be categorized in three phases  Stockbrokers will offer on their sites features such as live portfolio manager. etc. and enables the investors to take better and well considered decisions.business to consumer commerce. visit to shopping arcades. In the real world you place orders on your stockbroker either verbally (personally or telephonically) or in a written form (fax). the various operating systems are the most basis program within a computer. market research and news. It manages the resources of the computer system in a fair and efficient manner. In India. etc.e. on-line asset allocation. financial planning. Internet can change the nature and capacity of stock broking business in India. games. you will access a 40 . E-commerce Electronic commerce is associated with buying and selling over computer communication networks. tax planning. insurance services.

Objectives: Internet trading is expected to  Increase transparency in the markets. by increasing quote continuity and market depth.  Introduce flexibility in system. Requirements for net trading: For investors: 1. In India: Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading.  Reduce settlement risks due to open trades. The net is used as a mode of trading in internet trading. Compliance with SEBI guidelines for net trading The following should be produced to get a demat account and online trading account: As identity proof & address proof any one of the following: 1) Voter ID card 2) Driving license 41 . Registration for on-line trading with broker 5. The SEBI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. Under the ORS the client enters his requirements (security.  Enhance market quality through improved liquidity. These orders are routed to the stock exchange without manual intervention and executed thereon in a matter of a few seconds. through internet trading three fundamental objectives of securities regulation can be easily achieved. Installation of a modem 3. and  Reduction of the systematic risks. Installation of a computer with required specification 2. by elimination of mismatches.stockbroker’s website through your internet enabled PC and place orders through the broker’s internet based trading engine. Depository account 7. A bank account 6. price buy/sell) on broker’s site. Orders are communicated to the stock exchange through website. these are:  Investor protection  Creation of a fair and efficient market. Besides. quantity.  Provide management information system. Telephone connection 4. so as to handle growing volumes easily and to support nationwide expansion of market activity.

the broker will provide to them a Login name. They are checked electronically against the clients account and routed electronically to the appropriate exchange for execution by the broker. Order can be placed using place order window of the website. Orders are communicated to the stock exchange through website. The SEBI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. Communication of order (trade confirmation to investor by e-mail) 7. For stock brokers: 1. Secured and reliable software system 5. 50 lac 3. An order can then be placed by using the place order window as under: 42 . Adequate back-up system 4. quantity. Password and personal identification number (PIN). The net is used as a medium of trading in internet trading. Step 2: After registration.e. The client receives a confirmation on execution of the order. Setting up a website. NEAT-IXS. Under the Order Routing System the client enters his requirements (security. which are necessary  First page of the bank pass book and last 6 months statement. who are interested in doing the trading over internet system i.  Bank manager’s signature along with bank’s seal. Issue of contract notes within 24 hours of the trade execution 9. The user should have the user id and password to enter into the electronic ring. experienced and trained staff 6. and buy/sell) in broker's site. He should also have demat account and bank account. The customer's portfolio and ledger accounts get updated to reflect the transaction. Net worth of Rs. Use of authentication technologies 8. The system permits only a registered client to log in using user id and password. Step 3: Actual placement of an order. Procedure for net trading Step 1: Those investors.3) PAN card( compulsory) 4) Ration card 5) Bank pass book 6) Telephone bill Other requirements. manager registration code on photograph. Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. Adequate. should approach the brokers and get them self registered with the Stock Broker. Permission from stock exchange for net trading 2. price.

Step 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price limit. for which there are different mode. Instant feedback is available about the execution. In the open outcry system. With online trading investors can see themselves the price at which the deal takes place. At present. Step 4: It is the process of review. He may also re-set to clear the values. Step 5: After the review has been satisfactory. Some of the websites also offer. series and the default quantity. Confirmation and execution of trade reaches the investor within the least possible time.(a) First by entering the symbol and series of stock and other parameters like quantity and price of the scrip on the place order window. Thus. Internet trading provides total transparency between a broker and an investor in the secondary market. Step 8: It is regarding charging payment. fill in the symbol. News and research report BSE and NSE movements Stock analysis IPO and mutual fund centers Step by step procedure in online trading: Following steps explain the step by step approach to on-line trading: 1) Log on to the stock broker's website 2) Register as client/investor 3) Fill the application form and client broker agreement form on the requisite value stamp paper 4) Obtain user ID and pass word 5) Log on to the broker's site using secure user ID and password 6) Market watch page will show real time on-line market data 7) Trade shares directly by entering the symbol or number of the security 8) Brokers server will check your limit in the on-line account and Demat account for the number of shares and execute the trade 9) Order is executed instantly (10-30 seconds) and confirmation can be obtained. a time lag of about 10 seconds is there in executing the trade. the order has to be sent by clicking on the send option. Screen based trading provides more transparency. The time gap has narrowed in every stage of operation. 10) Confirmation is e-mailed to investor by broker 43 . the broker will ask the investor for transfer of funds to his account. an appropriate message will appear at the bottom of the screen. When the trade is executed. Step 6: The investor will receive an "Order Confirmation" message along with the order number and the value of the order. mostly within 30 seconds. only the broker knew the actually transacted price. (b) Second. the investor has to review the order placed by clicking the review option. Some brokers will take some advance payment from the investor and will fix their trading limits.

and stock for long-term basis and sat on them. and even insurance. ADVANTAGES OF ONLINE TRADING: 1) Online trading has made it possible for anyone to have easy and efficient access to more reports and charts than it was previously possible if one went to any brokers' office. to increase Purchasing power. 6) Individuals can invest in a variety of products. INVESTORS REASONS TO TRADE ONLINE: 1) They have control over their accounts. since you have to buy stock at the given price. mutual funds. 4) Margin account: where orders can be placed against stocks. this additional power to the underdogs. stock and index options mutual funds. unlike earlier when people bought bonds. They are independent. Companies can establish themselves according to their gains and losses.11) Contract note is printed and mailed in 24 hours 12) Settlement will take place automatically on the settlement day 13) Demat account and the bank account will get debited and credited by electronic means. therefore. 3) Online trading has allowed companies to locate themselves where they want as physical location is not an issue anymore. ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS: 1) Limit / stop orders: orders that can be go unfilled. Being online does not identify the size of any particular organization. government. 4) Online trading gives control to individuals and they can exercise it over accounts thus comprehend what is going on when they trade. It is like going back to school and re-educating oneself on how to trade online. Thus we have access to a lot more information online. but this type is much more risky. but there is an extra Charge for this leeway facility since one need to hold a price. for instance where tax (sales and value added taxes) is best suited to them. 3) Cash account: where funds have to be available prior to placing the order. 2) Online trading has let room for smaller organizations to compete with multinational organizations since it is no longer a leg it issue. 44 . 2) They have a reason to participate in the market and learn about it. 2) Market orders: orders can be filled at unexpected prices. can make their own decisions and don’t have to give reasons for their actions. Now they can invest in stocks. 5) Individuals’ benefit by saving comparatively a lot more when trading online as the cost per trade is less.

is the most sought after amongst investors. followed by derivative and commodities. debt market and commodities market. 5) According to a study conducted by Mary Rowland. 5) It will give investors a greater choice and better realization. 27% firms are dealing only in the cash market. but that is not so. especially when you are trading internationally. 4) One has no idea with whom he is dealing with on the other end. carried away online and begins to trade for too much which causes losses for him / her. Classification Of Financial Markets The financial markets have been classified as cash market. 7) It will lead to brokerage commissions going down and brokers striving to increase business afloat. Almost 20% firms trade in cash. fast. 45 . 3) A tax (sales tax and value added tax) evaluation becomes an issue. On the other hand. the basic rules of trading are the same. This simply means that the individual is himself / herself alone to. derivatives and commodities market. cheap. 4% firms trade in all the markets. meaning that an addicted trader gets. 9) They have access to numerous tools to invest. Firms that are into cash. derivatives and debt are 7%. cash & debt market and commodities alone are 2%. 4) A lot of information is online so they can keep up-to-date with what is happening in the trading world. derivatives market. firms into cash and commodities are 3%. also known as spot market. there will be problems and delays due to a large influx of rapid online trading criteria. 6) Individuals think that they are trading with the market directly and know what they are doing. and can create their own portfolio. and convenient. which have better trading conditions and also members to offer them better facilities. It seems that the middleman has been removed. careful investor: is online trading bad for your portfolio. SOME SHORTCOMINGS OF ONLINE TRADING: 1) When network crashes. Majority of the sample broking firms are dealing in the cash market. When the individuals click on the mouse. but the truth is that even though technology has taken over. 8) Investors will now go to place.3) It is interesting. The commissions online pertain to the intermediary. 7) There is a need for more effective communication links over the Internet and the ability of the server to deal with a large volume of visitors. his trade goes through a broker. Cash market. 2) Individuals are restricted to first-hand financial guidance. whereas 35% are into cash and derivatives. 6) The immediate impact will be competition and benefits will accrue to the investors. the more one trades the less returns one gets. easy.

The broking industry seems to have capitalised on the growth of the mutual fund industry. The sustained growth of the economy in the past couple of years has resulted in broking firms offering many diversified services related to IPOs. a host of other value added services such as fundamental and technical analysis. More than 50% of the sample broking houses deal in mutual fund investment services. arbitrage etc are offered by the firms at different levels. Margins are thus collected to safeguard against any adverse price movement. apart from trading. the firms have started offering various investment related value added services. forming 90% of the firms in the sample. 67% firms are engaged in offering IPO related services. mutual funds. Additionally. In case the price movement is adverse. investment banking. Company research is another lucrative area where the broking firms offer their services. However. which was pegged at 40% in 2006. company research etc. The average growth in assets under management in the last two years is almost 48%. However as you do not have the full amount to make good for your purchases or shares to deliver for your sale you have to cover (square) your purchase/sale transaction by a sale/purchase transaction before the close of the settlement cycle. you will make a loss and you will have to make the payment to the exchange. Margins are quoted as a percentage of the value of the transaction. you need to have the money to pay for your purchase and shares in your demat account to deliver for your sale. more than 33% of the firms are engaged in providing company research services. Concept Of Margin Trading: Normally to buy and sell shares. In case the price during the course of the settlement cycle moves in your favor (risen in case of purchase done earlier and fallen in case of a sale done earlier) you will make a profit and you receive the payment from the exchange. 46 .Products In the past couple of years. the core trading activity is still the predominant form of business.

On a fast moving.About Bid and Ask Prices The Bid Price is the highest price anyone is willing to pay for a particular stock at the moment. or volatile stock these prices can and will change very rapidly. Some stocks are seasonal. Why do stock prices go up and down? Fluctuations in a stock’s price occur partly because companies make or lose money. Other factors that cause price fluctuations are the time of year. When interest rates on deposits or bonds are high. stock prices generally go down. Conversely. There are many other factors not directly related to the company or its sector. If there is more money floating around. If you enter a Market Order to buy a stock you will pay the Ask Price when your order reaches the trading floor. pushing up their prices. But that is not the only reason. Thus. many factors affect the price of a stock. Why should they face the extra risks of the stock market? Money supply may also affect stock prices. The price of Asianet stocks may also go up because investors may feel that it is now in better hands. This could be a good bit different from the Ask Price when you placed the order. some of it may flow into stocks. for instance. Publicity affects stock prices. Interest rates. investors can make a decent amount of money by keeping their money in banks or in bonds. you may want to place a Limit Order instead. and publicity. odds are that the price of Zee’s stock will rise if the market thinks it’s a good decision. thinly traded. The Ask Price is the lowest price anyone is willing to sell a particular stock for at the moment. they do well only during certain parts of the year and worse during other parts. then it is a good bet that the price of that company’s stock will fall. You could pay substantially more than you expected! If this is a major concern. Otherwise it will fall. if an article says that a company's president is a crook and has used the money raised to build a palatial bungalow for himself. The behaviour of the price 47 . In such a situation. If a newspaper story reports that Zee Television has bought a stake in Asianet.

Stock splits should not normally raise the value of your stocks. Usually companies go for stock splits when the stock's price zooms up to some phenomenal level and hence. Reverse splits are currently not allowed in India though companies can buy back their shares upto a certain percentage of the outstanding number of shares. also increase liquidity. the total value of the holding will remain the same on the day of the split. a 1-for-2 reverse split would mean that any shareholder will now own half the number of shares with the price of each being double as before the reverse split. One fine day if the company whose 50 stocks you own and having a current market price of Rs 40. The market will then halve the price. on the other hand. Naturally. Splits in such cases make stocks affordable and usually lead to increased buying and. Settlement cycle 48 . since the prices fall to compensate for the larger number of shares held. unless it has reasons to be more bullish. you will now own 100 stocks of the company. Stocks also go for splits. Hence.movement of a stock is said to predict its future movement. A hiked price might invite more investors. \ TRANSACTION SETTLEMENT SYSTEM: Settlement period is the duration between a transaction date and a settlement date. This is called technical analysis. The main advantage of a stock split is that it improves liquidity. it is expected that the stock's value will make an upward ascent soon after the split and investors will stand to gain. It tells you when to buy a stock. which might be performing badly for a long time. You can sell 50 shares and retain the other 50. Analysis of the fundamentals of a company. declares a 2-for-1 split. However. during which all obligations for the transaction are fulfilled by the involved parties. who in turn delivers the purchased security. hence. Companies sometimes declare to retire their stocks in a certain proportion of their outstanding stocks. tells you which stock to buy. Companies usually go for reverse splits to boost up the stock's price. The behaviour is analysed by plotting on a graph the price movement against any standard index. to around Rs 20. This period is characterized by the buyer making the required payment to the seller. becomes out of reach of many investors.

On the other hand. Foreign shares may have a settlement period that spans months.S. For instance. Treasury are settled two days after the trade (T+2). However. the standard T + 3 settlement period for shares may be stretched to a week or more. the obligations of each broker are calculated and the brokers settle their respective obligations as per the rules. Rolling Settlement System: Rolling settlement is the trading system of securities in which the transaction (buying or selling of securities) can be squirred up by a counter-transaction on the same day only. For example. the cycle begins on Wednesday and ends on the following Tuesday.The accounting period for the securities traded on the Exchange. At the end of this period. T+2 or T+3. it will be settled on the fourth working day excluding the day of transaction. if an investor purchases a security on Monday and the transaction is not squirred up by a counter-sale transaction. where T stands for the transaction date. If a transaction is entered on the first day of the settlement. Length of Settlement period The settlement period is cited as T+1. If the transaction is not squirred up on the same day. then this buying transaction must be completed. Settlement risk Settlement risk refers to the risk of default by any of the parties involved in a transaction. For example. The length of this period varies with the type of transactions. the settlement period for stocks in the U. He will get the delivery and he will have to make the payment for the purchase. bye-laws and regulations of the Clearing Corporation. the same will be settled on the eighth working day excluding the day of transaction. This is referred to as extended settlement.S. However. if the same is done on the last day of the settlement. exchange is three days after the trade (T + 3). the settlement period for certain securities can be extended or stretched. then the delivery will take place as per the prevailing rules. mutual funds have a settlement period of one day (T+1) and Forex transactions in the U. On the NSE. 49 . There are several companies that provide such services online (T + 10. T + 20) or through telephone (T + 25). when the other parties have already made their payments or delivered securities as per the trade agreement. and on the BSE the cycle commences on Monday and ends on Friday.

the normal settlement period was 5 days and it used to take about 15-20 days to get the sale proceeds of the shares. It may be noted that there are some shares put in the TCategory. The wait for the money and the securities is lesser. and can manage their cash flows better. 2003. The transaction could be squirred up within the same settlement period also. SEBI formulated the system of Rolling Settlement. In a way. The investors get their money/securities much faster. the investor/speculator had to pay or receive the difference only. Initially. rolling settlement system is a step closer to an efficient delivery and payment system at the stock exchanges. Before the Rolling Settlement was introduced in year 2000. Advantages of Rolling Settlement Rolling settlement offers several advantages over account period settlement:  The account period settlement does not discriminate between an investor transacting on the first day and an investor transacting on the last day of the 50 . all other shares have been brought gradually in the compulsory rolling settlement system. In order to lessen the period of recovery of sale proceeds from 15-20 days. The mutual funds rotate their funds faster and need to keep lesser cash aside. The Rolling settlement system reduces the market risk to a considerable extent. and in that case. 10. The transactions cannot be squirred up even on the same day in these shares. These are known as “Trade to Trade Shares” and the transaction must end with a delivery and payment. thus enhancing their liquidity. 2000 when 10 scrip’s were put in the compulsory rolling settlement. Since 2000. the settlement period was T+5 but it has been gradually reduced toT+2 with effect from April 1. reducing the cost of funds and the credit risk of the investors.The Rolling settlement system was introduced in India on Jan. or the daily settlement system.

leading to significant market volatility. rolling settlement. This does not happen under rolling settlement. All of them wait for “X” days from the trade date for settlement. where positions can be built during a day only.  There is scope for both intra-settlement and intra-day speculation under account period settlement.  The account period settlement combines the features of cash as well as futures markets and hence distorts price discovery process. as trades are clubbed together for the purposes of settlement and all investors realize the securities and/or funds together. 51 . which allows large outstanding positions and hence poses greater settlement risks. In contrast. there is a pressure to close them out on the last trading day. it was possible to shift positions from one exchange to another under account period as they follow different trading cycles. the gap between the trade date and the settlement date is less under rolling settlement making both securities and funds easily convertible. Rolling settlement took care of this by making trading cycle uniform. Under rolling settlement. since all open positions under rolling settlement at the end of a date ‘T’ are necessarily settled ‘X’ working days later. the investors trading on a particular day are treated differently from the investors trading on the preceding or succeeding day. Hence some investors have to wait longer for settlement of their transactions.  Account period settlement allows build up of large positions over a trading period of five days and consequently.trading period.  Till recently. In contrast. it limits the outstanding positions and reduces settlement risk. helps in better price discovery. Further. which segregates cash and futures markets and thereby removes excessive speculation.

better prospects for the Rabi crop and continuing resilience of the services sector. recorded sharp deceleration thereafter in the wake of persistent global economic slowdown. Though India's growth trajectory has been impacted both by the financial crisis and the global economic downturn. This is the result of a rebound in industrial output. India's real GDP grew 6. up from 6. sustaining overall growth at a level much higher than most other economies in the world. which witnessed robust growth up to the second quarter of FY09.7 per cent recorded in 2008-09.7% during Financial Year (FY) 09 as compared with 9% during the corresponding period of FY08. Support for sustained momentum in growth can be expected 52 . and despite the impact of a deficient monsoon on agricultural production. GDP growth for 200910 has been estimated at 7. The Indian economy exhibited clear momentum in recovery. Output growth in 2010-11 is expected to be higher than in 2009-10. the structural drivers of the Indian economy continue to be intact. Concerns about domestic output growth are now subdued as the recovery is getting more broad-based. assuming a normal monsoon.2 per cent.India in Global Markets Macro-Economic Scenario The Indian economy.

INDIAN STOCK MARKET IN 2010 The prevailing economic conditions. financial stability holds great importance. And owing to the increased quantum of foreign investment inflows. Conclusion The Current Stock market Scenario In India In the current lifestyle. the recovery in India has been driven by domestic consumption and government expenditure. Share markets across the world are recuperating with traces of recession still visible in few nations. and related subjects. industry and services.from all three major components. And a particular section of ambitious people undertake short term courses on stock market trading to be able to manage their own stock portfolios thus having an influence on their financial futures. However. Investing in India has thus become a trend which is likely to gain more impetus in the near future. So far. stock broking. agriculture. However point of caution needs to be the phase wise withdrawal of financial support given by Indian government to the market. The Indian stock market is fast recovering and the emerging opportunities have led to the steady inflows of foreign investments. suggest the Indian stock market is poised to continue to rally in 2010 even though US and European Markets have yet to recover from recession effect. especially if you stay in the city where cost of living is very high. insurance. Many people have started investing in the stock market as an additional source of income to be able to meet lifestyle changes. financial institutes have introduced short term as well as long term courses on finance. In sync with the changing career trends and with the share markets platform gaining grounds. It is the promotion oriented user friendly policies of the Indian government that have led to this sudden surge. This is the reason why both partners in a household (nuclear family) work to meet both ends meet satisfactorily or even beyond expectations. both domestic and global. Key factor remains the impact of Q4 results and strong GDP growth of around 8%. corporate investment is expected to surge in 2010 due to the strong GDP growth which will 53 . helping aspirants build careers or professionals enhancing their qualification tags with additional degrees. Lavish living and availing all the conveniences of life may not be possible with a single salary.. viz. India is emerging as one of the best performing markets.

But the global credit crisis changed all that. But one must be cautious that the interest rate cycle might start moving up with the strong GDP performance and relatively high inflation.increase capacity utilisation. We have witnessed a global financial crisis in 2008-09 which is still very much an unforgettable incident and taught us good lessons. Stock markets were notching strong gains. Not just that. corporate profits were growing at a healthy rate. Credit was available and that too cheaply. enough cash and strong return ratios. During the bull rally (2003-2007) there was considerable exuberance. led to asset bubbles that finally burst. The abundant liquidity. Stocks in the infrastructure and power sectors may be the front runners in 2010 as they receive strong policy support from the Indian government. These are the ones who will be able to tide over the crisis and generate strong returns to shareholders in the long term beyond 2010. 54 . banking stocks will be affected severely as was seen in the past. not surprisingly. So if one learned a good lesson should go for companies with less debt. This was the time when interest rates were low. If it does.

but this market needs to be explored as investors are still hesitated to invest their money in mutual funds. 55 . so proper marketing of various schemes is required.RECOMMENDATIONS Improvement in the opening of De-mat procedure is required. The exchange authorities to take steps to educate Investors about their rights and duties. People at young age should be encouraged to invest in stock market. company should arrange more and more seminars on mutual funds. this is a service oriented industry hence the survival would require brokers to provide the best possible service to the clients. seminars should be held for providing information to prospective and present customers. I suggest to the exchange authorities to increase the investors’ confidences. Investors have inadequate knowledge about mutual funds. so that he can handle new as well as old customer properly. The facility of free demonstrations should be provided for all. Some promotional activities are required for the awareness of the customer. The exchange authorities should be more vigilant to curb wide fluctuations of prices. Necessary steps should be taken by the exchange to deal with the situations arising due to break down in online trading. The concept of business has changed today. There should be a limited number of clients under the relationship manger. There is high potential market for mutual fund in Mumbai city.

I learnt a lot about equity or cash market trading and derivative trading. Knowledge is the key to success so the knowledge about the trading of shares gave me confidence about trading in share market. Summer internship project help me realize that dedication. During the summer internship. During the summer internship. wise and knowledgeable people from industry. Sharekhan Ltd.Learnings experience from the Project Everyday of the office was a learning experience to me because various things I have learnt during my project work. BIBLIOGRAPHY 56 . Summer internship project helped me to gain more confidence. Summer internship project gave me the required exposure to improve my communication and convincing skills. Summer internship project gave me the opportunity to develop good contacts with experienced. I was required to market and sell online trading and demat account of Sharekhan Ltd. determination and hardwork are key to success. The summer internship project helped me in gaining in depth knowledge about the stock market and brokers operations. gave us two weeks training about their various product offerings and how to market those products. and for that purpose I was given database from the organization and I acquired seven such clients for Sharekhan.

wikipedia. S.in www. Bishnupriya and Debasish.bseindia.Khan.com www.com www.com/terms/s/shortselling.com http://en.gov.nseindia.capitalmarket. “ Indian stock Market” www.org/wiki/Primary_market http://www.moneycontrol.com www. Sharekhan. “Indian Securities Market-A Review” Mishra.sebi. Y.investopedia. S.M.com www.com www.trendwatch.” Indian Financial System” National Stock Exchange Of India Ltd.asp 57 .