Noida Institute of Engineering and

Technology greater Noida

A SUMMER INTERNSHIP PROJECT REPORT

ON
“EQUITY RESEARCH”
AT

SHAREKHAN

Submitted For
THE PARTIAL FULLFILLMENT OF THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATON (MBA)

Under the Guidance of: Submitted By:

Dr. Ajay Gangele Name: Rupam kumari
Roll No. 2201330700149
Session: 2022-24

1
 DECLARATION

I hereby declare that the report on ―A Study on Equity Research in SHAREKHAN is

my own work and that, to the best of my knowledge and belief, contains no material
previously published or written by another person nor material which to a substantial
extent has been accepted for the award of any other degree or diploma of the
university or other institute of higher learning, except where due acknowledgment
has been made in the text.

Place:

Date:

(RUPAM KUMARI)

2
 Acknowledgement

This project has been made possible by the co-operative and suggestion of many

people to whom I would like to express my great sense of gratitude and profound

thanks.

I can’t express in words in words my deep gratitude to the employees of

SHAREKHAN and to my respondents who had provided the data which I needed for

my project work. It is my great pleasure to express my deep sense of gratitude to

our faculties of the NOIDA INSTITUTE OF ENGINEERING AND TECHNOLOGY

GREATER NOIDA for their

constant encouragement and support during the entire project work.

I am also expressing my deep gratitude to my friends and family who helped me out

and gave me good suggestions for my work.

Sincerely

RUPAM KUMARI

3
 PREFACE
Summer Training is business organization in fuse among student a sense of critical
analysis of the real managerial situation to which they are exposed. This gins them an
opportunity to apply their conceptual theoretical & imaginative skills in a real life
situations and to evaluate the results there of.

Practical training through experts of ―SHAREKHAN gave me actual input to fulfill

my real aim.

This report is the written account of what I learnt experienced during my training. I
wish those going through it will not only find it real but also get useful information.

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 EXECUTIVE SUMMARY
Conceptually the mechanism of stock market is very simple. People who are exposed to

the same risk come together and agree that if anyone of the person suffers a loss the other

will share the loss and make good to the person who lost.

The Initial part of the project focuses on the sales of types of the products of the company,

and also focuses on the acquisition of the customer. The job profile is to create customer,

making good relationship with them to have references and motivating to trade for the

company benefit and their profit.

It also enlightens the readers about the SHAREKHAN strategies to acquire the customer

base. Further the project tells us about the profile of the company (SHAREKHAN ). It

provides knowledge to the readers about the company‘s history, mission, and customer

base and about the company in detail an management of the company. Also it gives

special emphasis on the selling of products and management of the company. Also it gives

special emphasis on the selling of products.

The next chapter is devoted to study the comparative analysis of the competitors and the

SWOT analysis, which tells about the SHAREKHAN over its competitors. This project

leads us towards the job descriptions and difficulties faced by me.t he next part of the

project throws light upon my finding

and analysis about the company and the suggestions for the company for better

performance.

During this project I have been given the responsibilities of creating customer bringing

HNI customer, handling team, generating leads.

5
CONTENTS PAGE NO

CHAPTER 1 INTRODUCTION

1.1 General introduction

1.2 Industry profile
a. Origin and development of the industry
b. Growth and present status of the industry
c. Future of the industry

CHAPTER 2 PROFILE OF THE ORGANISATION

2.1 Origin of the organization

2.2 Growth and development of the organization
2.3 Present status of the organization
2.4 Functional department of the organization
2.5 Organization structure and organization chart
2.6 Product and service profile of the organization Competitors

CHAPTER 3 EQUITY RESEARCH

3.1 Introduction
3.2 Financial services industries in India
3.3 Types of equity research
3.4 Process of Equity research
3.5 Equity AnalysisEquity relate to budget and foreign exchange

CHAPTER 4 DISCUSSION ON TRAINING

4.1 Student’s work profile (Role and responsibility)

4.2 Description of live experience

CHAPTER 5 STUDY OF SELECTED RESEARCH PROBLEM

5.1 Statement of research problem

5.2 Research design and methodology
5.3 Analysis of data
5.4 Summary of finding

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CHAPTER 6 SUMMARY AND CONCLUSIONS

6.1 Summary of learning experience

6.2 Conclusions and Recommendations
APPENDIX
Annexure like copy of questionnaire, interview schedule, leaflets, brochures,
photograph to be enclosed
Bibliography

7. QUESTIONNAIRE

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 INTRODUCTION

The topic is to study the consumer preference towards investment in the stock market.

DEMAT A/C is a pool of various scripts and securities, where as online trading A/C is a

tool of purchasing and selling of share or scripts online. These scripts are then transferred

to Depository account after two days.

This topic includes the practical experience of selling company product that is followed by

studying the consumer preference or interest towards the share market. This is a market,

which is uncertain sometime it gives the opportunity of the huge profit and vice versa. It

depends up on the investment customer made. This is better option to have better return on

the investment then investing in banks, mutual fund or bonds etc. but the risk is high in

this case.

This product offers the customer two type of investment option INTRADAY and

DELEVERAGE both of them has their own benefits and limitation but a better way to

have more return on investment. Intraday means investing in share market for a day i.e.

purchasing and selling of the share in one day. Deleverage is purchasing share and the

selling it next day. The charges that company charges in terms of brokerage are different

in the both of the cases.

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 OBJECTIVE OF STUDIES

Main Objective

 The main objective of selling DEMAT account cum online trading account.

Specific Objective

 Creating Customers

 Marketing of the product

 Creating the relationship with the customer to have there sources

 Motivating customers for trading

Job Responsibilities

I have been handling the following responsibility in the SHAREKHAN LTD

 My job profile is to call on the given data i.e. leads

 My job profile is to understand the customer need and advising them to make a

portfolio as per there investment.

 My Job profile is to convince customer for investment in the commodities and

Mutual Fund.

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 COMPANY PROFILE

ABOUT THE COMPANY

SHAREKHAN

Sharekhan provides rigorous, high quality, customized and cost effective offshore
research and analytics services. We offer a broad spectrum of services including
Investment Research, Business Research and Valuation & Advisory Services. Our clients
always receive a personalized service through our highly skilled and focused teams of
domain experts and analysts. Our cross-verticals research expertise enables us to deliver
precise, insightful and actionable research which helps our clients in the form of higher
efficiency and cost savings.

We help our clients to:

 Save up to 75% of research cost

 Ramp up or down research activities in least possible time without incurring any
fixed costs
 Free up more than 75% time of our clients for revenue generation and client
management activities
 Significantly reduce time-to-market of research production

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REASON TO CHOOSE SHAREKHAN LTD

Experience

SHAREKHAN has trust and credibility in the Indian stock market. In Asia money market

poll held recently, won the India best broking market. Ever since its launch

SHAREKHAN as its retail broking division in 2016 has been providing institutional level

research and broking service to individual level investor.

Technology

With our online trading account you can buy and sell share in the intent from any PC with

an internet connection. You will get access to our powerful online trading tool that will

help you take complete control over your investment in share.

Accessibility

SHAREKHAN provides ADVICE, EDUCATION, TOOL AND EXECUTION service

for investors. These services are accessible through our centres over the internet (throw

the website www.sharekhan .com) as well as over the voice tool.

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Knowledge

In a business where the right information at the right time translates into the direct profit,

you get access to a wide range of information on our content rich portal, SHAREKHAN .

You will also get a useful set of knowledge-based tools that will empower you to take

informed decisions.

Convenience

You can call our dial and trade number to get investment advice and execute your

transaction. We have a dedicated call center to provide this service via a toll free number

from anywhere in India.

Customer Service

Our customer service team assists you for any help that you need relating to the

transaction, billing d-mat and other queries. Our customer service can be contracted via a

toll-free number email or live chat on www.sharekhan .com.

Investment Advice

SHAREKHAN has dedicated research team of more than 15 people for fundamental

and technical research. Our analysis constantly tracks the pulse of the market and provides

the timely investment advice to you in the form of daily research email. Online chat,

printed report and sms on your mobile phone.

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 Benefits

 Free depository a/c

 Secure order by voice tool dial and trade

 Automated portfolio to keep track of the value of your actual purchase

 Personalized price and account alerts delivered instantly to your cell phone number

and e-mail address

 Special personal inbox for order and the trade conformation

 On-line customer service via web chat

 Any time ordering

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 LITERATURE REVIEW

GENERAL INTRODUCTION

DP (DEPOSITORY PARTICIPANTS)

As an investor you can open a securities accounts with a DP. DP are attached to the

depositories very much the same way as commercial banks are attached the RBI. All

interaction include account opening, dematerialization, pledge etc are done through DP

REASON TO CHHOSE DP

You can select your DP to open a Demat account just you like to select a bank for

opening a saving account. Some of the important factors for selecting DP can be:

 Convenience: proximity to the office /residence, business hours.

 Comforts: reputation of DP, past association, range of service etc. find out if the

DP is in a position to give the specific service you may need.

 Cost: the service charge levied by the DP and the service standard.

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Dematerialization

The dematerialization system is an alternative to the physical existence of the securities. In

the system securities are converted into the electronic form and deposited in a depository

account in the investor name. In order to dematerialize certificates an investor will have to

open an account with a DP and then request for the dematerialization of the certificate by

filling up a dematerialization request form (DRF) which is available with the DP and

submitted the same along with the physical certificate the investor has to insure that before

the certificate are handed over the DP for demat they are defaced by making surrender for

the dematerialization on the face of securities.

Procedure for selling dematerialized securities

The procedure for selling dematerialize securities in stock exchange is similar to the

procedure for selling physical securities instead of delivering physical securities to the

broker, you instruct your DP to debit your account with the number of securities sold by

you and credit your broking clearing account. This delivery instruction has to be given to

your DP using delivery instruction booklet received from the DP at the time of opening an

account. The procedure for selling securities are given below:

 Investor selling securities in any of the stock exchange linked to NSDL through a

broker.

 Investor gives instruction to the DP to debit his account and credit the brokers

account.

 Before the pay in day, investor brokers gives instruction to his DP for delivery to

clearing corporation.

 The broker received payment from the stock exchange (clearing corporation).

15
  The investor receives payment from the broker for the sale in the same manner

payment is received for a sale in the physical mode.

NSDL
Although India has a vibrant capital market which is more than a century old. The paper

based settlement of trade caused the substantial problem like bad delivery and delayed

transfer of title till recently. The enactment of depository act in august 1996 paved the way

for establishment of the NSDL the first depository in India .this depository promoted by

institution of nation structure responsible for economic development of the country has

since establishment of the national infrastructure of international standard that handle a

most of the trading and settlement in dematerialization from in Indian capital market.

Using the innovative and the flexible technology, NSDL works to support the investor and

brokers in the capital market of the country. NSDL aims at insuring the safety and the

soundness of Indian market place by developing settlement solution that increase

efficiency, minimize the risk and reduce cost. At NSDL we play a quiet but central role in

developing need of the financial service industry.

In the depository system securities are held in the depository account which is more or less

similar to the holding funds in the bank account. Transfer of ownership of securities is

done through simple account transfer .this method done away with all the risk and hassles

normally associated with paperwork consequently, the cost of transacting in a depository

environment is considerably lower as compared to the transacting in certificate.

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 TYPES OF THE PRODUCT

 CLASSIC ACCOUNT
This account allow the client to trade through our website www.sharekhan.com

and is suitable for the retail investor who is risk averse and hence and prefers to

invest in stocks and who do not trade very frequently.

Features classic screen serves hot.

 Online trading account for investing in equities and derivatives

 www.sharekhan.com

 Integration of the On-line trading, Saving bank and Demat Account

 Instant cash transfer facility against purchase and the sale of share

 Competitive transaction charge

 Instant order and the trade conformation by E-mail

 Streaming quotes (cash and derivatives)

 Personalized market watch

 Single screen interface for cash and derivatives and more

 Provision to enter price trigger and view the same online in the market watch

 Live terminal(NSE online and BSE offline)

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  TRADE TIGER
TRADE TIGER is an internet based software application that enables you to buy and sell

in an instant.

It is ideal for active traders and jobbers who transact frequently during day session to

capitalize on intraday price movement.

 Features

 Instant order execution and confirmation

 Single screen trading terminal (NSE)

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

 Market summary (cost traded scrip, highest value etc)

 Hot keys similar to the brokers terminal

 Alerts and reminders

 Back-up facility to place trades on Direct Phone lines

Customer can view 425 scripts at

a time

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PROCESS OF ACCOUNT OPENING
LEAD MANAGEMENT SYSTEM (LMS) / REFERENCES

CONTACT

TELEPHONE AND PRESONAL VISIT

APPOINTMENT

DEMONSTRATION

AGREE DISAGREE (CLOSE)

DOCUMANTATION

FILLING THE FORM

SUBMISSION OF THE FORM

LOGIN OF THE FORM

SENDING THE ACCOUNT OPENING KIT TO THE CUSTOMER

FOR TRADING

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CHARGE STRUCTURE

Account opening Advance brokerage for Transaction brokerage

6 months

FREE 750/-(classic) Intraday-0.10

Delivery-0.50

FREE 1000/-(classic) Intraday-0.09

Delivery-0.10

FREE 2000/-(classic) Intraday-0.035%*

Delivery-0.40%*

FREE 6000/-(trade tiger) Intraday-0.025%*

Delivery-0.25%*

10000/-(trade tiger) Intraday-0.022%*

FREE
Delivery-0.22%*

FREE 18000/-(trade tiger) Intraday-0.02%*

Delivery-0.20%*

FREE 30000/-(trade tiger) Intraday-0.015%*

Delivery-0.15%*

FREE 60000/-(trade tiger) Intraday-0.010%*

Delivery-0.10%*

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STRUCTURE FOR PREPAID - ACCOUNT INDIVIDUAL

*conditions apply

* Refundable incase the brokerage is more than RS 500/ p.m.

** Conditions Apply

*** Taxes as per govt.

STRUCTURE FOR POST PAID - ACCOUNT INDIVIDUAL

TRADE TIGER
CHARGE CLASSIC ACCOUNT
ACCOUNT

Rs. 750/- with Rs. 375/- with

Account opening
5000 Margin Money 5000 Margin Money

Monthly commitment Rs- NIL Rs 500

Intra day - 0.10% Intra day - 0.10%*

Brokerage
Delivery - 0.50% Delivery - 0.50%*

* Refundable in case the brokerage is more than Rs 500/-pm

** Taxes as per govt.

We offer an on line trading account along with Demat a/c for the benefit to the employee

of your company.

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Depository charges

Account opening charges Rs NIL

RS NIL first year RS 400/- p.a.

Account maintenance charges
from second calendar year onward

PRODUCT DETAILS
Online Trading

a) CLASSIC ACCOUNT: A/C Opening charges Rs. 750 /-

DEMAT ACCOUNT frees for first year and Rs.400 /- from second year onwards (annual

maintenance charges). Trading through website live terminal. No brokerage commitment

required. NSE and BSE Online both cash and F&O

b) TRADE TIGER : A/C Opening fee Rs. 375/-both cash and F&O

Monthly recurring Fee: Rs. 500/-per month, which is very nominal if you consider the

benefit of the product. This access charge will be debited to all the new customers signed

up and after end of the month if the client has contributed more than RS 500/-as brokerage

the access charge of Rs 500/-will be credited back to the client account. Please note-this

credit of Rs 500/-will be given to the customer who have contributed more than RS 500/-

brokerage during the month.

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Minimum brokerage Intra Day per Share
5 paisa each leg (buy or sell) for intraday traders (For e.g. on a Rs 20 Scrip, brokerage @

0.10%=2 paisa, but there is a minimum chargeable amount of 5 paisa)

Minimum Delivery Handing Charge:

10 paisa for Delivery Trades (buys and sells for e.g. On a Rs 10 scrip brokerage @

0.50%= 5 paisa, but there is minimum chargeable amount of 10 paisa)

Rs 16/-per Scrip (The brokerage scrip will be charged for the selling of share resulting in

delivery on actual.) (For e.g. if a customer sell 100 share of SAIL total delivery value

2200 brokerage @ 0.5%=RS 11 but the main chargeable amount per scrip per day=RS 16,

so additional RS 5 will be charged as minimum delivery handling charges)

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EXPOSURE: 4 TO 6.7 TIMES (ON MARGIN MONEY)

Online Ipo available

We have tie up with Eleven Bank for the online fund transfer i.e. HDFC, ICICI, IDBI,

CITI, Union Bank of India, Oriental Bank of Commerce, INDUSIND, UTI Bank, Bank of

India and Yes Bank for the online money transfer.

FOLLOWING DOCUMENT ARE REQUIRED TO OPEN AN ACCOUNT WITH THE

SHAREKHAN LTD.

FOR ID PROOF RESIDENCE PROOF

Pan card (Mandatory) Passport (valid)

Driving license Voter ID, Driving license(valid)

Telephone Bill or Electricity Bill

Voter ID
(latest)

MAPIN UIN card Insurance Policy (latest)

Leave License / Purchase Agreement

** 2 Photograph (Passport size & Front Face)

** 1 Cheque of Rs 5000/- for Classic Account and 5000/- for the Speed Trade in favors

of the (Sharekhan Limited)

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SHAREKHAN SERVICES

Dial-N-Trade
Along with enabling access for your trade online, the classic and speed trade account

also gives you our dial-n-trade services.

Can apply all the forthcoming IPO online hasselfree.

Research Tips

Company provide 4-6 e-mail to their customers per day.

Online Trade in Share

Sharekhan customers can online trade through their computers, through internet during

the market timings.

Online Fund Transfer

We have tie up with Eleven Banks for online fund transferring i.e. HDFC, IDBI, CITI,

UBI, OBC, INDSLANDAND and UTI BANK, Yes bank, Bank of India for Online

Money Transfer.

 Research based investment advice

 Investment and trading services

 Trading and seminars

 Technology based investment tools

 Integrated demat facility

 CUSTOMER CAN TRADE IN

o Equities

o Derivatives

o Commodities

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 PORTFOLIO MANAGEMENT SERVICES

SHAREKHAN is also having Portfolio Management Services for Exclusive

clients.

1. PROPRIME - Research & Fundamental Analysis ideal for investors

looking at steady and superior returns with low to medium risk appetite. This

portfolio consists of a blend of quality blue-chip and growth stocks ensuring a

balanced portfolio with relatively medium risk profile. The portfolio will mostly

have large capitalization stocks based on sectors & themes that have medium to

long term growth potential.

2. PROTECH - Technical Analysis Protech uses the knowledge of technical

analysis and the power of derivatives market to identify trading opportunities in the

market. The Protech lines of products are designed around various risk/reward/

volatility profiles for different kinds of investment needs.

 THRIFTY NIFTY: Nifty futures are bought and sold on the basis of an automated

trading system that generates calls to go long/short. The exposure never exceeds value

of portfolio i.e. there is no leveraging; but being short in Nifty allows you to earn

even in falling markets and there by generates linear.

 BETA PORTFOLIO: Positional trading opportunities are identified in the futures

segment based on technical analysis. Inflection points in the momentum cycles are

identified to go long/short on stock/index futures with 1-2 month time horizon. The

idea is to generate the best possible returns in the medium term irrespective of the

direction of the market without really leveraging beyond the portfolio value. Risk

protection is done based on stop losses on daily closing prices.

26
 STAR NIFTY: Trailing Stops Momentum trading techniques are used to spot short

term momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss

method of risk management or profit protection is used to lower the portfolio

volatility and maximize returns. Trading opportunities are explored both on the long

and the short side as the market demands to get the best of both upwards & downward

trends.

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 CUSTOMER SERVICES TRIANGLE

Supportive Caring & Competent

Management Employee

Efficient Product & System

SUPPORTIVE MANAGEMENT

 Understand the need of an employee and helps them with continuous improvement
through input and training.

 Creates a healthy environment for career growth.

 Rewards high performance and initiative.

 Backs decisions made by employees.

 Provide coaching and feedback.

EFFICIENT PRODUCT AND SYSTEM

 Efficient product and services.

 Well designed processes to serve the customer needs.

 System that are the back bone of the processes and ensure information flow and

data collection.

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 CARING AND THE COMPITENT EMPLOYEES

 Having the knowledge of the product

 Have competition knowledge

 Rapport building, listening and closing technique

 Communication skill

 Objective handling skill

SHAREKHAN LTD
SHAREKHAN , one of the India‘s leading brokerage house, is the retail arm of and

India‘s premier online trading portal www.sharekhan.com

customer enjoys multi channel access to the stock markets.

Citigroup Keen to buy 85% in Sharekhan for Rs 650 Cr

June 27 Citigroup Venture Capital has expressed interest in buying 85 percent stakes in

retail brokerage firm Sharekhan Ltd. for about Rs 650 crore.

Details of the deal, such as whether existing shareholders will offload their stake partly or

completely, are being worked out, according to Krishna Dev, Director, Sharekhan .

The post deal valuation would be about Rs 825 crore, he told Business Line.

29
Currently, the Morakhia Family owns about 44 per cent stake in the company while 42 per

cent is held by private firms HSBC Private Equity, Intel Capital and General Atlantic.

―We are working out how much stake of these Parties will have to offload. We are also

evaluating options of other private equity firms buying stake in the company,‖ he said

This exercise is expected to be completed in next few months.

The Company plans to use the capital raised through private equity to fund its Rs. 200

crore expansion, which includes expanding its online platform across India and launching

international Operation in Dubai by November.

In Chennai to inaugurate Sharekhan ‘s exclusive outlet that will distribute ICICI

Prudential Life Insurance products, Mr. Dev said that the company may go public with an

IPO next year, after spending the capital raised through private equity partners.

The company has entered into a tie-up with ICICI Prudential to distribute its products

through all Sharekhan offices, besides setting up some exclusive outlets. This tie-up may

also explore possibilities for launching exclusive products for Sharekhan customers, Mr.

Dev said.

Sharekhan has introduced ‗Share Mobile‘ a mobile application using GPRS technology

that tracks share prices, provides updates and also facilitates trading.

Currently being beta tested by a few thousand users, the application is available for free

but without the trading option.

30
Once the SEBI issues guidelines on mobile trading, the option would be available to users,

Mr. Dev said.

Pricing for the operator independent application has not been decided yet, Sharekhan has

over four lakhs trading members. With largest number of life insurance policies in force in

the world, insurance happens to be a mega opportunity in India. Its business is growing at

the rate of 15-20 per cent.

Annually and presently is of the order of Rs. 450 billion. Together with banking services,

it adds about 7 per cent to the country‘s GDP. Gross premium collection is nearly 2 per

cent of GDP and funds available with LIC for investments are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover while health

insurance and non life insurance continues to be below international standards and this

part of the population is also subject to weak security and pension systems with hardly and

old age income security. This itself is an indicator that growth potential for the insurance

sector is immense.

A well developed and evolved insurance sector is needed for economic development as it

provides long term funds for infrastructure development and at the same time strengthens

the risk taking ability. It is estimated that over the next ten years India would requires

investments of the order of one trillion US dollar. The Insurance sector, to some extent can

enable investments in infrastructure development to sustain economic growth of the

society.

Insurance is a federal subject in India. There are two legislations that govern the sector,

The Insurance Act, 1938 and the IRDA Act, 1999. The insurance sector in India has come

a full circle from being an open competitive market to nationalization and back to a

31
liberalized market again. Tracing the development in the Indian insurance sector reveals

the 360 degree turn witnessed over a period of almost two centuries.

CLOSURE OF ACCOUNT

1. CLOSURE ON CLIENT’S REQUEST

A DP can close a depository account on receipt of an application in the prescribed format.

The application should be made by the account holder or by all the joint-holders. An

account can be closed only when there is no balance in the account in case there is balance

in the account sought to be closed, the following steps are necessary:

a. Re-Materialization of all securities standing to the credit of the account at the time

of making the application for closure.

b. Transferring the balance to the credit of another account opened by the same

account holder(s) either with the same participant or with a different participant.

Before closing the account the DP should ensure that all pending transactions have

been settled. The request for closure should be processed only after ensuring that

there is unbalance lying in the account.

2. CONSOLIDATION OF ACCOUNT

Some clients could have opened multiple accounts to dematerialize their shares held in

multiple combination and sequence of names. However, they may not need so many

accounts after they have dematerialized their shares and may want to bring all their share

holdings into one or fewer accounts. This can be achieved by using normal market transfer

instruction.

32
3. CLOSURE BY DP

The DP may also initiate closure of a client‘s account if the client has defaulted in

performing its obligations laid out in the client-participant agreement. The participant

should give sufficient notice to the client before initiating closure of his account. The

notice should clearly state the reason for closure of account. The process of closing

account in such a case is the same that of client-initiated closure.

CLOSURE / SHIFTING OF CLEARING ACCOUNT

A clearing member may transfer its clearing account from one DP to another DP. For this,

simultaneously applications have to be made for closure of account to the earlier DP and

for opening of new clearing member account to the new DP. On receipt of the application,

the new DP forwards the application to the depository for approval and allotment of a new

CM-BP-ID. Once the new CM-BP-ID is allotted, the new DP opens.

New clearing account and intimates the depository about the new client-ID. On receipt of

intimation from the new participant, the depository advises the old DP to close the

account. The old DP then closes the account and intimates the clearing member. All

payout of securities, subsequent to closure of old clearing account, take place in the new

account.

33
 EQUITY RESEARCH

INTRODUCTION

Equity research is the area which deals with the live economy. Equity Research is a field
that has evolved and transformed the Financial Sector over the Past few decades. With the
Capital market in doldrums, sentiments and confidence reaching all time lows, investors
are going back to fundamental and technical analysis which seems to have taken a back
seat from past few years.
Equity Research helps the investor to know about the value, risk & volatility of the
covered security, and thus assist investors to decide whether to buy, hold, sell, sell short,
or simply avoid the security in question. In the process of research, analysts require high
level of real time as well as historical data, so as to evaluate and analyze different aspects
of the covered security. With Technology, the availability of data is no matter today but
there are tools and models needed to analyze the data. The project is divided into three
parts. The first topic emphasizes on financial services industries in India.
The main idea is to identify the Financial Services Industries Overview and analysis the
working of different financial services. This topic also includes Geographical Spread
and Service Quality of different financial companies. The second topic emphasizes on
Private Equity Outlook in India.
The main idea is to identify the trend of investment in Private Equity over a period of time
. This part also includes forecasting of the trend of Private equity in next ten years. The
third topic deals with
Long/Short Trading Strategies:
Stock pairing ideas this is the new project that the company is working on. There are two
components of this part. First is to Identifying the pairs and best trading rules that should
lead to higher returns and lower volatility of returns. And second is for Opening a position
when the ratio reaches two standard deviations away from the mean and closing it at one
standard deviation or when the price ratio approach its mean value, this methodology has
a reasonable balance between reward and risk.

PURPOSE AND BENEFITS

34
The purpose of the project is to have in-depth knowledge and understanding of financial
Sector in India. The project also intends to forecast and predict the future trend of financial
sector in India. The main purpose of project is the exposure to market neutral strategies
and to understand the derivative and stock market.
As the aspect of this project is multidimensional so is its purpose. The project brought
about value additions not only to the company but also benefited me academically. This
project also helps in understanding the Trading Strategies used by Escorts Mutual
Funds.This project leads us to emphasize on Using Pair Trading Strategy in Stock Market.

35
Process of Equity
Research

36
Economy analysis
Indian economy is facing a challenging times. After enjoying a high growth rates 8% for
the better past 2 years its GDP growth estimated at 6.9 per cent in real terms in 2011-12.
Slowdown in comparison to preceding two years is primarily due to deceleration in
industrial growth. Headline inflation expected to moderate further in next few months and
remain stable thereafter. Developments in India‘s external trade in the first half of current
year have been encouraging. Diversification in export and import market achieved.
Current account deficit at 3.6 per cent of GDP for 2011-12 and reduced net capital inflow
in the 2nd and 3rd quarters put pressure on exchange rate.
India‘s GDP growth in 2018-19 expected to be 8.2 per cent +/- 0.25 per cent. Deterioration
in fiscal balance in 2018-19 due to slippages in direct tax revenue and increased subsidies.
The recovery of Indian economy has been stalled due to host of factors like

 The intensification of sovereign debt crisis in the Euro zone , political turmoil in
Middle East injected widespread uncertainty, crude oil prices rose, an earthquake
struck Japan and the overall gloom refused to lift.
 A number of scams and scandal(common wealth ,adarsh society etc) have come
forward which has not only tarnished India‘s shining image in the world but also
reduce the confidence of retail investors.
 Certain policies aimed at improving growth prospect of the economy have been
stalled in the parliament like foreign investment in multi chain outlets etc.
but still if certain step are taken to remove indecision of the government and cure the
policy paralysis .there is no reason why India cannot repeat the same success story of the
past.
Industry outlook
Without a sound and effective banking system in India it cannot have a healthy economy.
The banking system of India should not only be hassle free but it should be able to meet
new challenges posed by the technology and any other external and internal factors.
For the past three decades India's banking system has several outstanding achievements to
its credit. It is no longer confined to only metropolitans or cosmopolitans in India; in fact,
Indian banking system has reached even to the remote corners of the country. This is one
of the main reasons of India's growth process. The government's regular policy for Indian
bank since 1969 has paid rich dividends with the nationalization of 14 major private banks

37
of India. Not long ago, an account holder had to wait for hours at the bank counters for
getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days
when the most efficient bank transferred money from one branch to other in two days.
Now it is simple as instant messaging or dial a pizza. Client satisfaction has become the
order of the day.

Post-Independence
In 1948, the Reserve Bank of India, India's central banking authority, was nationalized,
and it became an institution owned by the Government of India.
In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of
India (RBI) "to regulate, control, and inspect the banks in India."
The Banking Regulation Act also provided that no new bank or branch of an existing bank
may be opened without a license from the RBI, and no two banks could have common
directors.

Liberalization
The new policy shook the Banking sector in India completely. Bankers, till this time, were
used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. In the
early 1990s the then Narsimha Rao government embarked on a policy of liberalization and
gave licenses to a small number of private banks, which came to be known as New
Generation tech-savvy banks, which included banks such as Global Trust Bank (the first
of such new generation banks to be set up) which later amalgamated with Oriental Bank of
Commerce, UTI Bank(now re-named as Axis Bank), ICICI Bank and HDFC Bank

RECENT DEVELOPMENT IN BANKING SECTOR

A retrospect of the events clearly indicates that the Indian banking sector has come far
away from the days of nationalization. The Narasimhan Committee laid the foundation for
the reformation of the Indian banking sector. Constituted in 1991, the Committee
submitted two reports, in 1992 and 1998, which laid significant thrust on enhancing the
efficiency and viability of the banking sector. As the international standards became
prevalent, banks had to unlearn their traditional operational methods of directed credit,
directed investments and fixed interest rates, all of which led to deterioration in the quality
of loan portfolios, inadequacy of capital and the erosion of profitability.

38
The recent international consensus on preserving the soundness of the banking system has
veered around certain core themes. These are: effective risk management systems,
adequate capital provision, sound practices of supervision and regulation, transparency of
operation, conducive public policy intervention and maintenance of macroeconomic
stability in the economy.
Until recently, the lack of competitiveness vis-à-vis global standards, low technological
level in operations, over staffing, high NPAs and low levels of motivation had shackled
the performance of the banking industry. However, the banking sector reforms have
provided the necessary platform for the Indian banks to operate on the basis of operational
flexibility and functional autonomy, thereby enhancing efficiency, productivity and
profitability. The reforms also brought about structural changes in the financial sector and
succeeded in easing external constraints on its operation, i.e. reduction in CRR and SLR
reserves, capital adequacy norms, restructuring and recapitulating banks and enhancing the
competitive element in the market through the entry of new banks.
The reforms also include increase in the number of banks due to the entry of new private
and foreign banks, increase in the transparency of the banks‘ balance sheets through the
introduction of prudential norms and increase in the role of the market forces due to the
deregulated interest rates. These have significantly affected the operational environment of
the Indian banking sector.
To encourage speedy recovery of Non-performing assets, the committee laid directions to
introduce Special Tribunals and also lead to the creation of an Asset Reconstruction Fund.
For revival of weak banks, to maintain macroeconomic stability, RBI has introduced the
Asset Liability Management System.
The competitive environment created by financial sector reforms has nonetheless
compelled the banks to gradually adopt modern technology to maintain their market share.
Thus, the declaration of the Voluntary Retirement Scheme accounts for a positive
development reducing the administrative costs of Public Sector banks. The developments,
in general, have an emphasis on service and technology; for the first time that Indian
public sector banks are being challenged by the foreign banks and private sector banks.
Branch size has been reduced considerably by using technology thus saving manpower.

39
The deregulation process has resulted in delivery of innovative financial products at
competitive rates; this has been proved by the increasing divergence of banks in retail
banking for their development and survival.
In order to survive and maintain strong presence, mergers and acquisitions has been the
most common development all around the world. In order to ensure healthy competition,
giving customer the best of the services, the banking sector reforms have lead to the
development of a diversifying portfolio in retail banking, and insurance, trend of mergers
for better stability and also the concept of virtual banking.

40
Key players in banking industry
State Bank of India (SBI)
1.
HDFC Bank
2.
Punjab National Bank (PNB)
3.
ICICI Bank
4.
Axis Bank
5.
Bank of Baroda (BoB)
6.
Citi Bank
7.
IDBI Bank
8.
Bank of India (BOI)
9.
Canara Bank
10.

Punjab National Bank

State Bank of India

41
 ICICI BANK

HDFC Bank

PUNJAB NATIONAL BANK (PNB)

Punjab National Bank (PNB) (BSE: 532461, NSE: PNB) is an Indian financial services
company based in New Delhi, India. PNB is the third largest bank in India by assets. It
was founded in 1894 and is currently the second largest state-owned commercial bank in
India ahead of Bank of Baroda with about 5000 branches across 764 cities. It serves over
37 million customers. The bank has been ranked 248th biggest bank in the world by the
Bankers Almanac, London. The bank's total assets for financial year 2007 were about
US$60 billion. PNB has a banking subsidiary in the UK, as well as branches in Hong
Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai.

42
State bank of India (SBI)

State Bank of India (SBI) (NSE: SBIN, BSE: 500112, LSE: SBID) is the largest banking
and financial services company in India by revenue, assets and market capitalisation. It is
a state-owned corporation with its headquarters in Mumbai, Maharashtra. As of March
2011, it had assets of US$370 billion with over 13,577 outlets including 157 overseas
branches and agents globally. The bank traces its ancestry to British India, through the
Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the
oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other
two presidency banks—Bank of Calcutta and Bank of Bombay—to form the Imperial
Bank of India, which in turn became the State Bank of India. The Government of India
nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a
60% stake, and renamed it the State Bank of India. In 2008, the government took over the
stake held by the Reserve Bank of India. SBI is ranked No. 292 globally in Fortune Global
500 list in 2011.
SBI provides a range of banking products through its vast network of branches in India
and overseas, including products aimed at non-resident Indians (NRIs). The State Bank
Group, with over 18,324 branches, has the largest banking branch network in India. SBI
has 14 local head offices situated at Chandigarh, Delhi, Lucknow, Patna, Kolkata,
Guwahati (North East Circle), Bhuwaneshwar, Hyderabad, Chennai, Trivandram,
Banglore, Mumbai, Bhopal & Ahmedabad and 57 Zonal Offices that are located at
important cities throughout the country. It also has 157 branches overseas.
SBI is a regional banking behemoth and is one of the largest financial institutions in the
world. It has a market share among Indian commercial banks of about 20% in deposits and
loans.[3] The State Bank of India is the 29th most reputed company in the world according
to Forbes.[4] Also, SBI is the only bank featured in the coveted "top 10 brands of India"
list in an annual survey conducted by Brand Finance and The Economic Times in 2010.[5]
The State Bank of India is the largest of the Big Four banks of India, along with ICICI
Bank, Punjab National Bank and HDFC Bank—its main

43
HDFC
HDFC Bank Limited (BSE: 500180, NSE: HDFCBANK, NYSE: HDB) is an Indian
financial services company that was incorporated in August 1994. HDFC Bank is the fifth
or sixth largest bank in India by assets and the second largest bank by market
capitalization as of February 24, 2012. The bank was promoted by the Housing
Development Finance Corporation, a premier housing finance company (set up in 1977) of
India. HDFC Bank has 1,986 branches and over 5,471 ATMs, in 996 cities in India, and
all branches of the bank are linked on an online real-time basis. As of 30 September 2008
the bank had total assets of Rs.1006.82 billion.[3] For the fiscal year 2010-11, the bank
has reported net profit of 3,926.30 crore (US$783.3 million), up 33.1% from the previous
fiscal. Total annual earnings of the bank increased by 20.37% reaching at 24,263.4 crore
(US$4.84 billion) in 2010-11.

KEY RATIOS

Earnings Per Share (Rs) 22.02 84.40 64.42

DPS(Rs) 4.30 16.50 12.00

Book NAV/Share(Rs) 127.52 545.46 470.12

Yield on Advances 13.96 12.46 12.85

Yield on Investments 6.56 6.47 7.39

Cost of Liabilities 5.54 4.21 4.32

NIM 3.92 4.05 3.91

Interest Spread 8.42 8.25 8.53

ROA(%) 1.68 1.57 1.45

44
ICICI BANK
ICICI Bank Limited (NSE: ICICIBANK, BSE: 532174, NYSE: IBN) is an Indian
diversified financial services company headquartered in Mumbai, Maharashtra. It is the
second largest bank in India by assets and third largest by market capitalization. It offers a
wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and through its specialized subsidiaries in the areas
of investment banking, life and non-life insurance, venture capital and asset management.
The Bank has a network of 2,630 branches and 8,003 ATM's in India, and has a presence
in 19 countries, including India.
The bank has subsidiaries in the United Kingdom, Russia, and Canada; branches in United
States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance
Centre; and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. The company's UK subsidiary has
established branches in Belgium and Germany.

Key Ratios

Earnings Per Share (Rs) 56.09 44.73 36.10

DPS(Rs) 16.50 14.00 12.00

Book NAV/Share(Rs) 524.02 478.32 463.02

ROA(%) 1.47 1.34 1.08

ROE(%) 11.20 9.66 7.96

ROCE(%) 7.19 6.16 6.18

Cost Income Ratio 43.05 42.24 37.58

Core Cost Income Ratio 42.87 41.60 39.43

Operating Costs to Assets 1.66 1.63 1.61

45
BANK PNB SBI ICICI HDFC

P/E

P/BV

EV/EBIDTA 23.34

ROE 11.20

RECOMMENDATION

PUNJAB NATL. UNION BANK OF KOTAK MAH. YES

BANKS BANK INDIA BANK BANK

P/E(TTM) (x) 8.7 7.84 47.34 19.71

P/BV(TTM) (x) 2.04 1.81 5.85 2.99

EV/EBIDTA (x) 11.92 14.73 23.4 16.05

ROE (%) 25.8 26.2 13.3 20.3

RECOMMENDATION BUY BUY BUY HOLD

46
 . Private banking:-

Private banking is banking, investment and other financial services provided by banks to
private individuals who invest sizable assets. The term "private" refers to customer service
rendered on a more personal basis than in mass-market retail banking, usually via
dedicated bank advisers. It does not refer to a private bank, which is a non-incorporated
banking institution.

Private banking forms an important, more exclusive, subset of wealth management. At

least until recently, it largely consisted of banking services (deposit taking and payments),
discretionary asset management, brokerage, limited tax advisory services and some basic
concierge-type services, offered by a single designated relationship manager. On the
whole, many clients trusted their private banking relationship manager to ‗get on with it‘,
and took a largely passive approach to financial decision making.

47
  Investment Banks:-

A financial intermediary that performs a variety of services. This includes

underwriting, acting as an intermediary between an issuer of securities and the investing
public, facilitating mergers and other corporate reorganizations, and also acting as a broker
for institutional clients.

 Bank cards:-

A bank card is a plastic card issued by a bank to its clients that may perform one or more
of the following services:

 ATM card, card used for transactions at automatic teller machines

 Debit card, card linked to a bank account and used for making purchases
 Credit card, card attached to a revolving credit line

 Credit card machine services and networks:-

Companies which provide credit card machine and payment networks call
themselves "merchant card providers".

 Insurance Brokerage:-

Arthur J. Gallagher & Co., one of the world's largest insurance brokerage and risk
management services firms, provides a full range of retail and wholesale
property/casualty (P/C) brokerage and alternative risk transfer services globally, as

48
 well as employee benefit brokerage, consulting and actuarial services. Gallagher
also offers claims and information management, risk control consulting and
appraisal services to clients around the world.

 Insurance Underwriting:-

Underwriting is one of the aspects of insurance that makes most people‘s eyes glaze over.
Underwriters deal with statistics — they‘re number crunchers. Many people who have an
insurance policy don‘t even know that at some point their application passed through an
underwriter‘s hands.

But underwriting is one of the most important parts of the insurance process. And
knowing what an underwriter does — and why it‘s so important — is helpful for people
who are shopping for a new policy.

 Reinsurance:-

Reinsurance is insurance that is purchased by an insurance company (insurer also

sometimes called a "cedant" or "cedent") from another

insurance company (reinsurer) as a means of risk management. The insurer and

the reinsurerenter into a reinsurance agreement which details the conditions upon which
the reinsurer would pay the insurer'slosses (in terms of excess of loss or proportional to
loss). The reinsurer is paid a reinsurance premium by theinsurer, and the insurer issues
insurance policies to its own policyholders. The main reason for insurers to buy
reinsurance is to transfer risk from the insurer to the reinsurer, but reinsurance has various
other functions as explained below.

For example, assume an insurer sells one thousand policies, each with a $1 million policy
limit. Theoretically, the insurercould lose $1 million on each policy – totaling up to $1

49
billion. It may be better to pass some risk to a reinsurance company (reinsurer) as this will
reduce the insurer's exposure to risk.

There are two basic methods of reinsurance:

1. Facultative Reinsurance:- In facultative reinsurance, the ceding company cedes

and the reinsurer assumes all or part of the risk assumed by a particular specified
insurance policy. Facultative reinsurance is negotiated separately for each
insurance contract that is reinsured. Facultative reinsurance normally is purchased
by ceding companies for individual risks not covered by their reinsurance treaties,
for amounts in excess of the monetary limits of their reinsurance treaties and for
unusual risks. Underwriting expenses and, in particular, personnel costs, are
higher relative to premiums written on facultative business because each risk is
individually underwritten and administered. The ability to separately evaluate each
risk reinsured, however, increases the probability that the underwriter can price the
contract to more accurately reflect the risks involved.

2. Treaty Reinsurance:- is a method of reinsurance in which the insurer and

the reinsurer formulate and execute are insurance contract. The reinsurer then
covers all the insurance policies coming within the scope of that contract. The
reinsurance contract may oblige the reinsurer to accept reinsurance of all contracts
within the scope (known as "obligatory" reinsurance), or it may require the insurer
to give the reinsurer the option to reinsure each such contract (known as
"facultative-obligatory" or "fac oblig" reinsurance).

There are two basic methods of treaty reinsurance:

 Quota Share Treaty Reinsurance, and

 Excess of Loss Treaty Reinsurance.
 Stock brokers(private client services) and discount brokers

50
Services quality Rural Urban Regional Citibank ABN Amro, State Bank of India, ICICI
Bank HDFC ,AXIS Bank. IndusInd Bank, Vysya Bank ,Karur Vysya, PNB, Andhra
Bank, Canara Bank, Co-operative Bank, Rural Banks, Bank of Baroda, Bank of India Stan
CHSBC.

Financial Services Industries –

Overview

Equity Research with market sentiment turning positive due to the formation of a stable
newly elected government, the ripple effect is likely to felt across all the financial services
in India. The sectors, including banking and insurance ,and mutual funds are all beginning
to reap the benefits of a good closure for 2008-09. In 2008-09, the Indian economy is
estimated to have grown by 6.7 per cent. According to the latest Central Statistical
Organization (CSO) data, financial services and real estate sector rose by 9.5 per centin
the first quarter of 2009-10.The government has taken a number of steps in recent months
to revive the economy, including slashing interest rates, lowering factory levies and more
than doubling the limit on foreign investment in corporate bonds. The financial services
space is a rapidly growing one in India. The country received US$ 45 billion in foreign
currency remittances from non-resident Indians in 2008, the highest in the world. April-
May 2009 saw increased inflow in to equity with investors steadily turning positive on
equity according to mutual fund analysts. As per the Securities and Exchange Board of
India (SEBI), on May 15, net investment of mutual funds in equity was around US$ 83.3
million lowering to US$ 20.5 million on May 21. As against this, net investment of mutual
funds in debt has more than tripled from US$ 42.9 million on May15 to US$ 134.2 million
on May 31, 2009.There is optimism in the economy as funds are investing in corporate
bonds, making liquidity available to enterprises. The total amount trade din corporate
bonds tripled from US$ 17.8 million to US$ 55.7 million during May 15 to May 21,
2009.The largest fund house, Reliance Mutual Fund, registered 16 percent growth in its
average assets under management (AUM) to US$ 21.6billion in May 2009 compared to
April‘s figure of US$ 18.6 billion. The second-largest fund house, HDFC Mutual Fund,

51
grew 18 per cent to US$16 billion, compared with the previous month‘s figure of US$
13.4 billion .The Spice Group

is now looking for a US$ 1-billion valuation in financial services business in the next three
to five years. It has put US$ 105.2million as seed money for the financial services
business and is roping in a Singapore-based firm as a partner for the asset reconstruction
business .India has increased its exposure to American debt securities by over three-fold to
US$ 38.2 billion till March 2009 as against US$ 11.8 billion in March 2008, according to
the data from the US Treasury Department.

Stock markets

India‘s market capitalization (m-cap) has touched US$ 1.04 trillion making it the ninth
largest in the world. India‘s share in the total world m-cap has risen to 2.79 per cent
currently. The Indian stock market has currently responded to the optimism of reforms by
the new stable government and its continuity in policies. Further, according to global
consultancy firm, Deloitte Haskins & Sells, the Indian economy and capital markets are
expected to witness a turnaround within six to nine months .Fund raising by India Inc
through initial public offers (IPOs) rose by a whopping 62 per cent since the beginning of
2008 to May 29, 2008 to US$ 4.2 billion, against US$ 2.6 billion during the same period
in 2006,according to global deal data provider, Dealogic. According to Goldman Sachs,
Indian companies may raise US$ 4 billion-6 billion from IPOs in thefiscal year ending
March 31, 2010.

Insurance

India is the fifth largest life insurance market in the emerging insurance economies
globally and the segment is growing at a healthy 32–34 percent annually. The insurance
industry‘s sales rose the fastest in two years since April 2007. The country‘s 22 life
insurance companies saw 29.5 percent rise in premium collected through sale of new
policies to US$ 758million in April 2009, as against US$ 585 million in the corresponding

52
period last year. In case of LIC, which recorded 69.33 per cent growth in first-year
premium during April 2009, a bulk of the growth came from the group single premium
segment and individual single premium rose to US$89.8 million from US$ 77 million in
the corresponding period of last year .According to a report by research firm RNCOS—
'Booming Insurance Market in India (2008–2011)'—the total life insurance

premium in India is projected to grow to US$ 259.72 billion by 2010–11. Life Insurance
Corporation (LIC) is bullish on growth and is targetting business in excess of US$ 59.14
billion by 2011–12.The government is planning to ease restrictions on foreign investments
in insurance, banking and pensions, and allow foreign direct investment(FDI) of 49 per
cent from the present 26 percent .The ‗Mall assurance‘ delivery channel is first of its kind
in India's insurance sector, selling life and general insurance policies through all Future
Group retail outlets across the country. For Future General Insurance, a sizeable chunk of
their customers now comes through the Mall assurance route.

Online sales take place through two major channels through direct sales by the insurers
and through online insurance portals which offer a range of products from various
insurers. The most active insurers online are ICICI Lombard, Bajaj Allianz etc.

Banking services

During 2008-09, State Bank of India (SBI) and associate banks advanced US$ 16.8 billion
for infrastructure projects such as power plants and petroleum refineries. The big-sized
credits have made SBI and group one of the largest project financiers in the country .IDFC
Mutual Fund and Bank of India have entered into a strategic alliance to distribute and
market mutual fund products of IDFC through Bank of India's branches.

Government Initiatives

The Central Board of Direct Taxes (CBDT) has changed the investment pattern for
recognised provident funds and superannuation trusts managed by the private sector under
the income-tax rules to take a greater exposure in the stock market from April 1, 2009

53
Private Equity Outlook in India
India: Strong Macroeconomic Outlook

 Current Snapshot

 Gross Domestic Product (GDP) of US $1,030 billion

 12th largest economy in the world and 4th largest in PPP terms

 Real GDP growth of 9.4% in 2006-07

 Projections - 2020

 GDP of $1,030 billion during calendar year 2007

 Assuming real GDP growth rate of 8% per year and an average of 5.5% inflation:

GDP of $1.920 billion in 2012

GDP of $5,040 billion in 2020

 Projections – 2020 – Comparison

 Real GDP growth rate 8% per annum (13.5% including 5.5% annualinflation)

 4th largest economy of the world after US, China and Japan

 3rd largest economy in PPP terms behind China and the US

Private Equity in India

First started in 1975 by Risk Capital Foundation followed by other domestic financial
institutions

After 1996, international VC and PE firms started investing in India.

54
PAIR TRADING

What Is Pairs Trading?

Pair trading strategy is a market neutral strategy which enables traders to profit from
virtually any market condition; uptrend, downtrend or sidewise movement. Although
introduced in early 1980‘s, the strategy became popular among retail traders only after the
introduction of online trading through sophisticated trading systems. Opportunities of
pairs trading usually last for only a short-period of time thus quick response to market
movements .

55
TYPES OF MARKET NEUTRALITY

There are several types of neutrality, each of which has a different impacton the portfolio
and relates differently to pair trading. Understanding each and how to apply it
appropriately will directly impact the portfolio construction process.

Share Neutrality

Share neutrality refers to balancing a trade with an equal number of long shares and short
shares. This is a very uncommon approach because in terms of relationship investing, the
share price of either security is somewhat irrelevant. While it is usually a good idea to
trade in similarly priced securities, because it is unlikely that the two securities in question
will be priced identically share neutrality result in a disproportionate amount of exposure
between the two legs of the trade

56
Dollar neutrality

Dollar neutrality is the most common type of market neutrality and is usually considered a
requirement for market-neutral investing in equity securities. Dollar neutrality refers to
buying equal amounts of long and short investments so that the dollar risk is equal on each
side of the portfolio. By employing dollar neutrality in a market-neutral strategy, an
investor ensures that his net dollar exposure to market swings is zero

Sector neutrality

Sector neutrality means that portfolios are long/short balanced within each sector of the
market to insulate the overall portfolio against the possibility that one sector will perform
very well while another performs poorly. Being sector neutral avoids the risk of market
swings affecting some industries or sectors differently from others

Beta Neutrality

Beta neutrality refers to balancing the beta of the long side of the portfolio against the beta
of the short side of the portfolio. Beta is the measurement of a stock‘s volatility relative to
the market. A stock with a beta of 1 move historically in sync with the market, while a
stock with a higher beta tends to be more volatile than the market and a stock with a lower
beta can be expected to rise and fall more slowly than the market .Beta neutrality,
therefore, refers to the practice of matching the beta of the long portfolio with the beta of
the short portfolio to ensure that market swings affect each portfolio in a similar way.

57
MARKET NEUTRAL INVESTMENT PROCESS

The process describes the step involved to achieve a well constructed market neutral
portfolio. The process is broken down into three basic steps:-

 Initial Screen

 Stock selection process

Final Portfolio construction .In order to have an in-depth understanding of the market
neutral investment process an example is taken. The entire concept will be explained
taking this example into account. This example was also a part of the work done during
my summer internship.

58
ICICI BANK

. These companies make an appropriate pair because theyare not only in the same sector
and industry, but they follow similarbusiness plans.

CORRELATION BETWEEN PAIR

In order to calculate the correlation and mean of the pair, first the price ratio is calculated
which is defined as ratio of the closing price of the two stocks (figure ). Table below
shows the correlation for 1 year, 6 months and 3 months. We observe that the correlation
is quite healthy not only for short term but also for long term. As on 12 th December 2008
the correlation between the pair comes to near about 97% which is calculated by Pair
Trade finder software.

59
EQUITY RELATE TO BUDGET AND FOREIGN EXCHANGE

OPTION ELF-X’ :-

A put or call option that protects an investor from foreign-exchange risk for a future sale
or purchase of a specified foreign-equity portfolio.

ELF-X options are a combination of a currency option and an equity forward contract.
Should the exchange rate work in the investor's favor under the option contract, the total
payout from the option is dependent upon the performance of the equities underlying the
contract. Otherwise, the investor does not receive a payout.

For example, if an investor holds an ELF-X call option on USD relative to CAD, and the
Canadian dollar depreciates relative to the American, the investor would not receive a
payout. However, if USD depreciated relative to CAD, the investor would receive the
amount saved from use of the spot exchange rate in the option contract and the foreign-
equity portfolio value, less the premium paid for the call option. Also known as a
"portfolio currency protection option" or PCPO.

60
BUDGET IMPACT ON THE PRIVATE EQUITY INVESTMENT IN

INDIA:-

OVERVIEW
Private equity ('PE') has over the past decade financed opportunities In nearly every
business sector in India. As its role increased in Significance , PE has shaped itself to the
contours of the Indian economy and unique business culture. During the year 2011 alone,
there were 373 PE deals aggregating to US$8.75 billion and 644 M&A deals (both cross
border and domestic) aggregating to US$44.61 billion . All M&A transactions or PE deals
which happen do have a element of tax costs being considered at the time of structuring
the deal, though many times tax is not the main motive of the deal structure.

Finance Minister is his budget speech said that his tax proposals take us closer towards
DTC, which may see the light of the day now in 2013 only. In this respect, FM has
introduced General Anti Avoidance Rule ('GAAR') to counter aggressive tax avoidance
schemes. The only safe guard he has provided is that GAAR provisions would be used
only in appropriate cases Another major change being proposed which was also expected
post Vodafone judgement is introduction of provisions to cover all direct and indirect
transfer of shares / assets of Indian companies under the

Indian tax net and also introduce treaty overwrite provisions The proposals will now tax
the gains derived from all exits from India and leave very little scope for any beneficial
tax structuring. The proposal to tax Vodafone like transactions with retrospective effect
(which is taxing off-shore share transfers) could potentially increase costs of transactions
Foreign investor sentiments were positively impacted by the Supreme Court ruling,
however, these tax proposals could potentially have a negative impact on cross-border
transactions We are pleased to provide our analysis of the tax proposals which could
directly impact the private equity players in India and other major provision.

61
EQUITY FUTURE AND OPTION:

 Future:

An agreement between two parties to buy or sell an asset at a certain time in the Future at a certain
price. Stock futures on certain specified securities and internet rate futures are available for trading
at NSE (NATIONAL STOCK EXCHANGE).All the futures contracts are settled in cash.

 Options:

An Options is a contract which gives the right, but not but or sell the underlying at a stated price,
which a buyer of an option pays the premium and Options are of two types – calls and put.

Calls- Give the buyer the right but not the obligation to buy a given quantity of the underlying
asset, at a given price on or before a given future date. Calls also known as bulls.

Puts- Give the buyer the right , but not obligation to sell a given quantity of the underlying asset at
a given price on or before a given date. Puts also known as bears.

62
 CONCLUSION

 We all have personal biases, and every analyst has some sort of bias. There is
nothing wrong with this, and the research can still be of great value.
 Check the track record of an analyst before taking any decision based on his
recommendation.
 Corporate statements and press releases offer good information, but they should be
read with a healthy degree of skepticism to separate the facts from the spin.
 Investors should become skilled readers to weed out the important information and
ignore the hype.
 Keep long term horizon for investment but book profits at the right times.
 Always keep diversified investment, do not invest all your money in the same
sector or in the same company.

63
DISCUSSION ON TRAINING:-

Our group of 6 intern were given the following objectives to meet in 6 weeks of training

 To project Sharekhan as an authority in the retail stock trading business.

 To execute business for the company by selling demat accounts

 To study the various products of the company.

 To know how to open and close the calls.

 To learn the online terminal used for trading.

 To know the various policies of the company.

 To know how to handle various types of customers.

 To know various reasons for market fluctuations.

 To learn to manage time.

 To gain practical knowledge of the market.

 To have a practical experience of working in a reputed organization.

64
TARGETS / TASKS:

TARGETS

 To sell 10 Demat accounts individually for Sharekhan limited

 Trading in Demat accounts.

65
 MY SIP IN SHAREKHAN

Before my Summer Internship Programme, I had very little knowledge about the stock

market and its fundamentals. And now after undergoing training for the 12th week at

Sharekhan there is a tremendous increase in my knowledge about the stock market. I have

also gained a lot of knowledge about the Sharekhan Company and its various products,

schemes and policies and also about its competitors. The products which I have sold up till

now are Demat accounts . And I am confident about my knowledge about demat accounts

. Although nobody can claim complete expertise but there is a sea change at least from my

point of view. I have learnt what are the various indices and their significance in market. I

have also learnt the impact of Sensex and Nifty on overall stock market. I have learnt

about various fundamentals and technical aspects, which affect the stock prices in short,

run and long run. At Sharekhan we have also been taught to use the online terminal.

Sharekhan is one of the top retail brokerage houses in India with a strong online trading

platform. The company provides equity based products (research, equities, derivatives,

depository, margin funding, etc.). It has one of the largest networks in the country with

1000 share shops in 375 cities and India‘s premier online trading portal

www.Sharekhan .com.

Out of these we have to mostly sell demat accounts.

66
 RESEARCH METHODOLOGY

Research Methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. In it we study the

various steps that are generally adopted by a researcher in studying his research problem s

along with logic behind him.

My topic of research is Equity research .Equity research is what an equity research

analyst does. Well, to start with, equity research is a study of equities or stocks for

the purpose of investments.

Equities or common stock comprises a big chunk in any company’s capital and
shareholders need to know whether to stay invested in the company or sale the shares
and come out.

As an individual, it is time consuming to do equity research - that is to study the

company, its financial statements, products, management and take a decision about
investment. These researches help investors to make informed decisions.

Purpose

Purpose of equity research is to study companies, analyze financials, and look at

quantitative and qualitative aspects mainly for decision: Whether to invest or not.

Research problem
I have decided to take Indian banking industry for equity research .My plan is to take top 4

performing banks and analyze their performance and giving my suggestions about which

strategy should be adopted by investors.

67
RESEARCH DESIGN

A research design is the arrangement of conditions or collection and analysis of in a

manner and aims to combine relevance to the research purpose with economy in

procedure. In fact the research design is the conceptual structure within which research I

conducted. Research design is needed because it facilitates the smooth sailing of the

various research operations thereby making as efficient as possible yielding maximum

information with minimal expenditure of effort, time and money. I have adopted

descriptive and conclusive research design. Descriptive research is those studies, which

are concerned with describing the characteristics of a particular individual or a group.

Since the aim is to obtain the accurate information about the customer in terms of his

interest towards investment in stock sector. I have used the techniques of questioning

customer in order to know their consumer behavior, their interests, their needs and etc.

It is very important for the sales executive to study the mind of the consumer so that the

personal visit would not be a waste of time, money and efforts.

DATA SOURCES

The research can gather primary data, secondary data or both. Secondary data are data that

were collected for another purpose and already exist somewhere. Primary data are data

specially gathered for a specific purpose or for a specific research project. When the

needed data do not exit or are outdated, inaccurate, incomplete, or unreliable, the

researcher will have to collect primary data. Most marketing research project involves

some primary data collection.

68
PRIMARY DATA

 I have collected primary data through personal references.

 LMS i.e. Leads Management System of the company.

 Customer references.

SECONDARY DATA:

The main source of information for the project was:

 Weakly Magazine

 Telephone Directory

 sed Leads of the company

 Leads of the company; i.e. telephone list for tele calling

CONTACT METHOD:

The marketing researchers have four choices to contact the respondents:

 Mail

 Telephone

 Personal

 Online

I choose the above techniques to reach to the customer in a most convenient method.

69
LIMITATIONS:

 Lack of awareness of Sharekhan and stock market:

Since the area is not known before it takes lot of time in convincing people to start

investing in shares primarily in IPO‘s.

 Some people are comfortable with traditional system:

As people are doing trading from there respective brokers, they are quite comfortable to

trade via physical form of paper, they want to trade off line, i.e. through telephone or etc.

 Lack of Techno Savvy people and poor internet penetration:

Since most of the people are quite experienced and also they are not techno savvy. Also

Internet penetration is poor in India.

 Some respondent are unwilling to talk:

Some respondents either do not have time or willing does not respond, as they are quite

annoyed with the phone call.

 Inaccurate Leads:

Sometimes leads are provided which had error in it, which varies from only 5 digit phone

numbers to wrong phone numbers, some people have registered to know about their

personal quarries. They are the unsatisfied clients of the company.

70
Company Background:

India infoline was founded in 1995 and was positioned as a research firm in 2000 e-

broking was started under the brand name of 5paisa.com. Apart from offering online

trading in stock market the company offers mutual funds online. It also acts as a

distributor of various financial services i.e. GOI securities, Company Fixed Deposits,

Insurance. Limited ground network present in 20 cities.

Charges for Demat:

 Demat account opening charges Rs.555 (one time)or Rs. 250 p.a.

 Pricing for HNI Clients

KOTAK STREET

Company Background:

Kotakstreet is the retail arm of Kotak Securities. Kotak Securities limited is a joint venture

between Kotak Mahindra Bank and Goldman Sachs.

Charges for Demat:

 Rs. 22.5 p.m.

71
 INDIABULLS

Company Background:

Indiabulls Securities Limited (IBSL) is an India-based company. The Company‘s primary

business activity is to carry on business of stock and share broker on National Stock

Exchange of India Limited and Bombay Stock Exchange Limited, and other related

ancillary services. The Company also provides depository services, mutual fund and initial

Charges for Demat:

 zero AMC Charges to Rs 450 (account with POA) and Rs. 500/- (account without

POA) for AMC.

 POA for Clients DMAT

All shares held by client trading with IB are moved to IB Pool Account and the same is

shown as a reflection in client DP account. Charges are levied to move shares from IB

pool account to client DP account.

72
ICICI Direct

Company Background:

ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an Affiliate of

ICICI Bank Limited and the Website is owned by ICICI Bank Limited.

Charges for Demat:

 NIL first years & 500 p.a.

HDFC SECURITIES

Company Background:

The HDFC Bank, HDFC and Chase Capital Partners and their associates promote

HDFC SECURITIES LTD. Pioneers in setting up Dial-a-share services with the largest

team of Tele brokers

DEMAT ACCOUNT WITH HDFC:

 It is conversion of Physical shares into electronic form.

 Dematerialization charges

 Rs. 3 per share certificates

 Rs. 35 per request

 Folio charges are Rs. 150 per annum

73
DATA ANALYSIS

1. Market share of Sharekhan Securities

TABLE NO. 01

Company Market Share

28%
ICICI
sharekhan
24%
ltd

22%
India bulls

20%
5 Paisa
Others 6%
Graphical Representation: GRAPH – 01

The above data describes the market share of the Sharekhan competitors in which

Sharekhan has the second highest market share among all its competitors having

customer base of more than or approximate 15 lakh.

74
 COMPETITORS BROKERAGE COMPARISON

TABLE NO. 02

INTRADAY DILIVERY

ICICI 0.50% 0.75%

HDFC 0.40% 0.75%

INDIA BULLS 0.10% 0.50%

SHAREKHAN
0.10% 0.50%

5 PAISA 0.05% 0.40%

Graphical Representation: GRAPH NO. 02

The above is the detail of the companies‘ brokerage in which Sharekhan has competitive

brokerage over other in which there reduction of the brokerage depending upon the deal

between client and the customers.

75
 TABLE NO. 03

GROWTH RATE OF COMPANY IN %

Year 2004 2005 2006 2007 2008

Custom
er
3.6 4 4.5 5.2 4.8
(In
Lakhs)

GRAPH NO. 03

Graphical Representation:

The

above

data

shows the growth rate of the company from 2004 to 2006, which shows the increase in the

growth trend.

76
 TABLE NO. 04

Company Growth (in Per)

HDFC 4%

5 Paisa 2%

INDIA BULLS 4%

SHAREKHAN
5%

ICICI 6%

GRAPH NO. 04

Graphical Representation:

77
 TABLE NO. 05

Company No. of customers (In lakh)

INDIA BULLS 7.4
ICICI 9.5
HDFC 3
5 PAISA 5.4
VALOREGA RESEARCH &
8
ANALYTICS LLP

The above graph shows the market share of the customers we are at position no two

having customers base of around 8.0 lakh customers, ICICI having the maximum and

HDFC has the minimum customers.

TABLE NO. 06

CLIENT ACQUISITIONS

Client Acquisition (Approx.)

Total Data 1900

Calls Made 1300

Responses 700
Appointment Fixed 160

Appointment Confirmed 55

Appointment Converted 32

78
 GRAPH NO. 06

Graphical Representation:

The

above graph shows the number of customer (approx.). That has reached through the

marketing tools and technique. Approximately out of 1900 clients finally 32 were

converted.

79
 FINDING AND RECOMMENDATION

FINDINGS

According to the study of the project report and company experience of Four month the
analysis are the following findings.
According to graph one ICICI has the maximum market share and Sharekhan is at
position no.2 Sharekhan has a competitive product feature and services that makes it
possible to reach at this position.
According to graph two SHAREKHAN has brokerage less then ICICI and HDFC but
same as INDIABULLS but more then other competitors. Brokerage is the main concern
for the customer thus company provides some negotiation flexibility in brokerage charges
in terms of brokerage we are better then the ICICI and HDFC company charges less form
the customer for the same purpose and providing better service.
According to graph 3 which shows the competitors growth in terms of the customer
acquisition form 2004 to 2008 Sharekhan has growth rate of 5% and ICICI has a
maximum growth rate of 6%
According to graph no 4 which shows the total no of customer Sharekhan has the second
largest customer base with 8 lakhs among its competitors.
According to the graph 5 it shows the practical work done by me. In this I have made
approximate 1900-2100 calls in Four month to the customer and tried to communicate my
product. Out of all these calls I found 1300 numbers correct and rest are not in use. Near
about 700 customers shows interest towards at least listing to the product out of 700 only
160 customer fixed the appointment for further process of the account opening with share
khan , then out of 160 customers only 55 appointments are confirmed and visited by me.
Out of this total 32 are finally converted and are customer of the company.
Due to high competition the companies provides same product with different features and
service. With this regard share khan is at no one for service brokerage and follow up.

80
RECOMMENDATIONS

After heaving an experience of two months in sales of demat account I would like to

suggest the following things.

Company has an advantage of reach tips for which Sharekhan known for the customer

who are new they need relation ship manger who will tell them about investment so it

should be provided to all the customer on demand this will lead to customer on demand

this will lead to customer satisfaction and will hip to have more reference from satisfied

customer.

The company also have the advantage of broke rage charge it need some revision so that

the customer who are locking for the less brokerage can open there account in are

company taking into consideration the different proposal it can be reduced for a HNI

client.

The company has shown the growth trend and it has reached at no 2 it can move to no

one because it has an advantage of its service. As Sharekhan is already tie-up with 8

banks for online fund transfer that reduce the paper work for customers and ease in

trading.

The company can increase the customer base if the account opening charges it reduced

from 375 to 200, which will give boost the competition.The company should revise the

advertising strategy to increase its brand awareness. I suggest marketing making on

television so that maximum market can be targeted.

81
 APPENDIX

BIBLIOGRAPHY

 Valueline (Sharekhan monthly research Magazine)

 Capital Market (5 Paisa.COM), New Delhi
 The Finapoils (Your Personal Finance Advisor from Karvy)
 Training Kit Provided by the Sharekhan .

INTERNET

 www.reliancemoney.com
 www.nseindia.com
 www.bseindia.com
 www.indiabulls.com
 www.kotaksecurities.com
 www.Sharekhan .com

 www.motilaloswal.com
 www.icicidirect.com
 www.traderji.com
 www.religaresecurities.com
 www.demataccount.com

82
 QUESTIONNAIRE

DATE:

NAME :

OCCUPATION :

AGE :

CONTACT NO. :

Q1. In which of these Financial Instruments do you invest into?

(i) Shares (ii) Mutual Funds (iii)Bonds (iv) Others

Q2. Which type of trading you prefer?

(i) Online (ii) Offline (iii) Not Applicable

Q3. If you prefer online Trading then the reasons for it?

(i) Privacy (ii) User friendly & Time Saving

(iii) Convenience (IV) All The Above

Q4. What factors motivates you to invest in securities?

(i) New IPO's (ii) Entry of FII's (iii) More

returns in less time (iv) Others

83
Q5. Does online trading system motivate you to deal in securities?

(i) Yes (ii) No

Q6. Have you heard about Sharekhan ?

(i) Yes (ii) No

Q7. Which Brokerage Firm do you prefer for Online Trading?

(i) ICICI Direct (ii) Sharekhan (iii) India bulls

(iv) Kotak Securities (v) 5paisa (vi) Any other

Q8. What differentiates your Share Trading Company from others?

(i)Brokerage (ii) Research Report (iii) Dial up trade facility

(iv)Magazine (v) Exposure (vi) Account opening charges

Q9. How often do you trade?

(i) Daily (ii) Weekly (iii) Monthly (iv) Yearly

Q10. In which category does your income fall? (Per month in Rs)

i) 0-15000 ii) 15000 – 35000 iii) 35000 – 60000 iv) Above 60000

Q11. What percentage of your earnings do you invest in share trading?

(i)Up to 10% (ii) Up to 25% (iii) Up to 50% (iv) Above 50%

84
Q12. According to your preference rank the attributes of a share trading company.

(1=Most Important, 5= Not Important at all)

1. Customer Service :
2. Proper Guidance :
3. Regular Updates :
4. Trustworthiness :
5. Brokerage Charges :

Q13. Rank these share trading companies according to the quality of service they

provide. (1=Excellent, 5= Very poor)

1. 2. 3. a. Sharekhan

b. ICICI Direct
4. 5.
c. India Bulls

d. Kotak Securities

85