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MIT COLLEGE OF MANAGEMENT

1.CHAPTER-I
INTRODUCTION

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MEANING AND FUNCTION:-

Online share trading is a service offered on the internet for purchase and
sale of shares. In the real world, one place orders on your stockbroker either
verbally (personally or telephonically) or in a written form (fax). In online
trading, one can access a stockbroker’s website through internet-enabled PC and
place orders through the broker’s internet based engine. These orders are routed
to the stock exchange without manual intervention and executed thereon in
matter of a few seconds.

Many companies have used the internet to increase their reach to bring the
convenience and access to the doorstep of the customers. Financial service
sector was no different. E-brokers have used the net lubricant the entire
investment process so as to speedup and increase the reach of E-broking
services. Online trading is essentially an extension of e-shopping experience.

Online trading system known as National Exchange for Automated


Trading (NEAT) system, is an online, fully automated nationwide, anonymous,
order driven, screen based trading system where a number can punch into
computer quantities of securities and the prices at which he likes to transact and
the transact and the transaction is executed as soon as it finds matching sale or
buy order from a counter party. It electronically matches order a strict
price/time priority and hence, cuts down on time, cost and risk of error, as well
as on fraud resulting in improved operational efficiency. It provides
tremendous flexibility to the users in terms of kinds or orders (Good-Till-Can-
Till-Day, Immediate-or-cancel, and Limit Stop-loss) that can be placed on the
system.

NEAT System

The NEAT system supports an order driven market, wherein orders


match on the basis of time and price priority. All quantity fields are in units and
prices are quoted in Indian Rupees. The regular lot size and thick size for
various securities traded is notified by the exchange from time to time.

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SEVERAL TERMS USED IN ONLINE SHARE TRADING:-

1. DEMAT(DEMATERIALISATION)

Shares are traditionally held in physical or paper form. Holding /


trading of shares in physical form has many drawbacks and the said
drawbacks are either fully eliminated or minimized to a large extent in the
electronic form of holding or trading in shares. Dematerialisation is the
process of converting securities held in physical form into electronic form.

Holding shares and other securities in dematerialised (electronic)


form has interalia the following advantages:

• Easy and speedy execution of transactions viz. sale, purchase, transfer,


transmission etc.

• No worry about securities, certificates being lost, stolen or mutilated.

• Genuineness of the securities held – no risk of holding fake certificates.

• Less paper work and the resultant cost saving, your corporation and the
country as a whole.

• Less cost for transfer – No stamp duty.

• No risk of bad delivery.

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How to demat shares?

When one decides to convert your securities held in physical form to


electronic form, one should approach a DP and open a demat account. One will
be allotted a client ID. Thereafter one should surrender the certificates to the
DP by filling the DRF. On receipt of the DRF the DP generates a number
known as Demat Request Number (DRN) and thereafter will arrange to get the
certificate along with the DRF sent to the company/share Register. The
company/share Registrar after verification, confirms the DRN and upon
confirmation the number of securities dematerialised are credited in electronic
form to the respective demat account. This process is known as
dematerialisation.

How to deal shares held in electronic form?

Share transactions (like sale or purchase and transfer/transmissions etc.) in


the electronic form can be effected in a much simpler and faster way. Like in
physical form, sale of securities in electronic form in the stock Exchange has to
be carried through a registered broker. After the sale is confirmed by the broker
the seller is required to give debit instruction to his DP for debiting the number
of securities, after the payout the broker will ask his DP to debit his account and
credit the Client account of the purchaser with the number of shares purchased.

2. Demat A/C

This is the account where dematerialization takes place.


Dematerialization is the process by which physical securities of an investor are
converted to an equivalent number of securities in electronic form and credited
in to the investor’s account with his/her DP.

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3. Depository

A depository is like a bank wherein the deposits are securities (viz.


shares, debentures, bonds, government securities, units etc) in electronic
form. Besides holding securities, a depository also provides services related
to transactions in securities.

4. DP (Depository Participant)

Depository provides its services to investors through its agents called


as depository participant (DPs). These agents are appointed by the
depository with the approval amongst others, three categories of entities i.e.
Banks, Financial Institutions and members of stock exchanges registered
with SEBI can become DPs.

Ex:- India bulls

ICICI Direct

Share khan

5paisa.com

HDFC sec.

5. Online Trading A/C

This is the account through which actual trading i.e. buying and selling
takes place.

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BACKGROUND OF TOPIC:-

Now, plenty of "common" people own stock. Online trading has given
anyone who has a computer, enough money to open an account and a
reasonably good financial history the ability to invest in the market. You don't
have to have a personal broker or a disposable fortune to do it, and most
analysts agree that average people trading stock is no longer a sign of
impending doom. The market has become more accessible, but that doesn't
mean you should take online trading lightly.

To develop an online share trading system, the first thing that you r going
to need if you do not already have one is computer. Learning how develop an
online share trading system can become a very painful and costly process if the
two critical steps are skipped. Securing adequate capital and creating a business
plan.

Not beginning their share trading career with enough money is the
biggest mistake new traders make; just like new businesses in general that are
just starting up. Failure to prepare to business plan and stick to it ranks a close
second to undercapitalization as biggest reason new, inexperienced stock traders
go bust so quickly. Well prepared and thoroughly thought out, your business
plan is actually going to be your online share trading system. The strategy of the
plan should be implemented before the first share is traded.

An online trading system developed by you will have certain parameters


built in to it like maximum price per share, maximum number of shares, and
percent of holding limits.

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COMPANY PROFILE:-

HDFC Securities, a trusted financial service provider by HDFC Bank and


JP Morgan partners and their associates, is a leading stock broking company in
the country serving a diverse customer base of institutional and retail investors.

HDFC securities provide investor a robust platform to trade in equities in


NSE & BSE and derivatives in NSE. HDFC Securities website will support you
with the highest standards of service, convenience hassle -free trading tools.

Company research team tracks the economy, industries and companies to


provide you the latest information and analysis .company’s content offers
financial information, analysis , investment guidance, news& views and is
designed to meet the requirement of everyone from a beginner to a savvy and
well informed trader. With the HDFC SEC.COM, you get:-

SPEED

Company’s state-of-the art technology able to instantly trade on NSE &


BSE.

CONVENIENCE

You can trade with Company online or on the phone from the
convenience of your home or office. Use the 3-in -1 account to seamlessly move
fund and securities across your bank, demat and trading account.

TRANSPARENCY

With our trusted pedigree, you can be assured that u get the best services
in a transparent manner. Total control of funds and stocks of investor.

EXPERTISE

Hdfc group has decades of experience in providing financial services to


customers in a transparent and trusted manner. Company have a dedicated,
motivated and experienced team of professionals to provide you top class
services.
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CUSTOMER INTEREST

For company customer interest comes first, company endeavour to


provide high quality investment services, in a simple, direct and cost effective
way to help you achieve your financial goals.

TIMELY AND RELEVANT INFORMATION

Company realise the importance of making information available to you


as it happens. Empowered with the latest news, developments and research, you
will be able to take informed decisions.

COMPANY OFFERINGS

 Online trading for resident & NRI

 Cash-n-carry on both NSE and BSE by taking delivery of share.


 Day trading on both NSE and BSE, wherein all the position are
compulsorily squared up on the same trading day.

 Trade futures & options on the NSE


 Online IPO.
 Telephone – based trading for equities, derivatives & IPO.

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STATEMENT OF THE PROBLEM

Earlier the people used to do share trading in typical traditional


way, with the advent of technological development share trading took its
new from and that is online share trading.
Online share trading is much easier, transparent and hassle free. So the
survey was carried to identify the awareness of online share trading
amongst people of various categories in different areas of pune region.

This survey helps to know about the perception of various


categories of people towards online share trading. After understanding
there views a suitable system can be adopted create more awareness and
interest in the people to trade in online fashion.

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NEED OF THE STUDY

Generally people may not understand of concept of share market, function of


both stock exchange market BSE & NSE, on line trading and where we should
invest our money.

Basically my need of the study was know the all technical factor of stock
exchange and future prospect of investment market.

 For own money control in future ( divide according to ratio or


proportion)

 Investment through BSE/ NSE

 Market Review – Day to Day knowledge.

 Upgrade Market knowledge

 Understand the stock exchange working process

 Easy access in investment market

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SCOPE AND LIMITATIONS OF THIS STUDY

The scope and limitation of the study are briefly discussed below:

Scope of the study:

In today’s modernized banking, technology plays a very major and


important role. Technologies make banking more convenient without investing
more in infrastructure and thus cut down the cost simultaneously. It also helps
the bank to make its presence felt in any particular area.

This topic was chosen by me to study the awareness of online share


trading in pune. The data required for this stage was regarding the detail study
of online share trading i.e. study what is the impact of on line share trading in
the current scenario of the share market. Also to get some idea about the image
of Hdfc securities online trading in the minds of the existing customer. The
behaviour and perception of the existing customers towards the products and
services provided by Hdfc securities was also studied so that it could give a
clear picture of the Hdfc securities positioning in the minds of the customers
and what Hdfc securities is doing different to maintain good customers base and
create new customers in the competitive scenario of online share trading as
many companies are providing such services.

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Limitations of the study:

The study was conducted within Pune Region so the findings are
restricted to this region only.

• The method used in this survey for collecting the


information is very time consuming and slow.

• Due to lack of time some respondents were not reluctant to


give detailed information.

• The major limitation was some of the bank’s customers


were not at all co-operative.

• The analysis cannot be completed relied, as there were few


customers who didn’t take the questionnaire seriously and
checked any option they liked.

On the whole, the scope of the study was more than the limitations of the
study.

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OBJECTIVES OF THE PROJECT

The aim of this study is to identify awareness and interest among


prospective customer of on line share trading services and analyze the impact of
on line services in capital market.

 To have a proper understanding of Capital Market.

 To learn and understand of function of D-mat account.

 To understand the system of Stock exchange.

 To estimate the awareness level of the Share Trading.

 To know and work Invest in a good company and get a good return as
the company grows.

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 To develop the understanding of various Way of Investment in the


Capital market.

2.CHAPTER-II

CONCEPTUAL BACKGROUND
OF THE STUDY

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Indian Financial Services industry:

India is a large and growing economy with rapidly expanding financial


service sector. The sector has witnessed a transformation over the last decade as
a result of the last decade as a result of the economic liberalization which started
in 1991. Reforms aimed at improving the productivity and efficiency of the
economy. The role of an integrated financial infrastructure is to stimulate and
sustain economic growth.

The financial services sector has kept pace with the growing needs of
corporate and other borrowers, banks, capital market participants, insurers and
mutual fund companies have developed a wide range of products and services to
suit varied customer requirements. The Reserve Bank of India (RBI) has
successfully introduced a regime where interest rates are more in line with
market forces. Financial institutions have combated the reduction in interest
rates and pressure on their margins by constantly innovating and targeting
attractive consumer segments. Banks and trade financiers have also played an
important role in promoting foreign trade of the country.

Capital Markets:

The Indian capital markets have undergone a substantial change over the
last decade. The market has also witnessed substantial progress in terms of
regulatory reforms, application of technology to trading and settlement, and

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sophistication listed securities including single stock futures and options. These
have been accompanied by an accelerated growth in trading volumes, with BSE
and NSE combined average daily turnover expanding approximately from
Rs.4800 million in 1995-96 to approximately Rs.232, 094 million in April 2004.

India is now placed among the mature markets of the world. With over 20
million shareholders, India has the largest investor base in the world after USA
and Japan. Regulatory changes, increased capital requirement, greater customer
sophistication and application of technology have forced the brokerage industry
to consolidate. Over the last 7 years, the market share of the top 5 brokers has
increased from 6% (1998-99) to 15% (December, 2006), with most of the
consolidation coming in the last 2 years.

The consolidation in the online business is even greater, with the top 5
players owning more than 90% of the market. This consolidation is expected to
continue, and provide an opportunity for the top broker to own 15% market
share or more over the next 3-4 years.

Key initiatives in recent years include:

• Depository and share De-materialisation process have enhanced the


efficiency of the transaction cycle.

• Replacing the flexible, but often exploited, long settlement cycles


with rolling settlement, to bring about transparency.

• IT driven stock exchanges (NSE and BSE) with a national presence


(for the benefit of investors across location) and other initiatives to
enhance the quality of financial disclosures by the listed
companies.

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• Empowering SEBI with powers to impose higher penalties and


establish itself as an independent regulator with adequate statutory
powers.

• NSE, which in the recent past has accounted for the largest trading
volumes, has a fully automated screen based system that operates
in the wholesale debt market segment as well as the capital market
segment.

Consolidation in the Indian Equity Trading Markets:

As the Indian capital markets are evolving, they are undergoing rapid
consolidation spurred primarily due to continuous increase in capital
requirements, increased regulatory oversight, customer sophistication,
availability of technology to provide high quality service to a large customer
base increased back-office requirements.

The margin requirements for exposure and mark to market have increased
as the regulator and major exchanges enhance the risk management processes
and system in order to be in line with global practices. Moreover the shorter
settlement cycle has required stronger back office capabilities thus necessitating
heavy capital investments. From T+5 settlement regime till 2000, markets are
now in T+2 regime.

These changes in regulatory framework have enhanced the capabilities


required to stay in the business in terms of capital and infrastructure and have
resulted in the smaller players getting driven out of the system. These
companies’ strengths lie in their strong balance sheets, countrywide presence,
strong brand awareness and highly trained sales force delivering world-class
services levels to the retail investor. The retail presence in the stock markets has
been growing steadily with the advent of dematerialization and the recent
acceleration in opening of demat accounts.

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Emergence of Online Share Trading:

Share trading in India, until the arrival of online brokerages in about 2000
or so, was like driving on Indian roads. It was familiar story of might is right,
big trucks (brokers) ruled the market and there were potholes and pitfalls in the
shape of bad deliveries, dishonoured contracts, fakes and what not. Unlike the
highways, which have remained out of the reach of the aam admi, the share
markets have changed. Somewhere in the nineties there was a whole move into
the digital world at the NSDL. Then trading became electronic. First it was a
few of the blue chips, then it was most of the blue chips and slowly it has taken
over most of the market. New issues are today, exclusively electronic. If
digitisation took care of the back end, it has also made life easy at the front end.

In the physical delivery world, one had to talk to a broker who told you
the quotes. There was no way of knowing if the quote was right. There was no
way of knowing if your trade was made, especially if you made a good call
(Bad calls, almost inevitably got made). The broker could say that this was the
best price I got and nobody would be wiser. You would not know if the shares
came from his account or from the market. You would not know if the shares
were fake or unsigned, as it happened sometimes.

All this and more were true for the small investor. Odd lots, which were
inevitably awarded during splits, mergers were as good as stocks which would
never got sold or the broker would purchase them at a price way below the
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market price. Starting at about 2pct, online trading forms about 10pct in terms
of volume. Some of these have gone on to become the biggest “brokers” in
India. It has opened the market to a whole segment of people. Earlier, investing
in shares till they wanted money. Now, not only has online trading made life
easier for these people, it has opened up investing and trading to segments that
never before participated in it.

Rough estimates in India’s tech industry about 70% of employees are


having online active trading accounts, many of which were opened in ESOP era
(seems like a long while back). More than 80% of theses investors are active
traders, the number of day traders are less. But a small chunk of these also
dabble in the futures and options market. Besides this obvious segment which is
connected to the online world all day long from their cubicles, there are other
segments which have shown interest in trading due to its ease.

Housewives, retired professionals and even small businessmen. What


was hitherto a male dominated sphere also has quite a few women into trading.
The regional stock exchanges which were the way to route trades in the olden
days, are now almost defunct with BSE and NSE (NSE more than BSE) holding
sway. Earlier investors were mostly from the bigger cities. With online trading,
it has opened avenues for investors from all parts of the country with an internet
connection.

Going online via these professional services driven by technology is a


great way to cut the uncertainties caused by the middleman out of the business
of share trading and make lives easier for the investor. There will be more
competition in this space as brokers try to take over accounts of other brokers.

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INDIAN STOCK MARKET OVERVIEW:


The Bombay stock exchange (BSE) and the National stock exchange
(NSE) are the two primarily exchange in India. In addition there are 22 regional
stock exchanges. However, the BSE and NSE have established themselves as
the two leading exchanges and account for about 90% of the equity volume
traded in India. Most stock are traded on both the exchange and hence an
investor can buy them on both the exchanges. Out of which BSE consists of 30
stocks and NSE consists of 50 stocks. The NSE and BSE are equal in size in
terms of daily traded volume. The average daily turnover at the exchanges has
increased from Rs851 Crore in 1997-98 to Rs1284 Crore in 1998-99 and
further to Rs2273 Crore in 1999-2000. NSE has around 1500 shares listed with
the total market capitalization of around Rs 9, 21,500 Crore. The BSE has over
7000 stocks listed and has a market capitalization of around Rs 9, 68,000 Crore.
Most key stocks are traded on both exchanges and hence the investor could buy
on either of the exchanges. Both exchanges have a different settlement cycle,
which allow investors to shift their position on the bourses. The primary index
of BSE in BSE Sensex comprises 30 stocks. NSE has the S&P NSE 50 Index
(Nifty), Which consists of fifty stocks. The BSE Sensex is the older and most
widely followed index. Both these indices are calculated on the basis of market
capitalization and contain the heavily traded shares from key sectors. The
markets are closed on Saturdays and Sundays. Both exchanges have switched
over from the open outcry trading system to a fully automated computerized
mode of trading known as BOLT (BSE on line trading) and NEAT (National
Exchange Automated Trading) system. It facilitates more efficient processing,
automatic order matching, faster execution of trades and transparency. The
scrip traded on the BSE has been classified into ‘A’. ‘B1’, ‘B2’. ‘C’, ‘F’ and ‘Z’
groups. The ‘A’ group shares represent those, which are in the carry forward
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system (Badla). The ‘F’ group represent the dept market (fixed income
securities) segment. The ‘Z’ group scrip is the blacklisted companies. The ‘C’
group covers the odd lot securities in ‘A’, ‘B1’, & ‘B2’ groups and rights
renunciations. The key regulator governing stock exchanges, brokers,
depositories, depository participants, mutual funds, FIIs and other participants
in Indian Secondary and primary market is the Securities and Exchange Board
of India (SEBI) Limited.

Advantages of Indian Security Market:

 One of the most dynamic, modern and efficient securities markets


in the world.

 Two National level exchanges and several regional stock


exchanges.

 Fully electronic trading platforms and screen based trading.

 Listed companies over 7000 with market cap of about US $ 120


billion.

 Turnover of the two major exchanges at US $ 175 billion.

 T+2 securities settlement

 99.9 percent of the trades are settled in dematerialised form.

 Trade guarantees funds and customer protection funds.

 Two National level depositories.

 About 400 schemes of mutual funds with total asset base of nearly
US $ 22 billion.

 Presence of over 500 Foreign Institutional Investors.

 Wide product range: equities, wholesale debt, retail debt, index


future, index, options, stock future and stock options.

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 One of the fastest growing markets in the equity derivatives.

 Availability of Internet Trading.

 Strict disclosure norms for listed companies. Corporate


Governance standards evolved.

 Electronic Data information filing and retrieval system (EDIFAR)


for filing corporate information.

 Setting up of central listing Authority.

 Straight through processing (STP).

 Corporate Governance Rating.

 About 10000 trading terminals in around 400 cities.

 Consolidation of regional stock exchanges.

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Capital Market Profile:

Leading Stock exchange The Stock Exchange, Mumbai(BSE) &


National Stock Exchange (NSE)
No. of listed Companies Nearly 7,300-Next only to NYSE
Market Capitalization Nearly Us $120 Bn
Daily Turnover US $ 1441 Mn in Cash& US $ 1693
Mn in derivatives
No. of transaction 150-180 million
Settlement Cycle T+2
Market CAP/GDP 27%
Debt marketing total outstanding debt US$ 180 bn
No. of investors Approx 25 million

BSE INTRODUCTION:

Bombay Stock Exchange Limited is the oldest stock exchange in Asia


with a rich heritage. Popularly known as “BSE”, it was established as “The
Native Share & Stock Brokers Association” in 1875. it is the first stock
exchange in the country to obtain permanent recognition in 1956 from the
Government of India under the Securities Contracts (Regulation) Act, `1956. the

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Exchange’s pivotal and pre-eminent role in the development of the Indian


capital market. The Exchange provides and efficient and transparent market for
trading in equity, debt instruments and derivatives. The BSE’s On Line Trading
System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002
certified. The surveillance and clearing & settlement functions of the Exchange
are ISO 9001-2000 certified.

NSE INTRODUCTION:

The National Stock Exchange of India Limited has genesis in the report
of the High powered Study Group on Establishment of New Stock Exchanges,
which recommended promotion of a National Stock Exchange by financial
institutions (FIs) to provide access to investors from all across the country on an
equal footing. Based on the recommendations, NSE was promoted by leading
Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock
exchanges in the country. On its recognition as a stock exchange under the
Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced
operations in the wholesale Debt Market (WDM) segment in June 1994. The
Capital Market (Equities) segment commenced operations in November 1994
and operations in Derivatives segment commenced in June 2000.

The following are the prevailing stock market in India:

1. Ahmedabad Stock Exchange.

2. Bangalore Stock Exchange.

3. Bhubaneswar Stock Exchange Association.


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4. Bombay Stock Exchange.

5. Calcutta Stock Exchange.

6. Cochin Stock Exchange.

7. Coimbatore Stock Exchange.

8. Delhi Stock Exchange Association.

9. Gauhati Stock Exchange.

10. Hyderabad Stock Exchange.

11. Inter-Connected Stock Exchange of India

12. Jaipur Stock Exchange

13. ludhiana Stock Exchange Association

14. Madhya Pradesh Stock Exchange

15. Madras Stock Exchange

16. Mangalore Stock Exchange

17. Mumbai Stock Exchange

18. National Stock Exchange of India (NSE)

19. OTC Exchange of India

20. Pune Stock Exchange

21. Saurashtra-Kutch Stock Exchange

22. Uttar Pradesh Stock Association

23. Vadodara Stock Exchange

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ONLINE TRADING & Its BENEFITS:

In online trading is done on a computer network. The sellers and buyers


log on to the network and propose their bids. The system is designed in such
way that at any given instance, the buyers and sellers are bidding at the best
prices. The quotes of the market are available on the screen. The top bids are
displayed. There is facility to buy and sell at the same time.

Benefits of Online Trading:

1. Single screen order/trade entry, without going through the


hassles of giving transfer instruction, writing cheques.

2. Instant order/trade confirmation gives you similar trading


experience as exchange based software without the burden of
overhead and maintenance cost.

3. a refreshing experience of getting outstanding research based


advice on intraday and delivery trades on the same screen.

4. Live quotes of NSE-Cash/Derivative, BSE Cash, Commodity.


Create multiple market watches, default market watch –
NIFTY, SENSEX, and Industrial. You can add NSE-Cash,
Derivative & BSE script on the same market watch

5. Get access to various online reports like margin report, Demat


A/c details, trades executed, turnover report, net position with
mark to market profit/loss and realized profit.

6. Online transfer of funds through HDFC Bank.

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Access to latest research reports, daily market dairy, pivot points,


derivative dairy.

Ifs and Buts of Indian Online share Trading:

You have some money to dabble with. Trading shares on BSE/NSE has
always been your dream. When will you ever find the time? And besides, the
hassle of finding a broker is not easy.

Realizing there is untapped market of investors who want to be able to


execute their own trades when it suits them, brokers have taken their trading
rooms to the Internet. Known as online brokers, they allow you to buy and
sell shares via Internet.

There are 2 types of online trading service: discount brokers and full
service online broker. Discount online brokers allow you to trade via Internet
at reduced rates. Some provide quality research, other don’t. Full service
online brokerage is linked to existing brokerages. These brokers allow their
clients to place online orders with the option of talking/chatting to brokers if
advice is needed. Brokerage rates here are higher. 5paisa.com,
ICICIDirect.com, IndiaBulls.com, Sharekhan.com, Geojit securities.com,
HDFCsec.com, Tatatdw.com, Kotakstreet.com are some of the online
broking sites in India.

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COMPARISON FOR PRODUCT OFFERED

Parameters/Company HDFC SEC. Traditional Brokers


Product Offered

1.BSE Trading Y Y

2.NSE Trading Y Y
3.Margin Trading Y Y
4.Telephonic Trading Y Y
5.Online Trading Y N
6.Mutual Funds Y N
7.Derivaties Y Y
8.Govermenat securities & Bonds Y N
9.Personal Finance Y N
10. Insurance Y N
11. Multiple Broking A/C Y N
Who can open an A/C?
1.Individuals Y Y
2.HUF Y Y
3.Paartnership Firm Y Y
4.Company N N
5.NRI Y N

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Note: - Y: Yes

N: No

COMPTITIVE ANALYSIS
The major players in online trading:

• ShareKhan.com

• 5paisa.com

• KotakStreet.com

• IndiaBulls.com

• ICICIDirect.com

• HDFCsec.com

SHAREKHAN.COM

Company Background:

• Share khan is the retail broking arm SSKI Securities Pvt Ltd. SSKI owns
56% in Share Khan; balance ownership is HSBC, First Caryle, and Intel
Pacific.

• Into broking more than 80 years.

• Focused on providing equity solutions to every segment.

• Largest ground network of 210 branded share shops in 90 cities.


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Online Account Types:

1. Classic Account/Applet: Investor in equities.

2. Speed Trader: Trader in equities & derivatives.

5PAISA.COM

Company Background:

Indiainfoline was founded in 1995 and was positioned as a research firm. In


2000 e-broking was started under the brand name of 5paisa.com. A part from
offering online trading in stock market the company offers mutual funds online.
It also acts as a distributor of various financial services i.e. GOI securities,
Company Fixed Deposits, Insurance. Limited ground network, present in 25
cities.

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Online Account Types:

• Investor Terminal : Investors / Students

• Trader Terminal : Day Trader / HNI’s

Pricing For Retail Clients:

Investor Terminal

a) Account Opening: Rs 500

b) Demat 1st Yr: Rs 250

c) Initial Margin: Rs 2500(compulsory)

d) Min Margin Retainable: Rs 1000

e) Brokerage:

• Trading 0.10% each side + ST

• Delivery 0.50% each side +ST

Pricing For HNI Clients:

Trader Terminal

a) Account Opening: Rs 500

b) Demat 1st Yr: Rs 250

c) Initial Margin: Rs 5000(compulsory)

d) Min Margin Retainable: Rs 1000

e) Brokerage Rate : No change

(Negotiable to 0.05% each side)

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KOTAKSTREET.COM

Company Background:

Kotakstreet is the retail arm of Kotak Securities. Kotak Securities limited is


joint venture between Kotak Mahindra Bank and Goldman Sachs.

Online Account Types:

• Twin Advantage/ Green Channel: 2 DP’s limit against shares.

• Free Way: Flat Rs 999 Cover charge p.m. 0.03% per transaction.

• High Trader: 6 Times Exposure Cash & Derivatives, Auto sq off.

• Cash Expressway: Spot payment, additional 0.5% charges.

For Kotak Fast Lane/ Keat Lite / Keat Desktop are trading interfaces. Keat
Desktop with advanced tools comes at a charge of Rs 500 p.m. Non refundable.

Pricing Of Kotak:

a) Accounting Opening: Rs 500

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b) Demat A/C: Rs 22.5 p.m.

c) Initial Margin: Rs 5000(compulsory)

d) Min Margin Retainable: Rs 1000

e) Brokerage Slab wise: Higher the volume, lower the brokerage. Even
older customer (on0.25%&0.40%)have been moved to the slab wise
structure.

INDIABULLS
Company Background:

IndiaBulls is a retail financial services company present in 70 locations

covering 62 cities. It offers a full range of financial services and products

ranging from Equities to Insurance. 450+ Relationship managers who act

as personal financial advisors.

Online Account Types:

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• Signature Account: Plain vanilla Account with focus on equity


Analysis. The equity analysis is a paid service even for A/C holders.

• Power IndiaBulls: Account with sophisticated trading tools, low


commissions and priority access to RM.

Pricing Of IndiaBulls:

For Signature Account

a) Account Opening: Rs 250

b) Demat: Rs200

c) Initial Margin: NILL

d) Brokerage: Negotiable

For Power IndiaBulls

a) Account Opening: Rs 750

b) Demat: Rs 200

c) Initial Margin: NILL

d) Brokerage: Negotiable

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ICICI Direct

Company Background:

ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL

Is an affiliate of ICICI Bank Limited and the Website is owned by

ICICI Bank Limited.

Account Types:

• ICICI Direct e-invest Account: Plain Vanilla Account with focus on


3in 1 advantage. Differentiated in services within the account.

1. Cash on spot

2. Margin plus

Premium trading interface of ICICI Direct Link Is given to DBC


Partners and HNI’s.

Pricing Of ICICI direct:

a) Account Opening: Rs 750

b) Schemes: For short periods Rs 750 is refundable against brokerage


generated in a qtr. These schemes are introduced 3-4 times a year.

c) Demat: NILL, 1st year charges included in account opening plus a facility
to open additional 4 DP’s without 1st year AMC. Only Rs 100 as linking
charges per DP.
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d) Initial Margin: NILL

e) Brokerage: ICICI’s brokerage rates are inclusive of stamp duty (0.02%


for intra trading and 0.10% for delivery) while service tax (10.2%) on
brokerage and turnover tax is extra.

HDFC SECURITIES

Company Background:

HDFC Securities Ltd, is promoted by the HDFC Bank, HDFC and Chase

capital Partners and their associates. Pioneers in setting up Dial-a- share

services with the largest team of Tele-brokers.

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Online Account Type:

• HDFC Online Trading A/C: Plain Vanilla Account with focus on 3in 1
advantage.

Pricing of HDFC Account:

a) Account Opening:Rs799/ 499/399

b) Demat: NILL(1st year)

c) Initial Margin: Rs 5000/- for non HDFC Bank customer.

d) Brokerage:

• Intraday Trading 0.10% each side+ ST

• Delivery trading 0.50% each side +ST

• Min Brokerage Rs 15

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Competitor’s Rate

Online Account Research Intra-Day


Broker Brokerage% Opening Demat Reports Close
In-house,
ICICI Intraday:0.10 Rs750 Rs 500 weekly 2.30 pm
direct.com Delivery:1.25 e-mail
In-house,
weekly
HDFC Intraday:0.10 Rs799 RS450 e- 3.30 pm
Securities Delivery:0.5 Rs499 mail&SMS
3.30 pm
In-house,
Kotak Intraday:0.01 Rs 1,200 Rs360 daily
Securities Delivery:0.5 e-mail,SMS

Intraday:0.01 Rs100 Rs 300 In-house, 3.30 pm


Share Khan Delivery:0.5 SMS alerts,
e-mail
thrice daily
In-house
5paisa.com Intraday:0.05 Rs 5,500 Rs.250 daily 3.30 pm
Delivery:0.2 e-mail
In-house
Motilal Intraday:0.75 Rs.500 Rs 600 daily 3.30 pm
Oswal Delivery:0.4 Rs.1,500 e-mail

In-house,
Geojit Intraday:0.03 Rs 500 Free outsourced, 2.45 pm
Delivery:0.3 SMS,Daily
e-mail

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3.CHAPTER-III

RESEARCH METHODOLOGY:

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METHODOLOGY OF STUDY:-

Research can be defined as systemized effort to gain new knowledge.


A research is carried out by different methodologies which have their own
pros and cons. Research methodology is a way to solve research in studying
and solving research problem along with logic behind them are defined
through research methodology. Thus while talking about research
methodology we are not only talking of research methods but also considered
the logic behind the methods. We are in context of our research studies and
explain why it is being used a particular method or technique and why the
others are not used. So that research result is capable of being evaluated
either by researcher himself or by others.

The project, which is titled a study of “ONLINE SHARE TRADING” to


HDFC Securities, the objective behind the studies is tounderstand, evaluate,
collected and to know about its effectiveness in the HDFC
SECURITIES.

Project report, which prepaid consists of various information and data.


The data has been collected primary in two ways, which help in the
collecting, collating and analyzing the information about the project report.

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Data Sources:

The sources of data collection arc primarily categories are two types they
are as follows:

O Primary Data

O Secondary Data

Primary data:

Primary data is the first hand information, which is carried as for even
project report. Primary data can be collected by various ways, they are as
follows:

O Formal / Informal Discussion with the applicants.

O Telephonic interview / telemarketing

O Questionnaire

O Summary

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Secondary Data:

Secondary data is the information, which is not collected directly


from the target customer / audience. Secondary data helps in the
collecting additional information. The Research has its special
significance in solving various operational and planning problems of business
and industry. Research methodology is the way to systematically solve the
research problem.

For the purpose of project I referred following as secondary sources of


data:

1. Various websites, Information brochures of Hdfc securities.

2. Office records, newspaper and magazines.

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SAMPLE DESIGN:

In the project convenience sampling was used. Convenience sampling is


based on the convenience of the researcher who is to select a sample.
Respondent in the sample are included in it merely on account they are being
available on the spot where the survey was in progress. In this, researcher may
stand at a certain prominent point and interview all those or selected people who
he comes across.

The area selected by me for the actual marketing of the project was
Market Yard, Camp, Swarget, Tilak Road, Vadgaon, Pune-Satra Road, Deccan,
FC road, Koregaon park, D P Road, Viman Nagar, AUNDH. My basic
objective was to find awareness of online share trading in these areas. The
survey was conducted to analyze the prospective customer awareness for
various online trading services available in the market. For this purpose I
designed a questionnaire under the guidance of Miss Rashmi singh to conduct
the survey.

Probability sampling:-

This is the process of selecting the elements or group of elements or


group of elements from as well defined population by such procedure which
gives every element in the population an equal chance of being selected for
observation. The sampling method use for this survey is the area sampling
which a sub type is of probability sampling.

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Sampling size:-

Large sample gives reliable result than small sample. However, it is not
feasible to target entire population or even a substantial portion to achieve a
reliable result. So, in this aspect selecting the sample to study is known as
sample size. Hence, for my project my sample size was 210.

The Sample Size of 210 is not enough to draw a conclusion but as per
the time assigned it was difficult to take a sample size more than 210.

The Sample Size consists of both the Professional and Business class
people. IT peoples, Doctors, Jewellers, Timber Merchants & Real estate
Agents are taken as Sample.

The survey was conducted in selected areas of pune by taking the


interview of prospect.

Sampling technique: Probability, convenience Sampling

Sample Size : 210

Sample Unit : Prospective customers in different areas of pune

Region.

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METHOD OF DATA COLLACTION:

There was secondary data available for the study and also primary data
collected by carrying out by the survey which has been carried out to through
personal interviews of the customers. The sample size was roughly 210.

Schedule (Performa containing set of questions) was developed to conduct


the survey. The researcher put the respondents the questions from the performer
and recorded the replies. The schedule was available alternatives for data
collection. The other option was that of interview and questions. The schedule
has many features which added value to its use as a tool for accumulation of the
required information. Firstly, the segment i.e. industrialists segments is a very
busy profession. The changes of the non response would have been very large.
Moreover, if the mailing was used would have made the task of follow up
extremely difficult.
Interview as a tool is quite economical but it is difficult to record and retain
the information and especially if the queries include open ended question.
Moreover, schedule surveys the purpose of a structure form the interview.
Though schedule has limitations like error on behalf of researchers while
recording the response or putting the query. It solved the purpose of data
collection for the project.
Sampling methods: - A sample is the representative of the population
which will predict the behaviour of the whole universe.
The sampling size put under two categories: Probability sampling and
Convenience sampling.

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Development of Working Hypothesis:-

The Hypothesis could be developed by discussing with the concerning


department heads and guides about this exploratory research and reached to
the conclusion that the data is to be collected by personal interaction with the
customers, asking them about the services and the improvement required.
First of all they are aware of banking product or not and then analyzing the
findings to reach to the objectives of research.

Execution of the project:-


It is the very important step in the research process accuracy findings
depends on how systematically the study has been carried out in time so that
it can make some sense when required. I have executed the project after prior
discussion with the guide and structured in following steps:

a. Preparation of questionnaire.

b. Collection of list of some of the clients interview of the customer so


that more interaction is impossible and the variety of responses can
be registered to have a good data for analysis.

c. Visiting the corporate and asking about their feedback on the


Online trading service services they are availing. Try to find out
their satisfaction level with the existing mutual fund.

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4.CHAPTER-IV

ANALYSIS,PRESENTATION AND
INTERPRETATION OF THE DATA

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Area Surveyed In pune

Sr. No. Area No.of People


A Market Yard 26
B Camp 19
C Swargate 16
D Tilak Rd 25
E Dhayari 18
F Vadgaon 10
G satara Rd 19
H Khadki 14
I deccan 15
J FC Rd. 20
K Koregaon Park 19
L Sinhgad Rd 9
Total 210

The survey was conducted in the above mentioned different areas in pune. The
total numbers of areas were 12 which included 210 people from various
categories.

Involvement of Male and Female in the Survey:


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In the survey involvement of male was 76% and of females it was 24%. This
represented the growing numbers of women in the trading process.

1. Do you know equity/ Derivative?


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In the survey, it was found that out of 210 people 196 know the equity and
derivative and derivative market i.e. 93% awareness was there amongest the
people.

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2. Are you aware of online share trading?

In the survey it was found that out of 210 people,182 were aware of the online
share trading i.e. 87% of awareness was found amongst the people.

3. Which system you prefer for trading?


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The survey showed 95% of people preferred to go for online share trading this
is because of the ease, transparency and speed of online trading while rest of 5%
of people preferred to go for traditional sahre trading.

4. Are you aware of the companies which provides online share trading?

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In the survey it was found that 78% of the people were found to be awere of the
major online trading firms in Pune.

5. Are you familiar with the concept of E-broking?


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In the survey it was found that out of 210 people only 145 people were familiar
with concepts of the e-broking i.e. 69% people. This familiarity was mostly
amongst the professionals followed by business class people and the rest.

6. What about online share trading fascinates you more?

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The main feature which fascinated the surveyed people is time saving in
online share trading, then the transparency in the operating concepts of online
trading helped to know about the transactions that were made during trading.
Hassle free and economical were the features which fascinated the people but
with less favor shown in it.

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7. Your nature of investment:

In the survey it was found that most of the people invested in the equity
which contributes to 47%, investment in derivative was around 20%, and
commodity it was 17% investment. While investment in mutual funds was
around 9% and rest 7% of people were not investing in anything.

14. You belong to:

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In the survey diffrent areas were selected in pune Region and the
participation of various kind of people included business class, professionals,
student, housewife and others which inclyded retired people,Goverment
employee etc.so the major number of people were from professional category
i.e.43% followed by business class 30% and the rest of the other categories.

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5.CHAPTER-V

FINDINGS,SUGGESTIONS
AND CONCLUSION

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Findings

 Online share trading is the fastest mode of share trading.

 87% found to be aware of online trading of securities.

 People are aware of these online service providers like HDFC Securities,

ICICI Direct, IndiaBulls, Kotak, share khan etc.

 Professionals are found to be in the favour of the system. They showed

Keen interest in online system and its working concepts.

 With advent of IT people are using mostly online services. And they
referred various website of the services provides to get conversant with
online concepts.

 Many of the representatives of various service providers have visited the


clients place to make them fully aware of the functioning principles of
online share trading.

 Maximum number of people said that online share trading is interesting,


fast and transparent system.

 95% people said that they prefer online trading and rest opted for
traditional one.

 The reason behind people opting for traditional system of trading are:-

 Dependences on the broker for investment decision.

 Lack of computer knowledge.

 Fear of frauds in money/share transactions.

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 Costly services for people who makes small or infrequent trading.

 People who only like to hold stock for long term.

 Business class which can be defined as the people who are self employed
entrepreneurs are found to take interest in online trading.

 The others, which can be, defined as the people who are below Rs 20,000
incomes per month and which rarely trade or make small transactions are
very unwilling to go online, as they cannot afford the service charges.

 Therefore in all the response towards online system was positive and is
gaining more importance in the minds of people for its functioning aspect
and people showing interest because there is more transparency in online
share trading.

Suggestions
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 Although people have heard about online trading of securities still have
great doubts about its operational feasibility, as they are not clear about
the concept. Special awareness programs using various media mixes
should be carried out to remove fear from the mind of people and make it
familiarize. Word to mouth publicity would be the ideal medium.

 More emphasis should be laid on the convenience that trading facility


offers by either introducing kiosks in the centre where the clients have a
demonstrations for themselves and understand the various features of the
product. This would help them following the conventional mode of
trading.

 There are a large number of prospective customers, which trades in small


volume or make infrequent transactions or only like to hold the stock as a
long term investment. The current price structures are not suitable for
such population. E-trading companies should look at such class people.

 Clients should be allowed to make Bank &DP accounts in the Bank of


there own choice. In case of ICICI &HDFC it becomes difficult for the
client to operate from outside the metros.

 There is demand for services like insurance, mutual funds and other
capital market instruments. Some other E- trading company if offering
this like India Bulls. Introduction of these products will surely increase
the number of registrations.

 Organizations should also concentrate management institute students for


their future prospective customer.

Conclusion

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Internet has changed the way the retail investor invests. Stock prices,
volume information, investment tools, technical analysis is at his fingertips.
Many sites offer a spot review of news breaks and results analysis, which help
investor to form an opinion on particular stock. As the world is networked with
the web you can consult with experts from across cities states. As the internet is
flooded with information, an overload, its imperative that you learn to figure out
which information is useful and which is not.

To sum up, we say that computerization is not to be avoided. Technology


has been able to make stock markets accessible to every individual. It has also
led to positive developments in terms of reduced costs and fewer errors. But, as
some experiences have indicated, IT cannot be applied as a panacea for all
problems. Regulation and knowledge dissemination are still important. The use
of technology should be preceded by a detailed study and assessment of all
other alternatives. The key to successful, use to technology is the appreciation
of its constraints.

The major impacts of online Trading on stock Broking Industry:

 Internet made the securities market as transparent for investors as it was for
sophisticated professionals and investments gurus in the market.
 The biggest impact of internet was that it made a large amount of
information available “out there.” Gone are the days when the key financial
data that investors need to make informed and profitable decisions was
available only to the lucky few “on the inside”. Now the turnover and profit
figures, brokers forecast, details of how and why company directors buy
shares and all the rest of it are just a few mouse click away for everybody.
 Small trades could be executed at a fraction of the cost that was previously
Charged to customer for similar trades. This encouraged a number of small
investor to invest the money they can spare from the banks into share market.

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 Quality research and stock analysis could be disseminated to a number of


people by e –mails and alerts. Investment tips and news scoops found
themselves a more efficient medium to spread. This is improves market
activity and trading volumes, benefiting brokers with their omission.
Investment houses could provide these services, at a price to investors who
were interested, in an efficient and orderly way.
 E-business didn’t come along; it come along with automated stock
exchanges, electronic document holding services and efficient banking
system.
 Together these empowered a retail investor to provide a cheaper, more fun,
more convenient and more reliable way of trading in shares than old-
fashioned way of using a bank or a broker.

Common Issues:
 The spread of PCs and telephony infrastructure determines the growth of e-
business. This might be a non issue in developed countries,but in developing
countries, it is still the availability of PCs, download speed and reliability of
telephony services that determines the success of e-business and hence
online stock broking.
 High competition among stock brokers has put significant pressure in the
prices.
 Market consolidation and mergers are expected to keep the broking industry
viable in the long run.
 Efficient comparison shopping is now available for retail customers who
always look out for faster and cheaper alternatives.
 Demanding customers expert 24/7/365 transaction capability, instant access
to information, immediate delivery and customers service. Providing all
these with minimum overheads requires innovative ways to cut costs.

Future trends for Online Share Trading:


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 Mergers and acquisitions: in the highly competitive and over crowded


market, shakeouts and bankruptcies of online brokers can be anticipated.
The trend is towards a gradual consolidation of retail investors to a few
dominant players of partnerships.
 Stock broking applications that provided services in various delivery
modes, i.e. internet, WAP, plam pilots, pocket PCs etc will get more
common as more and more people start using these gadgets. Online
broking would have a completely new meaning in this scenario.
 In a crowded stock broking industry, differentiation becomes the key to
higher revenues. Better services, straight through processing (STP),
immediate execution, portfolio services, investment advisors and
telephone call centres or branch investment offices are needed to retain
customer and to increase the revenues base.

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BIBLIOGRAPHY

Books Referred:

• Financial market:

By L. M. BHOLE

(McGraw Hill 4TH Edition)

• Research Methodology

By C. R. Kothari

(New Age Publishers 2nd Edition)

• Brochures and information manuals from HDFC SECURITIES

Websites:

• www.bseindia.com

• www.sebi.com

• www.nse.com

• www.hdfcsec.com

• www.icicidirect.com

• www.sharekhan.com

ANNEXURE
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Dear Respondents,

I am Amit Kumar from MIT College Of Management as a


member of research team of HDFC Securities Pune. We are going to research
on Online Share Trading in Pune. This Survey to know the
customers/investors(in share market)acceptations and perception about Online
trading in pune region.

Kindly fill the questionnaire; it will not take much of your time. We
will be highly obliged for your kind cooperation. Please respond on this address
amitmaxmonu@yahoo.co.in.

With best regards

HDFC SECURITIES
Hdfcsec.com
Phone:-020-26286700

Personal Information
1. Name:-

2. Email(optional):-

3. Gender:- I. Male II. Female

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4. Age:- I.15-24 II.25-34

III.35-44 IV. Above 45

5. Occupation:- I. Student II. Business Class


III. Professional IV.Housewife
V. Others

6. Monthly income:- I. Below 20,000 II. 20,001-35000


III. 35,001-50,000 IV.50, 001-1, 00,000
V Above 1, 00,000

Questionnaire
1. Do you know equity/derivative market?

( ) Yes ( ) No

2. Are you aware of online share trading?

( ) Yes ( ) No

3. Which system you prefer for trading?

( ) Yes ( ) No

4. Are you aware of the companies which provides online share trading?

( ) Yes ( ) No

5. Are you familiar with the concept of E-broking?


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( ) Yes ( ) No

6. What about online share trading fascinates you more?

( ) Transparency ( ) Hassle free service ( ) Economical ( ) Time saving

7. Your nature of investment:

( ) Derivative ( ) Stock ( ) Commodity ( ) Mutual Fund ( ) None

8. How much investment you make on share trading monthly?

( ) Below 20000 ( ) 20001-50000 ( ) Above 100000

9. Who is your existing broker?

( ) HDFC ( ) Share khan ( ) ICICI Direct ( )Kotak ( ) India bulls

10.Are you satisfied with your existing broker?

( ) Yes ( ) No

11.Services provided by existing broker:

( ) RM facility ( ) Easy to use software ( ) Daily tips and advice


( ) SMS

12.Is there any PMS facility provide by your broker?

( ) Yes ( ) No

13.You make investment on:

( ) Intraday ( ) Delivery

14.You belong to:

( ) Business Class ( ) Professional ( ) Student ( ) Self Employed


( ) House wife

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