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“PADMAKSHI FINANCE SERVICES”
KAKATIYA UNIVERSITY For the Award of the degree of MASTER OF BUSINESS ADMINISTRATION By
CH.ANJANEYULU (H.T.NO: 10104C1052)
Under the guidance of
Mrs. V. SRUJANA DEVI Asst. Professor
Department of commerce & business Management
VANI NIKETAN INSTITUTE OF MANAGEMENT STUDIES
(Affiliated to Kakatiya University) Mukarampura, Karimnagar – 505001, A.P (2009-2011)
I here by declare that this project work entitled “ONLINE TRADING” of the
PADMAKSHI FINANCE SERVICES in an original work done under the guidance of Mrs. Srujana Devi Asst. Professor of M.B.A Department, Vani niketan institute for management studies. It has not
been submitted either in part or in full for any degree or diploma of any university.
Date : Place : Karimnagar
I am indebted to the management of Vaniniketan Institute of Management Studies, Mukarampura, Karimnagar. For their guidance & Suggestions without which the study would not have been completed. I can grateful to Prof. Gurajala Sudarshan, Director, Vaniniketan Institute of Management Studies, Mukarampura, Karimnagar for his encouragement & Co-operation for the successful completion of the project I can thankful to my guide Mrs. V. Srujana Devi Assit. Professor for his meticulous reading of typed material and co-operation for early completion of the project. I express a sense of gratitude to my lectures and other members of the Institute for their encouragement and co-operation for the success of project. It is my privilege to acknowledge and express a deep sense of gratitude to my parents, family members and friends for their constant help and encouragement during the course of this project.
CH. ANJANEYULU H.T.NO:10104C1052
30 31 .49 50.25 CHAPTER II OBJECTIVES METHODOLOGY OF THE STUDY NEED AND SIGNIFICANCE OF THE STUDY SCOPE OF THE STUDY LIMITATIONS OF THE STUDY CHAPTER III PROFILE OF PADMAKSHI FINANCIAL SERVICES CHAPTER IV DATA ANALYSIS & INTERPRETATION CHAPTER V SUGGESTIONS & CONCLUSIONS BIBLIOGRAPHY 26 .59 60 – 62 63 .64 4 .CONTENTS CHAPTER I INTRODUCTION 01 .
INTRODUCTION 5 .
And draw backs of manual trading makes to introduce the online trading process ONLINE TRADING Before getting in to the online trading we should know some things about the internet and E-commerce. delays in transfer and irregular Settlement. volume and value of securities in the Indian capital market exposed the limitation of handling and dealing in securities in physical / paper mode. 6 . It allows direct ubiquitous links to anyone anywhere and anytime to build up interactive relationship. The Shortcomings of the market became manifest in terms of bad deliveries. What is internet? Internet is a world wide self governed network connecting several other smaller network and millions o computers and persons to mega sources of information this technology shrinks vast distances accelerating the pace of business reform and revolutionizing the way companies are managed.INTRODUCTION The rapid growth in number. The National “Stock Exchange (NSE) followed by Bombay stock Exchange (BSE) in 1995 first introduced electronic medium of trading (online trading).
It is expected to bring changes in every functional area of business activity including management and financial services. It helps conduct traditional commerce through new of transferring and processing of information. Information is electronically transferred from computer to computer in an automated way. Internet can change the nature and capacity of sock broking business in India. It offers stock trading at a lower cost.defined the method of communication work study education business leisure health trade banking commerce and what not it is virtually changing every thing and we are living in dot.Commerce refers to the paperless exchange of business information using electronic data inter change electronic technologies. It not only automates manual processes and paper transactions but also helps organization move to fully electronic environment and change the way they operated. 7 . E-commerce Electronic commerce is associated with buying and selling over computer communication networks.A combination of time and space called the internet promises to bring unprecedented changes in our lives and business.com age. In India growth of internet is recent times. E. Internet or net is an interconnection of computer communication networks spanning the entire globe crossing all geographical boundaries. Net being an interactive two way medium through various websites enables participation by individuals in business to business and business to consumer commerce visit to shopping arcades games etc. It has re. In cyber space even the information can be copied downloaded and retransmitted. The use of internet has grown 2000 percent in last decade and is currently growing at 10 percent per month.
It manages the resources of the computer system in a fair and efficient manner. INVESTOR STOCK BROKERS INVESTORS SATELLITE LINK DEPOSITORY REGISTAR/COMPANY DEPOSITORY PARTICIPANT STOCK BANK EXCHANGE 8 . The computers are either workstations of individual office works or serves where large databases and information reside.PC’s and network attempts to introduce banks of the tools and technologies required for electronic commerce. Network connects both categories of computer the various operating systems are the most basis program within a computer. E.TRADING INTERFACE Consist the following link used in the e-trading interface.
tax planning. Stockbrokers will offer on their sites such as live portfolio manager live quotes market research and attract more investors. 2. The actual definition of “online trading” is as explained below: “Online trading is a service offered on the internet for purchase and sale of shares. In the real world you place order on your stockbroker either verbally or in a written form (fax).” In online trading you will access a stockbroker’s website through your internet enabled PC and place orders through the broker’s 9 . The net brings data to the investor on online and net broking enables him to trade on a click of mouse. Brokers will offer on line broking and relationship management by providing and offering analysis and information to investors during broking and nonbroking house based on their profile and needs i. portfolio management.e. 3. on-line asset allocation. Once investors learn to research on line they will demand more market information. insurance services etc. Now information has become easily accessible to both retail as well as big investors. EVOLUTION OF BROKING IN INDIA:The evolution of broking in India can be categorized in three phases1. Brokers (now e-brokers) will offer value management or services like initial public offering online. financial planning. customized services.Now we can enter in to the concept known as online trading In the past investors had no option but to contract their broker to get real time access to market data. And enables the investors to take better and well considered decisions.
These orders are routed to the stock exchange without manual intervention an executed thereon in matter of few seconds. The SEBI committees on internet based securities trading services has allowed the net to be used as an order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. Under the ORS the client enters his requirements (security quantity price buy/sell) on broker’s site.internet based trading engine. REQUIREMENTS FOR NET TRADING:For investors: • • • • • • • Installation of a computer with required specification Installation of a mode Telephone connection Registration for on-line trading with broker A bank account Depository account Compliance with SEBI guidelines for net trading 10 . Orders are communicated or the stock exchange through website. The net is used as a modem of trading in internet trading. IN INDIA: Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading.
Bank manager’s signature along with bank’s seal manager registration code on photograph. 11 .The following should be produce to get a demat account and online trading account: • • • • • • • As identity proof &address proof produce the following things: Voter ID card Driving license PAN card (in case of to trade more then 50000) Ration card Bank pass book Telephone bill Other requirements which are necessary First page of the bank pass book and last 6 months statement.
They are checked electronically against the clients account and routed electronically to the appropriate exchange for execution by the broker.For stock brokers: • • • • • • • • • Permission from stock exchange for net trading Net worth of Rs. and buy/sell) in broker’s site. The SEBI committees on internet based securities trading services has allowed the net to be used as an order Routing System (ORS) through registered stock on behalf of their clients for execution of transaction. price. Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. quantity. Under the order Routing System the client his requirements (security. Orders are communicated to the stock exchange through website.50 lac Adequate back-up system Secures and reliable software system Adequate experienced and trained staff Communication of order (trade confirmation to investor by e-mail) Use of authentication technologies Issue of contract notes within 24 hors of trade execution Setting up a website The net is used as a medium of trading in internet trading. The client receives a confirmation on execution of the 12 .
13 . The customer’s portfolio and ledger accounts get updated to reflect the transaction. • Margin account: where orders can be placed against stocks to increase purchasing power. • Cash account: where funds have to be available prior to placing the order. Order can be using place order window of the website. The system permits only a registered client to log I using user id and password.order. He should also have demat account and bank account. ONLINE TRADING HASSLED TO ADDITIONAL FEATURES SUCH AS: • Limit/stop orders: orders that can be go unfilled but there is an extra charge for this leeway facility since one need to hold a price. • Market order: orders can be filled at unexpected price but this type is much more risky since you have to buy stock at the given price. The user should have the user id and password to enter into the electronic ring.
Now they can invest in stock and stock index options mutual funds individual government and even insurance. • Online trading has allowed locating themselves where they want as physical location is not an issue anymore. Thus we have access to a lot more information.ADVANTAGES OF ONLINE TRADING: • Online trading has made it possible for anyone to have easy and efficient access to more reports and charts than it was previously possible if one went to any broker office. • Online trading gives control to individual and they can exercise it over accounts thus comprehend what is going on when they trade. • Individual can invest in a variety of products like earlier when people bought bonds mutual funds and stock for long-term basis and sat on them. Companies can establish themselves according to their gains and losses for instance where tax (sales and value added taxes) is best suited to them. 14 . It is like going back to school and re-educating on self on how to trade online. • Individual benefit by saving comparatively a lot more when trading online as the cost per trade is less. • Online trading has let room for smaller organization to compete with multinational organizations since is no longer a legit issue. Being online does not identify the size of any particular organization therefore this additional power to the underdogs.
They are independent. The immediate impact will be completion and benefits will accrue to the investors. • It will lead to brokerage commissions going down and brokers striving to increase business afloat. • It is the interest of the small investors because rates will be available immediately across the country execution will be immediately across the country and execution will be immediate. INVESTORS REASONS TO TRADE ONLINE: • They have control over their accounts can make their own decisions and don’t have to give reasons for their actions. A lot of information is online so they can keep up-to-date with what is happening in the trading world. • • • They have a reason to participate in the market and learn about it.• Online trading has made it possible for one fid investment option that were not available on a regular basis like offbeat net stock eccentric unique things and trading in global market. 15 . • • It will give investors a greater choice and better realization. It interesting cheap easy fast and convenient.
• Chances are that one has no idea who one is dealing with on the other end. 16 . This is harmful since it leaves brokerages wide open to sensitive data.• Investor will now go to place which have better trading conditions and also members to offer them better facilities. In short do the home work and be prepared. • Individuals are restricted to first –hand financial guidance. • They have access to numerous tool to invest and can create their own portfolio. • Online trading has left individuals open to too much information. HERE ARE THE POSSIBLE DISADVANTAGES: • When network crashes there will be problems and delays due to a large influx of rapid online trading criteria. This simple means that the individual is he/she alone to. • According to a study conducted by Mary Rowland careful investor: is online trading bad for your portfolio the more one trades the less returns one gets meaning that an addicted trader gets carried away online and being to trade for too much which cause losses for him/her. so it is advisable to gather all the possible information about the party one is dealing with. • A tax (sales tax and value added tax) evaluation becomes an issue especially when you are trading internationally.
SEBI has stipulated that all the stock exchanges in India must have same trading period. Monday to Friday is the trading period in all the exchanges. BROKER WORK STATION: At the broker work station the best BBO(Bridge Base Online) the last trading price the day’s opening price previous day’s closing price highest and lowest price the weighted average price the total trade value and total trade value will be available continuously as the BBO for each scrip.• The study also shows that smart investment is better then fast investment.M. on all 5 days of the trading period.Other information will be available on query from the BWS (Broker work station). Simply put speed should be considered to be a major factor would lead any online trader to think they know the market. It seems that the middleman has been removed but that is not so.M. • Individuals think that they are trading with the market directly and what they are doing but the truth is that even through technology has takes over the basis rules of trading are the same. These include top 17 . When the individuals click on the mouse his trade goes through a broker. TRADING SESSION Trading timings are from 9:00 A. The communications online pertain to the intermediary. • There is a need for more effective communication links over the internet and the ability of the server to deal with a large volume of visitors. to 3:30 P.
ORDERS Orders can be done at a time or in a batch mode. Each trade involves two brokers and respective trades who sent the order. The BWS (Broker work station) as a powerful profiling future which enables each trade to customize his/her screens layouts as is convenient profiles may be set at the BWS (Broker work station) by the individual users for the scrip’s that he/she is interested in watching columns of information available ect. 18 . Trader-wise scrip wise net position client wise net position top scrip by the volume/value market summary etc. The order will then be taken up for matching if it is a buy order the system tries to find a sell order which fits the requirement of the buy order when such match is found a trade gets exchange. If accepted at the CTS it will be added to the local pending order book.gainer/losers of the day.Broker can visualize his personal details relating to trade done he can have scrip wise details sub broker wise details and client wise details and can also take the point of daily volume reports and adjustment reports. Both these trades are informed of the trade being executed at their respective BWS. The submitted order will be accepted at the CTS after validation if found any invalid reason the order is return back to the BWS with the appropriate error message. Brokers are also provided with information relating to the companies in the +-matter of book closure Dividend declarations resolutions in board meeting information about liquidated companies company report ect.
19 . The order is executed if no match is found the order is cancelled on the last day of settlement period. This is also called as carry forward order like GFT broker has to select the option of GTC for the order. GOOD TILL CANCELLATION: This order is forwarded to the last trading day of that settlement period. If the order finds match with in the trading settlement period. If the match is not found then after trade time the order gets cancelled that day. If the correct match is not found order gets cancelled automatically and new quotation has been placed the next day. Next day he has to place a new order. Order sent by the brokers is two types: • • Good For the Day (GFD) Good Till Cancellation(GTC) Good for the Day This also called as a market order for an order if the member selects the deal as good for the day the order is treated as market order. For example if a member wants to purchase 1000 shares of satyam info @400 each through Good for Day order.At the BWS the trade is added to the local trade book land the pending quantity decreased by the trade quantity in the local pending order book. This order is not carried forward to the next settlement period. If a “best bid” founds match with “best order” then the transaction executes.
if Monday is trading day then Wednesday is the paying day. SURVEILLANCE: Surveillance can be done during the continuous trading session for monitoring the broker scrip and the market this is referred to as online may be used for analysis.delivery the securities will go for auction. In case on non. Finally the settlement is made by means of delivering the share certificates along with the transfer deeds. Settlement can done in the following way. The buyer then fills up the certificates fills up the particulars in the transfer deed. basis i. For the continuous trading session the surveillance workstation user can set up a member of alerts scrip broker or index the workstation profile will be automatically reported to user. The transferor (or the seller) duly signed transfer deed.SETTLEMENT OF TRANSACTIONS: Clearing of transaction in the form of shares and cash is called settlement which was held in clearing house of stock exchange (for example KOTAK SECURITIES is a clearance house is member in NSDL (National Securities Depository Limited).e. Analysis and monitoring reports that can generated. It bears a stamp of the selling broker. • Rolling settlement: Under this rolling settlement the trading is on “T+2”. • Spot settlement: Under this method the delivery of securities and payment for them are affected on the day of the contract itself. Buyers will take the delivery of shares through the Depository Participants (DP’S) like KOTAK SECURITIES and others. 20 .
e. This is the reason for which the overall trading as come down. The main reasons for declining volume of trading are: Bearish market: The poor performance in the online market segment can be attributed to lack of bull run in the stock market. There are three messages windows i. 21 .The market event list will be available to the BWS user. During the continuous trading session details of the scrip broker or index that pass the alter or violate their circuit breakers are displayed on message window. Almost ever since internet trading has started the markets have remained bearish. However two years down the line we find the system as failed to deliver up to potential. PROBLEM AREAS: When internet trading was first launched in Feb. This relationship between the mood of the market and the internet in trading indeed gets reflected in the volumes. one for each scrip and index different colors indicate the importance and BWS user is modified when BWS user is denied access to the system a number of are available for the SWS user. 2000 the stock markets were experiencing an unprecedented boom and it held out a lot of promise.
Poor penetration of the internet: Besides the bearishness in the equity market another reason for low acceptance of net trading could be poor penetration of the internet. Many times at particularly at places other then Mumbai.Deep penetration of the internet. 22 . Poor internet connectivity: The Indian context the quality of internet connection also comes into play for determining the reasons for the lack in response. In India it is a fact that internet has not been able to spread it’s tentacles in rural areas and small towns. The very basis of net trading is based on two factors: 1. sudden stoppage of electricity result in disconnection. Here we have connectivity problems and there are instances of clients panicking as they could not execute their trades.An equity market in good shape. 2.
Which have gone down. The global recession has also dampened the mood of the stock market. Where the stock exchanges terminals are kept for their use. For active traders doing online trading he has to remain connected all the time and the cost of connecting through dialup can work out to Rs 3500 per month which is over above the brokerage and other service charges. This is the reason offering online trading facility allows the clients to the conventional system as well in order to retain them. Although the US economy is showing sings of recovery but tangible outcome is yet to be felt.This sentiment has got reflected in the stock markets. A part from a dealing room most broking houses have a separate room for the clients. 23 . Low investor confidence: Investor confidence in the country has been badly hurt due to the escalating IndoPak tensions. A Costly affair: Other then the technological hassles there is an element of cost as well. However in case of internet trading the chain is quite long as it involves a client an internet service provides server stock exchange depositor and a broker and a problem can rise up at any stage of the chain breaking down the entire system.Long supply chain: Incase of conventional or offline trading the chain is small as the clients directly interact with the brokers.
MANUAL TRADING TRADING PROCEDURE BEFORE INTRODUCTION OF ONLINE TRADING:Trading on stock exchange is officially dined in the trading ring.DISADVANTAGES OF OUTCRY SYSTEM: • • • It lacks transparency. Hence various stages have to be completed in executing a transaction at a stock exchange. The steps involved in this method of trading have given below: 24 . In the trading ring the space is provided for specified and non. speculation and mal practices more. • In audibility was another disadvantage of the outcry system. The time gap between many of the trading operations used to be met quickly and easily. Non –members are not permitted to enter in to stock market. They carry a sauda book or confirmation memos duly authorized by the exchange and carry a pen with them. The stock exchanges operations are floor level are technical in nature.specified sections the members and their authorized assistants have to were a badge or carry with them on identity card given by the exchange to enter the trading ring. The scope of manipulation. • Signal were more important in the outcry system any member who could not interpret the buy/sell signal correctly often landed himself in disastrous situation.
25 . Dematerialized shares do not have any distinctive or certificate number. The company or its R&T agent would confirm the Demat request on its receipt from the DP (Depository) to reduce risk of loss in transit. Most of the active scrip’s in the market including all the scrip’s of S&P CNXNIFTY and BSE SENSEX have already joined NSDL. This list is steadily increasing.DEMATERLIZATION:Dematerialization is the process by which physical certificates of an investor are converted to equipment number of securities in electronic from and credited in the investor account with his DP (Depository). These shares are fungible –which means that 100 shares of a security are the same as any other 100 shares of the security. Briefly the process is as follows: after completion of transfer the investor gets the option to dematerialization such shares. Investor’s willing to exercise this option sends a Demat request along with the option letter sent by the company to his DP (Depository). Odd lost shares certificates can be dematerialized. Dematerialization can only be done to those certificates which are already registered in your name and belong to the list of securities admitted for Dematerialization at NSDL. The investor has to ensure that he marks “submitted for Dematerialization” on the certificates before the shares are handed over to the DP (Depository) for demat. In order to dematerialization his certifies an investor has to first open an account with a DP (Depository) and then request for the dematerialization request form which is DP (Depository) and submit the same along with the share certificated .
1 per borrower in case of loans against physical securities. The need for further follow-up with your broker for the shares returned for company objection.5%in stamp duty. • You can also expect a lower interest charge for loans taken against Demat shares as compared to internet for loans against physical shares. • In case of transfer of electronic shares you save 0. • RBI has also reduced the minimum margin to 25% for loans against dematerialized securities as against 50% for loans against physical securities.Dematerialization normally takes about fifteen to thirty days. in turn saving the cost and wastage of time associated with follow up for rectification. You avoid the cost of courier/notarization. 26 . To get back dematerialized securities in the physical form request DP (Depository) for Rematerialization of the same is made. BENEFITS OF DEMAT:Transacting the depository has several advantages like • It reduces the risk of bad deliveries.5%by quite a few brokerage firms. Rematerialization is the process of converting electronic shares into physical shares. • RBI has increased the limit of loans against dematerialized securities as collateral to Rs. • You can receive your bonuses and rights issues into your DA as a direct credit this eliminating risk of loss in transit. This has lead to reduction in brokerage to the extent of 0. • There is no lost in transit thus the overheads of getting a duplicate copy in such circumstances is reduces.
27 . Quality research team. Excellent reputation among the business society. Ability to attract and retain superior and quality personnel. Easier access to customer due to largest ground network of 280 branded shares shops in 120 cities. Highly sophisticated infrastructure. weakness. which by interpreting the economy and company’s performance accurately is enhancing the profitability of the client. Weaknesses • Limited customer appeal as the company product line does not include mutual funds which is increasingly becoming a preferred customer investment option.The Padmakshi financial services providing their company swot because they issuing their company strengths . Capability of providing superior customer service. Efficient research and analysis team. opportunities and thereats SWOT ANALYSIS STRENTHS • • • • • Strong credibility among investors because of its heritage. • • • • Abundant information about economy and companies.
Availability of unit linked insurance policies (ULIP’S) and mutual funds in the market. Limited customer appeal as the company does not have access to the BSE online space. • Threat of entry is high in this industry as the manpower required is less and capital requirement is medium.• • Inadequate product awareness among the retail investors. • • Brand awareness is low in the financial market. • • Bullish phase of the market attracts investing public. Threats:. Conclusion: 28 . Opportunities • Hyderabad covers only 2% of investors which gives huge potential for the market penetration. • An awareness campaign about online trading creates new market. Access to the BSE online space for the retail investors creates opportunity to increase clientele base. Promotional activities conducted by the company are not at par with the other firms.
Today technology enables us to completely plan the investing platforms. Fortunately. 29 . all at the click of the mouse.This either leads to a situation of too much dependency on someone. Today technology enables you to completely plan your investing needs in the comfort of your home and at a time you like. help is at hand through the online investing platforms. total inactivity or sometimes even taking wrong decisions while planning your investments.
OBJECTIVES & METHODOLOGY OBJECTIVES OF THE STUDY 30 .
• To study the effect of the changing trends in the capital market on the investor.• To know the online screen based trading system adopted by the PADMAKSHI FINANCIAL SERVICES LTD and about its communication facilities • It is to analyze the changes in trading after the exchange shifted from outcry to online trading system. 31 . Internet trading is expected to – • • Increase transparency in the markets. particularly in Hyderabad. Enhance market quality improved liquidity by increasing quote continuity and market depth. • • • Reduce settlement risks due to open trades by elimination of mismatches. Introduce flexibility in system so as to handle growing volume easily and to support nationwide expansion of market activity. Provide management information system. • Besides through internet trading three fundamental objectives of securities regulation can be easily achieved these are: • • • Investor protection Creation of a fair and efficient market and Reduction of the systematic risks. the broker and on the country to a greater extent.
dematerialization of shares. So in order to lessen the degree of uncertainty in the market. rolling settlement. NEED AND SIGNIFICANCE OF THE STUDY SEBI in September 1996 has issued guidelines to the stock exchanges to go for online trading procedure by the end of the year 1996. Following its directions Padmakshi financial services ltd. This project is only an attempt to find the effect of these trends on the Indian markets. SEBI introduced many new trends by making changes in the way the capital market functions by introducing online trading.• Some of the brokers offering net trading include ICICI web trade investment India Geojit securities etc. This study is done with reference of PADMAKSHI FINANCIAL SREVICES LTD. METHODOLOGY OF THE STUDY The uncertainty and the rapid fluctuation in the Indian capital market made many investors at home and foreign wary about the future of their investments. The major need of the study is to know the effectiveness of the online trading system in comparison with the out cry or mock trading study its advantages & recommend for beneficial and effective use of system. has installed the online trading system as on 20th February 1997. etc. The study is also includes the emergence of the depository system in the country to rule out the drawbacks of the system of physical transfer of the shares 32 .
The brochures and material provided by Padmakshi Financial Services Limited. economic time’s etc. as the exchange has changed its trading style from outcry to on-line (screen based) on 20th February 1997.there is need to asses the performance of the capital market. Secondary method: The secondary data collection method includes: The lectures delivered by the superintendents of respective departments. It is used on considerable grounds rather than finding the trading protocols at micro levels because such patterns are uniform and to be implemented by both investors and depository system without violation. SCOPE OF THE STUDY This study confines to the trading patterns on equity segment that is a macro level assessment through published sources. The scope of this project is however expeditious in terms of understanding the regulatory framework and steps involved in trading DATA COLLECTION METHOD The data collection methods include both primary and secondary collection methods. capital market and other topics 33 . The data collected from the magazines of the NSE. Primary method: This method includes the data collected from the personal interaction with authorized members of Padmakshi Financial Services Limited.The present study “to review the on-line trading procedure” a case study of ONLINE TRADING at PADMAKSHI FINANCIAL SERVICES LTD.various books relating to the investments.
SEBI guidelines relating there to be not covered due to limited time and to keep the study in manageable limits. Where: • N is the number of prior periods to include in the moving average A is the actual value at time j Fj is the forecasted value at time j • • LIMITATIONS OF THE STUDY The study is confined to the past 2-3 years and the present system of the trading procedure in the Padmakshi Financial Services Limited and the study is confined to cover all the related issues in brief. management of trade. based on the average value of the variable over a specific number of preceding periods. inventory. 34 . or other trends.STATISTICAL TECHNIQUE MOVING AVERAGE The Moving Average analysis tool projects values in the forecast period. Online trading procedure only exhaustive analysis. Each forecast value is based on the following formula. Use this tool to forecast sales. A moving average provides trend information that a simple average of all historical data would mask. problems of listing.
PROFILE OF PADMAKSHI FINANCIAL SERVICES 35 .
com Apart from offering online trading in stock market the company offers tax planning and other financial advisory services. Brokerage Services • Trading of equities/derivatives both on Bombay Stock Exchange & National Stock Exchange • Commodities & Currencies trading on Dubai Gold & Commodities Exchange (DGCX) • Commodity futures on Multi Commodity Exchange (MCX) & National Commodity & Derivatives Exchange (NCDEX) • Online and Trade on phone facilities are available. In 2000 e-broking was started under the brand name of padmakshi. 36 .Company Background Padmakshi Financial Services Limited was founded in1988 and was positioned as a research firm.
Demat form eliminates the risks like theft.e.Advisory Services: On Investments in Equity On both primary and secondary markets On both local and offshore On mutual funds On Real Estate On Commodities & Currencies On Arbitrage Opportunities On Insurance On Tax Issues Custodial services: Dematerialization is a process of converting securities held in physical form to electronic receipt form. In the present scenario. securities have to be delivered on the very same/next day of trade to the 37 . forgeries etc and paperwork associated with holding of securities in physical form and makes it very convenient and fast to trade/hold. Trading in dematerialized form is the safest and quickest option compared to holding securities in physical form. trades executed on exchanges are settled on T+2 basis i.
38 . Gradually. it shall move to a settlement on T+1 basis. Dematerialization makes facilitates better efficiency in the trading process. pledge. As a depository participant of Central Depository Services (India) Ltd. It is a zero risk strategy as positions are hedged simultaneously which can earn you returns better than fixed income instruments. It can settle trade on your behalf in case you have inhouse demat accounts through a special mandate for Pay-in Authorization Products: • • • • • • • PMS/PIS Commodities & Currencies Derivatives in Equities & Commodities Realty Portfolio Offshore portfolio Insurance Arbitrage Arbitrage: • Padmakshi can help you capture the price differentials provided by the spot/cash and futures market both in equities as well as commodities. nomination. Padmakshi offers you a wide range of services like demat/ remat.clearing corporation. transmission..
thereby taking on the entire administration on your behalf. Padmakshi can enter into contracts on your behalf and ensure you have no open positions.919 Crores (USD 630 m) Padmakshi Team Professional Team • • • • • • –Dealers –Derivative strategists –Financial research analysts –Dedicated Customer relationship managers –Support staff The team has been able to outperform the market consistently yielding better yields for its valued clients. MBAs and a Lawyer • Turnover of Over 2005-2006: INR 2. 39 . both institutional and Retail investors.• As your arbitrage advisor and commission agent. Padmakshi Overview • • Operational in equity market since 1988 Promoter Directors have Combined Experience in the Financial Markets of over 42 years • Board of Directors and Team Members Include Well Qualified CAs.
Mutual Funds • • • • • Sbi (state bank of India) ABN Amro Reliance Canara bankJM Mutual fund Banks • • • • Bank of Baroda Andhra Bank Canara Bank Corporation Bank Others • • Corporate Clients High Next Worth Individuals 40 .Padmakshi Clients Institutions • • • • life insurance corporation of India Unit trust of India Industrial development bank of India General insurance corp.
Ltd. Portfolio Management Services. realty • Padmakshi Commodities Pvt. Financial Planning services and offshore products • FPI-Padmakshi Insurance Broker Pvt. Ltd Members of Bombay Stock Exchange & National Stock Exchange. Advisory and Custodial services. advisory and arbitrage • FPI-Padmakshi Financial Planning and Wealth Management Pvt. derivates and arbitrage. Ltd Members of Multi Commodity Exchange (MCX) &National Commodity & Derivatives Exchange (NCDEX).• • Non Resident Indians Retail Cl Padmakshi Group • Padmakshi Financial Services Pvt. Ltd. 41 . Advisory and arbitrage • Apex Commodities DMCC Members of Dubai Gold & Commodities Exchange (DGCX). Deals in currency and Commodities.
directors or subsidiaries since inception Particulars BSE/NSE MCX/NCDEX Segments Cash/derivative/debt Future Market Investors Grievance cases pending NIL NIL Arbitrations cases pending NIL NIL Arbitration awards-Pending compliance NIL NIL Action by the Disciplinary Committee NIL NIL Disciplinary action initiated by the Exchange NIL NIL Any legal matter pending NIL NIL 42 .Insurance brokers for various Life and general insurance providers Padmakshi’s unique regulatory compliance record: No regulatory actions against the company.
who are interested in doing the trading over internet system i. Second fill in the symbol series and default quantity.PROCEDURE FOR NET TRADING:Step 1: Those investors. Step 2: After registration the broker will provide to them a login name password and personal identification number (PIN). 43 .e. Thus investor has to review the order placed by clicking the review option. He may also re-set clear the values. Step 4: It is the process of review. should approach the brokers and get them self registered with the stock Broker. Step 3: Actual placement of an order can then be placed by using the place order window as under: First by entering the symbol and series of stock and other parameters like quantity and price of the scrip on the place order window. NEAT-IXS.
Step5: After the review has been satisfactory the order has to be sent by clicking on the send option. Some brokers will take some advance payment room the investor and will fix their trading limits. In the open outcry system only the broker knew the actually transacted price. With online trading investor can see them sleeves the price at which the deal take place. At present a time lag of about 10 seconds is there in executing the trade. Some of the websites also offer: • • • • New and research report BSE and NSE movements Stock analysis Freebies 44 . Internet trading provides total transparency between a broker and an investor in the secondary market. The time gap has narrowed in every stage of operation. Step7: In case the order is rejected by the Broker or the stock exchange for certain reasons such as invalid price limit an appropriate message will appear at the bottom of the screen. Confirmation and execution of trade reaches the investor within the least possible tome mostly within 30 seconds. Step6: The investor will receive an “order confirmation” message along with the order number and the value of the order. When the trade is executed the broker will ask the investor for transfer of funds by the investor to his account. Instant feedback is available about the execution. Screen based trading provides more transparency. Step8: It is regarding charging payment for which there is different mode.
45 . • Broker’s server will check your limit in the on-line account and demat account for the number of shares and execute the trade.• • IPO and mutual fund centers and Movements of interaction stock exchanges STEP BY STEP PROCEDURE IN ONLINE TRADING: Following steps explain the step by step approach to on-line trading: • • • Log on the stock broker’s website Register as client/investor Fill the application from and client broker agreement from on the requisite value stamp paper • • • • Obtain user ID and pass word Log on to the broker’s site using secure user ID and password Market watch page will show real time on-line market data. Trade shares directly you broker’s if by entering the symbol or number of the security.
• Order is executed instantly (10-30seconds) and confirmation can be obtained. All these resulted in ever –increasing volumes on the exchanges offering the online trading. • • • printed and mailed in 24 hours Settlement will take place automatically on the settlement day Demat account and the bank account will get debited and credited by electronic means. • • Facilities better monitoring of the market by the exchange The best price achieved in buying and selling. • The ease of operation from the view of the both members and the investors. The online trading system imparted a greater level of transparency and preferred exchange that offered online trading because of the following factors. TRADING PROCERURE AT PADMAKSHI FINANCIAL SERVICES LTD 46 . • Increase in the confidence of the investors because at higher level of transparency. TRADING AND SETTLEMNT AT PADMAKSHI LTD The NSE first introduced online trading in India.
Even if the match is not found with in the prescribed period the order will not cancel. These centers are called “Broker Work Stations” these computers are connected to the server at the stock exchanges through cable. All these operations are in built. The main objective of CTS is to monitor the stock Exchanges operation Order placed by the broker will be sent for a match and if the match is found suitable the transaction will be executed. 47 .Padmakshi deals in buying and selling equity shares and debentures on the National Stock Exchange (NSE) the Bombay Stock Exchange(BSE) and the Over-the=Counter Exchange of India (OTCEI) Padmakshi is providing with a computer and software from their registered stock exchange. Otherwise the order will be deleted automatically after completion of trading time the carry forward transaction (good till cancellation) are forward to the next day. If there is any mistake in the order CTS will reject the order and send respective error message to the member concern. The central trading system (CTS) will accept these orders and send it for match. The members of broker sitting in his office can send the quotations orders negotiations deals in house deals auction orders etc through the computer. DETAILS OF PROCEDURES: Delivery in : The members who is in PAY-OUT position delivery share certificates in to clearing house with in the settlement period along with the delivery Chelan filled in with the details of share certificates which has folio numbers or distinctive numbers ect.
Pry-in: The member who is in paying position shall pay for value of shares with in the trading settlement period (T+2) Pay-out: The cheques paid in the clearinghouse will be members who are in paying position. All disputes arising between members regarding non-delivery non-payments good and bad deliveries pertaining to the settlement will be here by KOTAK SECURITIES and settled by the settlement committee of the exchange.Delivery out: The buyer of shares who made pay in position will take delivery of shares from the clearinghouse. The given flow chart clearly explains the process of online trading: Login Buy transaction Sell transaction The system will check your dp account quantity The system will check buying limit Order accepted Rejected order would be communicated along with reasons Your order is transmitted to exchange for execution Order accepted Pending buy orders would be displayed on your screen On execution of your orders Pending sell orders would be displayed on your screen 48 .
The floor of the stock exchange is divided in to a number of markets also known as ‘post pit’ or wing based on particular securities dealt there. Basically the brokers shout while buying or selling the securities. If he is not satisfied with the quote price he may turn to other dealer. the broker or his authorized representatives goes to the stock exchange. the dealer to whom the price is quoted. On the close of the bargain the dealer as well as the broker makes a brief not of 49 .You may edit your pending order You may delete your pending order You may edit your pending order You may delete your pending order Flashed on your screen immediately on execution Conformation could be sent to your e-mail and mobile Contract note would be sent by mail or hand delivery TRADING PROCEDURE OUTCRY SYSTEM TRADING IN THE STOCK EXCHANGE: -THE CONVENTION DAY The broker has to buy or sell securities for which he has received the orders. quotes his own price when the quotation of the dealer suits the broker he may loose the bargain. In the post pit or wing based using ‘open outcry’ method makes an offer or bid price. For making the necessary baring he quotes his purchase or sale price also known as offer or bid price. This method is called the open outcry system. For this.
Limited Discretionary Order.M on all working days Monday to Friday and a special one. are noted. The members or the authorized assistants have to be a badge given 50 . They can also appoint their bankers for this purpose as the present regulations.the particulars of the deal. Limit Order.hour session on Saturday. To avoid delay it is placed generally over the phone. The order may take any of the form such as At Best Order. EXECUTION OF ORDER OR CONTRACT:Orders are executed in the trading ring of the BSE. Such notes are made on some pad and on it the number of shares the price agreed upon the name of the party what membership number ect. and Open Order. Immediate or Cancel Order. stop Loss Order. The order is usually placed by telegram. PLACEMENT OF ORDER:The next step is the placing order for the purchase or sale of securities with a broker. fax etc or in person. letter. CHOICE OF BROKER:The prospective investor who wants to buy shares or the investors who wants to sell share and transact business have to act through member brokers only. This works from 11:30 to 2:30 P. telephone.
Issue of November 2002 51 . This in a purchase transaction once the shares are delivered to the client effects payment for the purchase and pays the stamp fees for transfer a bill in made out giving the total cost of purchase including other expenses incurred by the broker in price itself. A contract note is written agreement between the broker and his clients for the transaction executed. They carry a BLOCK BOOK or conformation memos. With this the process ends. the contract notes drawn up and posted to the client. DRAWING UP AND BILLS:Both sale and purchase bills are prepared along with the contract note and it is posted on the same day or the next day. which are duly authorized by the exchange when the deal is struck. So the next step process of data analysis showing on next page.by the exchange to enter into the trading ring. Above mentioned process of the company indicated clearly. LITERATURE REVIEW A successful trading architecture Network Magazine India --. both brokers and jobber make a note in their suada block books. From the sauda book.
which could be because of a variety of reasons. a major shift from the traditional method. Take screen shots or write down the 52 . To keep it real. the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have been conducting online trade successfully for sometime now. you need to do a few things right. Ensure that the broker has a back-up option where you can call the customer support centre and execute the transaction over the telephone.Online exchanges facilitate faster transactions by providing online trading portals and brokerage houses ease and flexibility. The trend has slowly picked up in India and two of the largest exchanges. ----Veena Venugopal The big risk in online trading is that of technology. BSE. • Make Online Trading Click—Outlook--MAGAZINE | Nov 7. By Soutiman Das Gupta As promised by technology visionaries and forecast groups over the last decade. In developed countries. If you want to quickly sell a share because the prices are going down and the site is ‘temporarily unavailable’ or hangs or refuses to let you log in or execute a transaction. the Internet has indeed opened up new avenues for conducting business. you will end up with unnecessary losses. Stock exchanges worldwide now conduct a bulk of its business online through its brokers and partners. Always keep an eye on your demat account. almost all exchange transactions are conducted online. Here's a look at the core infrastructure of NSE. 2008 The convenience expected from online brokers can prove to be illusory. and some trading portals.
don’t go only by the ticker on your portal. One faces several issues while 53 . Never assume that their calculations of brokerages and taxes are right. INVESTING ONLINE By Neeraj Thivary. Say good bye to hassles of investing offline… When one has very little time on hand too many option to choose from. While executing buy and sell orders. Some brokers place your shares in the pool account and trade in them to cover their proprietary positions. Examine the contract note carefully. especially on days that the stock market has seen volatile trade and at the end of the month.details of your portfolio. Dec. India today.’ This article explains how investing online can be very easy. open the NSE and BSE websites to cross-check the latest stock prices. investing can be very daunting experience. While most of us understand the benefits of investing. we often do not give enough importance to this process because ‘hassles’ involved and the erroneous belief that ‘it is not my cup of tea. 2007. recheck them yourself. convenient and an informed experience. In this article Mr. Neeraj Thivari discussed about the perception of the people towards online trading.
DATA ANALYSIS & INTERPRETATION 54 . constant struggle with the paper work that is generated (try filling an IPO – initial public offer – form manually). tools and advice.investing offline like maintaining bank and demat accounts separately and manually. lack of time to plan investments systematically and finally keeping track of your investment port folio and net worth. lack of proper information.
3 Dr. what are the companies they are traded shows the below table 1 Mahindra satyam computers. 3 4 Wipro. TECHNICAL ANALYSIS The padmakshi financial services is dealing with more no of companies for the study purpose two companies taken how these companies shares are traded. Infosys. Satyam computers services Ltd (NYSE:”say”) is a leading global consulting and IT services company offering a 55 .Padmakshi financial investors traded in number of companies. SATYAM COMPUTERS: Company Background Satyam Computers Ltd Company Back ground. 2 Reliance petroliun ltd.reddy”s labs.
19 228.wide array of solutions customized for a range of key verticals and horizontal.31 225. Japan. Over 2000 dedicated and highly skilled IT professionals. the UK. the UAE.55 224.1 232. Singapore.42 175.4 226.6 .5 158. From strategy consulting right through to implementing IT solutions for customer satyam straddles the entire IT space. Satyam’s network spans 55 countries.05 230.6 224.35 220. and Australia and Serve over 469 global companies.95 226.05 169.65 236. Hungary.72 211.85 233.01 200.75 229. work in development centers in India.8 56 5 day Moving Average 231. Canada.46 228.15 226.4 223. across 6 continents.01 188.35 162.75 225. the USA.82 158. China. Malaysia. including over 156 fortune 500 corporations Table 1 : Closing value & 5 Day moving average for the month of December of-MAHINDRA SATYAM COMPUTRER AT THE SERVICES LIMITED BEING TRADED PADMAKSHI FINANCIAL SERVICES Date 1-Dec-10 2-Dec-10 3-Dec-10 4-Dec-10 5-Dec-10 8-Dec-10 10-Dec-10 11-Dec-10 12-Dec-10 15-Dec-10 16-Dec-10 17-Dec-10 18-Dec-10 19-Dec-10 Close Value 235.
4 140.1 and 5 day moving average is 231.4 134.25 160.21 144.6 170.94 149.89.15 153.22-Dec-10 23-Dec-10 24-Dec-10 26-Dec-10 29-Dec-10 30-Dec-10 31-Dec-10 162. 250 closing and 5 day moving average of MAHINDRA SATYAM COMPUTER LTD VALUE 200 150 100 50 22 -D ec -2 01 0 29 -D ec -2 01 0 Close Value 5 day Moving Average 0 15 -D ec -2 01 0 ec -2 01 0 8D ec -2 01 0 1D DATE INTERPRETATION: 57 .19 at the end of the month it was decreased to 149.5 148.98 147.The 3-dec-10 the closing valve is 230.89 Source : The above table-1 shows closing value and 5 day moving avg for the month of dec of mahindra satyam computer services limited.95 135.3 143.
The Stock is showing a downtrend which is a good sign for genuine investors who go for long term investment rather than for a short-term investment, in this situation there is no way for speculative investor as the price are continuously going down.
RELIANCE PETROLIUM LTD: Company background
The companies was incorporated under the companies act, 1956 on October 24, 2005 as Reliance Petroleum Ltd and obtained its certificate of commencement of business on November 7, 2005.The company founded to set up a green field petroleum refinery and polypropylene plant to be located in a special economic zone in Jamnagar in the state of Gujarat In western India. The proposed refinery and polypropylene plant will be located adjacent to the existing refinery and petrochemical complex of the promoter, reliance industries ltd the largest private sector company In India with assets of over rs. 806 billion approximately as of march 31, 2005. RIL is the only private sector company from India to feature in the fortune global 500.2007: reliance petroleum ltd has informed that Mr., Michael Warwick ahs been appointed as an additional director of the company.2008: reliance petroleum ltd has appointed Mr. Joffery reney Pryor, vice president business development-chevron Corporation, as a nominee director of chevron in place of Mr.Jagjeet Singh.
Table 2 : Closing value & 5 Day moving average for the month of December of-RELIANCE PETROLIUM LTD BEING TRADED SERVICES
1-Dec-10 2-Dec-10 3-Dec-10 4-Dec-10 5-Dec-10 8-Dec-10 10-Dec-10 11-Dec-10 12-Dec-10 15-Dec-10 16-Dec-10 17-Dec-10 18-Dec-10 19-Dec-10
71.8 71.65 71.15 73.55 72.5 74.5 77.25 84 84.15 90 90.45 82.9 88.65 88.9
5 day Moving Average
72.13 72.67 73.79 76.36 78.48 81.98 85.17 86.3 87.23 88.18 87.93 86.7
22-Dec-10 23-Dec-10 24-Dec-10 26-Dec-10 29-Dec-10 30-Dec-10 31-Dec-10
88.75 84.3 79.65 84.7 88.4 88.25 87.25
86.05 85.26 85.16 85.06 85.65
Source : The above table-2 shows closing value and 5 day moving avg for
the month of dec of Reliance petroliam limited.The 3-dec-10 the closing valve is 71.15 and 5 day moving average is 72.13 at the end of the month it was Increased to 85.65.
closing and 5 day moving average of RELIANCE PETROLEIUM LTD
100 90 80 70 60 50 40 30 20 10 0
Close Value 5 day Moving Average
12 /1 /1 0
12 /8 /1
12 /2 9/
12 /1 5
12 /2 2
which indicates the investor to go for long term investment.com Apart from offering online trading in stock market the company offers tax planning and other financial advisory services.The stock had a down trend initially but has recovered and gives a buy signal. Thus it is not advised for short-term investors.COM PADMAKSHI FINANCIAL SERVICES LTD: Company Background Padmakshi Financial Services Limited was founded in1988 and was positioned as a research firm In 2000 e-broking was started under the brand name of padmakshi. There is a wide fluctuation in the prices. DATA ANALYSIS THE MAJOR PLAYER IN ONLINE TRADING PADMAKSHI. Online Account Types • • Investor Terminal : Investors/Students Trade Terminal : Day Traders / HNI’s 61 .
PRICING FOR RETAIL CLIENTS Investor Terminal • • • • Account opening : Rs 500 Demat 1st year Initial Margin Brokerage : Rs 250 : Nil : Trading 0.20% each side + ST Delivery 0. adjustable against brokerage 62 .20% each side + ST Delivery 0.25%) Account Access Charges: Monthly Rs 800.50% each side + ST (Negotiable to 0. adjustable against Brokerage Yearly Rs 8000.50% each side + ST PRICING FOR HNI CLIENTS Trader Terminal • • • • • Account opening Demat 1st year Initial Margin : Rs 500 : Rs 250 : 2500 Min Margin Retainable : 1000 Brokerage : Trading 0.05% each side % 0.
shortly Free calls for order placement on Toll-Free Trusted.CLASSIC WEBSITE FEATURES • • • • • • • • • • • Facility to integrate choice of four banks/DP/Trading Account Instant credit for shares sold from DP Automatic pick-up of shares from linked DP for pay-in Automatic deposit of shares into linked DP after pay-out 4 time leverage on Margin Trades Margin Trading available for entire market session Slab wise brokerage structure for delivery and margin trades. professional advice of Tele-broker Facility to enter after market orders online & Via phone Choice of electronic/physical contracts SPEED TRADE EXE FEATURES ALL THE FEATURES OF CLASSICS • • • • • • Real-time streaming quotes using 2 marker watches Trade execution in 2-3 seconds Instant order/trade confirmations in the same window Hot keys similar to a Broker’s Terminal MULTIPLE Tic-by-tic Intra-day charts with multiple indicators Availability of 2 ISP & 6 Servers ensuring maximum uptime 63 .
• Customized alerts based on multiple parameters SUGGESTIONS & CONCLUSIONS 64 .
SUGGESTIONS • I recommend the exchange authorities to take steps to educate investors about their rights and duties. therefore the authorities of the exchange should be more vigilant to curb the speculation. not attracting the genuine investors to the greater extent towards the market. • Necessary steps should be taken by exchange to deal with the situations arising due to break down in on-line trading. • The speculative pressure is responsible for the wide changes in the price. I suggest to the exchange authorities to increase the investor’s confidences. 65 . • Genuine investors are not at all interested in the speculative gain as their investment is based on the future profits. • The online system has to advice the investors at the time of trading which price can get him a profit for security. • I recommend the exchange authorities to be vigilant to curb wide fluctuations of prices.
The trading of PADMAKSHI FINANCIAL SERVICES LIMITED was 50 Lakhs in the last financial year. 66 . repeat over the last 3 to 4 years.CONCLUSION • Things have changed for the better with the PADMAKSHI FINANCIAL SERVICES LIMITED going on-line coupled with endeavor to stream line the whole trading system. New and advanced technologies have breached geographical and cultural barriers. • Due to invention of on-line trading there has been greater benefit to the investors as they could sell/buy shares as and when required and that to with on-line trading. and have brought the countrywide market to doorstep. • The introduction of on-line trading would influence the investors resulting in an increase in the business of the exchange. • The broker’s has a greater scope than compared to the earlier times because of invention of on-line trading. • In the present Scenario to compete with the Broker’s would require sound infrastructure and trading as per international standards. settlement system with adequate protection to investors. delivering. It has helped the brokers handling a vast amount of transactions and this can be an efficient trading.
BIBLIOGRAPHY 67 . this is a service oriented industry hence the survival would require them to provide the best possible service to the clients.• The concept of business has changed today.
Y.nseindia.K.com www.A.com www.A.com www.com 68 .com www.kotaksecurities.Bseindia.Khan WEBSITES: www.moneycontrol.BIBLIOGRAPHY Books: Investment Management V.com www.moneypore.Padmakshi.Avadhani Marketing of Financial Services V.sebi.Avadhani • Indian Financial System M.com www.Bhalia Investment Management Preethi Singh Security Analysis And Portfolio Management V.