SUMMER TRAINING REPORT

ON
“A Study on Capital Market with Special
Reference to Sharekhan Ltd.”
Submitted in partial fulfillment of
MASTER OF BUSINESS ADMINISTRATION (MBA)

Conducted by
DR APJ AK TECHNICAL UNIVERSITY, LUCKNOW
Under the guidance of Under the guidance of
(Prathana Sahi) (Faculty supervisor’s name)
Faculty supervisor’s designation

Submitted By
Renu Bisht
MBA III Semester
Enrolment No.1674870020
SESSION- 2017-18

ANSAL TECHNICAL CAMPUS, LUCKNOW

SECTOR-C, POCKET-9, SUSHANT GOLF CITY, SHAHEED PATH, LUCKNOW
www.aitmlucknow.edu.in
Page i
 ACKNOWLEDGEMENT

Any fruitful work is in complete without a word of thanks to those involved directly

or indirectly in its completion. With my sincere gratitude I would like to thanks

everyone who has supported me in my project.

I would like to extend my sense of acknowledgement to learning Experience. I would

like to thanks my HOD for their support of Ansal Technical Campus, Lucknow for

their blessings which always gave me courage to face all challenges and made my

path easier.

Their insight as well as guidance helped me understand the essentials of the report I

would like to thanks for their support college Guide of Ansal for their immense help

and guidance that they have provided during the research report .The present work has

taken its sharp largely to their wise counsels, concrete and constructive suggestions.

Renu Bisht

Page ii
 TABLE OF CONTENT

Title Page

Company Supervisor Certificate

Faculty Certificate

Acknowledgement

Executive Summary

1. Introduction 1

2. Company Profile 25

3. Conceptual Discussion 59

4. Research Methodology 66

Research Objectives 67
Research Design 68
Data Sources 68
Questionnaire 68
Sample Design 68

9. Data Analysis & Interpretation 70

10. Conclusions / Findings 88

11. Recommendations 91

12. Limitations of the research 93

13. Bibliography/Reference 95

14. Annexure 97

Page iii
 CHAPTER 1
INTRODUCTION

1|Page
 INTRODUCTION
Capital markets are markets where people, companies, and governments with more

funds than they need (because they save some of their income) transfer those funds to

people, companies, or governments who have a shortage of funds (because they spend

more than their income). Stock and bond markets are two major capital markets. Capital

markets promote economic efficiency by channelling money from those who do not

have an immediate productive use for it to those who do.

Capital markets carry out the desirable economic function of directing capital to

productive uses. The savers (governments, businesses, and people who save some

portion of their income) invest their money in capital markets like stocks and bonds. The

borrowers (governments, businesses, and people who spend more than their income)

borrow the savers' investments that have been entrusted to the capital markets.

For example, suppose A and B make Rs. 50,000 in one year, but they only spend

Rs.40,000 that year. They can invest the 10,000 - their savings - in a mutual fund

investing in stocks and bonds all over the world. They know that making such an

investment is riskier than keeping the 10,000 at home or in a savings account. But they

hope that over the long-term the investment will yield greater returns than cash holdings

or interest on a savings account. The borrowers in this example are the companies that

issued the stocks or bonds that are part of the mutual fund portfolio. Because the

companies have spending needs that exceeds their income, they finance their spending

needs by issuing securities in the capital markets.

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The Structure of Capital Markets

Primary markets:

The primary market is where new securities (stocks and bonds are the most common)

are issued. The corporation or government agency that needs funds (the borrower) issues

securities to purchasers in the primary market. Big investment banks assist in this

issuing process. The banks underwrite the securities. That is, they guarantee a minimum

price for a business's securities and sell them to the public. Since the primary market is

limited to issuing new securities only, it is of lesser importance than the secondary

market.

Secondary market:

The vast majority of capital transactions, take place in the secondary market. The

secondary market includes stock exchanges (like the New York Stock Exchange and the

Tokyo Nikkei), bond markets, and futures and options markets, among others. All of

these secondary markets deal in the trade of securities.

Securities:

The term "securities" encompasses a broad range of investment instruments. Investors

have essentially two broad categories of securities available to them:

1. Equity securities (which represent ownership of a part of a company)

2. Debt securities (which represent a loan from the investor to a company or

government entity).

3|Page
Equity securities:

Stock is the type of equity security with which most people are familiar. When investors

(savers) buy stock, they become owners of a "share" of a company's assets and earnings.

If a company is successful, the price that investors are willing to pay for its stock will

often rise and shareholders who bought stock at a lower price then stand to make a

profit. If a company does not do well, however, its stock may decrease in value and

shareholders can lose money. Stock prices are also subject to both general economic and

industry-specific market factors. In our example, if Carlos and Anna put their money in

stocks, they are buying equity in the company that issued the stock. Conversely, the

company can issue stock to obtain extra funds. It must then share its cash flows with the

stock purchasers, known as stockholders.

Debt securities:

Savers who purchase debt instruments are creditors. Creditors, or debt holders, receive

future income or assets in return for their investment. The most common example of a

debt instrument is a bond. When investors buy bonds, they are lending the issuers of the

bonds their money. In return, they will receive interest payments (usually at a fixed rate)

for the life of the bond and receive the principal when the bond expires. National

governments, local governments, water districts, global, national, and local companies,

and many other types of institutions sell bonds.

Developing countries, like all countries, must encourage productive investments to

promote economic growth. Thus, foreign savings, which many people simply call

foreign investment, can benefit developing countries.

4|Page
In Indian context:

The international capital market as it has been evolving provides an opportunity for

developing countries like India to attract the required capital inflow for accelerating their

pace of development, manage their foreign exchange assets and liabilities to their

advantage and develop export capabilities in the field of financial services. Active

participation in this market would not only improve their access to the market but also

indicate the institutional and policy framework essential for developing effective and

efficient domestic financial markets. The possibilities of such participation would be

enhanced if the developing countries like India take a constructive stand with regard to

the multilateral negotiations in respect of trade in services under the Uruguay Round.

Recent situation

Recent financial problems in emerging economies have led to calls for a new

international financial architecture. Some of the problems are:

1. Inflation concerns are increasingly taking hold of the international capital markets;

there are fears of a repetition of the 1970s, when industrialized countries endured

double-digit rates of inflation.

2. Higher energy and food prices, rising wages in emerging markets and the weak US

dollar which is driving up US import prices.

3. In emerging markets like India inflation is being driven above all by rising food

prices.

4. In recent months oil has breached the 130 US dollar per barrel mark, and thus been a

main driver of global inflationary pressure. Declining reserves in the oil-producing

5|Page
countries, and low levels of investment and political problems could tighten the supply

situation still further, countering any efforts to improve energy efficiency and further

develop alternative energy sources. Production will not be able to keep pace with

growing demand, especially from Asia. So the oil price is likely to remain high and

continue rising in the long term."

5. Still it is believed that there may not be a recession in the USA, but a there may not be

a quick recovery either. In the Euro zone we are likely to see a cooling-off of the

economy in 2008 and 2009. Emerging markets should be able to decouple further from

the US economy and consolidate their growth at a high level.

In the above conditions, International capital flows should not be restricted; they benefit

entrepreneurs and savers alike, with lower borrowing costs and greater returns. The

international flow of capital improves risk management, allows consumption smoothing,

improves financial-sector efficiency, and leads to greater overall market discipline.

Furthermore, capital flows have a stabilizing effect on financial markets. Restricting

international investment denies a country those benefits; the result is slower growth and

reduced standards of living.

6|Page
Importance of capital market:

1. The capital market serves as an important source for the productive use of

economy’s savings. It mobilizes the saving of the people for further investment and

thus avoids their wastage in unproductive uses.

2. It provides incentives to saving and facilitates capital formation by offering suitable

rates of interest as the price of capital.

3. It provides an avenue for investors, particularly the household sector to invest in

financial assets which are more productive than physical assets.

4. It facilitates increase in production and productivity in the economy and thus,

enhances the economic welfare of the society. Thus it facilitates “the movement of

stream of command over capital to the point of highest yield” towards those who can

apply them productively and profitably to enhance the national income in the

aggregate.

5. The operations of different institutions in the capital market induce economic

growth. They give quantitative and qualitative directions to the flow of funds and

bring about rational allocation of scarce resources.

6. A healthy capital market consisting of expert intermediaries promotes stability in

values of securities representing capital funds.

7. Moreover, it serves as an important source for technological up gradation in the

industrial sector by utilizing the funds invested by the public.

Thus, a capital market serves as an important link between those who save and those

who aspire to invest their savings.

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8|Page
CAPITAL MARKET IN INDIA: -

Coming to Indian context, the term capital market refers to only stock markets as per the

common man's ideology, but the capital markets have a much broader sense. Where as

in global scenario, it consists of various markets such as:

1. Government securities market

2. Municipal bond market

3. Corporate debt market

4. Stock market

5. Depository receipts market

6. Mortgage and asset-backed securities market

7. Financial derivates market

8. Foreign exchange market

India’s presence in International Markets:

India has made its presence felt in the IFMs only after 1991-92. At present there are over

50 companies in India, which have accessed the GDR route for raising finance. The

change in situation has been due to the following factors:

1. Improved perception of India’s economic reforms.

2. Improved export performance.

3. Healthy economic indicator.

4. Inflation at single digit.

5. Improved forex reserves.

6. Improved performance of Indian companies.

7. Improved confidence of FIIs.

9|Page
Reliance was the first Indian company to issue GDR in 1992. Since 1993, number of

Indian companies successfully tapped the global capital markets & raised capital

through GDR or foreign currency bond issues. Though there was a temporary setback

due to Asian crisis in 1997. Since 1999 even IT majors have stepped the bandwagon of

international markets & raised capital. The average size of the issue was around 75USD.

And the total amount raised was around USD 6.5billion. India has the distinction of

having the largest number of GDR/ADR issues by any country.

INTERMEDIARIES INVOLVED IN INTERNATIONAL CAPITAL MARKET:

Lead & co-lead managers:

The responsibilities of a lead manager include undertaking due diligence & preparing

the offered document , marketing the issues , arrangement & conducting road shows.

Mandate is given by the issuer to the lead manager.

Underwriters:

The lead manager & co managers act as underwriters to the issue , taking on the risk of

interest rates /markets moving against them before they have placed bonds/DRs. Lead

Managers may also invite additional investment banks to act as sub-underwriters , thus

forming a larger underwriting group. The underwriters undertake to subscribe to the

unsubscribed portion of the issue .

Agents & Trustees:

These intermediaries are involved in the issue of bonds/convertibles. The issuer of bonds

convertible in association with the lead manager must appoint ‘paying agents’ in

different fifnacial centers, who will arrange for the payment of interest & principal due

to investor under the terms of the issue. These paying agents will be banks.

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Lawyers & Auditors:

The lead manager will appoint a prominenet firm of solicitors to draw up documentation

evidencing the bond/DRs issue. The various draft documents will vetted by the

solicictors acting for the issuer. Many of these documents are prepared in standard forms

with a careful review to the satisfaction of the parties. The legal advisors will advise the

issuer pertaining to the local & foreign laws.

Similarly, Auditors are required for preparation of the financial statements, cash flows,

and audit reports. The Auditors provide a comfort letter to the lead manager on the

financial health of the company. They also prepare the financial statement as per GAAP

requirements wherever necessary.

Listing Agents & Stock Exchanges:

The listing Agent helps facilitate the documentation & listing process for listing on stock

exchange & keep file information regarding the issuer such as Annual reports,

depository agreements, articles of association,etc. The stock exchange reviews the

issuers application for listing of bonds/GDRs & provides comments on offering circular

prior to accepting the security for listing.

Depository Bank:

It is involved only in the issue of GDRs. It is responsible for issuing the actual GDRs

,disseminating information from the issuer to the DR holders, paying any dividends or

other distributions & facilitating the exchange of GDRs into underlying shares when

presented for redemption.

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Custodian:

The Custodian holds the shares underlying the GDRs on behalf of the depository &is

responsible for collecting rupee dividends on the underlying shares & repatriation of the

same to the depository in US dollars/foreign currency.

Sources of Capital

There are two sources of capital:

1. Private sources

2. Public sources

Both sources are very important to the economies of the world. Capital flows result

when funds are transferred across borders; the flows are recorded in the balance of

payments account. Read on for definitions, examples, and trends in capital flows.

1. Private Sources of Capital.

Important sources of private capital are

a. Foreign direct investment

b. Portfolio investment (both debt and equity flows)

Each is defined below.

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a. Foreign Direct Investment (FDI):

Foreign direct investment is capital invested by corporations in countries other than their

places of domicile (their home countries). Direct investment is not nearly as liquid as

portfolio investment and is therefore less volatile. The normal requirement to qualify as

foreign direct investment is for the foreign firm to own at least ten percent of voting

stock.

An example of foreign direct investment is a Japanese company that starts a joint

venture (50-50) in Mexico with a Mexican company. The Japanese company has a long-

term investment in the assets of the joint venture and not merely a passive investment

like portfolio investors, who can remove their money from a country almost

instantaneously.

FDI or Foreign Direct Investment is any form of investment that earns interest in

enterprises which function outside of the domestic territory of the investor. FDIs require

a business relationship between a parent company and its foreign subsidiary. Foreign

direct business relationships give rise to multinational corporations. For an investment to

be regarded as an FDI, the parent firm needs to have at least 10% of the ordinary shares

of its foreign affiliates. The investing firm may also qualify for an FDI if it owns voting

power in a business enterprise operating in a foreign country.

Types of Foreign Direct Investment: An Overview

FDIs can be broadly classified into two types:

1. Outward FDIs

2. Inward FDIs.

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This classification is based on the types of restrictions imposed, and the various

prerequisites required for these investments.

An outward-bound FDI is backed by the government against all types of associated

risks. This form of FDI is subject to tax incentives as well as disincentives of various

forms. Risk coverage provided to the domestic industries and subsidies granted to the

local firms stand in the way of outward FDIs, which are also known as “direct

investments abroad.”

Different economic factors encourage inward FDIs. These include interest loans, tax

breaks, grants, subsidies, and the removal of restrictions and limitations. Factors

detrimental to the growth of FDIs include necessities of differential performance and

limitations related with ownership patterns.

Other categorizations of FDI exist as well. Vertical Foreign Direct Investment takes

place when a multinational corporation owns some shares of a foreign enterprise, which

supplies input for it or uses the output produced by the MNC.

Horizontal foreign direct investments happen when a multinational company carries

out a similar business operation in different nations.

Foreign Direct Investment is guided by different motives. FDIs that are undertaken to

strengthen the existing market structure or explore the opportunities of new markets can

be called “market-seeking FDIs.”

“Resource-seeking FDIs” are aimed at factors of production which have more

operational efficiency than those available in the home country of the investor.

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Some foreign direct investments involve the transfer of strategic assets. FDI activities

may also be carried out to ensure optimization of available opportunities and economies

of scale. In this case, the foreign direct investment is termed as “efficiency-seeking.”

Benefits of FDIs:

 One of the advantages of foreign direct investment is that it helps in the economic

development of the particular country where the investment is being made.

 This is especially applicable for the economically developing countries. During the

decade of the 90s foreign direct investment was one of the major external sources of

financing for most of the countries that were growing from an economic perspective.

 It was observed during the financial problems of 1997-98 that the amount of foreign

direct investment made in these countries was pretty steady. The other forms of cash

inflows in a country like debt flows and portfolio equity had suffered major setbacks.

 Foreign direct investment also permits the transfer of technologies. This is done

basically in the way of provision of capital inputs. It also assists in the promotion of

the competition within the local input market of a country.

 The countries that get foreign direct investment from another country can also

develop the human capital resources by getting their employees to receive training

on the operations of a particular business.

 Foreign direct investment helps in the creation of new jobs in a particular country. It

also helps in increasing the salaries of the workers. This enables them to get access

to a better lifestyle and more facilities in life.

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 Foreign direct investment assists in increasing the income that is generated through

revenues realized through taxation. It also plays a crucial role in the context of rise in

the productivity of the host countries.

 It also opens up the export window that allows these countries the opportunity to

cash in on their superior technological resources. It has been possible for the

recipient countries to keep their rates of interest at a lower level.

 It becomes easier for the business entities to borrow finance at lesser rates of

interest. The biggest beneficiaries of these facilities are the small and medium-sized

business enterprises.

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Disadvantages of Foreign Direct Investment

 The disadvantages of foreign direct investment occur mostly in case of matters

related to operation, distribution of the profits made on the investment and the

personnel. The situations in countries like Ireland, Singapore, Chile and China

corroborate such an opinion.

 It is normally the responsibility of the host country to limit the extent of impact

that may be made by the foreign direct investment. They should be making sure

that the entities that are making the foreign direct investment in their country

adhere to the environmental, governance and social regulations that have been laid

down in the country.

 The various disadvantages of foreign direct investment are understood where the

host country has some sort of national secret – something that is not meant to be

disclosed to the rest of the world like defense.

 At times it has been observed that certain foreign policies are adopted that are not

appreciated by the workers of the recipient country.

 Foreign direct investment may entail high travel and communications expenses.

The differences of language and culture could also pose problems in case of

foreign direct investment.

 Yet another major disadvantage of foreign direct investment is that there is a

chance that a company may lose out on its ownership to an overseas company.

 At times it has been observed that the governments of the host country are facing

problems with foreign direct investment. It has less control over the functioning of

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 the company that is functioning as the wholly owned subsidiary of an overseas

company.

 This leads to serious issues. The investor does not have to be completely obedient

to the economic policies of the country where they have invested the money. At

times there have been adverse effects of foreign direct investment on the balance

of payments of a country.

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  Foreign Institutional Investors (FII) :

FII means an entity established or incorporated outside India which proposes to make

investment in India.

An investor or investment fund that is from or registered in a country outside of the one

in which it is currently investing. Institutional investors include hedge funds, insurance

companies, pension funds and mutual funds.

In countries like India, statutory agencies like SEBI have prescribed norms to register

FIIs and also to regulate such investments flowing in through FIIs. FEMA norms

includes maintenance of highly rated bonds (collateral) with security exchange.

Following entities / funds are eligible to get registered as FII:

1. Pension Funds

2. Mutual Funds

3. Insurance Companies

4. Investment Trusts

5. Banks

6. University Funds

7. Endowments

8. Foundations

9. Charitable Trusts / Charitable Societies

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 CHAPTER 2
COMPANY PROFILE

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 COMPANY PROFILE

Sharekhan is stock broking company. Share Khan comes under retail arm of SSKI

(Shripal Sevantilal Kantilal Ishwarlal ) investors Services Pvt. Ltd. offers World-class

facilities for buying and selling Shares on BSE and NSE, Demate

Services(DP)Derivatives(F&O). SSKI group also comprises of Institutional broking and

Corporate Finance. Sharekhan does not claim expertise in too many things.

Sharekhan's expertise lies in stocks and that's what he talks about with authority. So

when he says that investing in stocks should not be confused with trading in stocks or a

portfolio-based strategy is better than betting on a single horse, it is something that is

spoken with years of focused learning and experience in the stock markets. And these

beliefs are reflected in everything Sharekhan does for you!

Those of you who feel comfortable dealing with a human being and would rather visit a

brick-and-mortar outlet than talk to a PC, you'd be glad to know that Sharekhan offers

you the facility to visit (or talk to) any of our share shops across the country. In fact

Sharekhan runs India's largest chain of share shops with over hundred outlets in more

than 80 cities! What's a share shop? How do you locate a share shop in your city?

Sharekhan is 80 years old company which is started online in the year 2000 & it is the

first company who started online in 1984 they ventured into institutional broking&

corporate finance. They having 14 branches, 400 franchises also having 466 shops in

210 cities. In Rajkot branch daily dealing Rs.16 crore & 400 crore daily dealing all over

India. Almost 4000 employees and 100000 trading customers.

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VISION

To empower the investor with quality advice and superior service to help him take better

investment decisions. We believe that our growth depends on client satisfaction.

MISSION

 To provide the best customer service and product innovation tuned to diverse

needs of clientele

 Continuous up-gradation with changing technology, while maintaining human

values.

 Respond to progressive globalization and achieving international standard.

 Efficiency and effectiveness built on ethical practices.

CORE VALUE

 Customer satisfaction through

 Providing quality service effectively and efficiently

 “Smile, it enhances your face value ” is a service quality stressed on

periodic customer service Audits

 Maximization of stakeholder value

 Success through Teamwork, integrity and People

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About Sharekhan

 SSKI named its online division as SHARE KHAN and it is into retail Broking

 The business of the company overhauled 4 years ago on February 8, 2000.

 It acts as a discount brokerage house to a full service investment solutions

provider

 It has a 150 member strong team.

 It has specialized research product for the small investors and day traders

 Largest chain of share shops, 103 Franchisees & 17 Branches across India.

 It has $25m/trades every day.

 Leading player today with 20% market share

 Over 8000 online clients

 The site was also launched on February 8, 2000 and named it as

www.sharekhan.com

 The SpeedTrade account of share khan is the next generation technology

product launched on April 17, 2002

 SpeedTradePlus was launched on October 28, 2002 for trading in Derivatives

 It offers its customers with the trade execution facilities on the NSE, for cash as

well as derivatives, depository services

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 Ensures convenience in trading experience:

Share Khan’s trading services are designed to offer an easy, hassle free trading

experience, whether trading is done daily or occasionally. The customer will be

entitled to a host of value added services, in the investment process depending

on his investing style and frequency. and offers a suite of products and services,

providing the customer with a multi-channel access to the stock markets.

 It gives advice based on extensive research to its customers and provides them

with relevant and updated information to help him make informed about his

investment decisions.

 Share khan offers its customers the convenience of a broker-DP.

 It helps the customer meet his pay-in obligations on time thereby reducing the

possibility of auctions. The company believes in flexibility and therefore allows

accepting late instructions without any extra charge. And execute the instruction

immediately on receiving it and thereafter the customer can view his updated

account statement on Internet.

 Sharekhan Depository Services offers demat services to individual and corporate

investors. It has a team of professionals and the latest technological expertise

dedicated exclusively to their demat department. A customer can avail of Demat

\ Remat, Repurchase, Pledge, Transmission facilities at any of the Share khan

branches and business partners outlets.

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SEVEN P’S OF SHAREKHAN

PRODUCT

Product Variety

Share khan offers 3 types of online trading accounts for its customers specially designed

according to their volume in share trading. Those 3 varieties are:

 Classic- for retail investors

 Speed Trade: for high net worth investors with large and active equity

portfolio who need to monitor and action swiftly

 Speed trade Plus- for high net worth investors dealing in derivative market.

Quality

User Friendly, attractive & colorful Website.

Design

The website of Share khan namely www.sharekhan.com has been specially designed to

facilitate its users to buy and sell shares in an instant at anytime and from anywhere they

like. The site is user friendly allowing even a layman to easily operate without any

hassles.

Features:

Share khan’s product comes with the following features:

Trade execution in a fraction of a second!

Single Screen Trading Terminal

Real time streaming quotes. Price watch on any number of scripts.

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Hot keys similar to Brokers Terminal.

Customized Alerts based on Multiple Parameters.

Back up Facility to place trades on Direct Phone Lines.

Intra day charts, updated live, tick-by-tick.

Instant Order\ Trade Confirmation in the same window

Live margin, position, marked to market profit & loss report.

Competitive Brokerage.

Flexibility to customize screen layout and setting.

Facility to customize any number of portfolios & watch lists.

Facility to cancel all pending orders at one click.

Facility to square off all transactions at one click.

Top Gainers, Top Losers, and Most Active, updated live.

Index information; index chart, index stock information live.

Market depth, i.e. Best 5 bids and offers, updated live for all scripts

Online access to both accounts and DP.

Live updated Order and Trade Book.

Details of pending, executed and rejected orders.

Online access to Customer Service.

128 - bit super safe encryption.

Facility to place after market orders

Online fund transfer facility from leading Banks

Online intra-day technical calls.

Exhaustive database of over 2000 companies

Historical charts and technical analysis tools.

Last but not the least, ideas that help you to make money!!!

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Brand Name

The company as a whole in its offline business has named itself as SSKI Securities Pvt.

Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal Securities Pvt. Ltd. The company has

preferred to name themselves under a Blanket Family Name.

But in its online division started since 1997, the company preferred to name itself as

“SHARE KHAN”. The Brand Name “SHARE KHAN” itself suggests the business in

which

the company is dealing so that the consumer could easily identify the product or service

category.

Services

Share khan offers its customers, depository services and trade execution facilities for

equities, derivatives and commodities backed with investment advice tempered by

decades of broking experience. The teams of its dedicated analysts are constantly at

work to track performance and trends.

Dial-n-trade is also an exclusive service available to all Sharekhan customers for trading

in shares via the telephone. On dialing the toll free number 1600-22-7050 and on

entering the customers TPIN number, the customer will be directed to a telebroker who

will buy or sell shares for him.

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PRICE

 List Price

CLASSIC SPEED TRADE SPEED TRADE

PLUS
One time 750 1000 1500

registration fee
Minimum brokerage Nil 1000 1500

Charges –Quarterly

 Brokerage

Share khan in its online business charges brokerage as follows:

- In equity Market:

On Trading: 0.1% On Delivery: 0.5%

- In Derivative Market

On Trading: 0.12% (Total brokerage) On Delivery: 0.1%

 Service Tax

-8% on Brokerage.

 Turnover tax + Stamp duty

-0.015% (Rs. 15 on every turnover of Rs. 100000)

 Custody Charge

Re. 1 per script held per month.

 Discounts

For investors with High Net worth, there are slabs in brokerage rates.

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  Payment Period

The transaction settlement date in the securities market is T+ 2 days i.e. the

payment of the transaction taken place has to be made within two days of its

occurrence.

 Credit terms

Share khan allows its customers to trade up to 4 times i.e. by keeping 1/4th

margin with them.

PROMOTION

Online share trading is totally a new concept in Indian Market. Generally investor

doesn’t like to come out from conventional way of share trading. Share khan has

introduced this product in. The concept and Product are still new in the market.

Therefore the company has undertaken extensive promotion campaign to create

awareness about the product. Share khan adopts the following tools for promoting the

product

 Advertising

Company advertises its product through TV media on channels like CNBC, Print

Media-in leading dailies and outdoors media. It advertises itself as an innovative

Brand with a cartoon of tiger-called SHERU. Besides attractive and colorful

brochures as well as posters are used giving full details about the product.

Mails are sent to people logging on to sites like moneycontrol.com and

rediff.com.

Also, stalls are opened up now and then at places where prospective customers

can be approached.

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 Sales Promotion

The Company offers Rs.500 instead of Rs.750 for corporate accounts (more than

20 accounts).

Also, it provides online trading accounts for just Rs.300 for IIM students.

 Sales Force

The Company has an aggressive sales force, which is given incentives, based on

their sales. The sales force is given intensive training continuously.

 Seminar

The Company also arranges seminar in corporate world for creating awareness

about the product. Recently, it had organized for a seminar in ONGC, IIM.

 Direct Marketing

Company emphasizes more on direct marketing, as many people are still not

aware of this new way of smart trading. For this, the company recruits and trains

sales representatives so as to explain the product and solve customer queries

related to the product. This is the most effective way to communicate the three-

in-one concept which company offers.

 Telemarketing

This is another promotional tool company is using to boost up its sales. For this,

the company collects the database of the people belonging to different

professional segments.

30 | P a g e
PLACE

 Channels

Share khan uses various channel alternatives to reach to its customers through

 Internet

 Tele Marketing

 Retail Share Shops

 Franchisee Owners

 Power Brokers

 Sales Force

 Coverage

Access to the website from any part of the globe.

 Locations

Share khan has the largest chain of retail share shops in India. It has 180 share

shops located in 90 cities all over India like Pune, Thane, Chennai, Kolkata,

Banglore, Luckhnow, Darjleeng, Kanpur, Baroda, Midnapore, Surat, Delhi,

Gaziabad, Hydrabad, Allahbad, etc.

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 PEOPLE

 Employees

 Selection: Employees are selected on the basis of their experience

and qualification as applicable to the job.

 Training: Intensive training is provided to the employees till a week

once they join and even at times required after that.

 Motivation: The employees are motivated through incentives they

are provided.

 Research Team

Share khan has a team of dedicated analysts who have years of working

experience in the industries that they track, and a proven track record in using

their knowledge of the investment science to deliver results.

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 Customers,

The heart of sharekhan are really treated loyally like the kings. The customer

care, which comprises of highly trained executives operating from 9:30 to 8:00

p.m.

PHYSICAL EVIDENCE

 Locality of the office:

In Ahmedabad, two franchise outlets are located in posh areas like Navrangpura

and Maninagar. A new franchise is going to open up in Vastrapur.

 Office Environment:

The ambience within the office is what can make the customer feel comfortable

in trading. The cordial and friendly atmosphere at office is like a full time

motivation for the employees.

 Interiors and Infrastructure:

The office is well furnished and has 24 computer terminals on which tick-by-tick

price movements of the securities are displayed.

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PROCESS

 In this service organization, the ways in which the customers receive delivery of

the service constitutes the process. Here, the process involves adding ‘value’ or

‘utility’ so that the customers get full satisfaction for the money spent by them.

 Here the process begins from the step when customer wants to open e-invest

account and ends when his account is actually activated.

 All Indian residents and NRI are eligible to avail this service.

 Customers can open a sharekhan e-invest account by filling a single application

form.

This form includes 9 agreements like

1. Main form with customer details

2. Agreement between sharekhan and client in respect of the ONLINE-

INVESTMENT SUPPORT service offered.

3. Agreement between the Depository Participant and the client for providing the

transaction statement through Internet.

4. Irrevocable power of attorney

5. Agreement between the DP and the person seeking to open an account with the

DP.

6. Maintenance of client’s account on a running account bases by SSKI.

7. Agreement giving the right of lien on the credit balance of client in NSE trading.

8. Agreement giving the right of lien on the credit balance of client in BSE trading.

9. Risk disclosure document (cash segment)

34 | P a g e
 SEVEN ‘S’ MODEL

Structure

Strategy Systems

Super ordinate
Goals goals

Skills Style

Staff

STRUCTURE:

Share khan is flexible in terms of making temporary structural changes to

cope up with specific strategic tasks without any hassles. If need arises, the

top management can assign the role to any of its employees which it

considers capable and skillful.

STRATEGY:

Share khan believes not only in developing the strategies but also in its

successful execution.

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SYSTEMS:

This constitutes of all the training and development systems, estimating

budgets and the accounting system of Share khan.

STYLE:

Style refers to all the symbolic actions undertaken by top managers of Share

khan and its influence on the subordinates.

STAFF:

Share khan values its employees as its assets and therefore carefully trains

and motivates them by giving them incentives at regular intervals. Talented

employees are assigned as mentors and given real responsibility and moved

into higher positions.

SKILLS:

The term skills refer to those activities organizations do best and for which

they are known. Share khan is known for its timely advice (suggestions/tips),

which it caters to its customers and it boasts of 70-90% strike rates in

booking recommendations.

SUPERORDINATE GOALS:

This refers to guiding concepts, values and aspirations that unite an

organization in some common purpose. It provides the customers the best

service as it believes in customer satisfaction and retention.

36 | P a g e
 SHAREKHAN’S STOCK CLUSTER
We categorize all the scrip’s that are under coverage into six clusters. Each cluster

represents a certain profile in terms of business fundamentals as well as the kind of

returns you can expect over a certain time horizons and return objectives best.

 Evergreen

Dominant players with strong brands, robust management

credentials, supernormal shareholder returns. Will steadily compound 18-

20% per year for next five to ten years.

 Applegreen

Potentially steady compounders, but five to ten years graph bit unclear.

Could gallop at 25-30 per year over the next two to three years.

 Emerging Star

Young companies likely to rule chosen niches. Even better, the niches

could balloon into full-blow markets. Potentially ten-baggers if you’re

patient.

 Ugly Duckling

Trading below fair value or at huge discount to peer group. But

somtehing’s cooking.Could double in two to three years time.

 Vulture’s Pick

Companies with valueable assets at throwaway prices.Buy & await

predators.Stratlingly high returns possible.

 Cannonball

Season’s favourites. Typically fast gainers in rising markets, could return

30-50% within six months. Get in, cash in, get out.

37 | P a g e
Publications of sharekhan

 Sharekhan’s Valueline

 Derivatives Digest

 Eagle Eye

 High Noon

 Investor’s Eye

 Commodities Buzz

 Commodities Beat

 Commodity Trader’s Corner

 Sharekhan Xclusive

38 | P a g e
 PRODUCTS OF THE SHAREKHAN COMPANY

ShareKhan’s product

Offline Online Other Services

Speed Trade A/C

Classic A/C

Other Services:

1. Dial-n-Trade

2. Depository Services

3. Commodity Trading

4. Derivative Trading

5. Mutual fund

6. Portfolio Management Services

7. Online IPO

8. Research Based Information Provided

OFFLINE

 Offline A/c is the A/c for the investors who are not familiar with the use of
computer.

 The A/C opening charges Rs.500(One time)

 For 1st Year Demat A/C is Free,On 2nd Year AMC charge is applicable.

39 | P a g e
 ONLINE

 A/C Opening Charges Rs.750(onetime Charge).

 For 1st Year Demat A/C is Free,On 2nd Year AMC charge is applicable.

 Type with 7 banks through which one can transfer or withdraw his fund

online.Which are as follows

1. HDFC Bank

2. IDBI Bank

3. UTI Bank

4. OBC Bank

5. CITY Bank

6. Indusind Bank

7. Union Bank of India

40 | P a g e
Anyone who have A/C either of above banks they can use this facility.Otherwise one

has to make fund transfer or withdraw by cheque.

This account enables you to buy and sell shares through our website. You get features

like

a) Streaming quotes (using the applet based system)

b) Mutltiple watchlists

c) Integrated Banking, demat and digital contracts

d) Instant credit and transfer

e) Real-time portfolio tracking with price alert and, of course, the assurance of

secure transactions.

Features of Classic Account

That enables you to invest effortlessly

Online trading account for investing in Equities and Derivatives via sharekhan.com

Integration of: Online trading + Bank + Demat account

Instant cash transfer facility against purchase & sale of shares

Make IPO booking

You get Instant order and trade confirmations by e-mail

Streaming Quotes

Personalised Market Scan with your own customized stock ticker!

Single screen interface for cash and derivatives

Your very own Portfolio Tracker!

41 | P a g e
System Requirements
you’ll need access to a computer which has at least the following configuration:

Pentium 3 PC, Minimum 128 MB RAM

Windows 2000/XP

Internet Connection

Internet Explorer 6.0

Java enabled in IE

SPEEDTRADE

A/C Opening Charges Rs.1000/-(onetime Charge).

Monthly charges Rs.500/-(But if Client give Brokerage of Rs.1500/-in a Quarter, then

Rs.1500/-that was charged of a Quarter will be Reimbursed).

For 1st Year Demat A/C is Free, On 2nd Year AMC charge is applicable.

Type with 7 banks through which one can transfer or withdraw his fund online.Which

are as follows

HDFC Bank

IDBI Bank

UTI Bank

OBC Bank

CITY Bank

Indusind Bank

Union Bank of India

42 | P a g e
Anyone who have A/C either of above banks they can use this facility. Otherwise one

has to make fund transfer or withdraw by cheque.

Features of SpeedTrade

that enable you to trade effortlessly

Instant order Execution & Confirmation

Single screen trading terminal

Real-time streaming quotes, tic-by-tic charts

Market summary (most traded scrip, highest value and lots of other relevant statistics)

Hot keys similar to a brokers terminal

Alerts and reminders

Back-up facility to place trades on Direct Phone lines

Single screen interface for cash and derivatives

System Requirements
You'll need access to a computer which has at least the following configuration:

Pentium 3 PC

Minimum 128 MB RAM

Windows 2000/XP

Dial-up Modem / Cable modem

Internet Connection Account

Internet Explorer 6.0

Java enabled in IE

43 | P a g e
Charges of Different companies for online A/C

Parameters Opening Fee Brokerage Interface

Trading Demate Delivery Square Bank Associated
A/C A/c Off

Sharekhan 750 NIL 0.50 0.10 HDFC,UTI,OBC,

IDBI, City Bank

ICICI Direct 750 NIL 0.75 0.18 ICICI Bank

IndiaBulls 750 250 0.40 0.10

5 Paisa NIL 0.20 0.05 ICICI Bank

,UTI,OBC,HDFC,
City Bank
Kotak Street 500 0.59 0.06 Kotak Bank, City
Bank

HDFC Securities 700 NIL 0.50 0.15 HDFC & Other

Bank

Dial-n-Trade

Trade in Equity by using your phone!

Free with your Sharekhan Classic Account, the Dial-n-Trade service enables you to

place orders for buying and selling shares through your telephone.

All you have to do is dial any one of our two dedicated numbers (1-800-22-7050 or

30307600), enter your TPIN number (which is provided at the time of opening your

account) and on authentication you'll be directed to a telebroker who will buy and sell

shares for you.

44 | P a g e
Features of Dial-n-Trade

that enable you to trade effortlessly

TWO dedicated numbers for placing your orders with your cellphone or landline. Toll

free number: 1-800-22-7050. For people with difficulty in accessing the toll-free

number, we also have a Reliance number 30307600 which is charged at Rs. 1.50 per

minute for STD calls.

Automtic funds tranfer with phone banking (for Citibank and HDFC bank customers)

Simple and Secure Interactive Voice Response based system for authentication

No waiting time. Enter your TPIN to be transferred to our telebrokers

You also get the trusted, professional advice of our telebrokers

After hours order placement facility between 8.00 am and 9.30 am (timings to be

extended soon)

Reliable service, wherever you are

Requirements

All you need is access to a phone - either a landline or a cellphone: (the type of phone

doesn't matter)

If calling from a cellphone, please dial 022-1-800-22-7050

Currently for Citibank and HDFC customers. More banks to be added soon

After hour order timings: 8.00 am to 9.30 am

It takes approximately 10 minutes of your time to place an order

45 | P a g e
PORTFOLIO MANAGEMENT SYSTEM

With the Sharekhan Team Managing Your Portfolio, you can be assured that your

investments are in safe hands!

We follow a multi-disciplined approach incorporating quantitative analysis, fundamental

analysis and technical analysis. This multi-pronged approach enables us to provide risk-

controlled returns for you.

Right from choosing the combination of stocks most suitable for you based on your risk

appetite to monitoring their movements and discussing them with you at special events.

46 | P a g e
MUTUAL FUND

Introduction

Everybody talks about mutual funds, but what exactly are they? Are they like shares in a

company, or are they like bonds and fixed deposits? Will I lose all my money in funds or

will I become an overnight millionaire? Big questions that get answered in just five

minutes.

Meaning

A mutual fund is a pool of money that is invested according to a common investment

objective by an asset management company (AMC). The AMC offers to invest the

money of hundreds of investors according to a certain objective - to keep money liquid

or give a regular income or grow the money long term. Investors buy a scheme if it fits

in with their investment goals, like getting a regular income now or letting the money

47 | P a g e
accumulate over the long term. Investors pay a small fraction of their total funds to the

AMC each year as investment management fees.

Categories of Mutual Fund

There are three broad categories of funds in the Indian market - money market,

debt and equity. A money market fund invests in short-term government debt paper and

is good for parking money for the short term since the principal is safe, returns better

than a bank deposit and liquidity high. Debt funds invest mainly in debt instruments like

government securities, corporate and institutional debt paper. They are also called

income funds since people buy them for their income needs. Equity funds invest in the

stock market and suit long term investors who want capital appreciation. Commodity,

property and gold funds are yet to come into India.

Investing in Mutual Funds through Sharekhan

We're glad to announce that you will now be able to invest in Mutual

Funds through us! We've started this service for a few mutual funds, and in the near

future will be expanding our scope to include a whole lot more. Applying for a mutual

fund through us is open to everybody, regardless of whether you are a Sharekhan

customer.

You have two choice through which you can invest in Mutual Fund.

A) On the main page of this micro-site and scheme snapshot page we have provided

with a link to PDF version of application form which you just need to download, print

and fill up relevant details. Submit the duly filled copy with payment either to Nearest

Sharekhan Branch Or Mutual Fund Company.

48 | P a g e
B) Alternatively you can call up our customer service 1600-22-7500 and give your

contact detail wherey we will arrange to mail you a hard copy of application of desired

schemes from the list offered by Sharekhan.

Sharekhan Depository Services

Dematerialization and trading in the demat mode is the safer and faster alternative to the

physical existence of securities. Demat as a parallel solution offers freedom from delays,

thefts, forgeries, settlement risks and paper work. This system works through depository

participants (DPs) who offer demat services and hold the securities in the electronic

form for the investor Sharekhan Depository services offers dematerialisation services to

individual and corporate investors.We have a team of professionals and the latest

technological expertise dedicated exclusively to our demat department, apart from a

national network of franchisee, making our services quick, convenient and efficient. At

Sharekhan, our commitment is to provide a complete demat solution which is simple,

safe and secure.

The services offered by Depository Participant

Convert your physical holding into electronic holding (which is called

"dematerialization" of securities)

Keep custody of your holdings in electronic form.

Transfer the shares in the electronic form from one account to another.

Facilitate pledge of your electronic securities.

Give electronic credit of new share allotments such as public issues, bonus, rights etc.

49 | P a g e
Convert your electronic holding into physical holding (which is called

"dematerialization of securities")

RESEARCH BASED ADVICE

Every investor’s needs and goals are different. To meet these needs, Sharekhan provides

a comprehensive set of research reports, so that one can take the right investment

decisions regardless of their investing preferences! The Research and Development at

Sharekhan is done at its Head office Mumbai.

The R&D department Head Mr. Hemang Jani forwards all the details regarding all

stocks and scripts to all the branches through Internet. At the end of each trading day

there is a Teleconference, through which the R&D department Head MR. Hemang Jani

talks with each Branch heads and discusses about each day’s closing position and shows

their predictions about next day’s opening position. The quarries regarding stock

positions and other relevant matter of the branch heads of each branch is being solved

through teleconference.

The various publications of Sharekhan viz. Derivatives Digest, Sharekhan’s Valueline,

Eagle eye, High Noon, Investor’s Eye, Commodities Buzz, Commodities Beat,

Commodity Trader’s corner, Sharekhan Xclusive, etc. are being prepared by the

research team of Sharekhan made up of highly experienced people from diverse field.

These all publication provides:

 In-depth analysis of the markets

50 | P a g e
  Analysis Before, During (live market updates) and After market

timings

 Special sector tracking reports sent regularly

ONLINE IPO

Online IPO (Initial Public Offering) is a new service started by Sharekhan for
providing the application form of any company’s issues of shares just like the TCS issue
can be subscribed by filling an online form to reduce the paper work and the fund
transfer facility is also provided to the clients for transferring the funds online. It is given
on its web-site for helping the clients who are not able to collect the forms manually and
the speed of filling and reducing the risk of misplacing of forms, not reaching in time,
etc.

51 | P a g e
52 | P a g e
 SWOT ANALYSIS
During this training at sharekhan, we had come to know the Strengths-Weaknesses-

Opportunities-Threats for the company and it is very useful for a company to analyze

them. Therefore, the SWOT analysis is presented here and the suggestions for

maintaining strengths and removing weaknesses are explained.

 Strengths:

 Well-maintained infrastructure.

 Dedicated, Intelligent and Loyal staff.

 On-line Trading products.

 Lowest brokerage and other charges w.r.t. Competitors.

 The best investment advice correct up to 70-90 % through dedicated

 research and reports.

 Wide product range to enable the clients to choose the best alternative.

 One of the best DPs in India.

 A positive image in the existing clients.

 Weaknesses:

 Less awareness in the market.

 Time consuming process for account opening, resolving the problems of the

customers, etc.

 Service quality is not maintained accordingly how they are promoted.

53 | P a g e
 Opportunities:

 Slope of stock market towards delivery based transaction.

 Large potential market for delivery and intra-day transactions.

 Open interest of the people to enter in stock market for investing.

 Attract the customers who are dissatisfied with other broker & DPs.

 An indirect opportunity generated by the market from its bullishness.

 Large untapped market in the Saurashtra region of Gujarat.

 Threats:

 Decreasing rates of brokerage in the market.

 Increasing competition against other brokers & DPs

 Poor marketing activities for making the company known among the customers.

 A threat of loosing clients for any kind of weakness of the company.

 Loosing the untapped market with the entry of the competitors.

54 | P a g e
 CHAPTER - 3
CONCEPTUAL
DISCUSSION

55 | P a g e
 CONCEPTUAL DISCUSSION

There has been a wide range of studies concerning financial sector reforms in general,

and capital market reforms in particular, since mid 1980s in India. This section

highlights certain important studies that are context relevant. Several studies such as

Sahni (1985), Kothari (1986), Mookerjee (1988), Lal (1990), Chandra (1990), Franscis

(1991), Ramesh Gupta (1991,1992), Raghunathan (1991), Varma (1991), Gupta (1992),

and Sinha (1993) comment upon the Indian capital market in general and trading

systems in the stock exchanges in particular and suggest that the systems therein are

rather antiquated and inefficient, and suffer from major weakness and malpractices.

According to most of these studies, significant reforms are required if the stock

exchanges are to be geared up to the envisaged growth in the Indian capital market.

Barua et al (1994) undertakes a comprehensive assessment of the private corporate debt

market, the public sector bond market, the govt. securities market, the housing finance

and other debt markets in India. This provides a diagnostic study of the state of the

Indian debt market, recommending necessary measures for the development of the

secondary market for debt. It highlights the need to integrate the regulated debt market

with the free debt market, the necessity for market making for financing and hedging

options and interest rate derivatives, and tax reforms. Cho (1998) points out the reasons

for which reforms were made in Indian capital market stating the after reform

developments. Shah (1999) describes the financial sector reforms in India as an attempt

at developing financial markets as an alternative vehicle determining the allocation of

capital in the economy. Shah and Thomas (2003) review the changes which took place

on India’s equity and debt markets in the decade of the 1990s. This has focused on the

importance of crises as a mechanism for obtaining reforms. Mohan (2004) provides the

rationale of financial sector reforms in India, policy reforms in the financial sector, and

56 | P a g e
the outcomes of the financial sector reform process in some detail. Shirai (2004)

examines the impact of financial and capital market reforms on corporate finance in

India. India’s financial and capital market reforms since the early 1990s have had a

positive impact on both the banking sector and capital markets. Nevertheless, the capital

markets remain shallow, particularly when it comes to differentiating high-quality firms

from low-quality ones (and thus lowering capital costs for the former compared with the

latter). While some high-quality firms (e.g., large firms) have substituted bond finance

for bank loans, this has not occurred to any significant degree for many other types of

firms (e.g., old, export-oriented and commercial paper-issuing ones). This reflects the

fact that most bonds are privately placed, exempting issuers from the stringent

accounting and disclosure requirements necessary for public issues. As a result, banks

remain major financiers for both highand low-quality firms. The paper argues that India

should build an infrastructure that will foster sound capital markets and strengthen

banks’ incentives for better risk management.

Chakrabarti and Mohanty (2005) discuss how capital market in India is evolved in the

reform period. Thomas (2005) explains the financial sector reforms in India with stories

of success as well as failure. Bajpai (2006) concludes that the capital market in India has

gone through various stages of liberalization, bringing about fundamental and structural

changes in the market design and operation, resulting in broader investment choices,

drastic reduction in transaction costs, and efficiency, transparency and safety as also

increased integration with the global markets. The opening up of the economy for

investment and trade, the dismantling of administered interest and exchange rates

regimes and setting up of sound regulatory institutions have enabled time. Gurumurthy

(2006) arrives at the conclusion that the achievements in the financial sector indicate

that the financial sector could become competitive without involving unhealthy

57 | P a g e
competition, within the constraints imposed by the macroeconomic policy stance.

Mohan (2007) reviews India’s approach to financial sector reforms that set in process

since early 1990s. Allen, Chakrabarti, and De (2007) concludes that with recent growth

rates among large countries second only to China’s, India has experienced nothing short

of an economic transformation since the liberalisation process began in the early 1990s.

Chhaochharia (2008) arrives at the conclusion that India has a more modern financial

and banking system than China that allocates capital in a more efficient manner.

However, the study is skeptical about who would emerge with the stronger capital

market, as both the country is facing challenges regarding their capital markets. Prasad

and Rajan (2008) argues that the time has come to make a more concerted push toward

the next generation of financial reforms. The study advocates that a growing and

increasingly complex market-oriented economy and its greater integration with global

trade and finance will require deeper, more efficient, and wellregulated financial

markets.

The survey and review of literature about the financial sector reforms in India reveals

that the reforms have been pursued vigorously and the results of the reforms have

brought about improved efficiency and transparency in the financial sector. The reforms

also brought into inter-linkage of financial markets across the globe leading to new

product development and sophisticated risk management tools. Derivatives in general

perform as an instrument to hedge the risk arising from movement in prices not only in

commodity markets but also in securities market. Bose, Suchismita conducted research

on (2006) found that Derivatives products provide certain important economic benefits

such as risk management or redistribution of risk away from risk-averse investors

towards those more willing and able to bear risk. Derivatives also help price discovery,

i.e. the process of determining the price level for any asset based on supply and demand.

58 | P a g e
These functions of derivatives help in efficient capital allocation in the economy. At the

same time their misuse also poses threat to the stability of the financial sector and the

overall economy. Routledge, Bryan and Zin, Stanley E of Carnegie Mellon University

conducted research on “Model Uncertainty and Liquidity” in year 2001. Extreme market

outcomes are often followed by a lack of liquidity and a lack of trade. This market

collapse seems particularly acute for markets where traders rely heavily on a specific

empirical model such as in derivative markets. Sen Shankar Som and Ghosh Santanu

Kumar (2006) studied the relationship between stock market liquidity and volatility and

risk. The paper also deals with time series data by applying “Cochrane Orchutt two step

procedures”. An effort has been made to establish a relation between liquidity and

volatility in their paper. It has been found that there is a statistically significant negative

relationship between risk and stock market liquidity. Finally it is concluded that there is

no significant relationship between liquidity and trading activity in terms of turnover.

Shenbagraman (2004) reviewed the role of some non-price variables such as open

interests, trading volume and other factors, in the stock option market for determining

the price of underlying shares in cash market. The study covered stock option contracts

for four months from Nov. 2002 to Feb. 2003 consisting 77 trading days. The study

concluded that net open interest of stock option is one of the significant variables in

determining future spot price of underlying share. The results clearly indicated that open

interest based predictors are statistically more significant than volume based predictors

in Indian context. All the existing studies found that the Equity return has a significant

and positive impact on the FII (Agarwal, 1997; Chakrabarti, 2001; and Trivedi & Nair,

2003). But given the huge volume of investments, foreign investors could play a role of

market makers and book their profits i.e., they can buy financial assets when the prices

are declining thereby jacking-up the asset prices and sell when the asset prices are

59 | P a g e
increasing (Gordon & Gupta, 2003). Hence, there is a possibility of bi-directional

relationship between FII and the equity returns. Masih AM, Masih R, (2007), had

studied “Global Stock Futures: A Diagstinoc Analysis of a Selected Emerging and

Developed Markets with Special Reference to India”, by using tools correlation

coefficients , granger’s causality test, augmented Dicky Fuller test (ADF), Elliott,

Rothenberg and Stock point optimal test. The Authors, through this paper, have tried to

find out what kind of relationship exists between emerging and developed futures

markets of selected countries. Kumar, R. and Chandra, A. (2000), had studied that

Individuals often invest in securities based on approximate rule of thumb, not strictly in

tune with market conditions. Their emotions drive their trading behavior, which in turn

drives asset (stock) prices. Investors fall prey to their own mistakes and sometimes

other’s mistakes, referred to as herd behavior. Markets are efficient, increasingly

proving a theoretical concept as in practice they hardly move efficiently. The purely

rational approach is being subsumed by a broader approach based upon the trading

sentiments of investors. The present paper documents the role of emotional biases

towards investment (or disinvestment) decisions of individuals, which in turn force stock

prices to move. Srivastava, S., Yadav, S. S., Jain, P. K. (2008), had conducted a survey

of brokers in the recently introduced derivatives markets in India to examine the

brokers’ assessment of market activity and their perception of benefits and costs of

derivative trading. The need for such a study was felt as previous studies relating to the

impact of derivatives securities on Indian Stock market do not cover the perception of

market participants who form an integral part of the functioning of derivatives markets.

The issues covered in the survey included: perception of brokers about the attractiveness

of different derivative securities for clients; profile of clients dealing in derivative

securities; popularity of a particular derivative security out of the total set; different

60 | P a g e
purposes for which the clients are using these securities in order of preference; issues

concerning derivatives trading; reasons for non usage of derivatives by some investors.

The investors are using derivative securities for different purposes after its penetration

into the Indian Capital market. They use these securities not only for risk management

and profit enhancement but also for speculation and arbitrage. High net worth

individuals and proprietary traders account for a large proportion of broker turnover.

Interestingly, some retail participation was also witnessed despite the fact that these

securities are beyond the reach of retail investors (because of complexity and high initial

cost). Naresh, G., (2006), studied the dynamic growth of the Derivatives market,

particularly Futures & Options and the perceived risks to the financial sector continue to

stimulate debate on the proper regulation of these instruments. Even though this market

was initially fuelled by various expert teams survey, regulatory framework,

recommendations byelaws and rules there is still a debate on the existing regulations

such as why is regulation needed? When and where regulation needed? What are

reasonable and attainable goals of these regulations? Therefore this article critically

examines the views of market participants on the existing regulatory issues in trading

Derivative securities in Indian capital market conditions.

61 | P a g e
 CHAPTER 3
RESEARCH
METHODOLOGY

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 RESEARCH OBJECTIVES

 To study investor perception and investment behavior of capital market

investors.

 To identify the problems faced by the investors while on market through

brokers.

 To study the investors satisfaction level for the various services provided

by the broker relationship.

 To get the brief knowledge of trading system in securities.

63 | P a g e
 RESEARCH DESIGN:

Descriptive Research Design

Descriptive research is a study designed to depict the participants in an accurate way.

The three main ways to collect this information are: Observational, defined as a

method of viewing and recording the participants. Case study, defined as an in-depth

study of an individual or group of individuals.

Data Source

Primary Sources

These include the survey or questionnaire method as well as the personal interview

methods of data collection.

Secondary Sources

These include books, the internet, company brochures, product brochures, the company

website, competitor’s websites etc, newspaper articles etc.

Data collection instrument was structured schedule.

Questionnaire:-Schedule reservation filled with data by asking questions from

respondents.

Sample Design:-

Sample Unit:- Customer of Share Khan in Lucknow City.

Scope of the study: - Scope of the study is Limited to Lucknow City.

Time Frame: - 45 Days

Sampling Frame: - Lucknow City

Sample Technique: Simple Random Techniques

Sample Size: 100

64 | P a g e
 JUSTIFICATION OF THE PROJECT

The company was interested to find out the investor perception and the problems faced

by the general investor while dealing with the brokers. The company was also interested

to find out the common problems as faced by general investor while in share market and

the satisfaction level for the services provided by the brokers to the investor.

65 | P a g e
 CHAPTER-4
DATA ANALYSIS
&
INTERPRETATION

66 | P a g e
 DATA ANALYSIS & INTERPRETATION
DEMOGRAPHIC FINDINGS
AGE GROUP

Age group(years) % of respondents

Below 20 0
20-35 15
36-50 36
51-65 30
Above 65 19

90

80

70

60

50
Series 3
40

30

20

10

0
Below 20 20-35 36-50 51-65 above 65

Out of total 200 respondents, below 20 years of age were none, 39% of the respondents
falls in the age group of 36-50 years where as 29% were in the age group of 51-65 years
and next 16% falls in the group of more than 65 years.

JOB PROFILE
Category % of respondents
Service 47

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 Business 40
Others 13

No. of respondents
26

Service
Business
94 Others

80

Out of total respondents , most of respondents were from service class and 40 % were
during business and rest of the respondents include retired person, other people, other
professional’s students etc.

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ANNUAL INCOME (IN LACS)
Income group % of respondents
Less than 1 lac 2
7
1-5 lacs 4
1
More than 5 lacs 2
9

No. of Respondents

Less than 1 lac

1-5 lacs
More than 5 lacs

Most of the respondents belong to the income group of 1-5 lacs followed by the
respondents belong to income group of more than 5 lacs which is 28% of total
respondents and rest of Respondents belonging to the income group below 1 lac.

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EDUCATIONAL BACKGROUND:-
Qualification % of respondents
Under graduate (U.G) 25
Graduate 43
Post graduate(PG) 26
Others(O) 6

90

80 79

70

60
53 55
50
Column2
40

30

20
13
10

0
Under graduate Graduate Post graduate Other

Most of the respondents were graduate and 26% were post graduate and rest 6% belong
to other category.

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When the respondent were asked their preference of investment, is cash market ,
derivatives market or both, the following respondents were obtained .

No. of respondents
120 103

100 76
80
No. of respondents
60

40 21

20

Out of 200 respondents amount 52% respondents their fund in cash and derivative
market, 38% investment is only cash market and rest is derivative market.

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When the respondents were asked about the time period for which they are
investing, the following responses were obtained.

No of respondents

25

Less than 1 year

78
1-5 year
more than 5 year

97

Out of total 200 respondents 12% respondents were new investors, 48% were investing
for 1-5 year and rest were for more than 5 year.

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When the respondents were asked about proportion of income they invest in shares
and securities, the following responses were obtained.

No. of respondents
31 47

Up to 5%
5to 10 %
10 to 25%
more than 25%

63

59

When the respondents asked about the proportions of income they invest in shares and
securities, it was found that most of the (32%) respondents invest 10-25% of their
income, 30% of respondents invest 5-10%, 24% of them invest up to 5% and rest more
than 25%.

73 | P a g e
When the respondents were asked trading frequency, the following responses were
obtained.

No. of respondents
131
140

120

100
No. of respondents
80

60 49

40
13
20 7

0
Daily Monthly Weekly According to the market

On analyzing the trading practices it was found that majority, 65% of the investors trade
according to the market 25% trade daily followed by weekly traders 7%.

74 | P a g e
When the respondents were asked about trading advice , the following responses
were obtained.

No. of respondents
120
98
100

80

60
37 35 No. of respondents
40
19
20 11

0
ea n ice ice r
id tio v dv he
n o p ad a Ot
ow t' s
en
d er
ur er fri ok
yo Ex
p Br
On On

Regarding the decision of amount and investment area, 98 out of 200 takes the idea on
their own and 37 on expert’s opinion, 35 on brokers advice, and 19 on friends advice.

75 | P a g e
When the respondents asked whether any professional advice is available to them
when required, the following responses were obtained.

No. of Responding

19

73 Yes
No
Sometime

108

Out of 200, 108 respondents said that they don’t and professional advice , 73 said that
they get it sometimes, and 19 of them get advice when needed.

76 | P a g e
When the respondents were asked about the motive for making investment in
capital market, the following responses were obtained.
Option Rank I Rank II Rank III
Regular income in 113 27 60
the form of
dividend/ interest
Tax planning 55 26 119
Capital gain 120 25 55

Calculation of weight, (Rank I=3, Rank II=2,Rank =1)

Option Rank I Rank II Rank III

Regular income in 339 54 60

the form of
dividend/ interest
Tax planning 165 52 119
Capital gain 360 50 55
400 339 360
300
200 165
119
100 54 60 52 50 55
0

Rank I
Rank II
Rank III

On analyzing motives for investment in capital market it was found that capital gain
was the most important factor that influences investment decisions followed by regular
income and tax planning.

When the Respondents were asked about the factors they consider while selecting a
broker, the following responses were obtained.

77 | P a g e
 Option Rank I Rank II Rank III
Brokerage 129 59 12
Frequent payments 112 43 45
& transfer of
securities
Less advance 59 79 62
margin
Credit limits 65 46 89
Personal Relations 79 24 97

Calculation of Weight, (Rank I=3, Rank II=2, Rank III=1)

Option Rank I Rank II Rank III
Brokerage 387 118 12
Frequent payments 336 86 45
& transfer of
securities
Less advance 177 158 62
margin
Credit limits 195 92 89
Personal Relations 237 48 97

387
400 336
350
300 237
250 177158 195
200
118
150 86 92 89 97
45 62 48
100
12
50
0 Rank I
Rank II
Rank III

78 | P a g e
79 | P a g e
When The respondents were asked about the difference they feel between ring
trading (order form of trading) and online, the following responses were obtained.
Differences No. of respondents

The later is more easier than the former 59

The later is more transparent than the 106
former
The later is faster easier than the more 15
farmer
The later is more accurate than the former 18
Others 2

No. of respondents
120 106
100
80 59
60
40 18
20 15
2
0
er er er er rs No. of respondents
rm rm m rm he
o o or o ot
ef ef ef e f
th
n
th or th
an ha e m an
r th tt th e th
sie en an at
a ar th ur
ee ns
p
ier ac
c
or as
m tra e or
e
r is re ter m
o as s
lat
e m
sf ri
e r is i late
Th e er
e lat lat Th
e
h he
T T

About 53% Respondents said that online trading is more transparent then the older ring
trading system where as 30% investors feel online trading is more easier understanding
the mechanism of trading, 7.67% Respondents feel the later is more faster, 8.66% feel it
is more accurate.

80 | P a g e
When the Respondents were asked whether they are aware of different charges by
their broker , the following responses were obtained.
Charges No. of respondents
Yes No
Turnover/Transaction 197 3
Demat charges 184 16
Service Tax 179 21

No. of respondents

179
197

Turnover/Transaction
Demat charges
Service tax

184

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When the respondents were asked whether they are satisfied with the different
charges by their brokerage, the following responses were obtained.

No. of Respondents

124
140

120

100
No. of Respondents
80
51
60
25
40

20

0
Satisfied Somehow satisfied dissatisfied

When the Respondents were asked to rate the service provided by their broker, the
following responses were obtained.
Service Good Fair Poor
Phone service 33 50 117
Brokerage 122 67 11
Conformation of 53 23 124
traders
Professional advice 28 60 112
Relaxation in 26 85 89
advance margin
Payment/delivering 50 42 108
of securities
Staff behavior 31 124 45

82 | P a g e
 Service Good Fair Poor Total
weight
Phone service 99 100 117 316
Brokerage 366 1344 11 511
Conformation of 159 46 124 329
traders
Professional advice 84 120 112 316
Relaxation in 78 170 89 337
advance margin
Payment/delivering 150 84 108 342
of securities
Staff behavior 93 248 45 386

Total Weight
600
511
500
386
400 329 337 342
316 316
300
200
100 Total Weight
0
ice ge rs e in es r
rv era ade dvic a rg r iti avio
se ok tr la m cu h
e Br of na ce se be
on is o n f ff
Ph on s va go St
a
ati o fe ad r in
rm Pr in v e
nf
o
tion d eli
Co a t/
e lax m
en
R y
Pa

A remarkably high dissatisfaction was there among the investors for the brokerage
charged by their broker, most of them are dissatisfied with the staff and relation in
advance margin.

83 | P a g e
 CHAPTER 5
CONCLUSION
/FINDINGS

84 | P a g e
 CONCLUSION

 Business class investors more proportion of their income in shares & securities as

compared to service class investors.

 Majority of investors trade according to expert the daily traders.

 Majority of investors take the decision on investment (where/what amount to invest) on

their own idea and some rely on expert’s opinion and broker’s advice.

 In cash segment, capital gain is the prior motive of the investors followed by regular of

the investors followed by regular income and tax income and tax planning.

 The satisfaction level regarding services by brokers of phone service & professional

advice is very low.

 Professional advice available is not adequate regarding investment in secondary market.

 Most of the investors feel that online trading is more transparent than the older form of

trading (Ring trading).

 Most of the people are aware of different charges charged by the brokers (Demat

charges, transaction charges, service charges, service charges etc.).

 While selecting a broker, brokerage & frequent payments were considered as main

factors followed by personal relations.

 Most of the investors are not satisfied with “phone services” provided by the brokers,

 The major problem faced by the investors is of broker’s attitude towards small investors

is not same as with the big investors.

 Another major problems faced by the investors is to decide where/what amount is

invested.

85 | P a g e
 FINDINGS

Job Profile and Investment Proportion

Out of 94 services class investors, about 40% invest 10-25% of their total income in

shares and securities, 22% invest 5-10%,228% invest up to 5% where as only 10%

invest more than 25%. Out of 80 investors belonging to business class, 26% invest more

than 25% of their income in shares and securities where as 30.15% invest 10-25% and

rest invest 5-10. Out of 26 respondents having job other profession, 73% invest up to 5%

where as rest invest 5-10% of the total income/earning in shares & securities.

Annual Income & Investment Proportion

Out of 57 respondents having annual income than 5 lacs, 45% invest more than 25% of

their income in shares and securities, 34% invest 10-25% and rest invest 5-10% in

shares and securities. In 1-5 lacs annual income category 63% invest in 10-25%, 12%

more than 25% and rest invest 5-10% of their earnings in shares and securities.

Respondents having annual income up to 1 lac, mostly invest only up to 5-10% of total

income in shares & securities.

Age Group and Motive of Trading

While trading in each segment, the main motive of the respondents Is the age group of

51-65 years and above 65 years was regular income in the form of dividend/interest.

About 81% of the total respondents in these capital gain and 2 nd Tax Planning. 64%

respondent in the age group of 36-50 years have given priority to regular income,

followed by capital gain & Tax planning.

86 | P a g e
 CHAPTER 6

RECOMMENDATION

87 | P a g e
 RECOMMENDATION

 Professional advice should be made available in the city.

 Brokers should transfer the deliveries/payments to the investors in time.

 Brokers should deal all the investors in same respect.

 The phone service should be made prompt.

88 | P a g e
 CHAPTER 7
LIMITATIONS OF THE
STUDY

89 | P a g e
 LIMITATIONS OF THE STUDY

 The number of respondents include for the study is limited due to the time

constraints.

 All the findings and observations made in this study are purely based on

respondents answer; the response may be due to personal factor.

 Since the sample is very small when compared to the universe the findings and

suggestions made are not applicable to the universe.

 This study has contained only Lucknow population.

 Some of the respondents were reluctant to share information with the researcher.

90 | P a g e
BIBLIOGRAPHY /
REFERENCE

91 | P a g e
 Bibliography
BOOKS

1. The Mindful Investor, by Maria Gonzalez and Graham Bayron.

2. Understanding Indian Investors, by Jawahar Lal.
3. Security Analysis and Portfolio Management by Punithavathi Pandian.
4. Investment Analysis and Portfolio Management, by Prasanna Chandra.

RESEARCH PAPERS

An Empirical study on Indian individual investor’s behaviour, by Syed Tabassum

Sultana.

WEB SITES

WWW.NSEINDIA.COM
WWW.BSEINDIA.COM
WWW.SEBIINDIA.COM
NFCM, DEALERS MODULE HAND BOOK
RESEARCH METHODOLOGY
KOTHARI C.R. –EDITION 2000
WWW.GOGGLE.COM
WIKIPEDIA

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ANNEXURE

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 QUESTIONNAIRE

Name:……………………………………………………………………

Address:…………………………………………………………………

Phone No:………………………………………………………………

Age: ( ) 20 to 35 ( ) 36 to 50 ( ) 51 to 65 ( ) 36 to 50 ( ) more than65

Job profile: ( ) Govt. Servant ( ) Business ( ) Others

Annual Income (in lacs): ( ) less than 1 ( )1-5 lacs ( ) More than 5 lacs

Club Membership: ( ) Yes ( ) No

Qualification:

Under Graduate Graduate Post Graduate Others

(1) Where do you invest your funds?

(a) Only Cash/Capital Market

(b) Only Derivative Market

(c) Both ( )

(2) How much share or your income do you invest?

(a) Up to 5% (b) 5-10%

(c) 10-25% (d) More than 25% ( )

(3) For long you have been dealing in derivatives market?

(a) Less than 1 year (b) 1-5 year

(c) More than 5 year ( )

(4) Are you aware of Derivatives like?

94 | P a g e
 (a) Options ( b) Future in shares

(c) Future in Index ( )

(5) Where do you invest in derivative market ?

(a) Options (Call Option, Put Option)

(b) Future in shares and Index

(c) Both ( )

(6) Whom do you Consult before taking decision about the investment ?

(a) On your own idea

(b) Expert’s Opinion

(c) On Friend’s/Family members advice

(d) Broker’s advice

(e) Other source ( )

(7) How often do you trade ?

(a) Daily (b) Weekly

(c)Monthly (d) According to Market ( )

(8) Whether the professional advice is available to you ?

(a) Yes (b) No (c) Sometimes ( )

(9) What are your motives for making investment in shares and securities in Derivatives

Market (Please Rank) ?

(a) Risk Management

(b) High Volume transaction with less margin

(c) Low Brokerage as compared to cash delievery segment

(d) Portfolio/Index/Basket Trading

(e) More Opportunity for speculation ( )

(10) Which factors influence you while selecting a broker (Please rant up to 3 ) ?

95 | P a g e
 (a) Brokerage

(b) Frequent Payment

(c) Less advance margin

(d) Credit Limits

(e) Personal Relations ( )

(11) Are you aware of the different charged by your broker ?

(a) Turnover/Transaction charges

(b) Service Tax

(c) Others ( )

(12) What is your satisfaction level pertaining to different charges charged by your

broker ?

(a) satisfied (b) Neutral

(c) Dissatisfied ( )

(13) What are the benefits of trading in derivative segment over the cash segment ?

(a) Basket trading (b) Low Brokerage

(c) Short-Sale for a longer period

(d) Option (CA,PA)available which provides calculation risk( )

(14) Rate the services Provided by your brokers ?

Service Good Fair Poor

Confirmation of trades

Phone Service
Brokerage
Professional advice

Relaxation advance

margins
Payment
Staff Behavior

96 | P a g e
(15) Tick the problems faced by you ?

(a) Depending the initial amount of investment

(b) To trade where to invest

(c) To Complete Paper Work

(d) Delay in Payment

(e) Brokers do not deal all the investors in same respect

(f) Lack of knowledge about the rules and regulation of SEBI( )

(16) Any other problems faced by you:

……………………………………………………………………………………………

……………………………………………………………………………………………

……………………………………………………………………………………………

……………………………………………………………………………………………

……………………………………………………………………………………………

……………………………………………………………………………………………

………………………………………………

Suggestion, if any:

……………………………………………………………………………………………

……………………………………………………………………………………………

……………………………………………………………………………………………

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……………………………………………………………………………………………

…………………………………………………………

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