INTERNSHIP REPORT FOR “KOTAK SECURITIES LIMITED”

Submitted to Dr. M.G.R EDUCATIONAL AND RESEARCH INSTUTION, CHENNAI

in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
By
E ARAVINDHAN

(Reg. No: 215052101007)

Under the guidance of

Dr. B Neeraja
Professor

DEPARTMENT OF MANAGEMENT STUDIES

Dr. M.G.R.EDUCATIONAL AND RESEARCH INSTITUTE

DEEMED TO BE UNIVERSITY

University with Graded Autonomy Status (An ISO 21001:2018 Certified Institution)

Periyar E.V.R. High Road, Maduravoyal, Chennai-95, Tamilnadu, India.

2021-2023

-1-
 DECLARATION

I, E ARAVINDHAN hereby declare that the Internship report for KOTAK SECURITIES

LIMITED, submitted to the Dr. M.G.R EDUCATIONAL AND RESEARCH INSTUTION,

Chennai, in partial fulfillment of the requirements for the award of the degree of MASTER OF

BUSINESS ADMINISTRATION is a record of original and independent research work done

by me during JULY 2022 to AUGEST 2022 under the supervision and guidance of,

Dr. B NEERAJA, Professor Department of Management Studies,

Dr. M.G.R EDUCATIONAL AND RESEARCH INSTUTION, Chennai and it has not formed

the basis for the award of any Degree.

E ARAVINDHAN

Signature of the Candidate

II
3
 ACKNOWLEDGEMENT

I thank the almighty for installing in me the strength and power required to fulfil the work extended to me.

With immense pleasure I express my heartfelt gratitude to the management and staffs of Dr. M.G.R

EDUCATIONAL AND RESEARCH INSTUTION, for their valuable guidance extended to me for the

successful accomplishment of this organizational study. Dr. B Neeraja, Professor, my academic guide

without whose meticulous and industrial guidance, this study would have not served its very purpose. I

would like to express my sincere thanks and heartfelt to my organization guide.

I articulate the feeling of obligation for the splendid support extended by A.S KUMAR, FCA Manager

and all the staff in KOTAK SECURITIES LTD for their motivation, support and guidance throughout

the preparation of this project.

4
5
 CERTIFICATE

This to certify that the internship report, for ―KOTAK SECURITIES LIMITED, submitted to

the Dr. M.G.R EDUCATIONAL AND RESEARCH INSTUTION, Chennai, in partial fulfillment

of the requirements for the award of the degree of MASTER OF BUSINESS

ADMINISTRATION is a record of original research work done by E ARAVINDHAN

(Reg.No.215052101007) during the period JULY 2022 to AUGEST 2022 under my supervision

and guidance and the report has not formed the basis for the award of any Degree.

Signature of the Guide

COUNTER SIGNED BY

HEAD OF THE DEPARTMENT PRINCIPAL

6
 TABLE OF CONTENT

CHAPTER TITLE PAGE NO

NO
1 Introduction 01

2 Description of the Company 11

3 Information about the Internship - Learning 28

4 Review of Experience 66

5 Reflection on Learning 71

6 Conclusion 73

7
 CHAPTER 1

INTRODUCTION

1
 INTRODUCTION
There may be a strong intuitive appeal attached to the belief that relationships exist between
macroeconomic fundamentals and equity returns, but we lack correspondingly strong empirical
support that goes with it. Macroeconomic variables can be understood as: Variables reflecting
general economic conditions, variables related to interest rate and monetary policy, variables
concerning price level and variables involving international activities. General economic
conditions include variables like industrial production index or unemployment rate. The variables
concerning interest rate and monetary policy include interest rate, term spread, default spread,
money supply, etc., Variables focusing on price level may be general price level index or inflation
rate. Variables involving international activities are exchange rate or foreign direct investments
(FDI), etc., Studies have used different macroeconomic variables to examine which factors have
the most critical impact upon stock returns. One of the notable multi factor models, as proposed
by Chen et al., (1986) used empirical evidence to extend other risk factors besides the notion of
equity market risk premium as propagated by capital asset pricing model (CAPM). They used
various macroeconomic shocks including, industrial production index, inflation, risk premium,
default spread and term structure, as additional factors in the market model. There exists a huge
volume of literature on how stock returns get influenced. Much of the investigation between stock
returns and economic forces is based on the presumption that macroeconomic indicators are highly
influential in predicting stock returns and asset prices. One popular area of financial research is
studies on the factors that affect stock returns. As per the basic standard stock valuation model,
determinants of stock price are ―expected cash flows‖ from the stock and
―required rate of return‖ as per the riskiness of the stock. Macroeconomic indicators affect a firm‘s
cash flows and also influences risk-adjusted discount rate. The required rate of return comprises
of risk free rate along with the measure of asset‘s risk. This nominal risk free rate depends upon
real interest rate as well as expected inflation. Risk free rate has an inverse relationship with stock
prices. Similar is the case with inflation. Inflation depresses stock market (DE Tina, 1991).
Relationship of equity returns with money supply might be an empirical question. We know money
supply is positively related with inflation rate, hence it might adversely affect stock returns. Money
supply may also lead to increasing cash flows by building economic stimulus leading to increasing
stock prices. Expectations also play a very important role in determining stock returns and these
expectations, whether adaptive or rational, get influenced by economic fundamentals. Changes in
macroeconomic conditions affect current and future investment decisions i.e., an inflation shock
may result in a change in the expected return of an asset. Most popular models to determine stock
returns in finance textbooks are CAPM and arbitrage pricing theory (APT). CAPM is derived from
Markowitz‘s concept of diversification and it was further developed by Sharpe (1964), Lintner
(1965), Mossin (1966). CAPM is generally considered a single factor model because it states that
only market factor is to be considered for determining stock returns. Investors need to be
compensated in two ways, time value of money and risk. Time value of money is represented by
risk free rate that compensates for placing money in any investment over a period of time.
Investors, after diversifying their
2
Port folios, are concerned only with systematic risk or market risk (beta) which is inherent to the
market. Sources of systematic risk could be interest rate changes, inflation or even recession as
they affect the entire market. APT (Ross, 1976; Roll and Ross, 1980) is a form of multi-factor
model which claims that shocks or surprises of possible multiple factors can be used to explain
stock returns. An asset‘s return can be predicted using the relationship between the asset and many
common risk factors. APT predicts a relationship between the returns of a portfolio and the returns
of a single asset through a linear combination of many independent macroeconomic variables. A
multi factor model can also be thought of as the one in which macroeconomic variables are used
to explain stock returns. Since information technology (IT) revolution, information or news is
readily accessible. Access to information is easy and universal. This changing dynamics of the
environment has indeed made financial markets more efficient. Stock markets react promptly to
any news, good or bad, whether political tensions, and war situations, regulatory changes in
business environment or movements in global markets. Efficient market hypothesis (EMH) is an
idea partly developed in the 1960s by Eugene Fama. It states that it is impossible to beat the market
because prices already incorporate and reflect all relevant information. One cannot outperform the
overall market through expert stock selection or market timing, and the only way an investor can
possibly obtain higher returns is by purchasing riskier investments. Stocks always trade at their
fair value, making it impossible for investors to either purchase undervalued stocks or sell stocks
for inflated prices. Asset prices fully reflect all available information. There are three variants of
the hypothesis: ―Weak,―semi-strong, and
―strong forms. The weak form of the EMH claims that prices on traded assets (e.g. Stocks, bonds
or property) already reflect all past publicly available information. The semi-strong form of the
EMH claims both that prices reflect all publicly available information and that prices instantly
change to reflect new public information. The strong form of the EMH additionally claims that
prices instantly reflect even hidden ―insider‖ information. EMH states that if the market is efficient
then we cannot forecast stock returns leaving no arbitrage opportunities to make profit. If the
market is efficient, it means that all the relevant information is captured and is getting reflected in
the prices. We can say that if these macroeconomic variables are insignificant in explaining stock
returns and stock returns are also insignificant in explaining macroeconomic variables, then the
market is efficient. Interpretation of co-integration with respect to market efficiency depends upon
how efficiency is defined Mukherjee and Naka (1995). If we see market efficiency as lack of
arbitrage opportunities, then the presence of co-integration (long run equilibrium relationships)
among variables is a sign of market inefficiency. Prominent macroeconomic variables generally
considered are: Inflation rate, exchange rate, money supply, level of economic activity and interest
rates. There cannot be a finite list. Other macroeconomic variables can be unemployment rate,
savings, exports, FDI, fiscal policy (budget deficits), oil prices, and gold prices. Even the spread
between short and long interest rates, expected and unexpected inflation, high and low grade bonds
(Chen et al., 1986) can be analyzed while observing stock returns. Relationship between stock
returns and macroeconomic variables can be viewed in two ways. One view is to see the stock
market as the leading indicator of economic activity the macroeconomic variables based on the
findings that stock market rationally signals

3
Changes in real activity. Another view is that macroeconomic variables influence and predict stock
returns. We find that current economic activities can explain stock market returns since the stock
market reflects macroeconomic variables on stock price indices. Knowledge of sensitivity of stock
markets to key macroeconomic variables and vice versa is important in areas of investment,
finance and business environment. The present study improves the earlier studies in the Indian
context and offers a value addition to the existing literature. This paper is organized as follows:
Section 2 reviews previous literature followed by Section 3 giving data related issues. Section 4
details the methodology employed and Section 5 presents the results.

THE INDIAN STOCK MARKET:

The stock market is the collection of markets and exchanges where regular activities of buying,
selling, and issuance of shares of publicly held companies take place. Stocks, also known as
equities, represent fractional ownership in a company, and a stock market is a place where
investors can buy and sell ownership of such investible assets. Institutionalized formal exchanges
or over-the-counter (OTC) marketplaces that operate under a well-defined set of regulations,
conduct such financial activities. They make the stock market, a platform to facilitate seamless
exchange of shares.

There are two main stock exchanges in India where the majority of the trade takes place - the
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). NSE, located in
Mumbai, and established in 1922 is the leading stock exchange in India where one can buy and
sell shares of publicly listed companies. NSE has a flagship index named NIFTY50. The index
comprises the top 50 companies based on their trading volume and market capitalization. This
index is widely used by investors in India, as well as globally, as the barometer of the Indian capital
markets.

National Security Clearing Corporation Ltd (NSCCL) and Indian Clearing Corporation Ltd (ICCL)
are the subsidiaries of the National Stock Exchange and Bombay Stock Exchange respectively.
They ensure guaranteed settlement of transactions carried in stock exchanges. The clearing
corporation ensures there are no defaults either from the buyers' or sellers' side.

Securities Exchange Board of India (SEBI) is the regulatory body of the Indian Stock Markets.
The main objective of SEBI is to protect the interest of retail investors, promote the development
of stock exchanges, and regulate the activities of financial intermediaries and investors in the
market. SEBI ensures that the stock exchanges (BSE and NSE), brokers and sub-brokers conduct
their business fairly, the corporate houses do not use markets as a mean to unfairly benefit
themselves, the rights of small retail investors are protected and that the large scale investors with
enormous cash do not intend on manipulating markets.

Companies raise capital through the stock market, which they can utilize in expanding their
businesses. Offering stock shares instead of borrowing from financial institutions, is beneficial to
the companies since it saves them from incurring debt and paying interest charges on that debt. It
also provides investors, those who purchase stocks, the opportunity to earn a share in the profits

4
Of publicly-traded companies. An investor can earn from the stocks that pay regular dividends,
I.e. a given amount of money per share of stock, or may as well profit by selling their stock for a
profit if the stock price increases from their purchase price. An efficiently functioning stock market
is considered critical to economic development, as it gives companies the ability to quickly access
capital from the public.

There can be multiple stock trading venues in a country or a region which allow transactions in
stocks and other forms of securities. Though it is called a stock market or equity market and is
primarily known for trading stocks/equities, other financial securities - like exchange-traded funds
(ETF), corporate bonds, and derivatives based on stocks, commodities, currencies, and bonds are
also traded in the stock markets.

A market participant can trade in the stock market only through a registered intermediary known
as a stockbroker. A stockbroker or a dealer is a professional individual who buys/sells shares on
behalf of their clients. They are entities registered as a trading member of the stock exchange and
hold a stockbroking license. They operate under the guidelines prescribed by SEBI. An individual
needs to open a trading/DEMAT account to transact in the financial market. DEMAT account or
dematerialized account allows holding shares in electronic form instead of taking physical
possession of certificates. It is necessary to have a DEMAT account to trade in shares since it holds
all the investments an individual makes in shares, exchange-traded funds, bonds, government
securities, and mutual funds in one place.

A depositary is a financial intermediary that offers the service of a DEMAT account. In India,
there are only two depositaries that offer DEMAT account services - National Securities
Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). An investor
cannot directly go to the depositary to open the DEMAT account. They need to appoint a
Depositary Participant (DP). According to SEBI guidelines, banks, financial institutions and
members of stock exchanges registered with SEBI can become DPs.

A trading account is used to place orders in the stock market. One can open their trading account
with a stockbroker who is registered with SEBI. An order can be placed either through an online
or offline mode. In the online mode, one can buy/sell stocks through the trading terminal provided
by the broker whereas, in the offline mode, an individual can ask their broker to place an order on
their behalf. Banks help in transferring funds from a bank account to a trading account. The client
needs to categorically mention which bank account has to be linked to the trading account to the
stockbroker at the time of opening the trading account.

The prices of shares on a stock market can be set in a number of ways, the most common way
being through an auction process where buyers and sellers place bids and offer to buy or sell. A
bid is a price at which somebody wishes to buy, and an offer is a price at which somebody wishes
to sell. When the bid and ask coincide, a trade is made. Investors can then buy and sell these stocks
among themselves, and the exchange tracks the supply and demand of each listed stock. That
supply and demand help determine the price for each security or the levels at which stock market
participants, i.e. the investors and traders are willing to buy or sell.

The stock market is made up of millions of investors and traders, with different ideas about the
value of a specific stock and thus the price at which they are willing to buy or sell it. The

5
Thousands of transactions that occur as these investors and traders convert their intentions to
actions by buying and selling a stock cause minute-by-minute gyrations in it, over the course of a
trading day.

It is important to recognize one‘s long-term goals before investing in the stock market. It requires
consistency, regularity and commitment. It is always prudent to understand risk tolerance, which
is also dependent on an individual‘s perception of risk. Starting from the basics and then eventually
diversifying the investment safeguards the investor from adverse stock market conditions. It is
better to be patient and wait for returns than to expect quick returns.

TYPES OF SHARE MARKETS

Now that we understand the stock market meaning, one key aspect of stock market basics is that
one can trade on one of two market segments. In other words, there are two types of share markets
in India. These are primary markets and secondary markets.

1. Primary Share Markets

A primary share market is a place where a company first gets registered with the goal of raising
money and issues a certain amount of shares. The goal of being publicly listed on a primary stock
exchange is to raise money. This where a company gets registered to issue a certain amount of
shares and raise money. If the company decides to sell its shares for the first time, this is known as
an initial public offering.

2. Secondary Market

Once a company‘s new securities have been sold in the primary market, they are then traded in the
secondary stock market. On the secondary market, investors get the opportunity to exit their
investment and sell off their shares. Transactions on the secondary market mostly comprise trades
where one investor chooses to buy shares from a separate investor at the prevailing market price.

Based on whatever prices the two parties agree to set or the prevailing market price, one investor
will buy shares from another on a secondary market. Typically investors conduct these transactions
through a broker or other such intermediary who can facilitate this process. Brokers offer these
trading opportunities at different plans.

6
BOMBAY STOCK EXCHANGE:
Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning
three centuries in its 133 years of existence. What is now popularly known as BSE was established
as "The Native Share & Stock Brokers' Association" in 1875.

BSE is the first stock exchange in the country which obtained permanent recognition (in 1956)
from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal
and pre-eminent role in the development of the Indian capital market is widely recognized. It
migrated from the open outcry system to an online screen-based order driven trading system in
1995. Earlier an Association of Persons (AOP), BSE is now a corporatized and demutualized entity
incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE
(Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange
Board of India (SEBI). With demutualization, BSE has two of world's best exchanges, Deutsche
Börse and Singapore Exchange, as its strategic partners.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing
it with an efficient access to resources. There is perhaps no major corporate in India which has not
sourced BSE's services in raising resources from the capital market.

Today, BSE is the world's number 1 exchange in terms of the number of listed companies and the
world's 5th in transaction numbers. The market capitalization as on December 31, 2007 stood at
USD 1.79 trillion. An investor can choose from more than 4,700 listed companies, which for easy
reference, are classified into A, B, S, T and Z groups.

The BSE Index, s&p bse sensex, is India's first stock market index that enjoys an iconic stature
and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The s&p bse
sensex is constructed on a 'free-float' methodology, and is sensitive to market sentiments and
market realities. Apart from the s&p bse sensex bse, offers 21 indices, including 12 sectorial
indices. BSE has entered into an index cooperation agreement with Deutsche Börse. This
agreement has made s&p bse sensex and other BSE indices available to investors in Europe and
America

The first Exchange Traded Fund (ETF) on s&p bse sensex, called "SPIcE" is listed on BSE. It
brings to the investors a trading tool that can be easily used for the purposes of investment, trading,
hedging and arbitrage. SPIcE allows small investors to take a long-term view of the market.

BSE provides an efficient and transparent market for trading in equity, debt instruments and
derivatives. It has a nation-wide reach with a presence in more than 359 cities and towns of India.
BSE has always been at par with the international standards. The systems and processes are
designed to safeguard market integrity and enhance transparency in operations. BSE is the first
exchange in India and the second in the world to obtain an ISO 9001:2000 certification. It is also
the first exchange in the country and second in the world to receive Information Security
Management System Standard BS 7799-2-2002 certification for its BSE On-line Trading System
(BOLT).

7
BSE continues to innovate. In recent times, it has become the first national level stock exchange
to launch its website in Gujarati and Hindi to reach out to a larger number of investors. It has
successfully launched a reporting platform for corporate bonds in India christened the ICDM or
Indian Corporate Debt Market and a unique ticker-cum-screen aptly named 'BSE Broadcast' which
enables information dissemination to the common man on the street.

In 2006, BSE launched the Directors Database and ICERS (Indian Corporate Electronic Reporting
System) to facilitate information flow and increase transparency in the Indian capital market.
While the Directors Database provides a single-point access to information on the boards of
directors of listed companies, the ICERS facilitates the corporates in sharing with BSE their
corporate announcements.

NATIONAL STOCK EXCHANGE:

National Stock Exchange of India Limited (NSE) is the leading stock exchange of India, located
in the city of Mumbai (previously Bombay), Maharashtra. It is under the ownership of some
leading financial institutions, Banks, and Insurance companies. NSE was established in 1992 as
the first dematerialized electronic exchange in the country. NSE was the first exchange in the
country to provide a modern, fully automated screen-based electronic trading system that offered
easy trading facilities to investors spread across the length and breadth of the country. Vikram
Limaye is Managing Director & Chief Executive Officer of NSE.

National Stock Exchange has a total market capitalization of more than US$3 trillion, making it
the world's 10th-largest stock exchange as of May 2021. NSE's flagship index, the NIFTY 50, a
50 stock index is used extensively by investors in India and around the world as a barometer of the
Indian capital market. The NIFTY 50 index was launched in 1996 by NSE. However, Vaidya
Nathan (2016) estimates that only about 4% of the Indian economy / GDP is actually derived from
the stock exchanges in India.

Unlike countries like the United States where nearly 70% of the country's GDP is derived from
large companies in the corporate sector, the corporate sector in India accounts for only 12-14% of
the national GDP (as of October 2016). Of these only 7,400 companies are listed of which only
4000 trade on the stock exchanges at BSE and NSE. Hence the stocks trading at the BSE and NSE
account for only around 4% of the Indian economy, which derives most of its income-related
activity from the so-called unorganized sector and household spending.

Economic Times estimates that as of April 2018, 6 crore (60 million) retail investors had invested
their savings in stocks in India, either through direct purchases of equities or through mutual funds.
Earlier, the Bimal Jalan Committee report estimated that barely 1.3% of India's population invested
in the stock market, as compared to 27% in the United States and 10% in China.

National Stock Exchange was incorporated in the year 1992 to bring about transparency in the
Indian equity markets. Instead of trading memberships being confined to a group of brokers, NSE
ensured that anyone who was qualified, experienced, and met the minimum financial requirements
was allowed to trade. In this context, NSE was ahead of its time when it separated ownership and
management of the exchange under SEBI's supervision. Stock price information

8
That could earlier be accessed only by a handful of people could now be seen by a client in a
remote location with the same ease. The paper-based settlement was replaced by electronic
depository-based accounts and settlement of trades was always done on time. One of the most
critical changes involved a robust risk management system that was set in place, to ensure that
settlement guarantees would protect investors against broker defaults.

NSE was set up by a group of leading Indian financial institutions at the behest of the Government
of India to bring transparency to the Indian capital market. Based on the recommendations laid out
by the Pherwani committee, NSE was established with a diversified shareholding comprising
domestic and global investors. The key domestic investors include Life Insurance Corporation,
State Bank of India, IFCI Limited, IDFC Limited and Stock Holding Corporation of India Limited.
Key global investors include Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE
Investments Mauritius Limited, Aranda Investments (Mauritius) Pte Limited, and PI Opportunities
Fund I.

The exchange was incorporated in 1992 as a tax-paying company and was recognized as a stock
exchange in 1993 under the Securities Contracts (Regulation) Act, 1956, when P. V. Narasimha
Rao was the Prime Minister of India and Manmohan Singh was the Finance Minister. NSE
commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The capital
market (equities) segment of the NSE commenced operations in November 1994, while operations
in the derivatives segment commenced in June 2000. NSE offers trading, clearing and settlement
services in equity, equity derivative, debt, commodity derivatives, and currency derivatives
segments. It was the first exchange in India to introduce an electronic trading facility thus
connecting the investor base of the entire country. NSE has 2500 VSATs and 3000 leased lines
spread over more than 2000 cities across India.

NSE was also instrumental in creating the National Securities Depository Limited (NSDL) which
allows investors to securely hold and transfer their shares and bonds electronically. It also allows
investors to hold and trade in as few as one share or bond. This not only made holding financial
instruments convenient but more importantly, eliminated the need for paper certificates and greatly
reduced incidents involving forged or fake certificates and fraudulent transactions that had plagued
the Indian stock market. The NSDL's security, combined with the transparency, lower transaction
prices, and efficiency that NSE offered, greatly increased the attractiveness of the Indian stock
market to domestic and international investors.

9
SECURITIES AND EXCHANGE BOARD OF INDIA:

The Securities and Exchange Board of India is the regulatory body for securities and commodity
market in India under the jurisdiction of Ministry of Finance , Government of India. It was
established on 12 April 1992 and given Statutory Powers on 30 January 1992 through the SEBI
Act, 1992 Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-
statutory body for regulating the securities market. It became an autonomous body on 30 January
1992 and was accorded statutory powers with the passing of the SEBI Act 1992 by the Indian
Parliament. SEBI has its headquarters at the business district of Bandra Kurla Complex in Mumbai
and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata,
Chennai, and Ahmedabad respectively. It has opened local offices at Jaipur and Bangalore and has
also opened offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year
2013–2014.

Controller of Capital Issues was the regulatory authority before SEBI came into existence; it
derived authority from the Capital Issues (Control) Act, 1947.

The SEBI is managed by its members, which consists of the following:

• The chairman is nominated by the Union Government of India.

• Two members, i.e., Officers from the Union Finance Ministry.
• One member from the Reserve Bank of India.
• The remaining five members are nominated by the Union Government of India, out of
them at least three shall be whole-time members

10
 CHAPTER 2

DESCRIPTION OF THE COMPANY

11
DESCRIPTION OF THE COMPANY:

KOTAK MAHINDRA BANK LIMITED is an Indian banking and financial services company
headquartered in Mumbai. It offers banking products and financial services for corporate and retail
customers in the areas of personal finance, investment banking, life insurance, and wealth
management. It is India's third largest private sector bank by assets and by market capitalization
as of November 2021. As of February 2021, the bank has 1600 branches and 2519 atm.

HISTORY:
In 1985, Uday Kotak founded what later became an Indian financial services conglomerate. In
February 2003, Kotak Mahindra Finance Ltd. (KMFL), the group's flagship company, received
a banking licence from the Reserve Bank of India. With this, KMFL became the first non-
banking finance company in India to be converted into a bank.

In a study by Brand Finance Banking 500 published in February 2014 by Banker magazine,
KMBL was ranked 245th among the world's top 500 banks with a brand valuation of around
US$481 million and brand rating of AA+

Established in 1985, the Kotak Mahindra group has been one of India's most reputed financial
conglomerates. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship company
12
Was given the license to carry on banking business by the Reserve Bank of India (RBI). This
approval created banking history since Kotak Mahindra Finance Ltd. is the first non–banking
finance company in India to convert itself in to a bank as Kotak Mahindra Bank Ltd. Today, the
bank is one of the fastest growing bank and among the most admired financial institutions in India.
The bank has over 323 branches and a customer account base of over 2.7 million. Spread all over
India, not just in the metros but in Tier II cities and rural India as well, it is redefining the reach
and power of banking. Presently it is engaged in commercial banking, stock broking, mutual funds,
life insurance and investment banking. It caters to the financial needs of individuals and corporates.
The bank has an international presence through its subsidiaries with offices in London, New York,
Dubai, Mauritius, San Francisco and Singapore that specialize in providing services to overseas
investors seeking to invest into India.

CORPORATE OFFICE:

27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. Telephone No.:
+22 43360000, Fax No.: +22 67132430.
Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg,
Malad (East), Mumbai 400097. Telephone No: 42856825.
CIN: U99999MH1994PLC134051. SEBI Registration No: NSE INB/INF/INE 230808130, BSE
INB 010808153/INF 011133230,
MSEI INE 260808130/INB 260808135/INF 260808135, USE: INE270808137, AMFI ARN
0164, PMS INP000000258 and Research Analyst INH000000586.
NSDL/CDSL: IN-DP-NSDL-23-97.

13
MERGERS AND ACQUISITIONS:
ING Vysya Bank

In 2015, Kotak Bank acquired ING Vysya Bank in a deal valued at ₹150 billion (US$2.0 billion).
With the merger completed, Kotak Mahindra Bank had almost 40,000 employees, and the number
of branches reached 1,261. After the merger, ING Group, which controlled ING Vysya Bank,
owned a 7% share in Kotak Mahindra Bank.

Ferbine

In 2021, the bank acquired a 9.99% stake in Ferbine, an entity promoted by Tata Group, to
operate a Pan-India umbrella entity for retail payment systems, similar to National Payments
Corporation of India.

SUBSIDIARIES AND ASSOCIATES:

• Kotak Mahindra Prime

• Kotak Mahindra Investments
• Kotak Securities
• Kotak Mahindra Capital
• Kotak Mahindra Life Insurance
• Kotak Mahindra General Insurance
• Kotak AMC
• Kotak Investment Advisors
• Kotak Capital Company

14
CORPORATE SOCIAL RESPONSIBILITY:

In 2020, Kotak pledged to donate ₹50 crore to the PM CARES Fund to fight against the COVID-
19 pandemic in India.

TYPE : Public

TRADED AS : Kotakbank

INDUSTRY : Financial Service

FOUNDED : February 2003

FOUNDERS : Uday Kotak

HEAD QUARTERS : Mumbai Maharashtra India

KEY PEOPLE : Uday Kotak ( Chairman Md Ceo )

PRODUCTS : Banking, Commodities, Credit Cards, Equity Trading,Insurance, Investment

Management, Mortgage Loans, Mutuals Funds, Private Equity, Risk Management, Wealth
Management, Asset Management.

REVENUE : 56,703 CRORES

OPERATING INCOME :16,428 Crores

NET INCOME : 9,903 Crores

TOTAL ASSETS : 478,872 Crores

TOTAL EQUITY : 83,345 Crores

NUMBER OF EMPLOYEES : 71000 (2021)

15
 SHARE HOLDING PATTERN – KOTAK MAHINDRA BANK LTD.

PRODUCTS AND SERVICES:

• The bank offers complete financial solutions for infinite needs of all individual and non–
individual customers depending on the customer's need – delivered through a state of the art
technology platform. Investment products like Mutual Funds, Life Insurance, retailing of gold
coins and bars etc. are also offered. The bank follows a mix of both open and closed architecture
for distribution of the investment products. All this is backed by strong, in–house research on
Mutual Funds.
• The bank‘s savings account goes beyond the traditional role of savings, and allows us to put
aside a lot more than just money. The worry–free feature of Savings Account provides a range
of services from funds transfer, bill payments, 2–way sweep through our ActivMoney feature
and much more. We can place standing instructions for investment options that can be booked
through Internet or through Phone banking services. The Savings Account thus provides for
attractive returns earned through a comprehensive suite products and services that offer
investment options, all delivered seamlessly to the customer by well integrated technology
platforms.
• Apart from Phone banking and Internet banking, the Bank offers convenient banking facility
through Mobile banking, SMS services, Netcard, Home banking and BillPay facility among
others.

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• The Depository services offered by the Bank allows the customers to hold equity shares,
government securities, bonds and other securities in electronic or Demat forms.
• The Salary 2 Wealth offering provides comprehensive administrative solutions for Corporates
with features such as easy and automated web based salary upload process thereby eliminating
the paper work involved in the process, a dedicated relationship manager to service the corporate
account, customized promotions and tie – ups and many such unique features. The whole gamut
of investment products and investment advisory services is available to the salary account
holders as well.
• For the business community, the bank offer comprehensive business solutions that include the
Current Account, Trade Services, Cash Management Service and Credit Facilities. The bank‘s
wholesale banking products offer business banking solutions for long–term investments and
working capital needs, advice on mergers and acquisitions and equipment financing. To meet
special needs of the rural market, the bank has dedicated business offerings for agricultural
financing and infrastructure. Its Agriculture Finance division delivers customized products for
capital financing and equipment financing needs of our rural customers.
• For financial liquidity the bank offers loans that meet personal requirements with quick
approval and flexible payment options. To complete the personal financial offerings space, the
bank now offers Kotak Credit Card which is a hassle–free, transparent product that also happens
to be the first vertical credit card in the industry.
• Kotak Mahindra Bank addresses the entire spectrum of financial needs of Non–Resident Indians.
The bank has tie–up with the Overseas Indian Facilitation Centre (OIFC) as a strategic partner,
which gives them a platform to share their comprehensive range of banking and investment
products and services for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs).
Their Online Account Opening facility and Live Chat service helps to get in touch at the comfort
of homes and at the convenience. These offerings are specifically designed to suit the overseas
Indian's personal financial needs and give the global Indians a near to home feel.

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COMMERCIAL BANKING:

The Commercial Banking business has registered a reasonable growth in FY 2015–16 despite subdued
market sentiments and erratic monsoon.
Commercial Vehicles (CV) and Construction Equipment (CE) sectors, which have been
witnessing slowdown since 2011, showed strong signs of recovery. The CV situation has
improved significantly over the previous year, especially in the case of Medium Commercial
Vehicle (MCV) & Heavy Commercial Vehicle (HCV) sales across segments, which was driven
by replacement demand. Your Bank has increased exposure significantly to this sector in FY
2015–16. Light Commercial Vehicle (LCV) segment has also grown over the previous year.
Further, decrease in energy prices and all round improvement of load factors have improved
viability for transport operations and also reduced levels of delinquency. Small Commercial
Vehicles (SCV) segment is also showing signs of recovery with marginal growth in the last quarter.
Despite a second back to back dry spell last year, the agri business (including the tractor finance
business) managed to grow last year with the loans outstanding of Rs.17,993 crore. The agri
business increased its focus on financial inclusion activities by directly financing the micro loans
segment for women‘s Joint Liability Groups. Close to 56,000 women borrowers were added with
loan sizes of around Rs.20,000 each to women in the states of UP and Bihar.
Your Bank has maintained its market share in the tractor finance business. While the
delinquencies in this segment have increased, it is under control.
Activities in focus were loans for construction of ware houses & cold storages, warehouse receipt
funding under pledge, micro loans and loans for purchase of pumps etc. These loans qualified
for small and marginal farmer categorizations and direct individual farmer funding. Other Agri
loans included loans for food and Agro processing units.
The Agri division (including tractor finance) continued to manage its delinquency though
incremental stress was observed across locations due to monsoon shortfall.
The growth of the Emerging Corporate Group‘s (ECG) portfolio has been modest in FY 2015–
16. There has been an increase in delinquencies in this segment, mainly on account of volatile
commodity prices and uncertainty in the economy.

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TECHNOLOGY:

With the announcement of the merger with ING Vysya Bank, your Bank took up the initiative of
merging the technology systems and data of the two banks. The merger provided an opportunity
to leverage the ―best of breed‖ systems from both banks. As the technology integration progressed
across business verticals, your Bank identified synergies in systems and capabilities to optimize
costs across the technology operations of the two banks. The merged systems will provide a
standard customer experience across all channels to all customers of the merged entities.
Customer data security and risk management need to keep pace with digital offerings. With this in
mind, the Distributed Denial of Service was augmented with an in–premise solution. A fraud
management solution to track customer transactions across channels was implemented. On the
regulatory side, a new Enterprise Risk System was implemented for the Value at Risk calculation
of the treasury products.

DIGITIZATION:

Focus on creating more and more digitally enabled services across channels remained a key
priority for your Bank in this year. Some of the highlights being:
• Launched a comprehensive microsite for New Pension System with various calculators and
educative content to demystify the concept of pension and also enable people to get started with
opening their pension account online.
• Launched a real time customer acquisition platform for personal loan, where a customer PAN,
Adhaar & CIBIL are checked real time & decision about the loan amount and interest rate can be
given instantly.
• Launched Pre–approved Personal Loan on Net Banking for salaried customers. This enables a
pre–qualified customer to apply for personal loan while logged into the net–banking account and
the disbursed amount is instantly credited to customer‘s banking account.
• Launched tab based account opening process for Saving Account. This is an end–to–end
digitized workflow, from lead capture to account set up, thereby reducing the processing time
and enhancing customer experience.

19
• Hashtag banking was given further fillip by creating capability to order a book or special
promotional movies by just a single tweet.
• Launched Kotak Bharat Banking – India‘s first internet–free app. This app does not need
internet to transact. Customer can do 25 different transactions including mobile recharge and
small value fund transfer. The app is available in 6 languages (Hindi, Gujarati, Marathi, Tamil,
Kannada and English). Response messages within the app will also be in regional language.
• Rolled out e–store on Net Banking after successful roll out of m–store on banking app. This
includes travel categories like flight tickets, bus tickets and hotel booking.
• Introduced new features in the iPhone version of mobile app. iPhone customers can now book
a Recurring Deposit (RD), Add a new biller and set Auto Pay amongst various new services
introduced.
• Turn–around times for lending to commercial customers significantly improved by digitizing
the process by introducing a tablet based lead management system for use by sales people in the
field.
• Corporate customers got an upgraded FX trading portal.
• Digitization for wealth management customers was also strengthened with the launch of a
portal providing a single view of all their investments.

FEATURES OF TRADING WITH KOTAK SECURITIES LIMITED:

• Freedom from paperwork

• Instant credit and money transfer

• Trade from any net enabled PC or in mobile phone

• Share market and mutual funds portfolio.

• Online orders on the phone

• Timely advice and-research reports

• Real-time Portfolio tracking

• A profit motive company.

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ABOUT KOTAK SECURITIES APP

Kotak Stock Trader App is one of the designed with a vision to let the stock market be your all-
time companion.

That means the Kotak Securities Mobile App curators were clear that you could access the market
anytime and from anywhere.

After rigorous brainstorming, the makers are on the dais with the newly sorted version of the Kotak
Securities App designed to work flawlessly on I pads, Apple IOS, Tablets, Google Android,
Android tablets, etc.

The Kotak Stock Trader Mobile App is a user-friendly trader‘s app in a true sense as it allows the
trader to continue trading in domains like equities, currency derivatives, and derivatives.

The ease and proficiency offered by Kotak Securities Trading App makes it the Best App for
Trading.
It leverages the trader with a couple of interesting attributes like allowing tracking the portfolio,
offering varied securities and a wonderful trading experience. In addition, get real updates from
the market through live streaming.

Kotak Securities is one of the prominent entities dealing in stock broking facilities, no more about
it from the Kotak Securities Review section.

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PROCESS OF ONLINE TRADING IN KOTAK SECURITIES LIMITED:
The Trading procedure involves the following steps:

1. SELECTION OF A BROKER: The buying and selling of securities can only be

done through SEBI registered brokers who are members of the Stock Exchange. The
broker can be an individual, partnership firms or corporate bodies. So the first step is to
select a broker who will buy/sell securities on behalf of the investor or speculator.

2. OPENING DEMAT ACCOUNT WITH DEPOSITORY: Demat (Dematerialized)

account refer to an account which an Indian citizen must open with the depository
participant (banks or stock brokers) to trade in listed securities in electronic form. Second
step in trading procedure is to open a Demat account. The securities are held in the
electronic form by a depository. Depository 21 is an institution or an organization which
holds securities (e.g. Shares, Debentures, Bonds, Mutual (Funds, etc.) At present in India
there are two depositories: NSDL (National Securities Depository Ltd.) and CDSL
(Central Depository Services Ltd.) There is no direct contact between depository and
investor. Depository interacts with investors through depository participants only.
Depository participant will maintain securities account balances of investor and intimate
investor about the status of their holdings from time to time.

3. PLACING THE ORDER: After opening the Demat Account, the investor can place
the order. The order can be placed to the broker either (DP) personally or through phone,
email, etc. Investor must place the order very clearly specifying the range of price at which
securities can be bought or sold. e.g. ―Buy 100 equity shares of SBI for not more than Rs
500 per share.‖

4. EXECUTING THE ORDER: As per the Instructions of the investor, the broker
executes the order i.e. he buys or sells the securities. Broker prepares a contract note for
the order executed.

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PLATFORMS FOR ONLINE TRADING
There are different platforms available for online trading.

Website:

Users can access their online trading account through the service provider site. Using the
log-in name and password, traders can procure access to all the different services offered
by the service provider. Most service providers offer access to the trading accounts through
smartphones and other devices, such as tablets and IPad. Some of the service providers
offer specially designed websites for account-holders who use slow Internet connections.

Dealer-Assisted Trading:

Experienced and qualified dealers will assist the account-holders to oversee their online
share trading and provide guidance on making the right financial decisions. Moreover,
users can call the dealers and complete trades on the phone. The dealers answer customer
queries and offer the right financial advice to help users grow their capital and meet various
financial goals and objectives.

Call and Trade:

If the users do not have access to their computers, they can call to place their trades. The
account-holders can place any number of orders and can deal in any segment, including
cash, derivatives, and initial public offerings. Contrary to belief, the call and trade platform
is completely secured because users have to pass through several levels of verifications
ensuring no frauds can occur. All the above online share trading platforms provide
convenience and flexibility to the online stock trading account-holders.
Moreover, it makes the entire procedure significantly less cumbersome and greatly
reduces the need for completing the necessary paperwork related to stock market trading

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PEOPLE WORKS IN THE STOCK MARKET

There are many different players associated with the stock market, including stockbrokers,
traders, stock analysts, portfolio managers and investment bankers. Each has a unique role,
but many of the roles are intertwined and depend on each other to make the market run
effectively.

STOCKBROKERS:

Stockbrokers, also known as registered representatives in the U.S., are the licensed
professionals who buy and sell securities on behalf of investors. The brokers act as
intermediaries between the stock exchanges and the investors by buying and selling
stocks on the investors' behalf.

STOCK ANALYSTS:

Stock analysts perform research and rate the securities as buy, sell, or hold. This research
gets disseminated to clients and interested parties who decide whether to buy or sell the
stock.

PORTFOLIO MANAGERS:

Portfolio managers are professionals who invest portfolios, or collections of securities, for
clients. These managers get recommendations from analysts and make the buy or sell
decisions for the portfolio. Mutual fund companies, hedge funds, and pension plans use
portfolio managers to make decisions and set the investment strategies for the money they
hold.

INVESTMENT BANKERS:

Investment bankers represent companies in various capacities, such as private companies

that want to go public via an IPO or companies that are involved in pending mergers and
acquisitions.

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WHO IS A STOCK BROKER?

A stockbroker is a middleman who has the authority to buy and sell stocks and securities in a
stock exchange on the investor‘s behalf

Stocks are traded through exchanges. However, an investor cannot directly trade in stock
exchanges. To buy a stock or sell a stock through exchanges, you need an intermediary who will
help you with the transaction. This middleman can be a person or a company who is authorized to
buy and sell stocks and other securities on your behalf. Such a person or a company is known as a
stockbroker. Stockbrokers are generally associated with a stockbroking firm, but they can also be
an independent person. For providing this service, a stockbroker charges a commission or a fee.

When understanding stockbroker meaning, one should note that a stockbroker is performing a
service for the investor. The role of a broker is to buy and sell shares for a client. Stockbrokers
also play another vital role; they provide information that helps an investor make correct
investment decisions.

Let us look at the services a stockbroker traditionally provides to its clients in greater detail.

1. Stockbrokers give accurate advice on buying and selling stocks and other securities. Since they
know the markets, they can advise a client on what stocks to buy and sell and when to buy or sell
them. They thoroughly research securities before making such recommendations
2. Stockbrokers buy and sell shares on behalf of their clients and handle the associated paperwork.
They also act as a record keeper and keep records of all transactions, statements and so on
3. Stockbrokers manage the client‘s investment portfolio and provide regular updates to their clients
about their portfolios. They also answer investment questions that a client may have
4. Stockbrokers inform their client about any new investment opportunity in the stock market
5. Stockbroker also helps a client to make changes in investment strategies depending on the market
conditions

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HOW ARE THEY REGULATED?

Stockbrokers are governed under the Securities and Exchange Board of India Act 1992, Securities
Contract Regulations Act, 1956, and also the Securities and Exchange Board of India
(Stockbrokers and sub-brokers Regulations), 1992. Stockbrokers are also regulated under other
rules, regulations and bylaws that SEBI may issue from time to time. Every stockbroker in India
needs to be a member of stock exchanges and also requires to be registered with SEBI.
Stockbrokers display their registration details on their websites and even on official documents.
One can also visit the SEBI website and find details of registered stockbrokers.

TYPES OF STOCKBROKERS

Now that you know what a stockbroker is and also how they are regulated, let us take a look at
the types of stockbrokers. Based on types of service provided, there are two types of
stockbrokers- full-service stockbroker and a discount stockbroker.

Full-service stockbrokers: Full-service stockbrokers offer a full stack of services to its clients.
They are traditional brokers who provide a trading facility coupled with advisory services. For this
reason, the fees charged by full-service stockbrokers are high, and the brokerage they charge is
based on the total amount of trades that are executed by the client. Full-service brokerages are
established players who have branches located all over the country. Clients can visit these branches
for service and advice.

Discount stockbrokers: Discount stockbrokers have come into existence due to the increased use
and availability of the Internet. These brokers provide an online trading platform for their clients.
However, discount brokers do not offer advisory services and research facilities. For this reason,
discount brokers also charge fewer commissions, which is mostly a flat fee.

All brokerages now provide services online where a customer can log in with a username and
password and execute trades. Online stockbroking services are faster since transactions can be
done with the help of the Internet, and the broker can also connect with the client through chat
rooms, emails and provide real-time updates.

26
When knowing what a stockbroker is, it is also essential to understand the meaning of a sub-
broker. A sub-broker is a person or agent who is appointed by brokers to act on their behalf. A
sub-broker is not a member of the stock exchange. Sub brokers need to register with SEBI
without which they do not have the permission to deal in securities.

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 CHAPTER 3

INFORMTION ABOUT THE INTERNSHIP-

LEARNING

28
IN THIS INTENSHIP I HAVE LEARNED ABOUT 8 TOPICS THEY ARE:

➢ STOCK EXCHANGE

➢ ONLINE TRADING

➢ DIVIDENT

➢ STOCK SPLIT

➢ BONUS SHARE

➢ EQUITY SHARE

➢ IPO

➢ FUTURE AND OPTIONS.

29
 STOCK EXCHANGE

WHAT IS STOCK EXCHANGE?

MEANING OF STOCK EXCHANGE

A stock exchange is an important factor in the capital market. It is a secure place where trading is
done in a systematic way. Here, the securities are bought and sold as per well-structured rules and
regulations. Securities mentioned here includes debenture and share issued by a public company
that is correctly listed at the stock exchange, debenture and bonds issued by the government
bodies, municipal and public bodies.

Typically bonds are traded Over-the-Counter (OTC), but a few corporate bonds are sold in a
stock exchange. It can enforce rules and regulation on the brokers and firms that are enrolled
with them. In other words, a stock exchange is a forum where securities like bonds and stocks
are purchased and traded. This can be both an online trading platform and offline (physical
location).

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FUNCTIONS OF STOCK EXCHANGE:

Following are some of the most important functions that are performed by stock exchange:

1. Role of an Economic Barometer: Stock exchange serves as an economic barometer that is

indicative of the state of the economy. It records all the major and minor changes in the share
prices. It is rightly said to be the pulse of the economy, which reflects the state of the economy.
2. Valuation of Securities: Stock market helps in the valuation of securities based on the factors of
supply and demand. The securities offered by companies that are profitable and growth-oriented
tend to be valued higher. Valuation of securities helps creditors, investors and government in
performing their respective functions.
3. Transactional Safety: Transactional safety is ensured as the securities that are traded in the stock
exchange are listed, and the listing of securities is done after verifying the company‘s position. All
companies listed have to adhere to the rules and regulations as laid out by the governing body.
4. Contributor to Economic Growth: Stock exchange offers a platform for trading of securities of
the various companies. This process of trading involves continuous disinvestment and
reinvestment, which offers opportunities for capital formation and subsequently, growth of the
economy.
5. Making the public aware of equity investment: Stock exchange helps in providing information
about investing in equity markets and by rolling out new issues to encourage people to invest in
securities.
6. Offers scope for speculation: By permitting healthy speculation of the traded securities, the
stock exchange ensures demand and supply of securities and liquidity.
7. Facilitates liquidity: The most important role of the stock exchange is in ensuring a ready platform
for the sale and purchase of securities. This gives investors the confidence that the existing
investments can be converted into cash, or in other words, stock exchange offers liquidity in terms
of investment.
8. Better Capital Allocation: Profit-making companies will have their shares traded actively, and
so such companies are able to raise fresh capital from the equity market. Stock market helps in
better allocation of capital for the investors so that maximum profit can be earned.
9. Encourages investment and savings: Stock market serves as an important source of investment
in various securities which offer greater returns. Investing in the stock market makes for a better
investment option than gold and silver.

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FEATURES OF STOCK EXCHANGE:

• A market for securities- It is a wholesome market where securities of government,

corporate companies, semi-government companies are bought and sold.

• Second-hand securities- It associates with bonds, shares that have already been
announced by the company once previously.

• Regulate trade in securities- The exchange does not sell and buy bonds and shares on
its own account. The broker or exchange members do the trade on the company‘s behalf.

• Dealings only in registered securities- Only listed securities recorded in the exchange
office can be traded.

• Transaction- Only through authorized brokers and members the transaction for securities
can be made.

• Recognition- It requires to be recognized by the central government.

• Measuring device- It develops and indicates the growth and security of a business in the
index of a stock exchange.

• Operates as per rules– All the security dealings at the stock exchange are controlled by
exchange rules and regulations and SEBI guidelines.

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ONLINE TRADING
WHAT IS ONLINE TRADING?
Online trading is a fairly popular method of transacting in financial products online. Brokers
have gone online, with their platforms providing all kinds of financial instruments like stocks,
commodities, bonds, ETFS, and futures.

• Traditionally, when a buyer wanted to invest money in stocks, he used to call his brokerage firm
and asked for putting in a request to buy stocks of a given company for a specified amount.

• The broker would then let him know the market price of the stocks and would confirm the order.

• After the user confirmed his trading account, the broker's fees and the time period required for
the order, the order would get placed on the stock exchange.

• As is obvious, this method had multiple steps and was pretty long drawn. Not surprisingly, online
trading platforms have taken over the entire trading landscape because of their advantages:

• The users can open, manage and close accounts sitting at their homes, working on a device with
internet.

• Transactions can be made much more easily.

• Multiple financial products, which earlier needed to be bought from specific places or banks, can
now be bought and sold online, which also reduces the role of an intermediary and saves time.

• The money used is real and the user gets to analyze and choose from the various options of
stocks and products available.

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How Does Online Trading Work?
When a user places the order for buying any particular stock on an online platform, his order
gets saved in the database of the trading member platform and the exchange platform. This
data is then used to look across all platforms selling that particular stock and display the
result with the best price available. If the price matches with the user‘s demands and he
confirms the order, then the process is validated by both the parties. After all that is completed,
the broker usually has three days to complete the settlement of the money, and hence, the
money is transferred to your account.

Many online trading platforms provide analysis of stocks, which helps the users to find the
status of the stock market. This also helps them predict the situation of stocks in upcoming
days and shape their decisions. Online platforms attract users through ease of use and
reduced commission fees. Ultimately, having a properly funded account is essential to
execute trades smoothly on a platform.

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 OFFLINE VS ONLINE TRADING
As online trading increasingly widens its roots into the modern trading market, retail trading
finds its place in local stock exchanges and offices. The impact of online trading over offline
has been noticeable with the evolution of computers and internet, in the past two decades.
Online trading does provide a lot of advantages which are difficult to achieve offline.

The cost of the stocks and various financial products has reduced significantly. Online
platforms provide a far more inexpensive experience, which attracts a majority of traders
and investors. This has become possible because online trading eliminates the majority of
the middlemen, which in turn, decreases the extra added price of commissions over these
products.

Online trading is much faster as compared to offline trading. It is also easier to find the
price of securities when the information is flowing electronically. Receiving updates
regarding price changes in the form of price alerts, makes it easy to transact shares. Thus,
reducing the processing time. It also enables buying products from any location in the
world. Hence, it is not necessary to go to a definite place to trade.

As online trading platforms are surplus in number, the competition between them results in
a benefit for the trader or investor. These platforms, for better marketing and gaining greater
users, release offers and discounts which enables the users to buy products at lesser prices
or sell them at higher prices, ultimately, benefitting the users. This happens, but rarely in
offline trading.

Wrapping Up

• Online trading is electronic trading with the help of internet and computers.

• The user can search for stocks available on different exchanges, decide on the broker who offers
the best price and an intuitive trading experience.

• You can choose a trading platform and start placing various types of share trading orders.

• The order for stocks is stored in a database which after verification from the buyer and the seller,
is proceeded for the transaction of money.

35
• These platforms provide various offers for marketing and gaining users, eventually benefitting
the users a lot which seldom happens in offline trading.

• Reduction of cost of products, reduced role of intermediaries, increased competition among

brokers, etc. are some of the major impacts of online trading.

36
BENEFITS OF ONLINE TRADING:
Unless you‘ve been living under a rock, you‘d know we now trade securities such as stocks,
bonds, mutual funds, ETFs, options, futures and currencies almost entirely online. It‘s easy,
and efficient. But that‘s a high level perspective. In this post, we‘ll zoom in the lens on online
trading to bring you a clear picture about how it works, its benefits and how to trade online.
After you learn about the basics and benefits of trading online, you can do it hassle -free
through your brokerage's internet-based proprietary trading platform.

What is Online Trading?

Before the era of online trading, traders had to call and give ‗buy‘an d ‗sell‘order to their
brokerage firms to trade for them. It used to be a very tedious process, and understandably
caused many problems. Surprisingly, there are a few investors who still practice offline trading
even today.

However, with the advent of the internet in this digital era, the vast majority of traders have
moved to online trading platforms. You can place ‗buy‘ and ‗sell‘ orders, place market limits,
put a stop-loss, check the status of an order, read news about companies, view the list of
securities currently held through the dashboard, etc and you also have access to all your
previous investment statements. Online trading has also reduced costs for both traders and
investors.

Benefits of online trading:

• It eliminates the middleman:

You can buy and sell without even speaking to your broker. This makes online trading alluring
for someone who does not have the finances to work with full-service brokers.

• It’s cheaper and faster: When a broker executes your trades, it costs you more money. On the
other hand, when you trade online, a brokerage charge is levied but it is always less than what a
traditional broker who has to place a trade physically, would charge you. Online trading is almost
instantaneous.

• It offers greater investor control: One of the most important advantages of online trading is
that it gives you greater control over your investments. You can trade whenever you want with

37
 Online trading during the trading hours and you can also take your own decision without any
interference from the broker.

• You can monitor your investments in real time: Your online trading platform has a lot of
advanced tools and interfaces to monitor your investing performance and to do your own
research. You can see real time gains or losses whenever you login from your phone or
computer.

How does online trading work?

When you buy or sell a stock through online trading, you order gets executed within seconds.
But, within these seconds lots of operations take place which you are unaware, such as:

• Your order is registered.

• Your order is placed in a database

• It searches for a seller and when both buyer and seller is matched, a confirmation message is sent
to both the parties.

• The order and the price are reported to the regulatory bodies. These regulatory bodies look over
all the trading activities and are displayed to all the investors.

• Your trading records are stored in case regulators want to study your past transactions.

• A contract is sent to your broker who sold the shares and the broker who bought them.

• After all this, the brokers have 3 days to exchange the cash and shares which is called settlement.

• After this process, the money or the shares are officially in your account.

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 HOW DO YOU TRADE ONLINE?

• Researching and Choosing a Stock: You should perform value research, technical analysis, try
identifying patterns, understand short selling etc.

• Choosing a Brokerage Partner: You can see this article to learn how to choose the best broker.

• Learning to Trade Stocks: You can learn to trade through a trading account and a demat
account easily.

• Making Smart Investment Decisions: Try to decide which stocks you can afford to trade,
diversify your portfolio, research before you invest and buy good stocks at a low price.

Wrapping Up:

• You will be able to trade in the stock market efficiently after you go through the steps mentioned
carefully.

• Start investing as soon as possible as there is no perfect time to invest.

• Be in touch with your broker to start trading after you decide which stock you want to buy.
Before trading research properly on the stock.

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 DIVIDEND
WHAT IS A DIVIDEND?

➢ A DIVIDEND is a distribution of profits by a corporation to its shareholders. When a

corporation earns a profit or surplus, it is able to pay a proportion of the profit as a
dividend to shareholders. Any amount not distributed is taken to be re-invested in the
business (called retained earnings).

➢ The current year profit as well as the retained earnings of previous years are available for
distribution; a corporation is usually prohibited from paying a dividend out of its capital.
Distribution to shareholders may be in cash (usually a deposit into a bank account) or, if
the corporation has a dividend reinvestment plan, the amount can be paid by the issue of
further shares or by share repurchase. In some cases, the distribution may be of assets.

➢ The dividend received by a shareholder is income of the shareholder and may be subject
to income tax (see dividend tax). The tax treatment of this income varies considerably
between jurisdictions. The corporation does not receive a tax deduction for the dividends
it pays

➢ A dividend is allocated as a fixed amount per share, with shareholders receiving a

dividend in proportion to their shareholding. Dividends can provide stable income and
raise morale among shareholders. For the joint-stock company, paying dividends is not
an expense; rather, it is the division of after-tax profits among shareholders.

➢ Retained earnings (profits that have not been distributed as dividends) are shown in the
shareholders' equity section on the company's balance sheet – the same as its issued share
capital. Public companies usually pay dividends on a fixed schedule, but may declare a
dividend at any time, sometimes called a special dividend to distinguish it from the fixed
schedule dividends. Cooperatives, on the other hand, allocate dividends according to
members' activity, so their dividends are often considered to be a pre-tax expense.

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DIVIDEND DATE:
1. Declaration Date — the day the board of directors announces its intention to pay a
dividend. On that day, a liability is created and the company records that liability on its
books; it now owes the money to the shareholders.

2. In-Dividend Date — the last day, which is one trading day before the ex-dividend date,
where shares are said to be cum dividend ('with [including] dividend'). That is, existing
shareholders and anyone who buys the shares on this day will receive the dividend, and
any shareholders who have sold the shares lose their right to the dividend. After this date
the shares becomes ex dividend.

3. Ex-Dividend Date — the day on which shares bought and sold no longer come attached
with the right to be paid the most recently declared dividend. In the United States and many
European countries, it is typically one trading day before the record date. This is an
important date for any company that has many shareholders, including those that trade on
exchanges, to enable reconciliation of who is entitled to be paid the dividend. Existing
shareholders will receive the dividend even if they sell the shares on or after that date,
whereas anyone who bought the shares will not receive the dividend. It is relatively
common for a share's price to decrease on the ex-dividend date by an amount roughly equal
to the dividend being paid, which reflects the decrease in the company's assets resulting
from the payment of the dividend.

4. Book Closure Date — when a company announces a dividend, it will also announce the
date on which the company will temporarily close its books for share transfers, which is
also usually the record date.

5. Record Date — shareholders registered in the company's record as of the record date will
be paid the dividend, while shareholders who are not registered as of this date will not
receive the dividend. Registration in most countries is essentially automatic for shares
purchased before the ex-dividend date.

6. Payment Date — the day on which dividend cheques will actually be mailed to
shareholders or the dividend amount credited to their bank account.

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STOCK SPLIT

WHAT IS A STOCK SPLIT?

A stock split occurs when a corporation converts its shares into a multiple of its shares. Doing
so increases the total number of shares outstanding through an issuance of more shares to
existing shareholders. A split is usually authorized in order to alter the price of a company's
stock downward, so that it will be more accessible to retail investors. A stock split must be
authorized in advance by the board of directors of a corporation, which means that splits usually
follow soon after a board meeting.

Example of a stock split

If a business has 1,000 shares outstanding and triggers a one-for-five stock split, the 1,000
shares will be converted into 5,000 shares. Conversely, a reverse stock split will reduce the
number of shares outstanding. For example, a five-for-one reverse split will convert 1,000
shares into 200 shares.

Reasons for a Stock Split

There are several possible reasons for engaging in a stock split. One reason is that a company
is getting ready to go public, and its advisors are targeting a specific price point at which the
shares should initially sell. This may require that the existing number of shares be reduced or
expanded in order to achieve the targeted price. For example, if the estimated market value
of a company is expected to be $150 million and the target price is expected to be $15 per
share, then there should be 10 million shares outstanding. If there are currently one million
shares outstanding, then each share should be split into 10 shares in order to have 10 million
shares outstanding.

Another reason for a stock split is because a company's share price has crept higher over
time, to the point where it is becoming difficult for an investor to purchase a single share. If
so, a stock split will lower the price per share. The concept can also apply to the reverse
situation, where a company's share price has dropped below the minimum allowed price on
the stock exchange on which its shares are listed. In this case, the exchange will issue a

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Delisting warning. The company can engage in a reverse split to reduce the number of shares
outstanding, thereby increasing the price per share for the remaining shares.

Yet another use for a stock split is when there are a few shareholders whose holdings are
inconsequential, usually less than 100 shares each. The issuing company must pay to have
an annual report and other mailings sent to them each year, which can be expensive. To
flush out these odd lot holdings, a reverse split can be used to reduce the holdings to less
than one share each, at which point the company can cash them out.

Despite the number of reasons given, not that many stock splits occur. The reason is that
shareholder approval may also be needed, which many organizations consider too difficult
to bother with.

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BONUS SHARES

WHAT ARE BONUS SHARES?

Bonus shares are an additional number of shares given by the company to its existing
shareholders as ―BONUS‖ when they are not in the position to pay a dividend to its
shareholders despite earning decent profits for that quarter.
Only a company has the right to issue bonus shares to their shareholders, which has earned
massive profit or large free reserves that cannot be utilized for any particular purpose and
can be distributed as dividends.
However, these bonus shares are given to the shareholders according to their existing stake
in the company.
For example: If a company declares one for two bonus shares, it would mean that an existing
shareholder would get two additional shares for one existing share.
Suppose a shareholder holds 2,000 shares of the company. When the company issues
bonus shares, he will receive 1000 bonus shares, i.e. (2000 *1/2 = 1,000).
When the company issue bonus shares to its shareholders, the term ―record date‖ and ―ex-
date‖ are also mentioned. Let‘s learn about the term ―record date‖ and ―ex-date‖ given below:

What is the Record Date?

The record date is the cut-off date decided by the company to be eligible for bonus shares.
All shareholders who have shares in their Demat account on the record date will be eligible
to receive bonus shares from the company.

What is Ex-Date?

The ex-date is one day before the record date. Here an investor has to buy the shares at
least one day before the ex-date to become eligible for the bonus shares.

Who is Eligible for Bonus Shares?

Shareholders who own the company's shares before the ex-date and record date are eligible
to receive bonus shares from the company.

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 In India, the T+2 rolling system is set for the delivery of the shares, wherein the record
date is two days behind the ex-date.
Shareholders must purchase shares before the ex-date because if they purchase on the ex-
date, the company will not give the ownership of shares, and therefore, they will not be
eligible to receive bonus shares.
Once a new ISIN (International Securities Identification Number) is allotted for the bonus
shares. The bonus shares will be credited to the shareholder's account within 15 days of
time.

Advantages of Bonus Shares

From Investor's Point of View

1) Investors do not have to pay any tax while receiving bonus shares from the company.
2) Bonus shares are considered beneficial for long-term shareholders of the company
looking to multiply their investment.
3) Bonus shares are free of cost to shareholders as they are issued by the company, which
increases the outstanding shares of an investor in the company and enhances the liquidity
of the stock.
4) Bonus shares help build the trust of an investor in the company's business and
operations because they have invested in the company and, in turn, gives capital to the
investor.

From Company's Point of View

1) The issue of bonus shares enhances the company's value and increases positions and
image in the market, gaining the trust of existing shareholders and attracting several small
investors to be a part of the stock market.
2) The companies have more free-floating shares with the issue of bonus shares in the
market.
3) Issue of Bonus shares benefits companies to get themselves out of the situation where
they are not able to or simply not prefer to pay cash dividends to their shareholders.

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Disadvantages of Bonus Shares

From Investor‘s Point of View

1) There is no much of a disadvantage of owning the bonus shares from an investor‘s point
of view. However, they should know about receiving bonus shares because the profit will
remain the same, but the number of shares will be increased as the earning per share will
fall.

From Company‘s Point of View

1) The company do not receive any cash while issuing bonus shares. As a result, the ability
to raise money by following an offering is minimized.
2) When a company keep on issuing bonus shares instead of paying dividends, the cost of
the bonus issued keeps adding up over the years.

Types of Bonus Shares

There are two different types of bonus shares as follows:

1) Fully paid bonus shares
2) Partly-paid up bonus shares

• Fully Paid Bonus Shares

Fully paid bonus shares are those shares that are distributed at no extra cost in the proportion
of the investors holding in the company.
These types of bonus shares can be issued from the following sources:
1) Profit and loss account

2) Capital reserves

3) Capital redemption reserves

4) Security premium account

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• Partly-Paid Up Bonus Shares
Before understanding party-paid up bonus shares, let‘s understand what a partly-paid
share is?
A partly paid share is a share in a company that is only partially paid compared to the
full issue price. It means that the investor can buy partly paid shares without paying the
total issue price.
However, the remaining amount for partly paid shares can be paid in instalments
when the company makes calls.
So when the bonus is applied in the partly-paid shares and converted into fully paid
shares without calling out the uncalled amount through profit capitalization, it is called
partly-paid up bonus shares.
However, unlike fully-paid up bonus shares, partly paid-up bonus shares cannot be
issued through a capital redemption reserve account or security account.

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EQUITY SHARE

WHAT IS EQUITY SHARE :

Equity shares are a popular investment strategy amongst investors. The very reason behind this
popularity is the huge returns offered by the equity shares. Equity shares are issued to public
investors to earn capital for the expansion of business. Many organizations source the majority
of the capital from public investors. Let us understand what do you mean by equity shares and
how one can benefit from them in the long run?

WHAT IS MEANT BY EQUITY SHARES?

Companies launch their equity shares to generate a source of capital. These shares are made
available to public investors and are non-redeemable. When investors buy these shares, they get
the right to vote, share profits, and claim the assets of a company. As an equity shareholder, the
investor also receives dividends from the company.

Hope this makes the equity shares meaning clear let us discuss the different types of equity shares.

TYPES OF EQUITY SHARES AVAILABLE

ORDINARY SHARES

These shares are issued with a motive to generate capital that can meet long-term expenses.
Shareholders get the right to participate in management segments and other company operations.
Investors with the majority of such shares gain substantial voting rights.

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PREFERENCE EQUITY SHARES

Preference equity shares are generally issued to an investor as a guarantee of the payment of
cumulative dividends before returns are distributed among ordinary shareholders.
Shareholders with preference equity shares have limited voting rights. If the shareholders
have participating capacity they can gain from the stipulated amount of profits, as well as
bonus returns. But if the shares are classified as non-participating equity shares, they can‘t
avail of such benefits.

BONUS SHARES

These types of shares are issued to the investors in the form of additional stakes when the
company generates profit. However, bonus shares do not increase the total market capitalization
value of a company.

RIGHTS SHARES

These shares are offered by a company to certain investors at a discounted price which in turn will
grow the stake in the respective business. An organization offers shares to rights for a specific
time until required finances are generated to suffice the expenditures of the company.

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FEATURES OF EQUITY SHARES

PERMANENT IN NATURE

These shares issued by the company are permanent in nature and non-redeemable. You cannot
return these shares until the company decides to close its business.

TRANSFERABLE AND DIVIDEND PAY-OUT

Equity shares are transferable i.e. you can transfer the ownership of these securities from you
to another investor or vice versa. Many companies offer dividend payout to their shareholders.
This dividend amount depends on the profit made by the company and the availability of funds
with the company. So, whenever a company fails to make a profit it may decide to hold on to
dividend pay-out.

POTENTIALLY HIGH RETURNS

Equity shares are volatile and possess high-risk factors however the returns offered are huge.
So, if you have a greater risk appetite you can create a huge corpus with high returns from equity
shares.

BENEFITS OF INVESTING IN EQUITY SHARES

HIGH RISK, HIGH REWARD

As mentioned earlier equity shares are accompanied by high-risk factors. But higher the risk
greater the returns offered by equity share investment. When the company makes profits,
investors benefit through dividends offered by the company.

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EASY AND EFFICIENT

A investor can invest in the equity market with the help of a stockbroker or financial planner.
Investors can invest in equities of any company of their choice using a Demat account. A Demat
account enables easy and efficient trading transactions.

DIVERSITY

Investors can create a diverse investment portfolio by investing across equities of the company
from various sectors or industries. Diversification offers you exposure to equities of various
sectors and creates a balanced portfolio that offers stable returns in the future.

WHAT ARE THE RISKS ASSOCIATED WITH THIS INVESTMENT?

CAPITAL LOSS

The equity share price is evaluated by the demand and supply of the shares. If investors examine
the company to find that it will grow in the future, they start purchasing more shares. When the
shares are bought on a large scale the price of the share also increases. On contrary to this
scenario if the investors predict the poor performance of the company, they may decide to sell
all the shares. This means the demand for the shares decreases which may cause a drop in the
price of shares. So, if you have invested in such shares you may incur capital loss due to a
drop in their demand.

VOLATILITY

For many reasons you will observe fluctuation in the share price over some time, this is referred
to as volatility. Suppose the equity share price fluctuates between 100 and 200 in a single day
the share is said to be more volatile than the share whose price fluctuates between 140 and 160
in a single day. As the market price of a share is evaluated basis many factors like market
sentiment, social, political, or other reasons the equity share price can become

51
Volatile in no time. You can benefit from the volatile share when you purchase the shares at their
lowest price and earn profits even when there is a slight increase in share price. You can also
sell stocks when the share price increases to earn more returns.

WHY SHOULD YOU INVEST IN EQUITY SHARES?

Equity shares are popular and the best investment strategy here are some reasons why you
should consider investing in equity shares –

HIGH INCOME

You can generate a high income with the help of equity investment. You do not only build a
huge corpus with high returns but a steady dividend payout also adds to your wealth generation.

HEDGE AGAINST INFLATION

Investment in the equity market generates profits which in turn increases the spending power
of the investor. The profits generated are higher than the purchasing power during inflation.
This increases the investment value over time.

HOW TO BUY EQUITY SHARES?

To invest in the equity market, you need the following accounts –

Demat account

To hold the shares or securities in electronic form

Trading account

To buy or sell shares and place orders you need a trading account registered with a stock
brokerage firm

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 Linked Bank account

You can invest in the equity market via IPO or from the secondary stock market

Through IPO

Before the company gets listed on the exchanges it launches its IPO. IPO is a way to make the
company equities available to public investors. You can place bids for an IPO through stock
exchanges or apply to buy specific shares through your net banking account.

Stock Market

If you missed buying shares through IPO you can always purchase them once they get listed
on the stock exchanges. You can use the below steps to invest in the equity market using your
trading account –

• Open all the necessary accounts you need for stock market investment. Investors should have
a Demat account, trading account, and a linked bank account.
• Research about the company you want to invest in. Once you decide which shares to buy log
into your trading account and select the shares you want to buy
• Place an order once the transaction is completed shares will be credited to your Demat
account.

Investing in the equity market requires a lot of time and effort, never make any investment
decision without incomplete knowledge about the company. Make sure you understand all the
basics of the stock market and its operation. Once you have enough experience and knowledge
you can build a huge corpus through equity market investment.

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INITIAL PUBLIC OFFERING

WHAT IS INITIAL PUBLIC OFFERING :

People these days are becoming tech-savvy, and with that, they are opening up to investing. The
millennial are searching for more unique avenues to grow their money. They are willing to explore
varied platforms like being a stock trader, rather than sticking to the slow-growing safer mode
which the previous generation preferred. Millennial are more accustomed to the internet, more
exposed to the global world and they are better informed investors when compared to the]
generation that brought them up. Still there are a few things that you need to know before they
begin investing, like you should know about the domain in which you are putting your money.
One such section that confuses people is IPO, its intricacies, and the standard terms associated with
it.

WHAT IS IPO: MEANING AND DEFINITION

Initial Public Offering, or IPO, is a unique process to convert a private company into a public company
by issuing shares. The issuance of shares for the public allows the company to gather capital and an
excellent opportunity for the general public to invest and earn returns on that investment.

Initially, a private company grows with its initial investors, founders, and stakeholders. When a
company has achieved a specific goal where the management realises that they are stable enough
to handle the SEC (Securities And Exchange Commission) regulations, grow and diversify using
the general public's money, the company decides to offer an Initial Public Offering. Through this,
the stake-holdership in the company is offered to the general public through shares.

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ABOUT IPO - PRIMARY & SECONDARY MARKET:

Primary Market is where the company sells fresh stocks like IPO. This is the first instance where
the investors contribute to the company, and the company's equity capital is made by funds
accumulated by selling stocks in the primary market. Private placement and preferential allotment
are two other ways in which stocks can be sold in the primary market after an IPO. In private
placement, the company can offer stock to significant investors like banks, hedge funds. This
could be done without making the shares available for the general public. In preferential allotment,
the company can sell shares to select investors at a price which is not available in the market

Secondary Market is commonly known as a stock exchange. This is where the stocks that have
been allocated in the primary market are resold and purchased further by new people. A secondary
market is where the investors trade among themselves.

TYPES OF IPO:

There are two types of IPOs. They are dependent upon the type of price generation the company
or the underwriter is going for. These are of two types:

In Fixed Price Offering, the company decides on the price of the stocks initially, and any buyer
or investor pays that amount per share to obtain the desired number of stocks.

In Book Building IPO, the company decides the price band of the forthcoming IPO where the
floor price is the minimum, and the cap price is the maximum, and the bidding is done within this
range. The price is set by the underwriter and the company's investors with surveys done on what
would be the value of the share. The bids are made, and the selected investors get the stocks.

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Why are IPOs generated? What is the need for launching IPOs?

There are only two reasons due to which a company issues an IPO. It is to raise capital or return money
to the initial investors.

The company opens itself to public investors by releasing an IPO. The IPOs give them a greater
domain for the amount of investment. They can raise much more money than they could ever raise
by the private investors.

One other reason the company considers releasing an IPO in the future is that it attracts initial
investors. The investors have an option to sell their stocks in the company and get a return on
their initial investment.

TYPES OF INVESTORS:
Investors are classified into three major categories. They include the following:

Qualified Institutional Buyers (QIB): These are big investment firms, mutual funds, a
scheduled commercial bank, along with a few other institutions that have been registered with
SEBI. Not more than 50% of the securities are reserved for this category in a case of book-built
issue, minimum 75% of the securities in case of compulsory book-built issue and
Retail Individual Investor (RII): These are individual investors who apply or place bids for
shares with a cumulative value not exceeding 2 lakh rupees. At least 35% of shares are allocated
in this category in case of book-built issue and not more than 10% are allocated in case of
compulsory book-built issue. At least 50% shares are allocated in case of fixed price issue.
Non-Institutional Investors: These are investors other than QIB and Retail investors. These
include High Net worth Individuals (HNI) or corporate bodies. At least 15% of stocks are reserved
for this section of investors in case of a book-built issue and not more than 15% in case of
compulsory book-built issue.

What is the IPO Timeline?

The process of applying for an IPO and getting it allocated to your name with various procedures
in between is known as the IPO timeline. The process, also known as the IPO calendar, has the
following subdivisions:

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• Open/Close Date: These are the opening dates and closing dates of the bidding process in IPOs.
Any desiring bidders can apply or bid between these days.
• Allotment Date: Allotment date is when the allotment status is announced to the public by the
registrar of the IPO.
• Refund Date: The application amount is frozen, and you cannot withdraw the amount you used
to apply for the IPO. Based on the IPO's allocation, the date on which the refund is initiated for
the people who didn‘t get the IPO, is known as the refund date.
• Credit to Demat Account Date: This is different for different companies, but this is when you
receive the credit of the applied IPO shares in your Demat account before the listing date of the
shares of the company.
• Listing Date: It is also known as IPO listing. This is when the shares of a company are officially
listed on the respective stock exchanges (secondary market) and available for trading.

HOW TO CHECK FOR UPCOMING IPOS?

Investors interested in allocating their money to IPOs can stay updated about the upcoming IPOs
through various means. These means include the following:

• They can check the stock exchange websites and get news about the upcoming IPOs. Many stock
exchanges have a dedicated section of IPOs where desiring investors can get information about
the upcoming IPOs. These websites, in various cases, also provide the IPO calendar and the IPO
prospectus.
• Another mode is various websites on the internet. Those websites will provide you with
authentic news under the segments such as "new ipos" or "ipo list."
• The third avenue is to look on the official website of aggregators, brokers, stock market
information websites, blogs, and so on. Provide the investors with complete information and
analysis of the upcoming IPOs.

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 IPO GLOSSARY:
• Issuer: Issuer of an IPO is the company that issues the stocks to raise capital.
• Underwriter: Underwriter is a banker, financial institution, or broker who helps the company
underwrite the IPO. These act as a broker medium between the public and the issuer.
• DRHP: It stands for Draft Red Herring Prospectus, also known as the offer document. It is a
preliminary registration document prepared by the Investment bankers for the IPO issuing
company in case of a book built issue. the document contains the financial and operational
information of the company along with a few other information like why it is attempting to raise
money.
• RHP: Red Herring Prospectus is the preliminary registration document that is filed with SEBI in
a case of book built issue. It doesn‘t contain the number of shares or the price of the shares being
offered in an issue.
• Price Band: A price band is basically the lower price and the upper price per share with which
the company would go public.
• Issue Size: The Issue size in an IPO means the number of shares issues multiplied by the amount
of each share.
• Under Subscription: This is a condition when the number of shares applied by the public is less
than the number of shares issued by the company.
• Oversubscription: This is a condition when a company receives more applications than the
number of shares being offered by the public.

THINGS TO REMEMBER WHILE INVESTING IN AN IPO:

Investing in an IPO is usually a beneficial option, but before investing, you should keep the
following things in mind:

1. Study the company, its background, financials, and future aspects before you invest in the IPO.
2. Note the IPO locking Period. The locking period is a duration in which you cannot sell or trade
the stocks after an initial investment.
3. Always plan an investment strategy before investing in any IPO.

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FUTURE AND OPTIONS

WHAT ARE FUTURES AND OPTIONS?

Futures and options are essentially derivatives of other assets that are traded in the markets. In
other words, they derive their value from the underlying asset. Futures and options can be
derivatives of various assets like equity stocks, commodities or even currencies. And if the value
of the underlying asset changes, the value of the derivatives - that is, the futures and options -also
changes accordingly.

WHAT IS F&O TRADING?

The next question you may have is ‗What is future and option trading? ‘Simply put, futures and
options trading is the buying and selling of futures and options. Like their underlying assets, futures
and options can also be traded between buyers and sellers.

In this module, we‘ll focus purely on futures and options basics and look into what they mean.
Also, to get a better understanding of the concepts, we‘ll take a look at some theoretical
derivative contracts. Let‘s start off with the concept of futures.

WHAT ARE FUTURES?

In the stock market, futures are basically derivative contracts that obligate a buyer and a seller to trade
the stock of a company at a predetermined price, on a predetermined date in the future.
Here, both the buyer and the seller are obligated to honors their end of the contract. There

are essentially four main elements to a futures contract.

o The obligation of the buyer and the seller

o The trade of an underlying asset between the two parties
o The presence of a predetermined price
o The presence of a predetermined date for the trade to occur

And as far as a futures contract is concerned, the buyer of the contract is the person who is
obligated to buy the asset, while the seller of the futures contract is the person who is obligated
to sell the asset.

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Another point to note is that the buyer of the futures contract expects the share price to go up.
But the seller of the contract expects the share price to fall in the future. And so, both of these
parties get into an agreement to effectively lock in the prices.

Let‘s look at an example that will help you understand this better and strengthen your knowledge
about futures and options basics.

FUTURES - AN EXAMPLE:
Let‘s take up Reliance Industries, for instance. Assume that the stock is currently trading at Rs.
1,700 per share. You expect the share price of Reliance Industries to rise in the near future and
wish to lock in the current price.

In this case, what do you do? Well, you‘ll likely want to buy a futures contract that obligates you
to purchase one share of Reliance Industries for Rs. 1,700 at a future date, say one month later.

And since you believe that the price of the share at that point may be much higher, you believe
that this futures contract can help you make a profit by allowing you to purchase a share at Rs.
1,700 instead of at whatever higher price there may be at that time.

Meanwhile, Ram, who is another trader, expects that the share price of Reliance Industries will
likely fall in the near future. So, what does Ram do? He‘ll probably want to sell a futures contract
that obligates him to sell one share of Reliance Industries for Rs. 1,700 at a future date, say one
month later.

And since Ram believes that the price of the share at that point may be much lower, he believes
that this futures contract can help him make a profit by allowing him to sell a share at Rs. 1,700
instead of at whatever lower price there may be at that time.

So, both you and Ram enter into a futures contract that has these four main elements.

o You and Ram are both obligated to honour your individual ends of the transaction.
o The transaction is essentially the trade of one share of Reliance Industries.
o The predetermined price for the stock is Rs. 1,700.
o The predetermined date for the trade is one month from today.

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Both you and Ram are required to deposit a percentage of the transaction value with your
respective stockbrokers to enter into the contract. This amount that you‘re required to deposit is
termed as the ‗margin.‘ Consider this margin as a sort of a security deposit for entering into the
contract. And here, Ram, who sells you the futures contract, is obligated to sell the asset. You,
being the contract buyer, have the obligation to buy the underlying stock.

At the end of one month, on the predetermined date for the trade, you will have to buy the share
for Rs. 1,700 even if it is otherwise trading in the market for a lower price, say Rs. 1,500.
Similarly, Ram will also be obligated to sell you the share at Rs. 1,700 even if it is otherwise
trading in the market for a higher price, say Rs. 1,800.

WHAT ARE OPTIONS?

In the stock market, options are derivative contracts that give the buyer of the contract the right
to buy or sell the stock of a company at a predetermined price, on a predetermined date in the
future. Here, the buyer has the choice to either buy or sell the asset, while the seller has no such
right.

o If the buyer of the options contract chooses to exercise their right to buy or sell the asset,
the seller of the contract will be obligated to act accordingly.
o And if the buyer of the contract chooses not to exercise their right, then the seller will
again have to act accordingly.

Here, there are essentially four main elements to an options contract.

o The right of the buyer of the options contract

o The trade of an underlying asset between the two parties
o The presence of a predetermined price
o The presence of a predetermined date for the trade to occur

Unlike a futures contract, here, in an options contract, the buyer of the contract can be either the
purchaser or the seller of an asset. In other words, the buyer of the contract can buy the right to
either buy an asset or to sell an asset.

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If the contract buyer purchases the right to buy an asset from the contract seller, the contract seller
then automatically becomes the seller of the asset. And if the contract buyer purchases the right to
sell an asset to the contract seller, the contract seller then automatically becomes the buyer of the
asset.

TYPES OF OPTIONS: CALL AND PUT OPTIONS

With options contracts, there are two different types - call options and put options. This is quite
unlike futures contracts, where there‘s only one type. Let‘s take a look at both of them now.

CALL OPTIONS

A call option contract gives the buyer of the contract the right to purchase the underlying asset at
a predetermined price on a predetermined day. In exchange for receiving this right, the buyer of
the call option contract pays a certain sum of money known as the premium to the seller of the
call option contract.

PUT OPTIONS

A put option contract is the inverse of a call option contract. It gives the buyer of the contract,
the right to sell the underlying asset at a pre-agreed upon price on a predetermined day. And as
with call options, the buyer will have to pay a premium to the seller for receiving this right.

EXAMPLES OF OPTIONS

To understand options better, we‘ll now take a look at a few examples.

CALL OPTIONS - AN EXAMPLE

If you happen to visit the call options section of the National Stock Exchange or your trading
portal, you will likely see something like this - INFY SEP 1600 CE. This is a typical example of
a call option contract of Infosys Limited.

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Now, when you purchase this call option, you basically get the right to purchase a set number of
shares of Infosys (which in this case is 600 shares) at Rs. 1,600 per share on a predetermined date
in the month of September. Let‘s say that this options contract is priced at Rs. 200 per share, which
is the premium that you would have to pay to the seller to purchase this contract. So, to obtain this
right, you will have to pay around Rs. 1,20,000 (Rs. 200 x 600) to the seller.

PUT OPTIONS - AN EXAMPLE

Similarly, if you visit the put options section, you will see something like this - TCS NOV 2500
PE. This is a typical example of a put options contract of TCS Limited.

With the purchase of this contract, you essentially get the right to sell a set number of shares
(which in this case is 300 shares) of TCS for Rs. 2,500 per share on a predetermined date in the
month of November. Now, assume that the contract is priced at Rs. 120 per share. To purchase
this contract, you will have to pay the seller Rs. 36,000 (Rs. 120 x 300) as premium. This will
give you the right to sell 300 shares of TCS at Rs. 2,500 at a predetermined date in November.

DIFFERENCE BETWEEN OPTIONS AND FUTURES:

Managing risk is among the most important functions of security markets and one of the biggest
risks is time. Time is a risk because prices change constantly. A profitable deal today can turn sour
in a few months. Options and Futures must be understood in the context of commodity markets
since is an outgrowth of the commodity market. Unlike bonds or shares, options and futures do not
help you earn long term gains, instead, they are used to off-set specific risks which arise due to
constant price change.

Futures and Options (F&O) are agreements to buy and sell assets in future at certain princes and
in certain conditions. Although both options and futures allow an investor to buy an investment
at a specific price by a specific date, one works very differently from the other. An options
contract gives an investor the right, but not the obligation, to buy or sell but a futures contract
requires a buyer to purchase shares and a seller to sell them on a specific future date.

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HOW TO TRADE IN OPTIONS AND FUTURES?

➢ Options and Futures are traded in contracts. It could be 1 month, 2 months and 3 months.
All F&O contracts expire on the last Thursday of the month. Futures trade at a Futures
price which is normally at a premium to the spot price owing to the time value and there
is only one futures price for a stock for one contract. For instance, during January 2020,
one can trade in January Futures, February Futures and March Futures of a stock X.
➢ Trading in Options is complicated since you trade the premiums. So, there will be
different strikes traded for the same stock for Call Options and for Put Options. In the
case of stock X, the Call Options premium of 400 call will be Rs 10 while these Option
prices will be progressively lower as your streaks go up.

OPTIONS AND FUTURES DIFFERENCE IN TRADE:

➢ Futures offer the advantage of trading equities with a margin. The risks, however, are
unlimited on the opposite side irrespective of your position - long or short. In case of
options, the buyer can limit losses to the extent of the premium paid.
➢ When you buy or sell futures you are required to pay upfront margin and mark-to-market
(MTM) margins but when you sell an option also you are required to pay initial margins
and MTM margins. Conversely, you are only supposed to pay the premium margins when
you buy options.
➢ Traders buy futures on the stock that they expect to go up and sell Futures on the stock
when they anticipate a fall. But in the option markets there are 4 possibilities.
➢ Let us understand each one of them with an Options and Futures trading example. Let us
assume that company Y is currently trading at Rs 1,000 per share.
➢ Investor A expects Y to go up to Rs. 1,150 over the next 2 months. He will be inclined
towards buying a Call Option on Y of 1,050 strike. He will thereby get to participate in
the upside.
➢ Investor B expects Y to go down to Rs 900 over the next 1 month. His move to get
returns will be to buy Put Options on Y of 980 strikes. He can easily participate in the
downside movement and make profits after his premium cost is covered.

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➢ Investor C is not sure of the downside in Y. However, he is certain that with the pressure
on the stock from global markets, Y will not cross 1,080. He can sell Infosys 1,100 Call
Option and take home the entire premium.
➢ Investor D is not sure of the upside potential of Y. However, he is certain that considering
its recent management changes, the stock should not dip below Rs. 920. A sound strategy
for him will be to sell the 900 Put Option and take the entire premium.

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 CHAPTER 4
REVIEW OF EXPERIENCE

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REVIEW OF EXPERIENCE

The duration of internship was 2 months [15/03/2022 to 17/05/2022] I worked as a internship

trainee at Kotak securities limited on first day MD has welcomed me to the first day of internship
he told me to see how they are working and how to manage their client and how to attend the calls
and to put order or to buy share or to sell share how many quantity and which company and manage
their portfolio safely and neatly without any problem.

In this internship program I have learnt so many things there to work, learn and to grow more lots
and lots of things to learn and to do work not a single second to be free, every time we attend the
client call and we take the order want they want having any problem to buy or to sell share and we
want to clarify the doubts and we learned about more and more about stock market of rising and
falling what made the share market fall down and what made share market to rise up and learned
about more in quarter 4 results (Q4 result 2022) which company perform well and which company
stays same and which company did not perform well due to Q4 result. And I also learned about
which company gave dividend which company gives bonus and which company agreed to do stock
split. The learning about share market gives more energetic and enjoyable stage to learn more and
to grow more. The market timings is [9:15 to 3:30] on the time
9.15 all stock market had a major blast towards bull market and come down and some other
company goes bear market and come upwards more and more what impacted on Q4 results.

If Q4 results came on day market ends next day the results will impacted on company in market
whether the stock will go up or stock will go down and know about which company gave dividend
which company gave share split and which company gave bonus share and know about more in
nifty, sensex nifty bank, nifty it, learning more In future and options to get more information‘s on
calls for options and more information on futures so this much I have learned and I want to learn
more about share market.

Indian economy is an greatest and fastest growing economy in this world although the share market
fall down it makes a right moves and climbs the market very well all over the world India has an
top most economy in the world now -a- days India has growing faster and widest India is helping
others country to come out of the debt and they live without any problem people should

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Not suffer for their future. Because the share market has been growing faster the Indian economy
also growing faster because of share market they beat all other economy and came because of this
economy other country can invest more capital on our share market to have more ROI (Return on
Investment ) more on this economy so this Indian economy and other economy we also get
benefited same with this economy we can serve all others economy to get up from losses and run
back their economy perfectly and Indian economy also invest in other economy to get ROI more
profit percentage.

In our work place no one can get disturb while we are in market ( market makers) must
concentrated in market and connection with clients want they want they talk about share price how
much the quantity and which price to buy (FOR EXAMPLE : State bank of India share price is
462.65 so we can buy share at 462.50 and also in market price) with accurate price and to sell
with accurate price to earn more profit from the particular stock and we can also give what is
happening in the market whether it is loss or in profit and what stock to buy and what stock to sell
and what stock to hold. Because of fluctuations of market what is next we don‘t know so it can
help others to by stopping their losses and we maintain their portfolio without any losses or in
minus points all client get motivated by their profit only so we are all helping others to get their
profit percentage very high so they can get benefited by this market.

People who works in our organization they don‘t have a single stress or problem in personal or
work problem they always love their work and their work what they do and they know how to get
a solution from this problem and where the problem coming from. They have a cool minded work
and they daily learned something from the stock market or from their job/work so they are working
restlessly to satisfy others they must attend the call act towards it they know the how to handle the
situations and how to react to it they must concentrate what client is telling whether they telling to
buy share or sell share most of the situations they know to handle it. In our organizations we
conduct a company meetings what is happening in the market for past week what stock has gone
up and what stock has gone down 52 week high cut / 52 weeks low cut which company is going
to give dividend and which company is going to give bonus and which company is going to give
stock split and we talk about more about Q4 result which company perform well and which
company stays same and which company did not perform well and we talked about more on
company news and share market news , recently we handle a largest company IPO( initial public
offerings) LIC ( LIFE INSURANCE CORPORATION ) we have

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Entered 1020 lots for clients for IPOs to get it we can achieve easily without any problem. We
can do whatever we want and we are more motivated to do lots of work in future.

In our company they will conduct the meetings with others kotak bank or kotak securities to
improve the company and taking to the next level of stage and what situation we are.

Company meetings have:

1. Current market situations

2. Past market situations
3. Future market growth
4. Small cap company , mid cap company and large cap company
5. Which and all company giving dividend,
6. Which and all company giving bonus share,
7. Which company announced to give share split in upcoming days
8. Which IPOs is upcoming and what is the lot price and per share price
9. Whether company target is getting achieve or not and at last
10. We clarify our doubt in the market.

Then the kotak bank or kotak securities manager from headquarters from Mumbai they will
connect with us for meetings for upcoming growth and current market situations. We talk about
more about market and market growth we can ask and clarify our doubts what and all happening
in the market for future growth for the company next process it can be discuss in the meetings
With also invest on mutual funds and bond they will motivate others to invest in mutual funds also
in our organization we know all of them handle many situations each of them handle each category
if anyone had a problem others can find the problem and find the answer and they easily solve the
problem for others and find what they are lagging and they will easily come out of the situations
and they will learn more about this problem and next time they will easily clear the problem they
all are unity to do the work and they solve the problem easily each one will

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help another one to do the work not only the work they will motivate each other’s for work and
they will happy whatever work is done and completed.

Each of them working on different category. Example: demat account opening, stock buying, stock
selling, account maintaining, plus mutual funds and bonds etc. Each of them will motivate to invest
in share market as well as in mutual funds and bonds also for future market growth everyone will
help others for their work profit to achieve something in their work.

I have learned more in Q4result .In one year there will be four quarters result they will called as
Q1,Q2,Q3,Q4 results 2022 whether the company is performing well or company stays same or
company did not perform well. If the company result came after result came after result day the
next day the company has profit we can determine that company has profit we can determine the
company has a good result if company goes loss that time we can determine that company did not
perform well it does not have good result . some company has gone top of 60% to 90% of company
profit and growth because of Q4 result2022 some company growth has slower and slower and
some company goes downwards to loss because of the market is fluctuations so we cannot control
or predict the share market whether market is going up or going down.

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 CHAPTER-5

REFLECTION ON LEARNING

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REFLECTION ON LEARNING:

➢ In this internship I can able to read everything what they are doing and how they are
doing.
➢ There will be a huge scope on investment in future. We want to invest bow and be
enjoyable in future
➢ I can able to read share market price, news, target, profit, dividend, year of year growth,
board meetings.
➢ We want to increase investment people to invest more on share market and mutual funds.
➢ If new client want join we have to take care of them by telling about bull market and bear
market
➢ We must concentrate in share market for growth profit percentage suddenly market can
go up. It will never wait for anyone.
➢ I learned more about share market BSE AND NSE.
➢ Equity Share have more value for long term investment growth
➢ Customer should be aware about the derivative commodities currency because it is also
an investment options from equity market
➢ Customer should be aware about small cap, mid cap, and large cap company and their
wealth and growth in future market
➢ Learn while you learn and invest while you invest because investment teaches more
things to do and more things to learn
➢ Encourage others also to invest their money for future period
➢ I learned more about spider software and our company ODIN software for buying share
and selling share and for pending share.
➢ I have learned from others while they are working and communicating
➢ Investment is a key to open your future growth and now try to find the key.

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CHAPTER-6

CONCLUSION

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CONCLUSION:

After finishing my internship in KOTAK SECURITIES LIMITED I have learned many things
about the company process and company growth and company top to bottom process how to work
with it and how to handle with it everything you learned everything you can apply with it

“LEARNING EVERY TIME KEEPS YOU GROWING EVER TIME”

Learning about share market you can learn interesting while you can learn while you are doing it
practically. It can create a energetic to do the work you can buy and sell share and you can maintain
the account holdings and see whether the client account is in loss or profit to motivate clients to
buy or investment for short term or long term hold which share to buy and which share to hold and
which share to sell and also company target what price would go to be.

To tell more about investment in share market or in mutual funds. In our meetings we used to
discuss more about share market and how share market will be in future if investment had done it
would be a great result in future growth no one can take about you money put on investment where
will be absolute growth on market it will be growing year of year keep on investing it .it will be
growing faster and faster and your income will be double percentage and keep on encourage others
to invest for their safety because investment on share market is not illegal is fully legal and you
can save your money by investment and have a bright future investment will take care of it

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