A

Project Report

On

Investor Awareness towards Equity Market Investment

At

Share Khan India Ltd

Submitted To

Savitribai Phule Pune University

In partial fulfillment of the requirement for the award degree of

Bachelor of Business Administration (BBA)

Submitted By
HARSH PRAKASH MALPANI
Under the guidance of
Prof.Prasad Shishupal
Through
A.B.M.S.P’s Shri Shahu Mandir Mahavidyalaya
Parvati, Pune
2019-2020
 BONAFIDE CERTIFICATE

This is to certify that, this project report Investor Awareness towards Equity Market
Investment is the BONAFIDE work of HARSH PRAKASH MALPANI who carried out the
project work under my supervision.

SIGNATURE

PRASAD SHISHUPAL

ASSISTANT PROFESSOR

SHRI SHAHU MANDIR MAHAVIDYALAYA

PARVATI, PUNE.
 ACKNOWLEDGEMENT

I, undersigned express my sincere, gratitude to the following persons helped me in

completing the project work.

Officiating Principal: Dr. Zeenat Khan

HOD: Professor Yogesh Wagh

Project Guide: Professor Prasad R. Shishupal

Date:

Place: Pune

Signature of the Candidate

HARSH PRAKASH MALPANI

 DECLARATION

This is to declare that I, HARSH PRAKASH MALPANI student of Bachelor of Business

Administration (2017-2020), ABMSP’s Shri Shahu Mandir Mahavidhyalaya, Parvati, Pune
have given the original data and information to the best of my knowledge in this project
report Investor Awareness towards Equity Market Investment under the guidance of our
professor Prasad Shishupal and that, no part of this information has been used for any other
assignment but for the partial fulfillment of the requirement towards the completion of the
said course.

I have prepared this report independently and I have gathered all the relevant
information personally. I have prepared this project for B.B.A. for the year 2019-2020.

Date:

Place: Pune

Signature of the Student

HARSH PRAKASH MALPANI

 INDEX

SL CONTENTS PAGE
NO. NO.
1 Executive summary 1

2 Chapter 1 – Introduction 2
3 Objectives & Scope of the Study 20
4 Chapter 2 – Company Profile (SWOT Analysis) 21
5 Chapter 3 – Literature Review 28
6 Chapter 4 – Research Methodology 30
7 Population 30
8 Sampling Technique & Sample size 30
9 Sources of Data 30
10 Methods of Data Collection 30
11 Instrument used 30
12 Chapter 5 – Data Analysis 31
13 Chapter 6 – Findings 38
14 Conclusions 39
15 Suggestions 40
16 Bibliography 41
17 Annexure 43
 EXECUTIVE SUMMARY

This project attempts to know the preferences and analyze the significance of demographic
factors that influence the investor's decision towards making investments. This study attempts
to find out the significance of demographic factors of population such as gender, age, education,
occupation, income, savings and family size over several elements of investment decisions like
priorities based on characteristics of investments, period of investment, reach of information
source, frequency of investment and analytical abilities. The hypotheses have been developed
considering its relevancy to the research objectives. Investment decision making behavior in
risky situation has been taken as dependent variable. Demographic factors (age, gender and
education) are considered as independent variables.

Just 2 percent of India's household savings are exposed to equity, less than 1.5 percent of the
population invests in securities, compared with almost 10 percent in China and 18 percent in the
U.S.
An increasing trend has been observed in demand for the services of Non-Banking Financial
Institutions nowadays. This project focuses on the stock market as a whole and comparative
study of equity and derivatives. There has also been emphasis on brokerage industry in general
and competitive position of ShareKhan Ltd. in particular.
The researcher’s journey in ShareKhan LTD. start with overview about the stock market, at
Jhandewalan branch. On frequently basis the researcher get training sessions on different
products and functions of Share market and various sessions relating to the skills and product
knowledge of ShareKhan LTD.
The researcher’s work profile in ShareKhan is management trainee where he has learned about
market and broking firm then apply this knowledge in dealing with the clients and solve their
queries. Aware people about share market.
The researcher learnt how to operate website and mobile application of ShareKhan. The
researcher collected all the information about different products of ShareKhan.
The researcher studied behavior of different industries, sectors and impact of global market in
Indian market. As the company is a brokerage firm so we had few sessions on costing of trades,
which is very important part of share market trading functions.

1
 Chapter 1 - INTRODUCTION

STOCK MARKET

“An equity market, stock market or share market is the place in which shares of stock are bought
and sold.”
“Stock markets refer to a market place. Where investors can buy and sell stocks. The price at
which each buying and selling transaction takes is determined by the market forces (i.e.
Demand and supply for a particular stock).”

“A stock market is where shares in corporations are issued and traded”

The security contracts(Regulation)Act 1956 defines, a stock exchange as “an
association,organization or body of individuals, whether incorporated or not, established for the
purpose of assisting, regulating and controlling, business in buying, selling and dealing in
securities.

HISTORY OF STOCK MARKET IN INDIA

The first organized stock exchange in India was started in 1875 at Bombay.
Indian Stock Market is one of the oldest Stock Market in Asia. East India Company used to
transact Loan Securities by the end of 18th Century. In the 1830s, trading on corporate stocks
and shares in Bank and Cotton presses took place in Bombay.
In 1874, with the rapidly developing share trading business, brokers used to gather at a street
(now well known as "Dalal Street") for the purpose of transacting business.
In 1875 The Native Share and Stock Brokers' Association" (also known as "The Bombay Stock
Exchange") was established in Bombay.
In 1894 the Ahmedabad Stock Exchange was started to facilitate dealings in the shares of textile
mills there.
The Calcutta stock exchange was started in 1908 to provide a market for shares of plantations
and jute mills.
Then the madras stock exchange was started in 1920.Madras witnessed boom and business at
"The Madras Stock Exchange" was transacted with 100 brokers. When recession followed in

2
1923, number of brokers came down to 3 and the Exchange was closed down Post-
Independence Scenario
The depression witnessed after the Independence led to closure of many exchanges in the
country. Lahore stock Exchange was closed down after the partition of India, and later on
merged with the Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in
1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state
till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956.
The Exchanges that were recognized under the Act were:
1. Bombay
2. Calcutta
3. Madras
4. Ahmedabad
5. Delhi
6. Hyderabad
7. Bangalore
8. Indore

At present, there are twenty two recognized stock exchanges in India which does not include
the Over the Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of
India Limited (NSEIL).
Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities
and Exchange Board of India and The Reserve Bank of India.
The Ministry of Finance regulates through the Department of Economic Affairs – Capital
Markets Division. The division is responsible for formulating the policies related to the orderly
growth and development of the securities markets (i.e. share, debt and derivatives) as well as
protecting the interest of the investors. In particular, it is responsible for
Institutional reforms in the securities markets,
Building regulatory and market institutions,
Strengthening investor protection mechanism, and
Providing efficient legislative framework for securities markets.

The Division administers legislations and rules made under the

Depositories Act, 1996,

Securities Contracts (Regulation) Act, 1956 and Securities
and Exchange Board of India Act, 1992.

3
KEY FEATURES OF STOCK MARKET

Equity Market: Equity or cash market which includes intraday trading and delivery.

It also includes BIGTRADE of SHAREKHAN which provides 10 times exposure to the

customers for trading but it works for intraday trading only.

Derivatives Market : derivatives includes two types

A. Futures
B. Options

A. Futures:

• In futures customer can carry forward his position for three months which is called
contract.
• Last Thursday of every month is called expiry.
• In futures you cannot select the number of shares to buy. There is always a lot size defined
for every stock which trades in futures.
• M2M (mark to market) is also an important feature of future trading.
• Highest margin is 20% in stock market for future trading.

B.Options:

• This trading is available only in National stock exchange.

• Criteria for OPTIONS trading:
Lot Size
Premium
M2M
Strike Price
• Brokerage of SHAREKHAN is 100 rupees per lot.

4
STOCK EXCHANGE IN INDIA

The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the two major
exchanges in India.
1. National Stock Exchange (NSE)
The National Stock Exchange (NSE) was established in 1992 and trading began in 1994.
The NSE is used mainly for spot trading, or cash trading. When you conduct a spot trade, you
are completing the buy/sell immediately. When you sell, you get the price for the stock at that
moment in time; the same goes for selling.
Another large component of the NSE is the trading of futures and options, also called derivative
trading...Other stocks that are traded on the NSE include mutual funds, public offerings, and
wholesale debt. Like the BSE, the NSE has its own index of stocks that traders and investors
watch. There are 50 diverse stocks from 13 areas of the economy.
The index is known as the NIFTY 50.

FUNCTIONS OF NSE
The primary function of the NSE is

• To facilitate listing of companies and the whole process of trading the same as stocks
listed on the exchange.
• Apart from companies, NSE also has products such as derivatives listed which can be
traded.

FEATURES OF NSE
Features of NSE are as follows

• Nationwide coverage i.e., investors from all over country.

• Ringless i.e., it has no ring or trading floor.
• Screen-based trading i.e., trading in this stock exchange is done electrically.
Transparency i.e., the use of computer screen for trading makes the dealings in Securities
transparent.
• Professionalization in trading i.e., it brings professionalism in its functions.

5
2. Bombay Stock Exchange (BSE)
It is oldest and first stock exchange of India established in the year 1875. First, it was started
under banyan tree opposite to town hall of Bombay over 22 stockbrokers. There are 23stock
exchanges in the India.
Bombay stock exchange is the largest, with over 6000 stocks listed. The BSE accounts for over
two thirds of the total trading volume in the country.
Established in 1875, the exchange is also the oldest in Asia. Among the twenty-two stock
exchanges recognized by the government of India under the securities
contracts(Regulation)Act,1956, it was the first one to be recognized and it is the only one that
had the privilege of getting permanent recognition.

Vision & Mission of BSE

Vision

Our vision is to be the most sought after learning provider in the world in areas of financial
and leadership learning, by pioneering the generation and dissemination of knowledge of the
enhancement of skills and capabilities of professionals and aspiring professionals.

Mission

As a centre of learning, our mission is to promote an open learning environment that brings
people together, cultures and ideas from around the world, changing lives and helping transform
organizations through innovative learning programs.

Through our learning programs, we develop responsible thoughtful leaders and entrepreneurs
who create value of their organizations and their communities.

6
THE REGULATORS

1. Securities & Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) was formed after the Indian parliament
passed the securities and exchange board of India Act, 1992 in response to the financial Services
Assessment Program. SEBI Actually established in the year 1988 and given statutory power in
1992. With the growth in the dealings of the stock markets, lots of malpractices also started in
stock markets such as price rigging, ‘unofficial premium on new issue, and delay in delivery of
shares, violation of rules and regulations of stock exchange and listing requirements.
Due to these malpractices the customers started losing confidence and faith in the stock
exchange. So government of India decided to set up an agency or regulatory body known as
Securities Exchange Board of India (SEBI).
Function Of SEBI
• Regulating the business in stock exchange and any other securities markets.
• Promoting and regulating self-regulatory organization.
• Registering and regulating the work of collective investment scheme, including Mutual
funds.
• Prohibiting fraudulent unfair trade practices relating to securities market.
• Promoting education, and training of intermediaries of securities market.
Purpose and Role of SEBI
Issuers: For issuers it provides a marketplace in which they can raise finance fairly and
easily
Investors: For investors it provides protection and supply of accurate and correct
information.
Intermediaries: For intermediaries it provides a competitive professionals market.

2. Reserve Bank of India (RBI)

Reserve Bank of India (RBI) is governed by the Reserve Bank of India Act, 1934. The RBI is
responsible for implementing monetary and credit policies, issuing currency notes, being banker
to the government, regulator of the banking system, manager of foreign exchange, and regulator
of payment & settlement systems while continuously working towards the development of
Indian financial markets.
The RBI regulates financial markets and systems through different legislations. It regulates the
foreign exchange markets through the Foreign Exchange Management Act, 1999.

7
THE BROKERAGE INDUSTRY

Indian stock broking industry is the oldest trading industry that has been around even before
the establishment of BSE in 1875. Despite passing through a number of changes in post
liberalization period, the industry has found its way towards sustainable growth. With the
purpose of gaining deeper understanding about the role of Indian stock broking industry, in the
country’s economy, let us have a look at the
• 3% of firms started broking operations before 1950, 65% between 1950-1995, and 32%
post 1995.
• On the basis of terminals 40% are located in Mumbai, 12% in Delhi, 8% in Ahmadabad,
7% in Kolkata, 4% in Chennai, and 29% in other cities.
• From the study it was found that 36% of firms trade in cash, 27% in derivatives, and 20%
in cash, derivatives and commodities.
• In the cash market, 34% trade in NSE, 14% in BSE, 45% in both. Whereas in debt market,
31% trade in NSE, 26% trades in BSE, and 43% in both.
• Majority branches are located in North, i.e. 40%, 31% in West, 24% in South, and 5% in
East.
• In terms of sub-brokers, around 55% are located in South, 29% in West, 11% in North,
and 4% in East.
• Trading, IPOs and Mutual Funds are the top three products offered by 90% of firms
offering trading, 67% IPOs, and 53% offering Mutual Fund transaction.
• In terms of various areas of growth, 84% of firms have shown their interest in expanding
their institutional clients, 66% firms intend to increase FIIs, and 34% are interested in
setting up Joint Ventures in India and abroad.
• In terms of IT penetration 62% firms provide their website, and 90% have email facility.

The brokerage industry is currently characterized by a large number of companies (private or

unorganized). In effect it is a fragmented industry with a large number of participants. The
industry thus has ‘monopolistic competition’, i.e. a large number of firms selling a slightly
differentiated product.

8
DEMAND AND SUPPLY DRIVERS OF THE INDUSTRY

Demands for financial products are driven by risk-reward assessment, which considers:
Potential yield
The expectation of financial incentives or return on investment is a great demand driver
which tempts people to invest or engage into transactions of the financial markets.
Risk Rating
Higher risks assumes higher profits and vice versa. Risk ratings are a vital point when making
a decision to park ones resources into this industry.
Liquidity
To maintain strong and flexible liquidity position people tend to invest in financial markets,
in order to meet their contingencies.
Availability of information
The more disclosure, the more is information symmetry, and so will be visibility and access
to returns and so will be the expectation from this market increase along with investment
Access to alternatives
More the disclosure in the market more will be the competition with more profits, so more
will be the choices and access to alternatives to park ones resources.

The major supply drivers are:

Money supply
The supply of money has a big role to play in this industry, the more the supply of money in
this industry; more will be the availability of financial services and products.
Interest rates
Interest rate determines the terms of trade, fluctuations in interest rates can entirely fluctuate
this industry. Higher interest rate= will give higher returns, with great supply no doubt but
borrowing or ascertaining the real market value may become difficult.
Inflation
Value of a currency appreciates and depreciates with the rates of inflation. Inflation thus
serves as a great supply driver in this market. As in high inflation with higher supply of
money there will be higher supply and vice versa.
Economic conditions
Rates of inflation, the upsurge or downturn in the domestic and global economy is another
supply driver which is beyond the control of any business firm.

9
 Government Regulations
The attitude of the government towards the trade policies and various other financial firms
and industry matters a lot. Various restrictions or duties or taxes may restrict the supply and
may hinder the growth of this industry. And will flourish with the ease of trade.

Critical Success Factors of the Industry

Source: Wikipedia

Seeing the overall brokerage as a single unit, the key success factors or the winning strategy of
Indian Brokerage Industry is a mixture of:
• People
• Process
• Technology

There are the three ingredients that together create value for both international and domestic
customers.
By people it indicates to the service providers or the employees of the various firms of this
industry, who day in and day out interact with the customers and provide them services and
satisfy them.
Transparency of the process followed and disclosure method is yet another success factor. The
settlement of transactions is generally done in a process of T+2 days. And the government
support even still plays a very vital role in forming the rules and norms of such processes.
Technology enables to stay competitive and on edge with the competitors; facilitating the ease of
processes and speed and to maintain and be up to date. This serves as a great success of the
brokerage industry.
All these factors together help create value to the customer.

10
PHASES OF INDIAN BROKERAGE INDUSTRY

Indian Brokerage Industry-Pre 2000

• Post liberalization period.

• Business restricted to friends and relatives.
• Settlement T+15 days.
• Low trade volumes- No derivatives trading allowed.
• Lack of investment in technology- No front or back office software.

Indian Brokerage Industry 2000-2008

• Venture capital funding for brokerage businesses.

• Investment in technology- Front end and back end.
• National presence.
• Integrated risk management system.
• Significant increase in trade volumes- Derivatives trades play a major role. Margin
funding for the retail clients.

Indian Brokerage Industry 2009 onwards

• Paradigm shift from transaction oriented to research/ portfolio based advisory.

• Focus on franchisee based business model.
• Dematerialized accounts access for international trade.
• Access to international stock exchange.
• Trading on hand held platform (mobile phones etc) allowed.

11
PESTEL ANALYSIS OF BROKERAGE INDUSTRY

PESTEL analysis stands for "Political, Economic, Social, Technological, Environmental and
Legal analysis" and describes a framework of macro-environmental factors used in the
environmental scanning component of strategic management. It is a part of the external analysis
when conducting a strategic analysis or doing market research, and gives an overview of the
different macro environmental factors that the company has to take into consideration. It is a
useful strategic tool for understanding market growth or decline, business position, potential
and direction for operations.

• Political factors are how and to what degree a government intervenes in the economy.
Specifically, political factors include areas such as tax policy, labour law, environmental
law, trade restrictions, tariffs, and political stability.
• Economic factors include economic growth, interest rates, exchange rates and the
inflation rate. These factors have major impacts on how businesses operate and make
decisions. For example, interest rates affect a firm's cost of capital and therefore to what
extent a business grows and expands.
• Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social
factors affect the demand for a company's products and how that company operates.
• Technological factors include technological aspects such as R&D activity, automation,
technology incentives and the rate of technological change. They can determine barriers
to entry, minimum efficient production level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality and lead to innovation.
• Environmental factors include ecological and environmental aspects such as weather,
climate, and climate change, which may especially affect industries such as tourism,
farming, and insurance.
• Legal factors include discrimination law, consumer law, antitrust law, employment law,
and health and safety law. These factors can affect how a company operates, its costs, and
the demand for its products.

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SHAREKHAN BROKERAGE STRUCTURE FOR EQUITY MARKET:

Particulars BUY SELL

STT (Delivery) 0.125% 0.125%

STT (Intraday) 0.024% Nil

Brokerage (Delivery) 0.50% / 10 Paisa 0.50% / 10 paisa

Brokerage (Intraday) 0.10% / 5 paisa 0.10% / 5 paisa

GST 18% 18%

ONLINE TRADING

Online trading involves investment activity which takes place over the Internet and it does not
require physical inclusion of the broker. An investor has to register with an online trading portal
like ICICIdirect.com, motilaloswal.com and Sharekhan.com and many companies like that and
investor gets into an agreement with the firm to trade in different securities according to the
terms and conditions given on the agreement. As the servers of the online trading portal are
connected all the time to the stock exchanges and designated banks the order processing is done
in real time and investors can also have updates on the trading. They can also check the status
of their orders either through e-mail or through the interface that it cannot be accessed by a third
party. Some options are usually given to users such as to link their bank account, Demat accounts
and brokerage accounts into a single interface. A single window is also there for all exchanges
and a single screen is there for the complete order routing mechanism. The hardware used
comprises Web and application servers, switches, routers, firewalls and security devices, and
specialized appliances. There are two broad models in play in the online brokerage space-
1. Bank-backed firms

13
2. Entrepreneur-floated firms.

Bank-backed brokerages such as ICICI direct and HDFC Securities have expanded on the basis
of their brand name and the trust of investors in them. The integrated 3-in-1 accounts offered by
these bank-backed brokerages help their parent bank by giving it accounts along with float
income.
In second case i.e. Entrepreneur-backed companies like Sharekhan, Indiabulls, Religare and
motilal oswal have expanded by offering customers a mix of online and offline accounts, higher
margin finance amounts and lower brokerage rates. Though the bank based has performed better
but the latter have not lagged too far behind.
The reason why online trading has developed over conventional offline brokerage firms is that
this conventional method struggled with unfavorable economies. Staff cost is just one example
of it. As the markets opens for 330 minutes a day one dealer can at best execute 500 trades in a
day while online company like ICICI direct executes 150,000-200,000 trades a day on the
National Stock Exchange alone accounting for 3-4% of NSE trades of 5 million a day. It would
require a large amount of dealers to service this demand. Besides the salary costs it would also
demand huge expenses in real estate and support systems.
The offline model has got a downfall in the form of lower bandwidth and IT costs and the cost
of bandwidth has fallen to one-eighth of what it was in year 2000 giving online broking an
advantage especially in the case of lower-volume retail investors.
Today 30% of volumes on the NSE come from this and it may go up to 50% in three-four years
providing explosive growth for online broking in India.
To be a successful trading portal it will definitely depend on bouquet of services provided by it
for an end-user. Most of the portals charge a small registration fee and brokerage based on
various conditions but it's important for the organization to keep focused on customer-centric
services and delivery models to actually enjoy the most attention.
Emergence of E-Broking in India
The Indian trader is being fancied by the democratized world of online trading or also known as
e-broking. The regular and attractive advertisements in the print media and electronic media
have added to this fancy world.
But as we compare to the Western countries, in India online trading has not still grasped the
market, but has done a very important amount of progress in the past years and the future of
online trading is bright. That is why many new companies are coming into this form of business
structure and the existing companies are changing to this new format besides offline and other
traditional forms of business. With only a mere share of 10% online trading a combined gross

14
turnover of around Rs. 9000-10,000 crores handled by the BSE and NSE together there is a
much greater scope for online trading. At present some of the dominant players in the online
trading market of share market are:-

1.Sharekhan.com 9. Angel Trade

Reliance
2. Icicidirect.com 10. Money
3. Unicon 11. Religare
4. 5paisa.com 12. Karvy
5.Indiabulls 13. ILandFS
6. tak Securities
7.Motilal Oswal
8.Geojit Securities

Earlier the share market was not safe enough to invest but some of the changes in the past ten
years in the Indian share market have created the interest of trading in the shares by the people.
Broadly, we can classify three important factors, which have contributed to the development of
online trading in India-
Firstly the major step was taken by the National Stock Exchange (NSE) in the year 1994 which
allowed the electronic trading and seeing to this various other stock exchanges in India followed
soon. This helped in making the fast .accurate and transparent transactions saving a lot of time
then the traditional method of trading. The investors were also saved by the clutches of the fraud
brokers at the times when the clients were not aware of the true prices of the shares.
Secondly, in the year 1996 the dematerialization of the shares came (also known as DEMAT)
which avoided the online presence of shares in an electronic form avoiding them from theft,
pilferage or from other losses like counterfeiting and frauds regarding share transfer.
The third reason was the rapid growth of computer education and learning of internet by the
people. With the evolving of internet the online trading became a hit and the investors became
confident in investing just with a click of a mouse.

15
Advantages of Online Trading

1. Provides with the Freedom of Information

The Internet provides a new sense of controlling our financial future as the amount of investment
information available online is truly outstanding. An investor can-

• Know the price of any stock he desires at any point time on the internet.
• An investor can review the price history of any stock in chart format online.
• An investor can follow in-depth the events happening in the market
• Helps an investor to conduct an extensive financial research of any company he desires.
• He may also consult with other investors online present around the world

2. Provides Control to Investors Money

When an investor wants to buy or sell stock he no longer needs to call his broker on the phone
thus helping in the execution of the order instantly on the internet.
3. Provides access to the market
Through the sophisticated information streams, dedicated trading platforms and sophisticated
tools the investor can access the markets which provides more agility in buying and selling
stocks.
4. Ensures the best price for investors
Some companies like Invest smart (ILandFS) specialize in the techniques which offers the best
price deals for the buy and sell orders of the investors and traders providing the high level of
transparency by displaying of information relating to the specific stocks and company profiles
which helps in getting the best quote for the orders.
5. Online trading offers greater transparency
Online trading offers the investors with greater transparency by providing with an audit trail.
The process involves a complete integrated electronic chain starting from order placement, to
clearing and settlement and finally ending with a credit into the depository account of the
investor. All these stages are inspected which brings the transparency into the system.
6. Provides hassle free trading
Online trading provides an integration of the bank account, trading account and demat accounts,
which leads to easy and paperless trading for the client.

16
7. Online trading allows instant trade execution
Online transactions helps in the quick execution of the entire trading transaction right from
logging to the traders site and to the settlement of the bank account in a very short period of
time.

8. It provides a level playing field

Trading online gives even the smallest retail investor access to information which was earlier
available only to the big traders. It has provided with a level playing field for all investors in the
securities market.

17
EQUITY V/S DERIVATIVES

1. Ownership
When you buy shares in the cash market and take delivery, you are the owner of these shares or
you are a shareholder, until you sell the shares. You can never be a shareholder when you trade
in the derivatives segment of the capital market. This is because you just hold positional stocks,
which you have to square-off at the end of the settlement.

2. Holding period
When you buy shares in the cash segment, you can hold the shares for life. This is not true in
the case of the futures market, where you have to settle the contract within three months at the
very maximum. In fact, when you buy shares in the cash segment they can also be
transgenerational, that is they can be transferred from one generation to the other.

3. Risk
Both, cash and futures markets pose risk, but the risk in the case of futures can be higher, because
you have to settle the contract within a specified period and book losses. In the case of shares
bought in the cash market, you can hold onto them for an indefinite period and can hence sell
when prices are higher.

1. Investment objective differs

You buy a contract in the derivatives market to hedge risk or to speculate. Individuals buying
shares in the cash market are investors.

2. Lots vs shares
In the derivatives segment you buy a lot, while in the cash segment you buy shares.

3. Margin money
In the derivatives segment you pay only margin money for example, if you buy 1 lot of
Punjab National Bank (4000 shares) you just pay 15 to 20 per cent of the cost of the 4,000
shares and not the entire amount. That is not true in the case of cash segment, where you
have to pay the entire amount and not only margin

18
Analysis between equity and derivative

Basis Equity Derivative

Return Capital appreciation Capital gain

Dividend Income Price Fluctuation

Risk Company Specified Market risk

Sector specified Credit risk
Global risk Liquidity risk
General Market Risk Settlement risk

Types of margin VAR Initial margin

Extreme Loss Exposure margin
Mark to market Premium margin

Duration Generally Long term (more Short term

than 1 year) (Max. 3 months)
Participants
Long term Investors Speculators
Hedgers Arbitragers
Safe Investors Hedgers

Expiry Date of contract

No such things Last Thursday of any month

19
 OBJECTIVE & SCOPE OF STUDY

Objectives

• To study the investor awareness towards equity market investments.

• To learn about stock market, equity market, stock exchange & the regulators.

• To study about online trading and its various advantages.

• To study the differences between equity market and derivatives (Comparative analysis of

Equity & Derivatives).

• To analyze the Indian Broking Industry.

Scope

This Project is useful to get to know the awareness and perceptions of the investors towards the
equity market. It is also useful for the researchers to get to know about the stock market and
exchanges. This project is also useful for investors.

20
 Chapter 2 – COMPANY PROFILE

ShareKhan is the largest standalone retail brokerage in the country and the third largest in terms
of customer base after ICICI Direct and HDFC Securities. ShareKhan is one of the pioneers of
online trading in India.
ShareKhan was founded by Mumbai-based entrepreneur Shripal Morakhia in 2005. ShareKhan
pioneered the online retail broking industry and leveraged on the first wave of digitization, when
dematerialization (demat) of securities came into effect and electronic trading was introduced
in the stock exchanges.
In India, ShareKhan has over 4800+ employees, and is present in over 575 cities through 150
branches, more than 2,600 business partners. The company has 1.6 Million clients and on an
average, executes more than 4 lakh trades per day.
ShareKhan is now a fully owned subsidiary of BNP Paribas, it was rebranded as ShareKhan by
BNP Paribas.

KEY SERVICE OFFERING

• Demat and trading accounts
• Mutual fund distribution
• Loan against shares
• Wealth management
• Financial advisory
• Forex and commodities

COMPOSTION OF THE BOARD

S.NO NAME Type of Board members

1 Mr. Jaideep Arora CEO and Whole time director
2 Mr. Shankar Vailaya Whole-time director
3 Mr. Jimmy Mahtani Member of Board of directors
4 Mr. Marc Desaedeleer Member of Board of directors
5 Mr. Rahul Yadav Member of Board of directors
6 Mr. Anil Nagu Member of Board of directors
7 Mr. SumeetNarang Member of Board of directors

8 Mr. Vikram Limaye Member of Board of directors

21
 9 Mr. ThiruvidaimarudhurSivshankar Alternate Director
ShareKhan is among the top financial services company in India. It provides a complete package
of investment solutions in Equities, Derivatives, Commodities, IPO, mutual funds, Depositary
Services, Portfolio Management Services and Insurance.
On April 2002, it launched a new service called Speed Trade which was an online executable
application that is equivalent to the broker terminals accompanied with other information that
is used for Day Trade.
ShareKhan has various outlets which provide a full range of investment services like:- Online
Trading
Equity and Derivative trading on NSE & BSE
Commodities trading on MCX
Portfolio Management Services
Depository Services
IPO Services
A major strength of ShareKhan would be its ability to provide Specialized & Custom made
Research Products which highlight the investment philosophy of true Investors in the secondary
stock market.

Hierarchy of ShareKhan

CEO
Vice President
Assistant Vice President
Country head
Regional branch manager
Area sales manager
Territory Manager
Asst. manager/RM/Equity
manager
Senior sales executive
Sales executive
Super trainee
Trainee

Source: Sharekhan Website

22
BNP Paribas in Asia Pacific
In Asia Pacific, BNP Paribas is one of the best-positioned international financial institutions
with an uninterrupted presence since 1860. Currently with over 192000 employees and a
presence in 74 countries, BNP Paribas provides corporates, institutional and private investors
with product and service solutions tailored to their specific needs. It offers a wide range of
financial services covering corporate & institutional banking, wealth management, asset
management, insurance, as well as retail banking and consumer financing through strategic
partnerships.

BNP Paribas in India

BNP Paribas has had a presence in India for over 150 years having established its first branch
in Kolkata, in 1860. With this unparalleled experience of the Indian market, it is among the
leading corporate banks in the country. Through its branches in eight key cities — Mumbai,
Delhi, Kolkata, Chennai, Hyderabad, Bangalore, Ahmadabad and Pone — BNP Paribas offers
sophisticated solutions in its three core businesses — Corporate and Institutional Banking,
Investment Solutions and Retail Banking — many of them in association with strong local
partners.

Acquisition of Sharekhan by BNP Paribas

Sharekhan.com, one of the first movers in the country’s online broking segment, has been
acquired by French bank BNP Paribas. While the deal size was not disclosed, sources at the
brokerage said the company has been valued at about ₹2,200 crores.
Mumbai-based Sharekhan offers broking solutions across all asset classes to more than 1.2
million private clients and holds 7 per cent of the market share in terms of number of accounts.
BNP Paribas said: “Sharekhan will join BNP Paribas’ Personal Investors division, which is a
key player in retail brokerage and digital banking services with 1.7 million clients in Europe.
“All staff and clients at Sharekhan will be absorbed into BNP Paribas. The completion of the
transaction is subject to regulatory approvals

23
Products & Services of Sharekhan

Source: Sharekhan Website

SWOT ANALYSIS OF SHAREKHAN

Strengths

is a pioneer in online trading with a turnover of Rs.400 crores and more than 800 peoples
working in the organization.

the parent company of Share Khan has more than eight decades of trust and credibility
in the Indian stock market. In the Asian Money Broker’s poll SSKIwon the “India’s best broking
house for 2004” award.

Share Khan provides multi-channel access to all its customers through a strong online
presence with www.sharekhan.com, 250 share shops in 130 cities and a callcenter based Dial-
n-Trade facility.

24
 Khan has dedicated research teams for fundamental and technical research, which
constantly track the pulse of the market and provide timely investment advice free of cost to its
clients which has a strike rate of 70-80%.36

sier access to the customer due to largest ground network of 280 branded shareshops in 120
cities.

Efficient research and analysis team, which is, interpreting the economy
and company’s performance accurately, is enhancing the profitability of the client

Weakness
presence due to insufficient investments for countrywide
Expansion.

of awareness among customers because of non-aggressive promotional strategies (print

media, newspapers, etc).
emphasis on customer
retention.

ses more on HNIs than retail investors, which results in merger market-Share as
compared to close competitors.
activities conducted by the company are not at par with the other Firms.

Opportunities

With the booming capital market it can successfully launch new services and raise its client’s
base.

can easily tap the retail investors with small saving through promotional Channels like
print
media, electronic media, etc.

interest on fixed deposits with post office and banks are all time low, more and more small
investors are entering into stock market.37

25
 Abolition of long-term capital gain tax on shares and reduction in short term capital gain is
making stock market as hot destination for investment among small investors.

usage of internet through broadband connectivity may boost a whole new breed
of
investors for trading in securities.
Threats

Threats

Aggressive promotional strategies by close competitors may hamper ShareKhan’s acceptance

by new clients.
of sufficient branch-offices for speedy delivery of
services.

players are providing margin funds to investors on easy terms where asthere is no such
facility in share khan.

and more players are venturing into this domain which can further reducethe earnings
of Share Khan.

of Unit Linked Insurance Policies (ULIP’s) and mutual funds in themarket.

26
 Business analysis using Porter’s Five Forces Model

Potential Entrants
Investment options Various Banks

Competitors
ICICI securities
HDFC Securities
SUPPLIERS MotilalOswal BUYERS
Web Maintainers Kotak securities Small investors
NSCL Franchise
CSDL Partners
NSE HNI’s
BSE MF companies
MCX HUF
NCDEX Institutional investors

SUBSTITUTES
Mutual Funds Insurance

Bank FD
Post office deposits

27
 Chapter 3 – LITERATURE REVIEW

Barber and Odean (2001, 2002) studied the impact that the Internet is having on investors and
financial markets. Their first study (2001) examined how the Internet, with its abundance of
information, is affecting online investors’ decisions because of an illusion of knowledge and an
illusion of control. They further studied this phenomenon in a second study (2002) and they
concluded that after deciding to trade via the Internet, investors make more frequent trades,
more risky trades and make less profit than they did prior to switching to online trading.

Ranganathan (2006) in a study on impact of internet on financial markets found that the
investor behavior from the marketing world and financial economics has brought together to the
surface an exciting area for study and research: behavioral finance. The realization that this is a
serious subject is, however, barely dawning. Analysts seem to treat financial markets as an
aggregate of statistical observations, technical and fundamental analysis. A rich view of research
waits this sophisticated understanding of how financial markets are also affected by the
‘financial behavior’ of investors. With the reforms of industrial policy, public sector, financial
sector and the many developments in the Indian money market and capital market, mutual funds
that has become an important portal for the small investors, is also influenced by their financial
behavior. Hence, this study has made an attempt to examine the related aspects of the fund
selection behavior of individual investors towards Mutual funds, in the city of Mumbai. From
the researchers and academicians point of view, such a study will help in developing and
expanding knowledge in this field.

Bhasin (2007) in a study examined e-brokering and how e-brokerage firms can market financial
services. He discussed the benefits of the lower transaction costs and the convenience of online
trading for the investor. In a separate article by Phelan (2001), the difference between full
service brokers and online brokers is presented and a discussion about the need for good online
security is examined. Another study by Globerman, Roehl, and Standifird (2001) assessed how
e-commerce has added to the retail brokerage business. Brokers are now online and thus can
provide lower costs to their customers along with a larger variety of investment information.
Finally, Yap and Lin (2001) examined how online trading systems are changing. They think
that future online discount brokerage firms will evolve from systems that provide basic services
like low transaction costs, speed, and boundary spanning to systems that will eventually be able
to provide the one-on-one personal advice that online brokerage firms are now missing.

Lewison and Bernstein (2008) in a study on online investing found that online investing was
still in its infancy. They discussed how to match the investors’ needs with the right online
brokerage firm, how to avoid sales pitches, and how to think about security needs before one
begins to invest. Hong studied the information-processing costs that can occur from online
28
trading. He discussed how many online traders are new to the investing world and are therefore
naïve about how to go about investing. Konana, Menon, and Abramowitz explored the
observable and unobservable costs associated with online electronic brokerages. A second
article by the authors in 2000 looked at verifiable versus unverifiable costs. Verifiable and
observable costs are the direct costs associated with trading online, like commissions.

Turri A (2009) in a study on effects of online trading on the investment community found that
online investing is gaining prominence; it will not be for everyone. Some will not trust the
security of trading online and others will not have the time to do the research required and will
prefer to have traditional brokers invest for them. Overall, online investing will only encourage
new investors to trade in the stock market, bringing together buyers and sellers to make the
market more efficient. After some of the kinks are worked out of online trading, it will tend to
be more beneficial to the financial industry in the long run without many negative effects. Even
though online trading has slowed down somewhat at the present time, it is our belief that it will
pick up speed in the future. Once investors have become more comfortable with the current
economic conditions and foresee brighter economic conditions they will return.

Mayank (2009) has analysed the role of two important forces - the regulator and the capital
market as determinant of external finance in transition economies analyses the changing pattern
and future prospectus of external finance to India and reviews the role of external finance. Under
this framework, the study evaluates current Indian corporate governance practices in light of
external finance.

Impavido et al.and Claessens et al. (2010) in a study on institutional investors found that that
the development and particularly the liquidity of financial markets depend also on the existence
of a diversified class of institutional investors. Mutual funds, pension funds and insurance
companies act as a stable source of demand for equity and debt securities. They foster
competitiveness and efficiency in primary markets and create an incentive for the establishment
of a robust regulatory and supervisory framework. In this regard,, Catalan et al.(2000) examine
the determinants of stock market development for OECD countries and for some emerging
economies. Their findings suggest that, setting aside the issues of macro stability and legal
rights, contractual savings institutions positively affect stock market development.
Vishal B.S. (2011) in a study on public perception about stock exchanges conducted in Latur
city of India found that the number of investors in stock market has been increasing in the study
period. The public thinks investment in stock market is more risky and like gambling. In
addition, investors are less interested to invest in stock market than any other financial
investments & they generally think that return on investment in stock market is high as
compared to other financial investment. In the whole study period it was found that investment
through mutual funds is preferred than direct investment in stock market.

29
 Chapter 4 - RESEARCH METHODOLOGY

To study the investors awareness towards equity market investment, a structured questionnaire
was prepared and was administered on the investors of the stock market in Delhi. The
questionnaire was distributed through personal contacts. The link of the questionnaire was
forwarded to different people in Delhi and 103 responses were ultimately received.

Population

The population targeted was around 150 respondents. Survey was sent to all these respondents
in order to record their response towards investments in stock market.

Sampling Technique & Sample Size

The sampling technique used in this research is Convenient Sampling. The sample size from
which the researcher has recorded the responses is 103. Out of the targeted 150 respondents,
103 responded back.

Sources of Data

The main source of data was the young adults. A particular age group from 21- 30 years was
targeted in order to record their perception towards investments in stock market.

Methods of Data Collection

The main method of data collection was conducting an online survey that was sent to the 150
respondents. A questionnaire was designed and this was sent to the targeted respondents. This
questionnaire consisted of 14 questions including Name, Age, Salary, and other questions
related to the investments in stock market.

Instruments Used

Google Forms & MS – Excel

30
 Chapter 5 – DATA ANALYSIS

From this, the researcher found that out of the 103 respondents, 52.4% were female & 47.6%
were male, which is almost an equal ratio. Almost same no. of males & females answered the
questionnaire.

From this, the researcher found that out of the 103 respondents, 83.5% were from the age group
of 21 – 30 years.

31
From this, the researcher found that out of the 103 respondents, 63.1% were students. & 28.2%
were in service. Moreover, a few i.e., 6.8% were in business. This was one of the major findings
that a large no. of percentage of young adults were students.

From this, the researcher found that out of the 103 respondents, a major percentage i.e., 54.4%
of the total respondents were not earning. This was one of the major findings that a large no. of
percentage of young adults were not earning. There was almost an equal percentage of the
respondents earning different income bracket.

32
From this, the researcher found that out of the 103 respondents, almost equal percentage of the
respondents were Graduated & Post Graduated i.e., 45.6% & 42.7% respectively. A very few
were 12th passed i.e., 8.7% of the total respondents.

From this, the researcher found that out of the 103 respondents, 88.3% of the respondents were
single & a very few i.e., 10.7 were married. This was again one of the major findings that a large
percentage of young adults were single.

33
From this, the researcher found that out of the 103 respondents, 60.2% of the respondents known
a little on investments, this means that if a platform is provided to these respondents they can
do well in investments. A very few i.e., 6.8 % knows fully about the investments.

From this, the researcher found that out of the 103 respondents, 72.8% of the respondents were
not investing into equity markets. This was again one of the major findings that a large
percentage of young adults were not investing into equity markets.

34
From this, the researcher found that out of the 48 respondents, 37.5% were short-term investors
& rest were mid & long term investors.

From this, the researcher found that out of the 103 respondents, 58.3% of the respondents were
attracted towards the equity market due to high return.

35
From this, the researcher found that out of the 103 respondents, 90.3% of the respondents use
their savings to invest or trade in the stock market. This was again one of the major findings that
a large percentage of young adults use their personal savings to invest.

From this, the researcher found that out of the 103 respondents, 47.6% of the respondents were
interested in investing into mutual funds & almost equal percentage of respondents were
interested in stock market & FDs.

36
From this, the researcher found that out of the 103 respondents, almost equal percentage of the
respondents had the investment horizon upto 6 months, 6-12 months, 1-2 years & more than 2
years.

From this, the researcher found that out of the 103 respondents, 61.2% of the respondents said
they might invest through Sharekhan in future. 27.2 % of the respondents clearly said no that
they’ll not invest through Sharekhan. This was again one of the major findings.

37
 Chapter 6 – FINDINGS

After a thorough study of the questionnaire and responses received, the researcher came up
with the following findings:-

• A large percentage of young adults out of the total respondents were students.

• Almost 50% out of total respondents i.e., 54.4% were not earning. This means that for
investing into the stock market they are dependent on their parents i.e., they had to consult
with their parents before investing.

• A large percentage i.e., 72.8% of the respondents were not investing into equity markets.

• 90.3% of the total respondents use their saving/personal as a source to invest in the stock
market.

• 27.2 % out of the total respondents clearly said no that they‘ll not invest through
Sharekhan. This was again one of the major findings. Sharekhan should take major steps
to get involve with the customers.

• 47.6 % of the total respondents prefer to invest in mutual funds rather that equity market.

• 58.3% of the total respondents are attracted towards the equity market only due to high
returns, i.e., if they don’t get high returns they’ll not prefer equity investments over any
other investments.

38
 CONCLUSIONS

• After the survey, it was found that people in Delhi do not know much about the equity
markets.

• The Awareness of Investors in Stock Market tells about Age levels of investors above 40
are highly aware compare to other groups.

• Investors are investing in various avenues like equity, bonds but the most preferred is
mutual funds.

• The amount of investment is associated with the kind of investment and type of
transaction

39
 SUGGESSTIONS

• It is recommend for the individual investor to be in contact with a good broker and be
upgraded with latest news about the stock market before investing into it.

• The investors should rely on fundamentals and take the decision of investment in equity
after a detailed study of various accounting as well as non-accounting variables.

• Small investors should not be indulging into speculative activities

• As 27.2% of the total respondents clearly said no to invest through Sharekhan, Sharekhan
should indulge more with the people and should conduct online sessions so that people
can be made aware of the different schemes provided by Sharekhan for online
investments.

40
 BIBLIOGRAPHY

Journals

Barber, B.M., & Odean, T. (2001). “The Internet and the Investor.” The Journal of Economic
Perspectives, Volume 15, 40-55.

Barber, B.M., & Odean, T. (2002). “Online Investors: Do the Slow Die First?” The Review of
Financial Studies, Volume 15, 67-88.

Bhasin, M.L. (2007). “E-Broking as a tool for Marketing Financial Services the Global
Market.” Journal of Services Research, Volume 5, 53-65.

Impavido & Claessens, (2010) “Institutional Investors”, Journal of Diversified Classes of

Investors, Volume 30, 25-55.

Lewison , J.E, and Bernstein, P.(2008) “Cyberspace Investing.” Journal of Accountancy,

Volume 182, 20-32.

Ramachandran, P. S., & Chinnathambi. (2011). “Investment Behaviour and Risk Return
Perception of Investors in Equity Shares”, Contemporary Research Issues and Challenges in
Emerging Economies, Volume 82, 80-95.

Ranganathan (2006), “Investors Preference towards Stock Market and Other Investment Options”.
IJRMBSS. 41(9), 60-75.

Turri, A.M., (2009). “Effects of Online Trading on the Investment Community” Journal of
Investment Research, Volume 7, 10-20.

Vishal B.S., (2011), “A Study of Public Perception about Stock Exchange Transactions: Special
reference to Latur city”, Volume 23, 7-21.

41
Internet

“Company Profile”, retrieved from www.sharekhan.com on FEB 2020 at 4:30 p.m.

“Stock Market & Stock Exchange”, retrieved from

https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/stock-market/ &
https://www.avatrade.com/cfd-trading/stocks/stock-market, on FEB 2020 at 3:05 p.m.

“Analysis of Equity & Derivatives”, retrieved from

www.investopedia.com/terms/e/equity_derivatives.asp on FEB 2020 at 8:30 p.m.

“The Regulators”, retrieved from

www.investopedia.com/articles/economics/09/financialregulatory-body.asp on 20 FEB 2020 at
5:10 p.m.

“Online Trading”, retrieved from

www.financialdictionary.thefreedictionary.com/online+trading.html on 23 FEB 2020 at 6:15 p.m.

42
 ANNEXURE

Survey on “Investors awareness towards

equity market investment”.
This survey is conducted by Karan Saraf. All the details filled by the respondent will be kept confidential and will be used for
the purpose of survey only.
* Required

1.Name *

2.Sex *
o Male o
Female o
Other:

3.Age *
o 15 to 20 o 21
to 30 o 31 to
40 o 41 above

4.Occupation *
o Service o
Business o
Student o
Other:

5.Annual income *
o Below
1,20,000 o
1,20,000 to
3,00,000 o
3,00,000 to
5,00,000 o

43
 5,00,000
above

6.Educational Qualification *
o 10th o 12th o
Graduate o
Post Graduate
7.Marital Status *
o Single o
Married o
Divorced

8.What do you know about investment? *

o I don’t know
anything
about
investments
o I know a little
about
investment
but I could
use a little
help about
which is
suitable for
me. o I am
fully aware of
investment
o I am fully
aware and
sufficiently
applying my
knowledge

9.Are you investing in equity market?

o Yes o No

10.If yes, what type of investor are you?

44
 o Short term o
Mid term o
Long term o
Mix of any two

11.What attracts you to equity market? *

o High return o
Speculation o
Dividend
o Liquidity of
investment
fund

12.What sources of funds do you utilize to invest in stock market? *

o Savings o
Loan o
Pledging

13.Where would you like to invest?

o Stock market
o Mutual
funds o Bonds
o FD'S o
Other:

14.What is the purpose of investment? *

o To meet the
cost of
inflation o To
earn return on
idle resources
o To generate a
specified sum
of money for a
specific goal
in life o To
make a
45
 provision for
an uncertain
future

15.What is the factors which you considered before investing in particular company?
*
o Financial
position o
Current
market
position
o Goodwill o
Future
prospects o
Any other

16.Your investment decisions are influenced by? *

o Self o Broker
o Eco policies
o Market
research o
Friends/relativ
es o Other:

46