A Project Report on

A Market Feasibility Study on opening of new

branches of Investment and Finance Company

Submitted by:

Tushar Gautam
(MBA FINANCE)

Program Code: MBA

Roll No. 1408025351

TO

Sikkim Manipal University

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 Acknowledgement
I thank my friends, my colleagues and faculties at my SMU Learning center, Faridabad for
their help and support in completing this project.

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 Table Of Contents
Pg 5 to 7
Chapter 1: Objective and Methodology

a. Need for study

b. Objective of study

c. Methodology of study

d. Limitation of the study

Chapter 2: literature Review Pg 8 to 23

a. How are companies organized

b. Sole proprietorship, Partnership, Corporations, objective of

the corporations

c. Company listing prescribed by the Exchange

d. What is a Follow on Public Offering?

e. Company listing prescribed by the Exchange.

f. What is a Rights Issue? What is a Preferential Issue?

g. What is SEBI’s Role in an Issue

h. Who decides the price of an issue, What are Fixed Price offers

i. What does “price discovery through book building process, How

does Book Building work.

j. What is firm allotment

Pg 25 to 30
Chapter 3: Indian Financial System

a. Flow chart of Indian Financial Market

b. Money Market

c. Capital Market (Primary Market, Secondary Market)

d. Securities Market

Chapter 4: Stock Markets in India Pg 31 to 39

a. Definition of a stock exchange

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 b. History of Stock Exchanges

c. Function of stock exchange

d. Various Stock Exchanges in India

e. Regulatory Frame work of Stock exchange

f. SEBI ( Securities and EXCHANGE BOARD OF INDIA)

g. Objective and Functions of SEBI

Chapter 4: Company Profile Pg 40 to 51

a. About Sharekhan Limited

b. Profile of the Company

c..Vision , Mission

e. Reason to Choose Sharekhan Limited Mission

f. How to open an Account with Sharekhan Limited

Chapter 5: Project Analysis Pg 52 to 59

a. Outcry System

b. Dematerlization

c. Benefit of Demat

d. Online Trading, Procedure for net trading

e. Advantages and disadvantage of online trading

. f. Investors reasons to trade online

Pg 60-61
Chapter 8: SWOT Analysis

Pg 63
Chapter 9: Finding and observation

Pg 63
Chapter 10. Conclusion and Recommendation

BIBLIOGRAPHY Pg 64

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 Objectives and Methodology

Objective and Methodology

Need for study:

The present study to review the online trading procedure a case study of ONLINE TRADING
at SHAREKHAN as the exchange and performance of the capital market.

Objective of study:

1. It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system.

2. It is to study the functions of SHAREKHAN through various departments

3. To know the online screen based trading system adopted by SHAREKHAN

and about its communication facilities. The appropriate configuration to set

the network, which would link the SHAREKHAN to individual / members.

4. To know about the latest and future development in the stock exchange trading
system.

5. To know how to start a new venture as a sub-broker

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Methodology of study:

The data collection methods include both primary and secondary collection methods

Primary method:
This method includes the data collected from the personal interaction with authorized
members of Sharekhan Securities limited.

Secondary method: The secondary data collection method includes:

 The lecturers delivered by the superintendents of respective departments.

 The brochures and material provided by Sharekhan Securities limited.

 The data collected from the magazines of the NSE, economic times, etc.

 Various books relating to the investments, capital market and other related topics .

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Limitation of the Study:

Despite of the training my level best, there were still some limitation which I think remains
there to draw fruitful conclusion. There were some practical problem which come across and
could not be properly deal with

 The advisory services being promised by the brokers would be of little use
to investors looking for an insight into the market.

 As a client one will access the NSE through a server of the online
Brokerage and this may involve queuing delays.

 If one likes to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If
he wants advice on a particular stock in his portfolio he may not even be able to get
the proper advice.

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 Literature Review
Corporate financee by Michael C. Ehrhardt, Eugene F. Brigham 2008 edition and Investment
Banking by Pratap Subramanyam 2005 edition.

How are companies organized?

There are three main forms of business organization 1 sole proprietorships, 2 partnership 3
corporations. In terms of numbers, about 80 % of business are operated as sole
proprietorships, while most of the remainder are divided equally between partnerships and
corporations

Sole Proprietorship:

Sole Proprietorship ia an unincorporated business owned by one individual. Going into

business as a sole proprietor is easy one merely begins business operations. However, even
the smallest normally must be licensed by a governmental.

The proprietorship has three important advantage:

1. Easily and inexpensively formed

2. It is subject to few governmental regulations

3. The business avoid corporate income taxes.

The proprietorship also has three important limitations:

1. It is difficult for a proprietorship to obtain large sums of capital.

2. The proprietor has unlimited personal liability for the business debts which can result in
losses that exceed the money
3. The life of a business organized as a proprietorship is limited to the life of the individual
who created it.

Partnership:

A partnership exists whenever two or more persons associate to conduct a non – corporate
business. Partnership may operate under different degrees of formality, ranging from
informal, understanding to formal the major advantage of a partnership is its low cost and
ease of formations.

Disadvantage:

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1. Unlimited liability

2. Limited life of the origination,

3. Difficulty transferring ownership

4. Difficulty raising large amount of capital

Corporations:

A corporation is a legal entity created by a state, and it is separated and distinct from its
owner and mangers.

This separateness gives the corporation three major advantage

1. Unlimited life

A corporation can continue after its original owners and managers are deceased.

2. Easy transferability of ownership interest.

Ownership interest can be divided into share of stock which, in turn, can be transferred far
more easily than can proprietorship or partnership interest

3 Limited Liabilities

Losses are limited to the actual funds invested. To illustrated limited liability, suppose you
invested $10,000 in a partnership that then went bankrupt owing $ 1 million. Because the
owners are liable for the debts of a partnership, you could be assessed for a share of the
company debt, and you could be held liable for the entire $1 million if your partner could
not pay their share. Thus an investor in a partnership in a partnership is exposed to
unlimited liability. On the other hand , if you invested $10,000 in the stock of a corporation
that then went bankrupt , your potential loss on the investment would be limited to your
$10,000 investment.

The primary objective of the corporations:

Shareholders are the owner of a corporation, and they purchase stock because they want to
earn a good return on their investment without undue risk exposure. In most cases,
shareholders elect directors, who then hire manager to run the corporations on a day to day
basis. Because managers are supposed to be working on behalf of shareholder, it follows
that they should pursue policies that enhance shareholder value.

Stock price Maximization and social welfare:

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If a firm attempts to maximize its stock price, is this good or bad for society ? In general, it is
good. Aside from such illegal actions as attempting to form monopolies, violating safety code,
and failing to meet pollution requirement the same actions that maximized stock price also
price benefit society. Here are some of the reasons.

1. To a large extent, the owner of stock is society.

Seventy five years ago this was not true , because most stock ownership was
concentrated in the hands of a relatively small segment of society , comprised of the
wealthiest individual . Since them there has been explosive growth in pension funds ,
life insurance companies, and mutual funds. These institutions now own more than 57
% of all stock. In compared with only 32.05% in 1989. Moreover, most people with a
retirement plan have an indirect ownership interest in stock. Thus, most members of
society now have an important stake in the stock market, either directly or indirectly.

2. Consumers benefit:
Stock price maximization requires efficient, low –cost business that produces high
quality goods and services at the lowest possible cost. This means that companies
must develop products and services that consumer want and need, which leads to new
technology and new product.

3. Employees benefit :
There are cases in which a stock increase when a company announces a plan to lay
off employees, but viewed over time this is the exception rather than the rule. In
general , companies that successfully increase stock price also grow and add more
employees thus benefiting society. Managerial Actions to maximize Shareholder
Wealth.

What type of actions cans manager to maximize a firm’s stock price? To answer this
question, we first need to ask, “What determines stock price? In a nutshell, it is a company’s
ability to generate cash flows now and in future.

The three basic facts here:

1. Any financial assets , including a company’s stock, is valuable only to the extent that it
generated cash flows.

2. The timing of cash flows matters – cash received sooner is better , because it can be
reinvested in the company to produce additional income or else be returned to investors

3. Investors generally are averse to risk , so all else equal, they will pay more for a stock
whose cash flows are relatively than for one whose cash flow re more risky.

A company intending to have its securities listed on the Exchange has to comply with

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the listing requirements prescribed by the Exchange. Some of the requirements are as
under:-
 Minimum Listing Requirements for new companies

 Minimum Listing Requirements for companies listed on other stock exchanges

 Minimum Requirements for companies delisted by this Exchange seeking

relisting of this Exchange

 Permission to use the name of the Exchange in an Issuer Company's prospectus

* Submission of Letter of Application

 Allotment of Securities

 Trading Permission

 Requirement of 1% Security

 Payment of Listing Fees

 Compliance with Listing Agreement

 Cash Management Services (CMS) - Collection of Listing Fees  

Minimum Listing Requirements for new companies:

The following revised eligibility criteria for listing of companies on the Exchange, through
Initial Public Offerings (IPOs) & Follow-on Public Offerings (FPOs), effective August 1, 2006.

Eligibility Criteria For IPOs / FPO:

Companies have been classified as large cap companies and small cap companies. A large
cap company is a company with a minimum issue size of Rs. 10 crores and market
capitalization of not less than Rs. 25 crores. A small cap company is a company other than a
large cap company.

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1) In respect of Large Cap Companies

i. The minimum post-issue paid-up capital of the applicant company

(hereinafter referred to as "the Company") shall be Rs. 3 crores; and
ii. The minimum issue size shall be Rs. 10 crores; and
iii. The minimum market capitalization of the Company shall be Rs. 25
crores (market capitalization shall be calculated by multiplying the post-
issue paid-up number of equity shares with the issue price).
2) In respect of Small Cap Companies

i. The minimum post-issue paid-up capital of the Company shall be Rs. 3

crores; and
ii. The minimum issue size shall be Rs. 3 crores; and
iii. The minimum market capitalization of the Company shall be Rs. 5 crores
(market capitalization shall be calculated by multiplying the post-issue
paid-up number of equity shares with the issue price); and
iv. The minimum income/turnover of the Company should be Rs. 3 crores in
each of the preceding three 12-months period; and
v. The minimum number of public shareholders after the issue shall be
1000.
vi. A due diligence study may be conducted by an independent team of
Chartered Accountants or Merchant Bankers appointed by the
Exchange, the cost of which will be borne by the company. The
requirement of a due diligence study may be waived if a financial
institution or a scheduled commercial bank has appraised the project in
the preceding 12 months.

3) For all companies :

i. In respect of the requirement of paid-up capital and market capitalization,

the issuers shall be required to include in the disclaimer clause forming a

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 part of the offer document that in the event of the market capitalization
(product of issue price and the post issue number of shares) requirement
of the Exchange not being met, the securities of the issuer would not be
listed on the Exchange.
ii. The applicant, promoters and/or group companies, should not be in
default in compliance of the listing agreement.
iii. The above eligibility criteria would be in addition to the conditions
prescribed under SEBI (Disclosure and Investor Protection) Guidelines,
2000.

Minimum Listing Requirements for companies listed on other stock exchanges:

The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the
direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at
BSE. These norms are applicable with immediate effect.

1. The company should have minimum issued and paid up equity capital of Rs. 3 crores.
2. The Company should have profit making track record for last three years. The
revenues/profits arising out of extra ordinary items or income from any source of non-
recurring nature should be excluded while calculating distributable profits.
3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves
excluding revaluation reserves).
4. Minimum market capitalisation of the listed capital should be at least two times of the
paid up capital.
5. The company should have a dividend paying track record for the last 3 consecutive
years and the minimum dividend should be at least 10%.
6. Minimum 25% of the company's issued capital should be with Non-Promoters
shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter
holding no single shareholder should hold more than 0.5% of the paid-up capital of the
company individually or jointly with others except in case of Banks/Financial
Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-
Resident Indians.

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 7. The company should have at least two years listing record with any of the Regional
Stock Exchange.
8. The company should sign an agreement with CDSL & NSDL for demat trading.

Minimum Requirements for companies delisted by this Exchange seeking relisting of

this Exchange

The companies delisted by this Exchange and seeking relisting are required to make a fresh
public offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial
public offerings.

Permission to use the name of the Exchange in an Issuer Company's prospectus

The Exchange follows a procedure in terms of which companies desiring to list their securities
offered through public issues are required to obtain its prior permission to use the name of
the Exchange in their prospectus or offer for sale documents before filing the same with the
concerned office of the Registrar of Companies. The Exchange has since last three years
formed a "Listing Committee" to analyze draft prospectus/offer documents of the companies
in respect of their forthcoming public issues of securities and decide upon the matter of
granting them permission to use the name of "Bombay Stock Exchange Limited" in their
prospectus/offer documents. The committee evaluates the promoters, company, project and
several other factors before taking decision in this regard.

Submission of Letter of Application:

As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on
the Exchange is required to submit a Letter of Application to all the Stock Exchanges where it
proposes to have its securities listed before filing the prospectus with the Registrar of
Companies.

Allotment of Securities:

As per Listing Agreement, a company is required to complete allotment of securities offered

to the public within 30 days of the date of closure of the subscription list and approach the

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Regional Stock Exchange, i.e. Stock Exchange nearest to its Registered Office for approval
of the basis of allotment.

In case of Book Building issue, Allotment shall be made not later than 15 days from the
closure of the issue failing which interest at the rate of 15% shall be paid to the investors.

Trading Permission:

As per Securities and Exchange Board of India Guidelines, the issuer company should
complete the formalities for trading at all the Stock Exchanges where the securities are to be
listed within 7 working days of finalization of Basis of Allotment.

A company should scrupulously adhere to the time limit for allotment of all securities and
dispatch of Allotment Letters/Share Certificates and Refund Orders and for obtaining the
listing permissions of all the Exchanges whose names are stated in its prospectus or offer
documents. In the event of listing permission to a company being denied by any Stock
Exchange where it had applied for listing of its securities, it cannot proceed with the allotment
of shares. However, the company may file an appeal before the Securities and Exchange
Board of India under Section 22 of the Securities Contracts (Regulation) Act, 1956.

Requirement of 1% Security:

The companies making public/rights issues are required to deposit 1% of issue amount with
the Regional Stock Exchange before the issue opens. This amount is liable to be forfeited in
the event of the company not resolving the complaints of investors regarding delay in sending
refund orders/share certificates, non-payment of commission to underwriters, brokers, etc.

Payment of Listing Fees:

All companies listed on the Exchange have to pay Annual Listing Fees by the 30th April of
every financial year to the Exchange as per the Schedule of Listing Fees prescribed from
time to time.

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The schedule of listing fees for the year 2006-2007, prescribed by the Governing Board of the
Exchange is given hereunder:

SCHEDULE OF LISTING FEES FOR THE YEAR 2006-2007

Sr. Amount
Particulars
No. (Rs.)

1 Initial Listing Fees 20,000

2
Annual Listing Fees
(i) Companies with paid-up capital* upto Rs. 5 crores
10,000

(ii) AboveRs. 5 crores and upto Rs. 10 crores

15,000

(iii) Above Rs. 10 crores and upto Rs. 20 crores

30,000

3 Companies which have a paid-up capital* of more than Rs. 20 crores will pay additional fee of
 
Rs. 750/- for every increase of Rs. 1 crores or part thereof.

4 In case of debenture capital (not convertible into equity shares) of companies, the fees will be
 
charged @ 25% of the fees payable as per the above mentioned scales.

Compliance with Listing Agreement:

The companies desirous of getting their securities listed are required to enter into an
agreement with the Exchange called the Listing Agreement and they are required to make
certain disclosures and perform certain acts. As such, the agreement is of great importance
and is executed under the common seal of a company. Under the Listing Agreement, a
company undertakes, amongst other things, to provide facilities for prompt transfer,
registration, sub-division and consolidation of securities; to give proper notice of closure of
transfer books and record dates, to forward copies of unabridged Annual Reports and
Balance Sheets to the shareholders, to file Distribution Schedule with the Exchange annually;
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to furnish financial results on a quarterly basis; intimate promptly to the Exchange the
happenings which are likely to materially affect the financial performance of the Company and
its stock prices, to comply with the conditions of Corporate Governance, etc.

The Listing Department of the Exchange monitors the compliance of the companies with the
provisions of the Listing Agreement, especially with regard to timely payment of annual listing
fees, submission of quarterly results, requirement of minimum number of shareholders, etc.
and takes penal action against the defaulting companies.

Cash Management Services (CMS) - Collection of Listing Fees:

As a further step towards simplifying the system of payment of listing fees, the Exchange has
entered into an arrangement with HDFC Bank for collection of listing fees, from 141 locations,
situated all over India.Details of the HDFC Bank branches, are available on our website site
www.bseindia.com as well as on the HDFC Bank website www.hdfcbank.com The above
facility is being provided free of cost to the Companies.

Companies intending to utilise the above facility for payment of listing fee would be required
to furnish the information, (mentioned below) in the Cash Management Cash Deposit Slip.
These slips would be available at all the HDFC Bank centres.

What is a Follow on Public Offering?

A follow on public offering (FPO) is when an already listed company makes either a fresh
issue of securities to the public or an offer for sale to the public, through an offer document.
An offer for sale in such scenario is allowed only if it is made to satisfy listing or continuous
listing obligations.

What is a Rights Issue?

Rights Issue (RI) is when a listed company which proposes to issue fresh securities to its
existing shareholders as on a record date. The rights are normally offered in a particular ratio
to the number of securities held prior to the issue. This route is best suited for companies who
would like to raise capital without diluting stake of its existing shareholders unless they do not
intend to subscribe to their entitlements.

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What is a Preferential Issue?

A preferential issue is an issue of shares or of convertible securities by listed companies to a

select group of persons under Section 81 of the Companies Act, 1956 which is neither a
rights issue nor a public issue. This is a faster way for a company to raise equity capital. The
issuer company has to comply with the Companies Act and the requirements contained in
Chapter pertaining to preferential allotment in SEBI (DIP) guidelines which inter-alia include
pricing, disclosures in notice etc.

What is SEBI’s Role in an Issue?

Any company making a public issue or a listed company making a rights issue of value of
more than Rs.50 lakhs is required to file a draft offer document with SEBI for its observations.
The company can proceed further on the issue only after getting observations from SEBI. The
validity period of SEBI’s observation letter is three months only ie. the company has to open
its issue within three months period.

Does it mean that SEBI recommends an issue?

SEBI does not recommend any issue nor does take any responsibility either for the financial
soundness of any scheme or the project for which the issue is proposed to be made or for the
correctness of the statements made or opinions expressed in the offer document.

Does SEBI approve the contents of the issue?

It is to be distinctly understood that submission of offer document to SEBI should not in any
way be deemed or construed that the same has been cleared or approved by SEBI. The
Lead manager certifies that the disclosures made in the offer document are generally
adequate and are in conformity with SEBI guidelines for disclosures and investor protection in
force for the time being. This requirement is to facilitate investors to take an informed decision
for making investment in the proposed issue.

Does SEBI tag make my money safe?

The investors should make an informed decision purely by themselves based on the contents
disclosed in the offer documents. SEBI does not associate itself with any issue/issuer and

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should in no way be construed as a guarantee for the funds that the investor proposes to
invest through the issue. However, the investors are generally advised to study all the
material facts pertaining to the issue including the risk factors before considering any
investment. They are strongly warned against any ‘tips’ or news through unofficial means.

What are Disclosures and Investor protection guidelines?

The primary issuances are governed by SEBI in terms of SEBI (Disclosures and Investor
protection) guidelines. SEBI framed its DIP guidelines in 1992. Many amendments have been
carried out in the same in line with the market dynamics and requirements. In 2000, SEBI
issued “Securities and Exchange Board of India (Disclosure and Investor Protection)
Guidelines, 2000” which is compilation of all circulars organized in chapter forms. These
guidelines and amendments thereon are issued by SEBI India under section 11 of the
Securities and Exchange Board of India Act, 1992. SEBI (Disclosure and investor protection)
guidelines 2000 are in short called DIP guidelines. It provides a comprehensive framework for
issuances buy the companies.

How does SEBI ensure compliance with Disclosures and Investor protection?

The Merchant Banker are the specialized intermediaries who are required to do due diligence
and ensure that all the requirements of DIP are complied with while submitting the draft offer
document to SEBI. Any non compliance on their part, attract penal action from SEBI, in terms
of SEBI (Merchant Bankers) Regulations. The draft offer document filed by Merchant Banker
is also placed on the website for public comments. Officials of SEBI at various levels examine
the compliance with DIP guidelines and ensure that all necessary material information is
disclosed in the draft offer documents.

With the presence of the Central Listing Authority, what would be the role of SEBI in
the processing of Offer documents for an issue?

The Central Listing Authority’s , CLA, functions have been detailed under Regulation 8 of
SEBI (Central Listing Authority) Regulations, 2003 (CLA Regulations) issued on August 21,
2003 and amended up to October 14, 2003. In brief, it covers processing applications for
letter precedent to listing fromapplicants; to make recommendations to the Board on issues

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pertaining to the protection of the interest of the investors in securities and development and
regulation of the securities market, including the listing agreements, listing conditions and
disclosures to be made in offer documents; and; to undertake any other functions as may be
delegated to it by the Board from time to time. SEBI as the regulator of the securities market
examines all the policy matters pertaining to issues and will continue to do so even during the
existence of the CLA. Since the CLA is not yet operational, the reply to this question would be
updated thereafter.

Who decides the price of an issue?

Indian primary market ushered in an era of free pricing in 1992. Following this, the guidelines
have provided that the issuer in consultation with Merchant Banker shall decide the price.
There is no price formula stipulated by SEBI. SEBI does not play any role in price fixation.
The company and merchant banker are however required to give full disclosures of the
parameters which they had considered while deciding the issue price. There are two types of
issues one where company and LM fix a price (called fixed price) and other, where the
company and LM stipulate a floor price or a price band and leave it to market forces to
determine the final price (price discovery through book building process).

What are Fixed Price offers?

An issuer company is allowed to freely price the issue. The basis of issue price is disclosed in
the offer document where the issuer discloses in detail about the qualitative and quantitative
factors justifying the issue price. The Issuer company can mention a price band of 20% (cap
in the price band should not be more than 20% of the floor price) in the Draft offer documents
filed with SEBI and actual price can be determined at a later date before filing of the final offer
document with SEBI / ROCs.

What does “price discovery through book building process” mean?

“Book Building” means a process undertaken by which a demand for the securities proposed
to be issued by a body corporate is elicited and built up and the price for the securities is
assessed on the basis of the bids obtained for the quantum of securities offered for

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subscription by the issuer. This method provides an opportunity to the market to discover
price for securities.

How does Book Building work?

Book building is a process of price discovery. Hence, the Red Herring prospectus does not
contain a price. Instead, the red herring prospectus contains either the floor price of the
securities offered through it or a price band along with the range within which the bids can
move. The applicants bid for the shares quoting the price and the quantity that they would like
to bid at. Only the retail investors have the option of bidding at ‘cut-off’. After the bidding
process is complete, the ‘cut-off’ price is arrived at on the lines of Dutch auction. The final
prospectus with all the details including the final issue price and the issue size is filed with
ROC, thus completing the issue process.

What is firm allotment?

A company making an issue to public can reserve some shares on “allotment on firm basis”
for some categories as specified in DIP guidelines. Allotment on firm basis indicates that
allotment to the investor is on firm basis. DIP guidelines provide for maximum % of shares,
which can be reserved on firm basis. The shares to be allotted on “firm allotment category”
can be issued at a price different from the price at which the net offer to the public is made
provided that the price at which the security is being offered to the applicants in firm allotment
category is higher than the price at which securities are offered to public.

Is there any preference while doing the allotment?

The allotment to the Qualified Institutional Buyers (QIBs) is on a discretionary basis. The
discretion is left to the Merchant Bankers who first disclose the parameters of judgment in the
Red Herring Prospectus. There are no objective conditions stipulated as per the DIP
Guidelines. The Merchant Bankers are free to set their criteria and mention the same in the
Red Herring Prospectus.

Retail Investor:

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‘Retail individual investor’ means an investor who applies or bids for securities of or for a
value of not more than Rs.1, 00,000.

Can a retail investor also bid in a book-built issue?

Yes. He can bid in a book-built issue for a value not more than Rs.1,00,000. Any bid made in
excess of this will be considered in the HNI category.

Where can I get a form for applying/ bidding for the shares?

The form for applying/bidding of shares is available with all syndicate members, collection
centers, the brokers to the issue and the bankers to the issue.

Useful links about ShareKhan

Sharekhan Website: http://www.ShareKhan.com

Product Demo - Speed Trade: http://www.sharekhan.com/Demos/speedtrade/index.html
Product Demo - Classic: http://www.sharekhan.com/Demos/classic/index.html
Email: info@sharekhan.com
FAQs: http://sharekhan.com/KnowledgeCentre/Sharekhan_FAQ.aspx
Phone: 022-66621111
Toll Free: 1-800-22-7500

TRADING SESSION:

Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period
Monday to Friday is the trading period in all the stock exchanges. SEBI has stipulated that all
the stock exchanges in India must have same trading period.

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 The given flow chart clearly explains the process of online trading

Login

Sell transaction
Buy transaction

The system will check your

The system will check dp account quantity
buying limits

Orders accepted Rejected orders would be orders accepted

communicated along with
reasons
communicated along with
reasons

your order is transmitted to exchange for execution

pending buy orders on execution of pending sell orders

would be displayed on your orders would be displayed
your screen on your screen

you may delete

you may edit you pending you may delete your pending you may edit your pending your pending
order order order order

flashed on your screen Conformation could contract note would be

immediately on execution be send to your e-mail sent to by mail or hand
and mobile delivery
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 Indian Financial System

Following diagram gives the structure of Indian financial system:

Indian Financial System

Financial
Market

Capital Market FE Market

Consist of the equity market, debt, Consist of dealing in foreign currency

derivative, Major player are and exchange transaction, Major
instructional and other high network player are Banks
investor

Money markets Loan Market

Consist of dealing in short and long Consist of commercial and resale loan to
run debt Major player are Banks corporate and no personal borrower Major
players are financial institution , bank and

Insurance / PF? Pension

Saving and investment market

Consist of business of selling insurance

product/ retirement product and deploying Major Player are govern, small
such fund, Major player are LIC in life saving, banks, finical, institution and
mutual funds
Capital Market
insurance and GIC

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 Intermediates Instruments Infrastructure
Issuers Investors

Flow Chart of Securities Market

Securities Market

Capital Market Money Market

( Long term securities) Market for short term debt products such as
government paper, international bank
product, corporate debt and repo market

Primary Market
Secondary Market

Equity Market Debt Market Derivative

Market Exchange
1. Companies 1. Governm traded
ent investment.
2. Other bodies Securities
compotes 2. Cooperat 1. Optional
e Debt Market

2. Future Market

Wholesales Segment

International investors Retail Segment

Small investor

Financial Market

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Financial markets are helpful to provide liquidity in the system and for smooth functioning of
the system. These markets are the centers that provide facilities for buying and selling of
financial claims and services. The financial markets match the demands of investment with
the supply of capital from various sources.

According to functional basis financial markets are classified into two types There Are

 Money Marker (Short –term)

 Capital Market (long - term)

Money Market

According to institutional basis again classified in to two type: They are

 Organized financial market
 Non-organized financial market.

The organized market comprises of official market represented by recognized institutions,

bank and government (SEBI) registered/controlled activities and intermediaries. The
unorganized market is composed of indigenous bankers, moneylenders, individual
professional and non-professionals. Money market is a place where we can raise short- term
capital.
Again the money market is classified in to

 Interbank call money market

 Bill market and

 Bank loan market Etc.

 E.g.; treasury bills, commercial papers, CD's etc.

Capital Market

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Capital market is a place where we can raise long-term capital.

 Primary market and

 Secondary market. E.g.: Shares, Debentures, and Loans etc.

Primary Market

Primary market is generally referred to the market of new issues or market for mobilization of
resources by the companies and government undertakings, for new projects as also for
expansion, modernization, addition, diversification and up gradation.

Primary market is also referred to as New Issue Market. Primary market operations include
new issues of shares by new and existing companies, further and right issue to exisiting
shareholder, puplic offers, and issue of debt instrument such as debenture, bonds, etc The
primary market is regulated by the Securities and Exchange Board of India. SEBI is a
government regulated authority.

Function:

The main services of the primary market are origination, underwriting, and distribution.
Origination deals with the origin of the new issue. Underwriting contract make the shares
predictable and remove the element of uncertainty in the subscription. Distribution refers to
the sale of securities to the investors.

The following are the market intermediaries associated with the market:

1. Merchant banker/book building lead manager

2. Registrar and transfer agent

3. Underwriter/broker to the issue

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4. Adviser to the issue

5. Banker to the issue

6. Depository

7. Depository participant

Investors’ protection in the primary market:

To ensure healthy growth of primary market, the investing public should be protected. The
term investor protection has a wider meaning in the primary market. The principal ingredients
of investors’ protection are:

 Provision of accurate information and

 Transparent allotment procedures without any bias.

Secondary Market

The primary market deals with the new issues of securities. Outstanding securities are traded
in the secondary market, which is commonly known as stock market or stock exchange. “The
secondary market is a market where scrip’s are traded”. It is a market place which provides
liquidity to the scrip’s issued in the primary market.

Thus, the growth of secondary market depends on the primary market. More the number of
companies entering the primary market, the greater are the volume of trade at the secondary
market. Trading activities in the secondary market are done through the recognized stock
exchanges which are 23 in number including Over The Counter Exchange of India (OTCE),
National Stock Exchange of India and Interconnected Stock Exchange of India.

Secondary market operations involve buying and selling of securities on the stock exchange
through its members. The companies hitting the primary market are mandatory to list their
shares on one or more stock exchanges in India. Listing of scrip’s provides liquidity and offers

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an opportunity to the investors to buy or sell the scrip’s.

The following are the intermediaries in the secondary market:

1. Broker/member of stock exchange – buyers broker and sellers broker

2. Portfolio Manager
3. Investment advisor
4. Share transfer agent
5. Depository
6. Depository participants

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 Stock Markets In INDIA

Stock exchanges are the perfect type of market for securities whether of government and
semi-govt bodies or other public bodies as also for shares and debentures issued by the joint-
stock companies. In the stock market, purchases and sales of shares are affected in
conditions of free competition. Government securities are traded outside the trading ring in
the form of over the counter sales or purchase. The bargains that are struck in the trading ring
by the members of the stock exchanges are at the fairest prices determined by the basic laws
of supply and demand.

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Definition of a stock exchange:

Stock exchange means anybody or individuals whether incorporated or not,

constituted for the purpose of assisting, regulating or controlling the business of buying,
selling or dealing in securities.” The securities include:

1) Shares of public company.

2) Government securities.

3) Bonds

History of Stock Exchanges:

The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875
and Ahmadabad set up in 1894. These were organized as voluntary non-profit-marketing
associations of brokers to regulate and protect their interests. Before the control on securities
under the constitution in 1950, it was a state subject and the Bombay securities contracts
(control) act of 1925 used to regulate trading in securities. Under this act, the Mumbai stock
exchange was recognized in 1927 and Ahmadabad in 1937. During the war boom, a number
of stock exchanges were organized. Soon after it became a central subject, central legislation
was proposed and a committee headed by A.D.Gorwala went into the bill for securities
regulation. On the basis of the committee’s recommendations and public discussion, the
securities contract (regulation) act became law in 1956.

Function of stock exchange

Stock exchanges provide liquidity to the listed companies. By giving quotations to the listed
companies, they help trading and raise funds from the market. Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their
medium, the central and state government have raised crores of rupees by floating public

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loans. Municipal corporations, trust and local bodies have obtained from the public their
financial requirements, and industry, trade
and commerce- the backbone of the country’s economy-have secured capital of crores or
rupees through the issue of stocks, shares and debentures for financing their day-to-day
activities, organizing new ventures and completing projects of expansion, diversification and
modernization. By obtaining the listing and trading facilities, public investment is increased
and companies were able to raise more funds. The quoted companies with wide public
interest have enjoyed some benefits and assets valuation has become easier for tax and
other purposes.

Various Stock Exchanges in India:

At present there are 23 stock exchanges recognized under the securities contracts
(regulation), Act, 1956. Those are:

1) Ahmadabad Stock Exchange Association Ltd.

2) Bhubaneswar Stock Exchange Association
3) Calcutta Stock Exchange
4) Cochin Stock Exchange Ltd.
5) Coimbatore Stock Exchange
6) Delhi Stock Exchange Association
7) Guwahati stock Exchange
8) Hyderabad Stock Exchange Ltd.
9) Jaipur Stock Exchange Ltd
10)Kanara Stock Exchange Ltd
11)Ludhiana Stock Exchange Association Ltd
12)Madras Stock Exchange
13)Madhya Pradesh Stock Exchange Ltd.
14)Magadh Stock Exchange Limited
15)Meerut Stock Exchange Ltd.
16)Mumbai Stock Exchange

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 17)National Stock Exchange of India
18)OTC Exchange of India
19)Pune Stock Exchange Ltd.
20)Saurashtra Kutch Stock Exchange Ltd.
21)Uttar Pradesh Stock Exchange Association
22)Vadodara Stock Exchange Ltd.

Out of these major stock exchange are:

NSE (National Stock Exchange)

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

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NSE's mission is setting the agenda for change in the securities markets in India. The NSE
was set-up with the main objectives of:
 Establishing a nation-wide trading facility for equities and debt instruments.
 Ensuring equal access to investors all over the country through an appropriate
communication network.
 Providing a fair, efficient and transparent securities market to investors using electronic
trading systems.
 Enabling shorter settlement cycles and book entry settlements systems, and
 Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology, have become
industry benchmarks and are being emulated by other market participants NSE is more than
a mere market facilitator. It's that force which is guiding the industry towards new horizons
and greater opportunities.

BSE ( BOMBAY STOCK EXCHANGE)

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The
Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the

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Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making
Association of Persons (AOP) and is currently engaged in the process of converting itself into
demutualised and corporate entity. It has evolved over the years into its present status as the
premier Stock Exchange in the
country. It is the first Stock Exchange in the Country to have obtained permanent recognition
in 1956 from the Govt. of India under the Securities Contracts.

Regulation) Act 1956.The Exchange, while providing an efficient and transparent market for
trading in securities, debt and derivatives upholds the interests of the investors and ensures
redresses of their grievances whether against the companies or its own member-brokers. It
also strives to educate and enlighten the investors by conducting investor education
programmers and making available to them necessary informative inputs.

REGULATORY FRAME WORK OF STOCK EXCHANGE

A comprehensive legal framework was provided by the “Securities Contract Regulation Act,
1956” and “Securities Exchange Board of India 1952”. Three tier regulatory structure
comprising

 Ministry of finance
 The Securities And Exchange Board of India
 Governing body

Members of the stock exchange:

The securities contract regulation act 1956 has provided uniform regulation for the
admission of members in the stock exchanges. The qualifications for becoming a
member of a recognized stock exchange are given below:

 The minimum age prescribed for the members is 21 years.

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  He should be an Indian citizen.
 He should be neither a bankrupt nor compound with the creditors.
 He should not be convicted for fraud or dishonesty.
 He should not be engaged in any other business connected with a company.
 He should not be a defaulter of any other stock exchange.
 The minimum required education is a pass in 12th standard examination.

SEBI ( Securities and EXCHANGE BOARD OF INDIA)

The securities and exchange board of India was constituted in 1988 under a resolution of
government of India. It was later made statutory body by the SEBI act 1992.according to this
act, the SEBI shall constitute of a chairman and four other members appointed by the central
government.

With the coming into effect of the securities and exchange board of India act, 1992 some of
the powers and functions exercised by the central government, in respect of the regulation of
stock exchange were transferred to the SEBI.

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OBJECTIVES AND FUNCTIONS OF SEBI

 To protect the interest of investors in securities.

 Regulating the business in stock exchanges and any other securities market.
 Registering and regulating the working of intermediaries associated with securities
market as well as working of mutual funds.
 Promoting and regulating self-regulatory organizations.
 Prohibiting insider trading in securities.
 Regulating substantial acquisition of shares and takeover of companies.
 Performing such functions and exercising such powers under the provisions of capital
issues (control) act, 1947and the securities to it by the central government.

SEBI GUIDELINE TO SECONDERY MARKET: (STOCK EXCHANGE)

Board of Directors of Stock Exchange has to be reconstituted so as to include non-members,

public representatives and government representatives to the extent of 50% of total number
of members.

Capital adequacy norms have been laid down for the members of various stock exchanges
depending upon their turnover of trade and other factors. All recognized stock exchanges will
have to inform about transactions within 24 hrs

TYPES OF ORDERS:
Buy and sell orders placed with members of the stock exchange by the investors.
The orders are of different types.

Limit orders: Orders are limited by a fixed price. E.g. ‘buy Reliance Petroleum at
Rs.50.’Here, the order has clearly indicated the price at which it has to be bought
and the investor is not willing to give more than Rs.50.

Best rate order: Here, the buyer or seller gives the freedom to the broker to execute the

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order at the best possible rate quoted on the particular date for buying. It may be lowest rate
for buying and highest rate for selling.

Discretionary order: The investor gives the range of price for purchase and sale. The broker
can use his discretion to buy within the specified limit. Generally the approximation price is
fixed. The order stands as this “buy BRC 100 shares around Rs.40”.

Stop loss order: The orders are given to limit the loss due to unfavorable price movement in
the market. A particular limit is given for waiting. If the price falls below the limit, the broker is
authorized to sell the shares to prevent further loss. E.g. Sell
BRC limited at Rs.24, stop loss at Rs.22.

Buying and selling shares: To buy and sell the shares the investor has to locate register
broker or sub broker who render prompt and efficient service to him. The order to buy or sell
specifying the number of shares of the company of investors’ choice is placed with the broker.
The order may be of any type. After receiving the order the broker tries to execute the order
in his computer terminal. Once matching order is found, the order is executed. The broker
then delivers the contract note to the investor. It gives the details regarding the name of the
company, number of shares bought, price, brokerage, and the date of delivery of share. In
this physical trading form, once the broker gets the share certificate through the clearing
houses he delivers the share certificate along with transfer deed to the investor. The investor
has to fill the transfer deed and stamp it. The stamp duty is one of the percentage
considerations, the investor should lodge the share certificate and transfer deed to the
register or transfer agent of the company. If it is bought in the DEMAT form, the broker has to
give a matching instruction to his depository participant to transfer shares bought to the
investors account. The investor should be account holder in any of the depository participant.
In the case of sale of shares on receiving payment from the purchasing broker, the broker
effects the payment to the investor Share groups.

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ROLLING SETTLEMENT SYSTEM:

Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or 5days)
after the trading day. The shares bought and sold are paid in for n days after the trading day
of the particular transaction. Share settlement is likely to be completed much sooner after the
transaction than under the fixed settlement system.

The rolling settlement system is noted by T+N i.e. the settlement period is n days after the
trading day. A rolling period which offers a large number of days negates the advantages of
the system. Generally longer settlement periods are shortened gradually SEBI made RS
compulsory for trading in 10 securities selected on the basis of the criteria that they were in
compulsory Demat list and had daily turnover of about Rs.1 crore or more. Then it was
extended to “A” stocks in Modified Carry Forward Scheme, Automated Lending and
Borrowing Mechanism (ALBM) and Borrowing and lending Securities Scheme (BELSS) with
effect from Dec 31, 2001.
SEBI has introduced T+5 rolling settlement in equity market from July 2001 and subsequently
shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement experience it was
further reduced to T+2 to reduce the risk in the market.

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 Company Profile

ABOUT SHAREKHAN LIMITED

Sharekhan Ltd. is one of the leading retail stock broking house of SSKI Group which is
running successfully since 1922 in the country. It is the retail broking arm of the Mumbai-
based SSKI Group, which has over eight decades of experience in the stock broking
business. Sharekhan offers its customers a wide range of equity related services including
trade execution on BSE, NSE, Derivatives, depository services, online trading, investment
advice etc.

The firm’s online trading and investment site - www.sharekhan.com - was launched on
Feb 8, 2000. The site gives access to superior content and transaction facility to retail
customers across the country. Known for its jargon-free, investor friendly language and high
quality research, the site has a registered base of over one lakh customers. The content-rich
and research oriented portal has stood out among its contemporaries because of its steadfast
dedication to offering customers best-of-breed technology and superior market information.
The objective has been to let customers make informe decisions and to simplify the process
of investing in stocks.

On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application that
emulates the broker terminals along with host of other information relevant to the Day
Traders. This was for the first time that a net-based trading station of this caliber was offered

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to the traders. In the last six months Speed Trade has become a de facto standard for the
Day Trading community over the net.

Share khan’s ground network includes over 1288 centers in 325 cities in India which provide
a host of trading related services.

Sharekhan has always believed in investing in technology to build its business. The company
has used some of the best-known names in the IT industry, like Sun
Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign
Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading engine and
content. The Morakhiya family holds a majority stake in the company. HSBC, Intel & Carlyle
are the other investors.

With a legacy of more than 80 years in the stock markets, the SSKI group ventured into
institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading
players in institutional broking and corporate finance activities. SSKI holds a sizeable portion
of the market in each of these segments. SSKI’s institutional broking accounts for 7% of the
market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional
portfolio investment in the country. It has 60 institutional clients spread over India, Far East,
UK and US. Foreign Institutional Investors generate about 65% of the organization’s revenue,
with a daily turnover of over US$ 2 million.
The Corporate Finance section has a list of very prestigious clients and has many ‘firsts’ to its
credit, in terms of the size of deal, sector tapped etc. The group has placed over
US$ 1 billion in private equity deals. Some of the clients include BPL Cellular Holding, Gujarat
Pipavav, Essar, Hutchison, Planetasia, and Shopper’s Stop.

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Profile of the Company

Name of the company: Sharekhan LTD

.
Year of Establishment 2003

Headquarter Sharekhan SSKI

A-206 Phoenix House
Phoenix Mills Compound
Lower Parel
Mumbai - Maharashtra, INDIA- 400013

Nature of Business Service Provider

Services Depository Services, Online Services and

Technical Research.

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Number of Employees : Over 35

Revenue Data Not Available

Website www.sharekhan.com

Slogan Your Guide to The Financial Jungle

Vision

To be the best retail brokering Brand in the retail business of stock market.

Mission

To educate and empower the individual investor to make better investment decisions through
quality service and superior service. Sharekhan is among the top 3 branded retail service
providers No. 1 player in online business largest network of branded broking outlets in the
country serving more than 7, 00,000 clients.

REASON TO CHOOSE SHAREKHAN LIMITED

Experience

SSKI has more than eight decades of trust and credibility in the Indian stock market. In
the Asia Money broker's poll held recently, SSKI won the 'India's Best Broking House
for 2004' award. Ever since it launched Sharekhan as its retail broking division in
February 2000, it has been providing institutional level research and broking services to
institutional-level individual investors.

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Technology

With its online trading account one can buy and sell shares in an instant from any PC
with an internet connection. One can get access to its powerful online trading tools that
will help him take complete control over his investment in shares.

Accessibility

Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services

forEXECUTION investors. These services are accessible through its centers across the
country over the internet (through the website www.sharekhan.com) as well as over the Voice
Tool.

Knowledge

In a business where the right information at the right time can translate into directtime
profits, one can get access to a wide range of information on Sharekhan limited’s
content-rich portal. One can also get a useful set of knowledge-based tools that will based
empower him to take informed decisions.

Convenience

One can call its Dial-N-Trade number to get investment advice and execute his Trade
investment transactions. Sharekhan ltd. have a dedicated call centre to provide this service

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via a call-centre Toll Free Number 1800-22-7500 & 1800-22-7050 from anywhere in
India.7500

Customer Service
Sharekhan limited’s customer service team will assist one for any help that one may
require relating to transactions, billing, demat and other queries. Its customer service
can be contacted via a toll-free number, email or live chat on www.sharekhan.com

Investment Advice

Sharekhan has dedicated research teams of more than 30 people for fundamental and
technical researches. Its analysts constantly track the pulse of the market and provide timely
investment advice to its clients in the form of daily research emails, online chat, printed
reports and SMS on their mobile phone.

Product and Services Of Shareknan Limited

The different types of products and services offered by Sharekhan Ltd. are as follows:

 Equity and derivatives trading

 Depository services
 Online services

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  Commodities trading
 Dial-n-trade
 Portfolio management
 Fundamental research
 Technical research
 Share shops

Sharekhan offers two types of trading account for its clients:

1) Classic Account (which include a feature known as Fast Trade Advanced Classic
Account for the online users) and

2) Speed Trade Account

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 1) Classic Account:

This is a User Friendly Product which allows the client to trade through website
www.sharekhan.com and is suitable for the retail investor who is risk-averse and hence
prefers to invest in stocks or who does not trade too frequently. This account allow investors
to buy and sell stocks online along with the following features like multiple watch lists,
Integrated Banking, Demat and digital contracts, Real-time portfolio tracking with price alerts
and Instant credit & transfer.

Following features:

a. Online trading account for investing in Equities and Derivatives

b. Free trading through Phone (Dial-n-Trade)
I. Two dedicated numbers(1800-22-7500 and 39707500) for placing
the orders using cell phones or landline phones
II. Automatic funds transfer with phone banking facilities (for Citibank
and HDFC bank customers)
III. Simple and Secure Interactive Voice Response based system for
authentication
IV. get the trusted, professional advice of Sharekhan limited’s Tele
Brokers
V. After hours order placement facility between 8.00 am and 9.30 am
c. Integration of: Online Trading +Saving Bank + Demat Account.
d. Instant cash transfer facility against purchase & sale of shares.
e. IPO investments.
f. Instant order and trade confirmations by e-mail.
g. Single screen interface for cash and derivatives.

2) Speed trade Account

This is an internet-based software application, which enables one to buy and sell in an
instant. It is ideal for active traders and jobbers who transact frequently during day’s session

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to capitalize on intra-day price movement.

This account comes with the following features:

i. Instant order Execution and Confirmation.

ii. Single screen trading terminal for NSE Cash, NSE F&O & BSE.
iii. Technical Studies.
iv. Multiple Charting.
v. Market summary (Cost traded scrip, highest value etc.)
vi. Hot keys similar to broker’s terminal.
vii. Alerts and reminders.
viii. Back-up facility to place trades on Direct Phone lines
ix. Live market debts.

CHARGE STRUCTURE

Fee structure for General Individual:

Charges Classical Speed trade

Account Account
Account Rs 750 Rs 1000
Opening
Brokerage Intra day 0.01% Intra-day - 0.10%

Delivery-0.50% Delivery-0.50%

Depositary Charges

Account opening Charge Rs NIL

Annual Maintenance Charge Rs. NIL first year Rs. 300/= p.a. from
second calendar year onward

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HOW TO OPEN AN ACCOUNT WITH SHAREKHAN LIMITED?

For online trading with Sharekhan Ltd., investor has to open an account. Following are the
ways to open an account with Sharekhan Ltd.:

One need to call them at phone number provided below and asks that he want to open an
account with them

a. One can call on the Toll Free Number: 1-800-22-7500 to speak to a Customer Service
executive
b. b. Or If one stays in Mumbai, he can call on 022-66621111

One can visit any one of Sharekhan Limited’s nearest branches. Sharekhan has a huge
network all over India (640 centers in 280 cities). One can also log on to
“http://sharekhan.com/Locateus.aspx” link to find out the nearest branch.

One can send them an email at info@sharekhan.com to know about their product and
services

One can also visit the site www.sharekhan.com and click on the option “Open an
Account” to fill a small query form which will ask the individual to give details regarding his
name, city he lives in, his email address, phone number, pin code of the city, his nearest
Sharekhan Ltd. shop and his preferences regarding the type of account he wants.

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Generally the process of opening an account follows the following steps

LEAD MANAGEMENT SYSTEM (LMS) / REFERENCES

CONTACT THE PERSON OVER PHONE OR THROUGH

EMAIL

FIXING AN APPOINTMENT WITH THE PERSON

Giving Demonstration

yes No

Documentation

Filling Up the Form

Submission of the Form

Longin the Form

Sending Account Opining kit to the Client

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In order to open an account with ShareKahan Limited we need:

Photocopy of the clients’ PAN Card which should be duly attached Photo copy of any of the
following documents duly attached which will serve as correspondence address proof
 a Passport (valid)
 Voter’s ID Card
 Ration Card
 Driving License (valid)
 Electricity Bill (should be latest and should be in the name of the client)
 Telephone Bill (should be latest and should be in the name of the client)
 Saving Bank Statement** (should be latest)
 Demate Account of the Client

Two cheques drawn in favour of Sharkhan Limited, one for the Account Opening Fees and
the other for the Margin Money (the minimum margin money is Rs 5000

A cancelled cheque should be given by the client if he provides Saving Bank

Statement as a proof for correspondence address

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 Project Analysis

OUTCRY SYSTEM
The broker has to buy or sell securities for which he has received the orders. For
this, the broker or his authorized representatives goes to the stock exchange. This
method is called the open outcry system. Basically the brokers shout while buying or
selling the securities. The floor of the stock exchange is divided into a number of
markets also known as ‘post pit’ or wing based on particular securities dealt there

In the post pit or wing, the broker using ‘open outcry’ method makes an offer or bid
price. For making the necessary bargain, he quotes his purchase or sale price, also
known as offer or bid price. The dealer, to whom the price is quoted, quotes his own
price when the quotation of the dealer suits the broker, he may loose the bargain. If

he is not satisfied with the quote price, he may turn to some other dealer. On the close of the
bargain, the dealer as well as the broker makes a brief note of the
particulars of the deal. 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

DISADVANTAGES OF OUTCRY SYSTEM

 It lacks transparency.
 The scope of manipulation, speculation and mal practice is more.
 Signal were more important in the outcry system any member who could not interpret
the buy/sell signal correctly often landed himself in disaster situation.
 In audibility was another disadvantage of the outcry system.

Due to the above disadvantages of the outcry system the SHAREKHAN has shifted from
outcry system to online trading from February 29th 1997

DEMATERLIZATION

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Dematerialization is the process by which physical certificates of an investor are converted to
an equivalent number of securities in electronic form and credited in the investor account with
his DP. In order to dematerialize the certificates, an investor has to first open an account with
a DP and then request for the Dematerialization Request Form, which is DP and submit the
same along with the share certificates. The investor has to ensure that he marks “Submitted
for Dematerialization” on the certificates before the shares are handed over to the DP for
demat. 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
Dematerialization normally takes about fifteen to thirty days.

Rematerialization:
Rematerialization is the process of converting electronic shares in to physical share. To get
back dematerialized securities in the physical form, request DP for Rematerialization of the
same.

Benefit of Demat

It reduces the risk of bad deliveries, in turn saving the cost and wastage of time associated
with follow up for rectification. This has lead to reduction in brokerage to the extent of 0.5% by
quite a few brokerage firms.

In case of transfer of electronic shares, you save 0.5% in stamp duty. You avoid the cost of
courier / notarization
You can receive your bonuses and rights issues into your DA as a direct credit, this
eliminating risk of loss in transit.

You can also expect a lower interest charge for loans taken against Demat shares as
compared to loans against physical shares.

There is no lost in transit, thus the overheads of getting a duplicate copy in such
circumstances is reduced

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RBI has also reduced the minimum margin to 25% for loans against dematerialized securities
as against 50% for loans against physical securities.

Online Trading

Before getting in to the online trading we should know some things about the
internet, e-commerce and etc

1) What is Internet?
Internet is a worldwide, self-governed network connecting several other smaller networks and
millions of computers and persons, to mega sources of information. This technology shrinks
vast distances, accelerating the pace of business reforms and revolutionizing the way
companies are managed. It allows direct, ubiquitous links to anyone anywhere and anytime to
build up interactive relationships
Internet or net is an inter- connection of computer communication networks spanning the
entire globe, crossing all geographical boundaries. It has re-defined the methods 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.com age. 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. in
cyber space even the information can be copied downloaded and retransmitted.

2. E-commerce

Electronic commerce is associated with buying and selling over computer communication
networks. It helps conduct traditional commerce through new way of transferring and
processing of information. Information is electronically transferred from computer to computer
in an automated way. E-commerce refers to the paperless exchange of business information
using electronic data inter change, electronic technologies. It not only reduces manual

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processes and paper transactions but also helps organization move to a fully electronic
environment and change the way they operated.

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 orders on your stockbroker either verbally (personally or telephonically) 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 internet based trading engine.
These orders are routed to the stock exchange without manual intervention and executed
thereon in a matter of a few seconds

The net is used as a mode of trading in internet trading. Orders are communicated to the
stock exchange through website

In India
Internet trading started in India on 1st April 2000 with 79 members seeking permission for
online trading. 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

Objectives:

 Internet trading is expected to Increase transparency in the markets,

 Enhance market quality through improved liquidity, by increasing quote continuity and
market depth

 Reduce settlement risks due to open trades, by elimination of mismatches

 Provide management information system

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  Introduce flexibility in system, so as to handle growing volumes easily and to support
nationwide expansion of market activity.

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

For stock brokers:

1. Permission from stock exchange for net trading
2. Net worth of Rs. 50 lac
3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
9. Setting up a website

Procedure for Net Trading:

Step 1: Those investors, who are interested in doing the trading over internet system i.e.
NEAT-IXS, should approach the brokers and get them self registered with the Stock Broker.
Step 2: After registration, the broker will provide to them a Login name, Password and
personal identification number (PIN)
Step 3: Actual placement of an order. An order can then be placed by using the place order
window as under
(a) First by entering the symbol and series of stock and other parameters like quantity and

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 price of the scrip on the place order window
(b) Second, fill in the symbol, series and the default quantity.
Step 4: It is the process of review. Thus, the investor has to review the order placed by
clicking the review option. He may also re-set to clear the values
Step 5: After the review has been satisfactory, the order has to be sent by clicking on the
send option.
Step 6: The investor will receive an "Order Confirmation" message along with the order
number and the value of the order.
Step 7: 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. At
present, a time lag of about 10 seconds is there in executing the Trade
Step 8: It is regarding charging payment, for which there are different mode. Some brokers
will take some advance payment from the investor and will fix their trading limits. When the
trade is executed, the broker will ask the investor for transfer of funds to his account

Internet trading provides total transparency between a broker and an investor in the
secondary market. In the open outcry system, only the broker knew the actually transacted
price. Screen based trading provides more transparency. With online trading investors can
see themselves the price at which the deal takes place

The time gap has narrowed in every stage of operation. Confirmation and execution of trade
reaches the investor within the least possible time, mostly within 30 seconds. Instant
feedback is available about the execution. Some of the websites also offer

Step by step procedure in Online Trading:

Following steps explain the step by step approach to on-line trading:

1) Log on to the stock broker's website
2) Register as client/investor
3) Fill the application form and client broker agreement form on the requisite value stamp
paper

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 4) Obtain user ID and pass word
5) Log on to the broker's site using secure user ID and password
6) Market watch page will show real time on-line market data
7) Trade shares directly by entering the symbol or number of the security
8) Brokers server will check your limit in the on-line account and Demat account for the
number of shares and execute the trade
9) Order is executed instantly (10-30 seconds) and confirmation can be obtained
10)Confirmation is e-mailed to investor by broker
11)Contract note is printed and mailed in 24 hours
12)Settlement will take place automatically on the settlement day
13)Demat account and the bank account will get debited and credited by electronic means

Advantage of online trading

1. Online trading has made it possible for anyone to have easy and efficient access to
more reports and charts than it was previously possible if one went to any brokers'
office. Thus we have access to a lot more information online

2. Online trading has let room for smaller organizations to compete with multinational
organizations since it is no longer a leg it issue. Being online does not identify the size
of any particular organization, therefore, this additional power to the underdogs

3. Online trading has allowed companies to locate themselves where they want as
physical location is not an issue anymore. Companies can establish themselves
according to their gains and losses, for instance where tax (sales and value added
taxes) is best suited to them

4. Online trading gives control to individuals and they can exercise it over accounts thus
comprehend what is going on when they trade. It is like going back to school and re-
educating oneself on how to trade

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 5. individuals’ benefit by saving comparatively a lot more when trading online as the cost
per trade is less

Investor reason to Trade Online

 They have control over their accounts, can make their own decisions and don’t have to
give reasons for their actions. They are independent
 They have a reason to participate in the market and learn about it
 It is interesting, cheap, easy, fast, and convenient
 A lot of information is online so they can keep up-to-date with what is happening in the
trading world
 It will give investors a greater choice and better realization
 The immediate impact will be competition and benefits will accrue to the INVESTOR
 It will lead to brokerage commissions going down and brokers striving to increase
business afloat
 Investors will now go to place, which have better trading conditions
 They have access to numerous tools to invest, and can create their own portfolio

Here are the Possible Disadvantages

 When network crashes, there will be problems and delays due to a large influx of rapid
online trading criteria
 Individuals are restricted to first-hand financial guidance. This simply means that the
individual is himself / herself alone to
 A tax (sales tax and value added tax) evaluation becomes an issue, especially when
you are trading internationally
 One has no idea with whom he is dealing with on the other end
 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 begins to trade for too much which

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 causes losses for him / her
SWOT ANALYSIS

Strengths
 Strong credibility among investors because of its heritage
 Excellent reputation among the business society
 Capability of providing superior customer service
 Quality research team
 Easier access to the customer due to largest ground network of 280 branded
share shops in 120 cities
 Abundant information about economy and companies
 Ability to attract and retain superior and quality personnel.
 Highly sophisticated infrastructure
 Efficient research and analysis team, which by interpreting the economy and
company’s performance accurately is enhancing the profitability of the clientele

Weaknesses

 Limited customer appeal as the company product line does not include mutual funds
which is increasingly becoming a preferred customer investment option
 Inadequate product awareness among the retail investors
 Limited customer appeal as the company does not have access to the BSE online
space
 Brand awareness is low in the financial market
 Promotional activities conducted by the company are not at par with the other firm

Opportunities
 Hyderabad covers only 2% of investors which gives huge potential for the market
penetration.
 Bullish phase of the market attracts investing public

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  Access to the BSE online space for the retail investors creates opportunity to
increase clientele base
 Awareness campaigns about online trading create new market

Threats
 Availability of Unit Linked Insurance Policies (ULIP’s) and mutual funds in the market
 Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium

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Findings and Observations
 Fluctuations are more in secondary market than any other market

 There are more speculators than investors

 Information plays a vital role in the secondary market
 Previously rolling settlement is T+5 days, now it changed to T+2 days and further it will
be changing to T+1 day
 It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service provider
 The number of players is increasing at a steady rate and today there are over a
dozens of brokerage houses who have opted to offer net trading to their, customers
and prominent among them are SHARE KHAN, India bulls kotak street, ICICI direct
 The Bombay stock exchange sensex zoomed past the 7700 barrier for the first time in
history to achieve new all time high of 7800 intraday trade and ended at a historic
close of 7732 points

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Conclusion and Recommendations
 Things have changed for the better with the SHAREKHAN going on-line coupled with
endeavor to stream line the whole trading system, things have changed dramatically
over the last 3 to 4 years. New and advanced technologies have breached
geographical and cultural barriers, and have brought the countrywide market to
doorstep
 In the present scenario to compete with the Broker’s would require sound
infrastructure and trading as per international standards
 The introduction of on-line trading would influence the investors resulting in an
increase in the business of the exchange. It has helped the brokers handling a vast
amount of transactions and this can be an efficient trading, delivering settlement
system with adequate protection to investors. The trading of SHAREKHAN of the first
day was Rs. 1.8 crores
 Due to invention of online trading there has been greater benefit to the investors as
they could sell / buy shares as and when required and that to with online trading
 The broker’s has a greater scope than compared to the earlier times because of
invention of online trading
 The concept of business has changed today, this is a service oriented industry hence
the survival would require them to provide the best possible service to the clients
 I recommend the exchange authorities to take steps to educate Investors about their
rights and duties. I suggest to the exchange authorities to increase the investors’
confidence.
 I recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
 The speculative pressures are responsible for the wide changes in the price, not
attracting the genuine investors to the greater extent towards the market.
 Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits, therefore the authorities of the exchange should be more
vigilant to curb the speculation
 Necessary steps should be taken by the exchange to deal with the situations arising
due to break down in online trading

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