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A Project Study Report On Training Undertaken At Bonanza Portfolio Limited Titled

Study of Capital Market & Fundamental Analysis of Securities

Submitted in partial fulfillment for the Award of degree of Master of Business Administration

Suresh gyav vihar university,jaipur Submitted To:Submitted By: Lakhan adsella MBA 1 (2ND SEM)

kaj gupta

2009-2011

TABLE OF CONTENTS

Preface 6 Acknowledgement ..7 Executive summary 8 CHAPTER -1 Introduction of industry ..10 CHAPTER- 2 Introduction of organization 14 2.1 Company profile15 2.2 Product & services ...16 2.3 Bonanzas affiliation .19 2.4 Bonanzas strength ...20 2.5 Bonanzas management team 20. 2.6 Bonanzas vision 22 2.7 Bonanzas value .23

2.8 Bonanzas research desk .25 2.9 Bonanzas technology 26 2.10 Bonanzas achievement ..26 CHAPTER-3 Research methodology 28 3.1 Title of the study .29 3.2 Duration of the project ..29 3.3 Objective of study ..29 3.4 Type of study ...30 3.5 Sample size& method of selecting ...30 3.6 Scope of study .32 3.7 Limitation of study33

CHAPTER-4 Study of capital market and fundamental analysis of securities...34 4.1 Various type of financial market35 4.2 Capital market35 4.3 Secondary market.35 4.4 Stock market transaction issues.40

4.5 Requirements of details for forms42 4.6 Various resources for redressal grievances.49 4.7 Traditional structure of stock exchange in India..50 4.8 Demutualization of stock exchange...51 4.9 Delisting of securities..52 4.10 Corporate governance..54 4.11 Clearing settlement related issues...56 4.12 Demat settlement58 4.13 Market participants..63 4.14 Fundamental analysis..66

CHAPTER-5 Facts and findings 77 CHAPTER-6 Analysis and interpretation of data 88 CHAPTER-7 Questionnaire 101 CHAPTER-8 SWOT Analysis 103

CHAPTER-9 Conclusion .105 CHAPTER-10 Recommendation ...107 CHAPTER-11 Bibliography 109

Suresh gyan vihar university

Preface
Masters of Business Administration is conducted with providing knowledge to the students regarding various type of management like financial management, marketing management and production management etc. MBA being a specific management course there is necessary of practical knowledge to support other theoretical subject name practical training The practical training is very important of MBA course. I have done my training in Bonanza Portfolio Limited at kota for 45 days i.e.2-05-10 to 20-0710. During this training period I have learned about Back office work, depository work, and security market and sector analysis. I have come to know that how does security market function and how one can deal in stock market and how to manage risk and portfolio. Thus it was really beneficial for me in terms of knowledge and experience.

ACKNOWLEDGEMENT

I express my, sincere thanks to my project guide, Ms. Jyotsana Sharma (Regional HR Manager) for guiding me right from the inception till the successful completion of the project. I sincerely acknowledge her for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of the project.

I would also like to thank the supporting staff of all the departments of the company, for their help and their cooperation throughout, our project.

Lakhan singh

EXECUTIVE SUMMARY

The Indian stock market have seen various stages of economic cycles if we look at market condition then we find that at the beginning of the year 2008 the market was on cloud nine (all time high on 10 January 2008) sensex was 21207.83. But after reaching its all time high it has started to show strong resistance to carry on and the result of the resistance and sharp slump in the word economy, the bull suddenly turned into bear and all expectations of investors that market will reach 25000 just turned into dream and according to current situation that is for away from reality. Investors just shocked due to slump in the market condition, they have rethink about investment alternatives risk and returns. Capital appreciation and time value of money. Since investment become a basic need of everyone so each and every person wants to secure his investment and willing to get good returns and capital appreciation upon the investment fund. This study really gives an overview about how and when we invest in various sectors. That how can invest money for future safety in various markets such as primary market, secondary market, Govt. security market etc. Thus the study is providing knowledge about investment scenario and guiding the investors for safe investment with the help of economic analysis, fundamental analysis, and financial analysis. One can analysis the market and understand the nature and movement of market for safe investment and can become wiser investor that is most challenging thing in current scenario.

INTRODUCTION OF INDUSTRY

Broking industry is growing for last ten year with leaps & bounces to Indian economy and stock market. Brokerages houses are known as intermediaries between market and investor and play a key role in execute the functions to carry on the stock market. All the brokerage houses having different sort of charges and fee according to their facilities and efficiency provided to investors. They manage the portfolio, risk management and providing guidance to investor for dealing in security market the major players of Indian broking industry are as follows:1. 2. 3. 4. 5. 6. 7. Bonanza Portfolio Limited Sharekhan Limited Religare Limited Hem Securities Limited Angle Broking Limited India bulls Securities Limited Anand Rati Securities Limited

Analysis of players in the industry


Unicon Unicon has been founded with the aim of providing world class investing experience to hitherto underserved investor community. The technology today has made it possible to reach out to the last person in the financial market and give him the same level of service which was available to only the selected few. We give personalized premium service with reasonable commissions on the NSE, BSE & Derivative market through our Equity broking arm Unicon Securities Pvt. Ltd. With our sophisticated technology you can trade through your computer and if you want human touch you can also deal through our Relationship Managers out of our more than 100 branches spread across the nation.

Religare securities
Trading In Equities with Religare truly empowers you for your investment needs. We ensure you have a superlative trading experience through A highly process driven, diligent approach Powerful Research & Analytics and One of the best-in-class dealing rooms

Further, Religare also has one of the largest retail networks, with its presence In more than 1800* locations across more than 490* cities and towns. This means, you can walk into any of these branches and connect to our highly skilled and dedicated relationship managers to get the best services .

The Religare Edge Pan India footprint Powerful research and analytics supported by a pool of highly skilled research analysts Ethical business practices Offline/Online delivery models Single window for all investment needs through your unique CRN

Anand rathi
AnandRathi (AR) is a leading full service securities firm providing the entire gamut of financial services. The firm, founded in 1994 by Mr. Anand Rathi, today has a pan India presence as well as an international presence through offices in Dubai and Bangkok. AR provides a breadth of financial and advisory services including wealth management, investment banking, corporate advisory, brokerage & distribution of equities, commodities, mutual funds and insurance, structured products all of which are supported by powerful research teams.

How Bonanza differ from other in the industry


Bonanza Portfolio Ltd is an emerging leader in the high growth retail financial services sector in India. India set to emerge as one of the worlds largest retail financial services markets * Indias GDP growth has averaged 6.5% since 1994 and expected to continue to grow at 8+% * Increasing sophistication of financial markets * Indian consumers affinity for equity Emergence of large domestic retail brokerage houses *India has nearly 10,000 brokers; most of them are small family businesses * The last 5-7 years has witnessed the emergence of large institutional players driving consolidation of the retail financial services market Global players are starting to make strategic inroads into the retail financial services market *Foreign broking houses dominate FII based institutional broking * Some global majors like Citigroup are making inroads into retail by leveraging their network * E-trade has announced majority ownership of IL&FS Investment * BNP Paribas has invested in Geojit *ABN Amro has started its own retail broking network in India

Introduction of Organization

Head office (Delhi) 2/2-A, insurance Laxmi 1ST Floor, Building, Asaf Ali Road, New Delhi -110002

Corporate office (Mumbai ) Bonanza House, plot no.M-2, Cama Industrial Estate Walbhat road, Behind the hub, Goregaon(east) Mumbai-400063 Regional office Raj. (Jaipur) 410-413,4th floor, Silver Square, Near Raj MandirCinema, Bhagwandas Road, Jaipur-01

Registered office (Delhi) 4353/4C,Madan Mohan Street, Ansari Road, Drayman, New Delhi-110002

Company Profile

Bonanza, a leading financial services &brokerage house working diligently since 1994 can be describe in a single word as a financial powerhouse. With acknowledged industry leadership in execution and clearing services on exchange traded derivatives and cash market products, bonanza has spread its trustworthy tentacles all over the country with more than 1050 outlets spread across 350 cities. It provides an extensive range of services in equity, commodities, currency derivatives, wealth management, distribution of third party product, etc. Being at par with the modern tech-savvy world, bonanza makes an integrated and an innovative use of technology. It also enables its clients to trade online as well as offline the strategic tie-ups with he latest technology partners has earned bonanza a prestigious place as one of the top brokerage houses in the country. Client-focused philosophy backed by membership of all principal Indian stock and commodity exchange makes bonanza stand apart from competitor as a preferred services provider in the industry for value-based services.

Bonanza group of companies

Bonanza portfolio Limited

Bonanza Commodity Brokers (p) Ltd.

Bonanza Insurance Broker (p) Ltd.

Bonanza Global DMCC, Dubai

Sunglow Fin invests Pvt. Ltd.

Bonanza Product and Service


Bonanzas service encompasses the spectrum of wealth creation, management and preservation. Bonanza offers a wide range of product and services to help client reach their financial goal. Bonanza Product &Services

Brokerage Services

Wealth Management

Demat

Distribution

Equity

PMS

NSDL

Insurance

Commodity

Advisory

CSDL

Mutual Fund

Derivatives

IPOS

SA VE Sa g& d p e t m etsh rt vin e osit d o e o t rm ashre u e e c q iremnt for yo u IN EST V M d t lo g t rm e iumo n e in st e tw ic p vid s ve mn h h ro e in om & a a g h c e c pit l rowt

PRO TECT In ra c t atp vid su n e h ro es p t ct n t you life roe io o r

Prime Brokerage Services:


Equity and equity derivatives Trading Platform offers online Equity & Equity Derivatives trading facilities for investors.

This high-end, efficiently integrated application makes trading convenient, quick and hassle free. Added advantages - Having access to resources like research charts, advice, live quotes online assistance - to take well-versed decisions. Trading through our branch network or phone available, by simply registering with us.

Commodity Derivatives We offer access to future trading via multiple exchanges in wide-ranging commodities We also provide investment opportunities in gulf commodities futures and currency

agricultural commodities, base metals, energy and precious metals. market.

Currency Derivatives

Known as being predecessors in contributing to unique financial products, we have now This service, we provide both offline and online.

added to our stable - currency Derivative.

Asset Management:

Portfolio Management Services (PMS)

Our team of portfolio managers design portfolios to suit every customers needs.

Constantly scrutinizing the developments in market and moving stocks, we aim for maximum capitalization. We suggest the most appropriate product to customers, based on factors like their investment spheres, return expectation and risk tolerance. Our experience, expertise and research helps us give our customers investments the best upshots.

Advisory

Bonanza guides and supports its clients to re-structure and streamline their portfolios

based on changing market conditions and client objectives.

Depository Services:
Bonanza is a depository participant with NSDL and CDSL. We provide an array of Depository Services to make share transactions quicker, easier

and cheaper for both Equity and Commodity.

Distribution:

Insurance

Bonanza offers insurance products in Life and General Insurance.

Our IRDA certified advisors offer prudent advice on policy selection and assists through the Our advisory team matches the insurance products to financial profiles of customers to offer

claim redressal process. the best solution options, maintaining transparency and professionalism.

Mutual Funds

Bonanza is one of the largest distributors of mutual fund in India. With the help of our in-depth research across categories covering 20 parameters and our Keeping in mind customers' budgets, needs and securities, our AMFI certified investment

expertise, we guide our clients to take appropriate investment decisions. advisors offer the best deals.

Initial Public Offer (IPO)

We offer our customers online investment access for Public offerings. In-depth research advice for the forthcoming IPOs.

Bonanzas Affiliations

Equity National Stock Exchange of India Ltd. (NSEIL) The Bombay Stock Exchange Ltd. (BSE) OTC Exchange of India Ltd (OTCEIL)

Commodities Multi Commodity Exchange (MCX) National Commodity and Derivatives Exchange Ltd (NCDEX) Dubai Gold Commodities Exchange (DGCX) National Multi Commodity Exchange (NMCE)

Currency National Stock Exchange of India Ltd. The Bombay Stock Exchange Ltd. (BSE) MCX-SX Ltd.

Depository participant with CDSL and NSDL

Bonanzas Strengths
Bonanza has over 1050 outlets in more than 350 cities in India. (as on March 2009) Bonanza has more than 2 lakh clients comprising of Corporate Financial Institution Investors, Bonanza has a young dynamic team of 1900 professionals. Strong infrastructure supporting over 3000 trading terminal supporting more than 350 VSAT's 24x7 service and support via our federal support system.

Mutual Funds, High Net-worth Individuals and Retail Investors.

to support geographic reach and servicing capabilities.

Bonanzas Pillars: Management Team


Meet the minds behind the corporation Bonanza - the Directors who are leading this gigantic force.

S.P. Goel

The Founder Director of Bonanza who has been instrumental in chartering critical and strategic initiatives. With an experience of 25 years in the finance business, Mr. Goel has also been appointed as the director of the OTC Exchange of India. He represents NSEIL for the SEBI constituted Dr. J R Verma Advisory committee for the development of the derivatives market in India. He started his career as a CA in 1987 and soon after he embodied several prominent committees on settlement issues (COSI), a policy generating body at the NSE of India Ltd and Dispute Resolution Committee (DRC) of National Stock Exchange Clearing Corporation Limited (NSCCL).

Shivkumar Goel Being the Founder Director of Bonanza, he has been handling IT & risk initiatives since inception. Formerly, designated as the CEO of SRF Finance Limited, Delhi; Mr. Shivkumar Goel had also spearheaded the IT committee of the DELHI Stock Exchange.

A CA & CS with more than 30 years of experience, he recently was nominated as the executive committee member of Depository Participants Association of India. He is currently a functional member with Association of National Exchanges Members of India - NR S.K. Goel Has been Bonanzas Founder Director and a prominent CA for more than 35 years now. Being actively involved in managing the Business initiatives and Accounting across India; Mr. S.K.Goel has been mainly heading Bonanzas northern and eastern zone. He was formerly with the Modis & OSWALS - one of the leading manufacturing companies, in addition to being empanelled with various major banks as their Internal Auditor. Vishnu Kumar Agarwal The Founder Director of Bonanza with over 30 years of experience; Mr. Vishnu has proficiently taken charge of Administration, Real Estate Investments and Initiatives for all the group companies of Bonanza. Anand Prakash Goel He has been playing a pivotal role as Bonanzas Founder Director by resourcefully managing Taxation, Compliance and DP. A qualified CA with more than 30 years of experience in his stride, he has undertaken audits for leading banks across India. Saurabh Shukla He plays a pivotal role as the Group COO and one of the Directors of Bonanza Commodity Brokers Ltd. He has been actively involved in varied key strategic functions and management of retail business. Previously, designated as Head of Marketing for the Refco Group, he has also worked for Merchant and Investment Banking and Corporate Finance. He was also ardently involved in

developing and servicing corporate / institutional customers at Blue Blends Finance Ltd. and Natsons Pvt. Ltd.

Bonanzas Vision
To be one of the most trusted and globally reputed financial Distribution companies.

Bonanza Values
Transparency Honesty is our forte. We believe in dealing on thoroughly ethical grounds, being fair and transparent with our customers We recognize and appreciate efforts put in by our employees. And we, as a matter of fact, reward and distinguish each one of them, ceaselessly. Solidarity We believe in sharing a forthright and respectful relationship with our business partners and employees. We consider them both as our team associates, who work together. Succeed together. Started at zero Its biggest strength is that it started its business with a zero level, merely as sub broker then taken the self trading membership, hence it understand the needs of its clients and business partners very well. Integrated and transparent services

It values integrity and transparency in clients transaction and providing the best value for money to its clients. Value of client service Its dedicated relationship managers are trained to provide excellent services and complete satisfaction to all their clients, strongly believes that success is only the end result of clients growth. All the service is one umbrella All the memberships are in one company name, no hassle of account transfer, deliveries adjustments, and buy stock in one exchange and sale in another, get arbitrage opportunities. Accurate and timely research It is always endeavored to provide timely research based advice to its clients, its research team comprises of experienced fundamentals and technical analysis, sector specialist and derivatives strategist, who are constantly looking for new trading and investment opportunities. Wide range of services:It is offering Sock broking, Investment Advisory Services, Depository Services, Commodities Trading, Portfolio Management, IPO & Mutual Fund Distribution etc. to its esteemed clients. 24*7 online back office software Web enabled centralized back office software installed at head office, having direct access to all branches. Business associates, sub broker and client to have online information about their transaction, account derivatives, open position and so many things live updated. Its all client can obtain up to date information online at click of a button on their desktop PC.

Bonanzas growth:

Clientele growth After spreading our wings across varied segments, we are now growing in all direction with more than 2 lakh clients under the banner.

Bonanza Research Desk


Bonanza Research desk has a dedicated team of research analysts and experts that have an in-depth knowledge of the market place. They offer value perspectives, focus on opportunities for investment and growth and endeavor to reduce risk potential. It's premium advisory services are based on technical and fundamental views and strategies. Equity - SMS alert - Daily market strategy - Weekly market strategy

- Monthly market strategy - 'Equity talk' - Daily derivative strategy Commodity

- SMS alert
- Daily report - Weekly report - Monthly report: Commodity Review

Mutual funds - Daily Performance Sheet - Weekly Mutual Fund Report 'The Edge' - Monthly free News Letter 'The Perspective' Regular updates on products, performance and new launches.

Currency Derivatives -Daily Forex Insight report

Bonanzas Technology
Single VSAT Connectivity for NSE/BSE/F&O/NCDEX /MCX/MCX-SX through Virtual Private Network (VPN) Other connectivity links to branches through Leased Lines, ISDN, Radio Frequency and Broadband. High Speed and Streaming live quote access via Internet for NCDEX/MCX/MCX-SX for branches and retail clients. Internet based Depository access (Speed-e/Easiest) to offer DP services to Retail investors.

24x7 online access to a centralized support structure for all products offerings.

Bonanzas Achievement
Top Equity Broking House in terms of branch expansion for 2010 3rd in terms of Number of Trading Accounts for 2008 6th in terms of Trading terminals in for two consecutive years 2007- 2008 9th in terms of Sub Brokers for 2007

Awarded by BSE 'Major Volume Driver 07-08,08-09,09-10. Nominated among the Top 3 for the "Best Financial Advisor Awards '08" in the category of National Distributors Retail instituted by CNBC-TV18 and Opti Mix.

3.1 Title of study Study of capital market & Fundamental analysis of Securities

3.2 Duration of project


2-06-10 to 20-07-10

3.3 Objective of the study


The objective of the present study can be accomplished by conducting a systematic market survey. Market Research is a systematic design, collection, analysis and reporting of data and finding that are relevant to different market situation facing by the company. As I have done my project training in Bonanza Portfolio Limited. The following are the objectives, which I kept in mind while doing summer training: 1. To know practical concept about equity research and portfolio management.

2. 3. 4.

To study the general operation of the Bonanza Portfolio Limited. Analyzing the market survey and thereby finding out the investment pattern of the consumer. To impart knowledge about the general working of the stock exchange and PMS. The marketing research processes that will be adopted in the present study consist of the following stages:

Defining the problem and research objective: The research objective state that what information is needed to solve the problem. Here the objective of other research is awareness and Investigation of investors overconfidence and familiarity and Challenges faced by Reliance Money. Developing research plan: Once the problem is defined, the next step is to prepare a plan for getting the information needed for the research. The present study will adopt exploratory approach where in there is a need to gather a large amount of information before making a conclusion if required. The descriptive and casual approaches may also be used. We can summarize objective as:-

To understand the Stock market and process from account opening to settlement of securities. To understand the securities, securities market, function of securities market and who regulates the securities market. To know the types of sectors available in the security market and methods for analysis. To gain the knowledge, how one can invest in securities.

3.4) Type of Research


Exploratory

3.5) Area of research


Bonanza Portfolio Ltd

3.6) Sampling Plan


Sampling unit: The market of securities in baran city is so large so I will include the area

randomly. Sampling size: A survey will be conduct for the investors in securities. The size will

depend on customer base in baran

3.7) Type of sampling


Stratified sampling

3.8) Data type


To collect the data, relevant information is necessary as regards to the project; as a result data was collected by using two ways: Primary Data

Secondary Data.

Primary Data: In this the information is being possessed with first hand information, which is new and fresh. The tools used by us for the primary data are: Questionnaire Face-to-Face Interview Observation

Secondary data: The information that is received with the help of Journals, Magazines, Financial reports or which is already present with the company. References used from management books Gathered information through World Wide Web (www). Support and knowledge provided by Faculty and Company guide.

3.9) Data collection technique


Questionnaire and Personal interview Analyze the collected information: This involves converting raw material in to useful information. It involves tabulation of data and using statically measures on them for developing frequency distribution and calculating the averages and dispersions.

Report research findings: This phase will mark the culmination of the marketing research efforts. The report with the research finding is a formal written document.

3.10) Scope of Study


This study is giving an overview about the Capital market and available various functions and security market as it is evident from the title of work. It has given insight into the functioning and components of primary and secondary market. It made clear the meaning of stock exchange which provides a platform to enlist the companys securities and facilitates the buying and selling of various securities like shares, debentures, bonds, and government securities etc. after going through the report one can easily know about the available various sectors and methods of their analysis and investment. We can summarize as follows: Multiple Invoice tracking Duplicate Vendor Payment Tracking Strategic Sourcing Supplier Risk Analysis Supplier Tracking Reduce Inventory Level Contract Compliance Financial Regulation Compliance Analytics (Acts such as SOX, Basel II) Supplier Management Analytics

Optimal Credit Period Analytics (Discounts vary based on credit periods)

3.11) Limitation of the Study


Some of the limitations of this study may be summarized as follows: Getting accurate responses from the respondents due to their inherent problems is

difficult. They may be partial, and refuse to cooperate. Sample size is limited. Time constraint. Convincing people. Weather conditions.

3.1 Various type of financial market


The financial markets can be divided into money and capital market:-

Money market:-money market is a market of debt securities that pay off in the short term
usually less than one year, for e.g. the market for 90 days treasury bills. This market encompasses the trading and insurance of short term non equity debt instruments including treasury bills commercial paper, bankers acceptance, certificates of deposits, etc.

Capital Market: - Capital market is a market for long term debt and equity shares. In this
market the capital funds comprising of both equity and debt are issued and traded. This also

includes private placement sources of debt and equity as well as organized market like stock exchanges. Capital market can be further divided into primary and secondary market.

3.2 Capital market


The capital market is the market for securities, where companies and governments can raise long term fund. It is a market in which money is lent for periods longer than a year. The capital market includes the stock market and the bond market.

3.3 Secondary market


Secondary market refers to the market where securities are traded after being initially offered to the public in the primary market and / or listed on the stock exchange. Majority of the trading is done in the Secondary market. Secondary market comprises of equity market and debt markets. For the general investor, the secondary market provides an efficient platform for trading on his securities. For the management of the company Secondary equity markets serve as a monitoring and control conduit-by facilitating value enhancing control activities, enabling implementation of incentives-based management contracts and aggregating information(via price discovery) that guides management decisions.

Difference between the Primary and secondary market


In the primary markets, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading in which already exists/preissued securities are traded among investors. Secondary market could be either action or dealer market. While Stock exchange is the part of an action market, over the counter (OTC) is a part of dealer.

SEBI and its role


The SEBI is the regulatory authority in India established under Section 3 of SEBI act to protect the interest of the investors in the securities and to promote the development of, and to regulate, the securities market and for matters connected therewith and incidental thereof.

Products dealt in Secondary market

Equity

Treasury bills Products dealt in secondary market

Debenture

Bond

Commercial paper

Coupon

Following are the main financial products/instruments dealt in the Secondary market:-

Equity:-The ownership interest in company of the holders of its common and preferred stock.
The various kinds of equity shares are as follows:Equity Shares :- an equity share, commonly referred to as ordinary shares also represents the form of fractional ownership in which a shareholder, as a fractional owner undertakes the maximum entrepreneurial risk associated with a business ventures. The holder of such shares

is a member of the company and has voting rights. A company may issue such share with differential as to voting, payment of dividend etc.

Rights issue/ Rights Shares: - The issue of new securities to existing shareholder at a

ratio to those already held.

Bonus Share: - shares issued by the companies to their shareholders free of cost by the

capitalization of accumulated reserves from the profit earned in the earlier year.

Preferred Stocks/ Preference Shares: - Owners of this kind of shares an entitled to a

fixed dividend calculated at a fixed rate to be paid regulatory before dividend can be paid in respect of equity shares. They also enjoy priority over the equity shareholder in payment of surplus, but in the event of liquidation, their claims rank below the claims of the companys creditors, bondholders/ debentures holder.

equity share

Cumulative Preference Shares: - A type of preference share on which dividend

accumulates if remains unpaid. All arrears of preference dividend have to be paid out before dividend on

Cumulative Convertible Preference Shares:- A type of preference share where the

dividend payable on the same accumulates, if not paid. After a specified date, these shares will be converted into equity capital of the company.

Participating Preference Shares:- The right of certain preference shareholder to

participate in profits after a specified fixed dividend contracted for is paid. Participation right in linked with quantum of dividend paid on equity shares over and above a particular specified level.

Bond: - A negotiable certificate evidences indebtedness. It is normally unsecured. A debt


security is generally issued by a company, municipality or government agency. A bond investor lends money to the issuers promises to repay the loan amount on a pacified maturity date. The issuer usually pays the bond holder periodic interest payment over the life on the loan. The various types of bonds are as follows: Zero coupon bonds: - bond issued at a discount and repaid at a face value. No

periodic interest is paid. The difference between the issue prices and redemption price represents t5hereturn to the holder. The buyer of these bonds receives only one payment, at the maturity of the bond.

Convertible bonds: - a bond giving the investor the option the convert the bond

into equity at a fixed conversion price

Debentures: - Bond issued by a company bearing a fixed rate of interest usually payable
half yearly on specified dates and principal amount repayable on particular date on redemption of the debentures. Debentures are normally secured/ charged against the assets of the company in favor of debenture holder.

Commercial papers: - A short term promise to repay a fixed amount that is placed on the
market either directly or through a specialized intermediary. It is usually issued by companies

with a high credit standing in form of a promissory note redeemable at par to the holder on maturity and therefore doesnt require any guarantee. Commercial Paper is a money market instrument issued for the tenure of 90 days.

Coupon: - Tokens for payment of interest attached to bearer securities.

Treasury bills: - Short term (up to one year) bearer discount security issued by government
as a mean of financing their cash requirements.

3.4Contact for stock market related transactions


You can contact a broker or a sub broker registered with SEBI for carrying out your transaction pertaining to the capital market.

Broker
A broker is a member of a recognized stock exchange, who is permitted to do trades on the floor of the exchange. He is enrolled as a member with concerned exchange and is registered with SEBI.

Sub broker
A sub broker is a person who is registered with SEBI as such and is affiliated to a member of a recognized stock exchange.

Broker, sub broker registered or not

You can confirm it by verifying the registration certificate issued by SEBI. A brokers registration number being with the letters INB and that of a sub broker with the letters INS.

Requirement to sign any agreement with the broker or sub broker


Yes, you have to sign the Member-Client agreement / Sub-broker-Client agreement for the purpose of engaging a broker to execute trades on your behalf for time to time and furnish details relating to yourself for enabling the member to maintain client registration form. The model agreement between the broker-client/ sub-broker client and know your client. Form can be viewed from SEBI Website at www.sebi.gov.in. The model agreement has to be executed on the non judicial stamp paper. The agreement contains clauses defining the rights and responsibilities of client vies a vies broker/sub broker. The broker/sub broker can also add further clauses in the module agreement as per their requirements.

Member-client agreement form


This form is an agreement entered between client and broker in presence of witness where the client agrees (is desirous) to trade / invest in the securities listed on the concern exchange through the broker after being satisfied of brokers capabilities to dealt in securities. The member on the other hand, agrees to be satisfied by the genuineness and financial soundness of the client aware of his (brokers) liability for the business to be conducted

3.5 Requirements of details in client registration form


The brokers have to maintain a database of their client, for which you have to fill client registration form. In case of individual client registration, you have to broadly provide following information:-

o /others) o o o o identity card. o

Your name, address, educational qualification, residential status (resident Indian/ NRI Particulars of bank account Income tax No (PAN/GIR), which also serve unique client code. If you are registered with any other broker, then the name of the broker and concerned Proof of identity submitted either as passport number/driving license/ration card /voters Each client has to use one registration form. Incase of joint name/family members, a

Stock exchange and concerned Client Code Number.

separate form has to be submitted from each person.

Incase of corporate client, following information has to be provided: o o o o o o o o o o o Name, address of the company/firm Date of incorporation and date of commencement of business Copy of memorandum and articles of the Association/Partnership deed. Details of promoters/partners/key managerial personnel. Company/firm in specified format. Copies of annual report of last three years Net worth pf the company Particulars of the bank account Income tax number of the company Annual income in last three years and market value of portfolio If you are registered with any other broker, then the name of broker and concerned

Stock exchange and Client Code Number

Unique Client Code

In order to facilitate maintaining database of their clients, it is necessary for all brokers to use unique client code, which will act as an exclusive identification for the client. For this purpose, PAN number/ passport number/ driving license/ voter ID number/ ration card number coupled with the frequently used bank account number and the depository beneficiary account can be used for identification, in the given order, based on availability.

Placing order with the broker or sub broker


You can go to the broker/ sub broker office or place an order on the phone/ internet or as defined in the Model Agreement given above.

Confirmation of order placement


The stock exchange assign a Unique Order Code Number to each transaction, which is intimated by broker to his client and once the order is executed, this order code number is printed on the contract note. The broker member has to also maintain the record of time when the client has placed order and reflect the same in the contract note along with the time of execution of the order.

Documents obtained from broker on the execution of trade


You have to ensure receipt of the following documents for any trade executed on the Exchange:A) Contract note in Form A to be given within stipulated time. B) Purchase/ sale note or confirmation memo in the case of a sub broker.

It is the contract note/ purchase or sale note (confirmation memo) that gives rise to contractual rights and obligations of parties of the trade. Hence you should insist on contract note from stock broker and purchase/sale note (confirmation memo) from sub broker. The contract note displays the order number, order time, and unique trade number. The quantity and the price of the trade executed ay the exchange can be verified by the exchange. The contract note also contains arbitration clause for raising dispute with the Arbitrators as per the byelaws of the exchange.

Required details to be mentioned on the contract note issued by the Stock Broker
A broker has to issue a contract note to clients for all transaction in the form of specified by the Stock exchange. The contract note inter-alias should have following: exchange. settlement. Constituent (client) name/ code number. Order number and order time corresponding to the trades. Trade number and trade time. Quantity and type of security brought/ sold by the client. Brokerage and purchase/ sale rate are given separately. Service tax rates and any other charges levied by the broker Appropriate stamps have to be affixed on the original contract note or it is mentioned that Signature of the Stock broker/ Authorized Signatory. Contract number, date of issue of contract note, settlement number and time period of Name, address and SEBI Registration number of the Member broker. Name of partner /proprietor/Authorized Signatory Dealing Office Address/ Tel no/Fax No, code number of the member given by the

the consolidated stamp duty is paid.

Incase of purchase and sale note provided by the sub broker, following additional information is provided: the date of contract. Both contract note and purchase/ sale note provided for the recourse arbitrators for settlement of disputes arising out of transactions to the system of Name and SEBI registration no. of the sub broker. Name of affiliating trading member. Purchase/sale note number. Corresponding contract note issued by the broker for relevant trade number along with

Pay-in-day and pay-out-day


Pay in day is the day when the brokers shall make payment or delivery of securities to the exchange. Pay out day is the day when the exchange makes the payment or delivery of securities to the broker. Since settlement cycle has been reduced from T+3 rolling settlement to T+2 w.e.f. April 01, 2003, the exchange have to ensure that the pay out of funds and securities to the client is done by the broker within 24 hours of the payout. The exchange will have to issue press release immediately after pay out.

Time period to receive money for a sale transaction and shares for a buy transaction
Brokers were required to make payment or give delivery within two working days of the pay-out day. However, as settlement cycle has been reduced from T+3 rolling settlement to T+2 w.e.f. April 01,2003, the pay out of funds and securities to the clients by the broker within 24 hours of the pay out.

Provision for getting faster delivery of shares in account


The investors /clients can get direct delivery of the shares in their beneficiary accounts. To avail this facility, you have to give details of your beneficiary account and the DP-ID of your DP to your broker along with the Standing Instruction for Delivery-In to your Depository participant for accepting shares in your beneficiary account. Given these details, the clearing corporation/ clearing house shall send pay out instructions to the depositories so that you receive pay out of securities directly into the beneficiary account.

Timing of payment to broker in case of purchase of shares


The payment for the shares purchased is required to be done prior to the pay in date for the relevant settlement or as otherwise provided in the rules and regulations of the Exchange.

Timing of giving shares to broker in case of selling shares


The delivery of shares has to be done prior to the pay in date for the relevant settlement or as otherwise provided in the rules and regulations of the Exchange and agreed with the broker/sub broker in writing.

Maximum brokerage, a broker/sub broker can charge


The maximum brokerage that can be charged by a broker is decided by the Stock Exchange as per the Exchange regulation. The SEBI (Stock brokers and sub brokers) ,1992 stipulates

that sub broker can not charge from its clients a commission which is more than 1.5% of the value mentioned in the respective purchase or sale note.

Charges that can be levied on the investor by a stock broker/ sub broker
The trading member can charge: 1. 2. 3. Brokerage charged by member broker. penalties arising on specific default on behalf of client(investor) service tax as stipulated The brokerage and service tax is indicated separately in the contract note.

Not making the payment on pay-in-day


In case of purchase on your behalf, the member broker has the liberty to close out transactions by selling securities in case you fail to make full payment to the broker for the execution of the contract before pay in day as fixed by Stock Exchange for the concerned settlement periods unless you already have an equivalent credit with the broker.

Not making the delivery of shares on pay-in-day


In case of sale of shares on your behalf, the member broker has the liberty to close out the contract by effecting purchases if you fail to deliver the securities sold with valid transfer documents, if any before delivery day as fixed by Stock Exchange for the concerned settlement period.

In both the cases, any loss in transactions will be deductive from the margin money paid by you. The shortage are met through auction process and the differences in price indicated in contract note and price received through auction is paid by member to the Exchange, which is then liable to be recovered from the client.

When shares are not bought in the auction


If the shares could not be bought in the auction i.e. if shares are not offered for sale in the auction, the transactions are closed out as per SEBI guidelines. The guidelines stipulates that the close out price will be the highest price recorded in that scrip on the exchange in the settlement in which the concerned contract was entered into and up to the date of auction /close out OR 20% above the official closing price on the exchange on the day on which auction offers are called for (and in the event of there being no such closing price on that day, then the official closing price on the immediately preceding trading day on which there was an official closing price), whichever is higher

Not getting money or shares on the due date


In case a broker fails to deliver to you in timely and proper payment of money/ shares or you have complaint against conduct of the stock broker, you can file a complaint with the respective stock exchange. y\the exchange is required to resolve all the complaints. To resolve the dispute, the complaint can also resort arbitration as provide on the reserve of conduct note/ purchase or sale note. However, if the complaints along with supporting documents may be forwarded to Secondary Market Department of SEBI. Your complaint would be followed up with the exchanges for expeditious redressed. In case of complaint against may be forwarded to the concerned broker with whom the sub broker is affiliated for redressal

3.6 Various resources for redressing grievances


You have following resources available: Investor Grievance Redressal Cell (IGG):-You can lodge complaint with IGG cell of SEBI against companies for delay, non receipt of shares, refund orders etc and with Stock Exchanges against broker on certain trade disputes or non receipt of payment/ securities. Arbitration: - if no amicable settlement could be reached, then you make application for references to arbitration under the Bye Laws of concerned Stock exchange.

Arbitration
Arbitration is an alternative dispute resolution mechanism provided by a stock exchange for resolving disputes between the trading members and their clients in respect of trades done on the exchange.

Process of preferring arbitration


The byelaws of the exchange provided procedures for Arbitration. You can procure a form for filling arbitration from the concerned stock exchange. The arbitral tribunal has to make the arbitral award within 3 months from the date of entering upon the reference. The time taken to make an award can not be extended beyond three times up to maximum period of three months.

Appointer of arbitrators

Every exchange maintains a panel of arbitrators. Investors may choose the arbitrator of their choice from the panel. The broker also has an option to choose an arbitrator. The name(s) would be forwarded to the member for acceptance. In case of disagreement, the exchange shall decide upon the name of arbitrator

Some general Questions


3.7 Traditional structure of stock exchange in India
In terms of legal structure, the stock exchanges in India could be segregated into two broad groups-20stock exchanges that were set up as companies, either limited by guarantees or by shares, and the 3 stock exchanges which are functioning as association of persons (AOP) viz. BSE, ASE and Madhya Pradesh Stock Exchange. The 20 stock exchanges which companies are: stock exchange of Bangalore, Bhuvneshwar, Calcutta, Cochin, Coimbatore, Delhi, Guvahati, Hyderabad, interconnected SE, Jaipur, and Ludhiana, madras, Magadha, Mangalore, NSE, pune, OTCEI, saurashtra-kutch, Uttar Pradesh and vadodara. Apart from NSE, All stock exchanges whether established as corporate bodies or associations of persons (AOPs), are non profit making organizations.

Coropratisation of stock exchanges


Corporatisation is the process of converting the organizational structure of the stock exchange from a non corporate structure to a corporate structure. Traditionally, some of the stock exchanges in India were established as Association of persons, e.g. BSE, ASE and MPSE. Corporatisation of such exchanges is his process of converting them into incorporated companies.

3.8 Demutualization of stock exchange


Demutualization refers to the transition process of an exchange from a mutually-owned association to a company owned by shareholders. in other words,transforming to the legal structure of an exchange from mutual form to a business corporation form is referred to as demutualization. The above, in effect means that after demutualization, the ownership, the management and the trading rights at the exchange are segregated from one another.

Difference between Demutualised Exchange and Mutual Exchange


In a mutual exchange, the three functions of ownership, management and trading are intervened into a single group. Here, the broker members of the exchange are both the owners and the traders on the exchange and they further manage the exchange as well. A demutualised exchange, on the other hand, has all these three functions clearly segregated, i.e. the ownership, management and trading are in separate hands.

Currently Demutualised Stock Exchange in India


Currently, two stock exchanges in India, the national stock exchange (NSE) and over the counter exchange of India (OTCE) are not only corporative but also demutualised with segregation of ownership and trading rights of members.

Steps taken by SEBI of demutualization in India


SEBI has constituted a group on coropratisation and demutualization of stock exchanges under the chairmanship of justice M H Kalia, former chief justice of India, for advising SEBI on coropratisation and demutualization of exchanges and to recommend the steps that need to be taken to implement the same. The group had submitted its report to SEBI on august 28, 2002. SEBI has taken up with central government to amend the SC (R) A to effect coropratisation and demutualization. The amendment is to be introduced in the house of parliament.

3.9 Delisting of securities


The term delisting of securities means permanent removal of securities of a listed company from a stock exchange. As a consequence of delisting, the securities of that company would no longer be traded at that stock exchange.

Difference between Voluntary Delisting and Compulsory Delisting


Compulsory delisting refer to permanent removal of securities of a listed company from a stock exchange as a penalizing measure at the behest of the stock exchange for not making submissions/comply with various requirements set out in the listing agreement within the time frames prescribed. in voluntary delisting, a listed company decides on its own permanently remove its securities from a stock exchange.

Exit Opportunity for Investors In Case Of Delisted Company


SEBI (Delisting of Securities) Guidelines, 2003 provide an exit mechanism, whereby the exit price of securities is determined by the promoter of the concerned company which desires to get delisted, in accordance to book building process. The offer price has a floor price, which is average of 26 weeks average of traded price quoted on the stock exchange where the shares of the company are most frequently traded preceding 26 weeks from the date public announcement is made. There is no ceiling on the maximum price. In case of infrequently traded securities, the offer price is as per regulation 20 (5) of SEBI (substantial Acquisition and Takeover) regulations. for this purpose, infrequently traded securities are determine in the manner as provided in regulation 20(5) of SEBI(substantial Acquisition and Takeover) regulations.

Central Listing Authority


The central listing authority (CLA) is set up to address the issue of multiple listing of the same security and to bring about the uniformity in the due diligence exercise in scrutinizing all listing applications on any stock exchanges. The function of CLA as enumerated in SEBI (Central Listing Authority) regulations, 2003 include: * Processing the application made by any body corporate, mutual fund or collective investment scheme for the letter of recommendation to get listed at the stock exchange * Making recommendation as to listing condition, and * Any other that may be specifying by the SEBI Board from time to time.

Established code of corporate governance


The code may be divided into supranational, national or institutional course depending on the author. Some of the selected examples of super national codes are: OECD, ICGN(International Corporate Governance Network),CACG(Commonwealth Association For Corporate Governance); selected examples of national codes are :Vienot Report from France, the Cadbury, Greenbury and hampel reports and the Combined code from the UK , the Malaysian code; and selected institutional codes are ; Calpers, Hemes Investment Management, the CLL code on desirable corporate governance. SEBI has also laid down certain codes like Kumar Mangalam, Birla Committee Report, and Clause 49 of Listing Agreement for good governance of listed companies with the purpose of enhancing wealth creation, wealth management and distribution

3.10 Corporate Governance


As Kumar Mangalam Committee report on Corporate Governance enumerates, the fundamental objective of corporate governance is the enhancement of shareholder value, keeping in view the interest of other stakeholders. This definition harmonizes the need for a company to strike a balance at all times between the need to enhance shareholders wealth whilst not in any way being detrimental to interest of the other shareholders in the company.

Independent Directors
As per Clause 49 of the listing agreement ,independent director means a director who apart from receiving directors remuneration, do not have any other material pecuniary relational ship or transactions with the company, its promoters, its management or its subsidiaries, which in judgment of the board may effect the independence of judgment of the director.

EDIFAR
Electronic Data information filing and Retrieval System (EDIFAR) is a website launched by SEBI in association with National Informatics Center (NIC) in July 2002 to facilitate filing of certain material information/ documents/ statements by the listed companies on line in the EDIFAR web site- www.sebiedifar.nic.in. EDIFAR would enable electronic filing of information in a standard format by the companies and expedite dissemination of information to various classes of market participants like investors, regulatory organization, research institutions, etc. Financial System=Financial Market + Financial Assets+ Financial Services+ Financial Institutions

The capital market comprises institutions and mechanism through which long term funds and midterms funds are pooled and made available to companies, govt. etc. Capital market is a market for long term debt and equity shares. In this market, the capital funds comprising of both equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as the organized markets like stock exchanges.

Documents to be given by trading member


Order confirmation slip after the order has been place.

Trade confirmation slip after the trade has been executed Contract note- within 24 hours of the trade being executed Purchases/Sale note there deal is routed through a registered sub-broker of a NSE Investor should always insist on getting is contract notes or purchases/ sale not from his trading member or sub-broker respectively. Contract not is a confirmation of trade (s) done on a particular day for and on behalf of a client. A contract not issued in the format and manner prescribed by NSE establishes a legally enforceable relationship between the trading member and the client in respect of settlement of trades executed on the exchange as stated in the contract not. Contract note are made in duplicate, and the member and client both keep one copy of each. The Said contract not should be signed by a trading member or by authorized signatory of the trading member. After the verifying the details contain therein, the second copy of the contract note should be written to the trading member duly acknowledged by investor. To ensure that the contract note issued by the trading member is a valid one, one must verify the following details:

The contract note should be in prescribed format Name and address of the trading member The SEBI registration no of the trading member Detail of the trade viz order no. trade no.. trade time, security name quantity, rate The trade price should be shown separately from the brokerage changed Signature of authorized signatory and the arbitration clause stating that the trade is

brokerage, settlement no, detail of other levies.

subject to the jurisdiction of Mumbai must be present on the face of the contract note.

3.11 Clearing and settlement related issue


What is account period settlement?
An account period settlement is a settlement where the trades pertaing to a period stretching over more than one day are settled. For e.g. Trades for the Monday to Friday, the obligations for the account period are settled on a net basis. Account period settlement has been discontinued since January 1 2002, pursuant to SEBI directives.

What is Rolling settlement?

In a rolling settlement trades executed during the day are settled base on the net obligations of for the day. In NSE. The trade pertaining to the rolling settlement are settled on a T+2 day basis where T stands for the trade day. Hence, trades executed on a Monday are typically settled on the following Wednesday (considering two working days from the trade day).The funds and securities pay-in and pay-out are carried out on T+2 days

Activity Trading Clearing Rolling settlement trading Custodial confirmation Delivery generation Settlement Securities and funds pay in Security and fund pay out Post settlement Auction Bad delivery reporting Auction settlement Valuation debit

Day T T+1 working days T+1 working days T+2 Working days T+2 working days T+2 working days T+3 working days T+4 working days T+5 working days

Close out

T+6 working days

Rectified bad delivery pay-in and pay-out Re-bad delivery reporting and pickup Close out re-bad delivery

T+6 working days T+8 working days T+9 working days

What are pay-in and pay-out of funds and securities?

Investors have to deliver the securities to the trading member immediately upon getting the contract not for sale but in any case before the prescribed securities pay in day. If they have bought securities, they have to pay amount to the trading member in such a manner that the amount paid is relised before the funds pay- in day. The securities and the funds are paid out to the trading member on the pay out day. The NSE regulation stipulates that the trading member should pay the money or security to the investor within 48 hours of the pay out. The pay in and pay out days for funds and securities are prescribed as per the settlement cycle. A settlement cycle of normal settlement is given below.

3.12 Demat Settlement


One should instruct his depository participant (DP) to give Delivery out instructions to transfer the shares from his beneficiary account to the pool account of his trading member through whom he have sold the share. The details of the pool account (CM-BP-ID) of his trading member to which share are to be transferred, scrip quantity etc. should be mentioned in the delivery instructions given by him to his DP. The instruction should be given well before the prescribed securities pay-in day. SEBI has advise that the delivery out instruction should be given at least 24 hours prior to the cut off time for the prescribed securities pay in to avoid and rejections of instructions due to the date entry error, network problem etc. The four main legislations governing the securities market are Securities contract (regulations) Act. 1956 The companies act 1956 Securities and Exchange Board of India Act. 1992 The Depositories Act 1996.

Role of securities contract (regulation) Act. 1956


It provide for direct and indirect control of virtually all aspects of securities trading and running of stock exchange and aim to prevent undesirable transaction in securities. It gives Central govt. regulatory jurisdiction over.

* Stock exchange through a process of recognition and continued supervision. * Contract in securities, and * Listing of securities on stock exchanges. As a condition of recognition, a stock exchange complies with conditions prescribed by Central Govt. organized trading activity in securities takes place on a specified recognized stock exchange. The stock exchange determines their own listing regulations which have to confirm to the minimum listing criteria set out in the rules.

Securities and exchange board of India act, 1932


The SEBI act 1992 was enacted to empower SEBI with statutory powers for Protecting the interest of investors in securities, Promoting the development of the securities market, and Regulating the securities market Its regulatory jurisdiction extends over corporate in the issuance of capital and transfer of securities, in addition to all intermediaries and persons of capital and persons associated with securities market. It can conduct enquiries, audits and inspection of all concerned and adjudicate offences under the act. It has power to register and regulate all market intermediaries and also to penalize them in case of violations of the provisions of the act, rules

and regulations made here under. SEBI has full autonomy and authority to regulate and develop an orderly securities market. The following departments of SEBI take care of the activities in the secondary market.

s. no 1

Name of the department market registration supervision department(MIRSD) intermediaries and

Major activities
Registration, supervision, monitoring and inspections in debt of all market of all intermediaries derivatives, derivatives respect and

segments of the markets viz. equity, related

Market department

regulation

Formulating new policies and supervising the functioning and operations (except relating to derivatives) of securities exchanges, their subsidiaries, and market institutions such as clearing depositories( and settlement and Collectively organizations

Derivatives products

and

new

referred to as Market SROs) Supervising trading at derivatives segments of stock exchanges, introducing new products to be traded, and consequent policy changes

department(DNPD)

Role of Depositories act, 1996


The depositorys act 1996 provides for the establishment of securities with speed, accuracy and securities by

* Making securities of public ltd.companies freely transferable subject to certain exception. * Dematerializing the securities in the depository mode; and * Providing for maintenance of ownership records in a book entry form. In order to streamline the settlement process, the act envisages transfer of ownership of securities of securities electronically by book entry without making the securities move from one person to person. The act has made the securities of all public ltd. Companies freely transferable, restricting the companys right to use discretion in effecting the transfer of security and the transfer deed and other procedural requirement under the company act has been dispensed with.

Role of Stock Exchanges


The stock exchange has an interesting side effect, because all the buying and selling concentrated in one place, it allows the price of a stock to be known every second of the day. Therefore, investor can watch as a stocks price fluctuate based on news from the company, media report, economic news and a range of other sector. Smart buyer and sellers take all of these factors into account before making decision.

There are 24 reconigned stock exchanges in India, Mangalore; Stock exchange was refuse to renewal of recognition wide SEBI order dated August 31, 2004. In term of legal structure, the stock exchanges in India could be segregated into two broad groups 19 stock exchanges which were setup as company, either limited by guarantees or by shares, and the three exchanges which were associations of persons (AOP) viz BSE, ASE and Madhya Pradesh. . The 20 stock exchanges which companies are: stock exchange of Bangalore, Bhuvneshwar, Calcutta, Cochin, Coimbatore, Delhi, Guvahati, Hyderabad, interconnected SE, Jaipur, and Ludhiana, madras, Magadha, Mangalore, NSE, pune, OTCEI, saurashtra-kutch, Uttar Pradesh

and vadodara. Apart from NSE, All stock exchanges whether established as corporate bodies or associations of persons (AOPs), are non profit making organizations.

Functions

The first function is to provide to companies with a way of issuing of shares to people who

want to invest in the company. This can be illustrated by en example suppose a company has mining lease over and area with some rich ore deposits. It wants to exploit these deposits, but it cannot have any equipment. To buy the equipment its needs money. One way to raise money through stock market. The company issues a prospect, which is the sort of advertisement informing people about the prospects of the company and inviting them to invest some money in it. When the company is floated (Established) on the stock market, interested investors can become part owners of the company by buying shares. If the company operates at a profit shareholders benefit in two ways-through the issuing of dividend in the form of cash or more shares, and through growth in the value of the shares. On the other hand, if the company does not operate at a profit (e.g., if the price of the product dips), the shareholders will probably lose money. The second function of the stock market, related to the first, is to provide a venue for the buying and selling of shares.

What is De Mutualisation of stock exchanges?


Demutualization refers to the transition process of an exchange from a mutually-owned association to a company owned by shareholders. in other words, transforming to the legal structure of an exchange from mutual form to a business corporation form is referred to as demutualization. the above, in effect means that after demutualization, the ownership, the management and the trading rights at the exchange are segregated from one another.

Currently, two stock exchanges in India, the National Stock Exchange (NSE) and other the Counter Exchange of India (OTCEI) are not only corporative but also de-mutualised with segregations of ownership and trading rights of members. The corporation and de-metualisation schemes of 19 stock exchanges (other than NSE, OTCEI, Mangalore Stock Exchange and Coimbatore Stock Exchange) have been notified by SEBI and are at various stages of implementation.

Who are Promoters?


Leading Financial institutions, banks, insurance companies & other financial intermediaries such as have promoted NSE. IDBI IFCI SBI ICICI bank limited Stock Holding Corporation of India limited Corporation bank Indian bank Union bank of India

3.14 Market participants


Members who participate in the whole clearing and settlement process are as follows: 1. Clearing Member

2. 3. 4.

Clearing Banks Depository participants Professional Clearing members

Clearing Members
Definition: - Clearing members means a member of the Clearing Corporation who clears and settles deals through the clearing corporation. The clearing members clear and settle deals for a segment in a manner and mode and subject to such terms and conditions and procedures prescribed for them. Mechanism: - Further, a clearing member may clear and settle deals either on their own account or on behalf of their clients subject to eh terms and conditions prescribed by the clearing corporation. In the capital market segment, all trading member of the Exchange are required to become the Clearing Member of the Clearing Corporation. In F&O segment, trading members need not necessarily clear their own deals but can select another clearing member or a professional clearing member to clear and settle their dues. Trading members, who are also Clearing Members, can clear and settle their deals and also deals of other trading member who opt to settle their deals through the said clearing members, self clearing members may clear and settle only their own proprietary trades and their clients trades but cannot clear and settle trades of other trading members.

Role of Clearing Banks

Definition: - Clearing banks holds the fund of customer and helps in fund pay in and out with clearing corporation. Banks are required to provide all the facility to a customer in a following way. 1. 2. like (a) Dedicated branch facilities (b) software to interface with the clearing corporation (c) Access to accounts information on a real time basis. 3. 4. 5. 6. 7. 8. 9. Value-added services to members such as free of cost funds transfer across centers providing working capital funds stock lending facilities services as professional clearing members Services as D.P. Other capital market facilities All other banking facilities like issuing bank guarantees/credit facilities etc. Branch network in cities that cover bulk of the trading cum clearing members High level automation including electronic funds transfer (EFT) facilities. Facilities

Depository participant
They are members of depository namely NDSL and CDSL and they work like a branches of a bank to hold a share in a demat form for a client in their respective accounts.

Professional Clearing Members


Clearing corporation admits a special category of members namely professional clearing members. Professional clearing members are clearing member who are not trading member. They are typically banks custodians etc. who clear and settle trade executed for their client (individuals, institutions etc.) in such an event, the function and responsibilities of the PCM would be similar to custodians. PCMs may also undertake clearing and settlement

responsibility for trading member. In such a case, the PCM would settle the trade carries out by the trading members connected to them. The bonus for settling the trade would be thus on the PCM and not the trading members.

3.15 Fundamental analysis


Fundamental analysis is a technique that attempts to determine a securities value by focusing on underlying factors that effect a companys actual business and its future prospect. On a broader scope, fundamental analysis on industries or the economy as a whole. The terms simply refer to the analysis of the economic well being of a financial entity as opposed to only its price movements. Fundamental analysis serves to answer questions such as is the companys revenue growing is it actually making a profit is it in a strong enough position to bear out its competitor in the future is it bale to repay its debts is management trying to cook the books

Quantitative and Qualitative


The various fundamentals factors can be good into two category quantities and qualitative. The financial meaning of these terms is not all the different from their regular definitions. Here is how the MSN Encarta dictionary defines the items. Quantitative: - capable of being measured or expressed in numerical terms, quantitative fundaments are numeric, measurable characteristics about the business. The quantitative information gleaned from financial statements to make investment decisions. Before we jump into the specifics the three most important financial statements-income statements, balance sheet and cash flow statement

Balance sheet
The balance sheet represents a record of a companys assets, liabilities and equity at a particular point in time. The balance sheet is named by the fact that a businesss financial structure balances in the following manner: Assets= liabilities+ shareholders equity

Income statement
While the balance sheet takes a snapshot approach in examining a business, the income statement measures a companys performance over a specific time frame. The income statement presents information about revenues, expenses and profit that was generated as a result of the business operation for the period

Statement of cash flows


The statement of cash flows represents a record of a business cash inflow and outflow over a period of time. Typically, a statement of cash flows focuses on the following cash related activities: Operating Cash Flow (OCF). Cash generated from day to day business operations. Cash from investing (CFI). Cash used for investing in assets, as well as the proceeds from the sale of other businesses, equipment or long term assets. Cash from financing (CFF) cash paid or received from the issuing and borrowing of funds.

The cash statement is important because its very difficult for a business to manipulate its cash situation. There plenty that aggressive accountants can do to manipulate earnings, but its tough to take cash in the bank. For this reason some investors use the cash flow statement as a more conservative measure of a companys performance.

Step-1: Politico-Economic Analysis 1. 2. 3. 4. 5. 6. Politico-economic factors affect an industries and a country Stable political environment necessary for steady, balanced growth. International events impact industries and companies. Countries need foreign exchange reserves to meet its commitments, pay for import and The possibility of the devaluation of ones currency/ the appreciation of another currency Restrictive practices or cartels imposed by countries can affect companies and

services foreign debts. is a real risk. One can hedge this by entering into forward contracts. industries. Investors must determine how sensitive a company is to governmental policies and restrictive policies. 7. 8. 9. 10. 11. 12. Foreign debt can be an enormous burden which would eat into a companys results. Inflation erodes purchasing power. Low inflation indicates stability and companies Low interest and taxation rates stimulate investment and industry. Domestic saving can accelerate economic growth. Development of a country is depending on its infrastructure. Budgetary deficits resulting from excess governmental spending stimulate the economy.

prosper at such time.

It also gives rise to increasing demand and increasing inflation.

Economic cycle 1. 2. Business or economic cycle has direct impact on industry and individual companies. It Four stages of economic cycle are depression, recovery, boom and recession.

affects investment decision, employment, demand and profitability.

3.

Investors should determine the stage of the economic cycle before investing. Investors

should disinvest just before or during a boom.

Step-2: Industry analysis 1. 2. 3. 4. 5. 6. 7. Importance of the industry can never be understated. State of industry will affect It is important to determine cycle .these are entrepreneurial or sunrise, expansion or investors should purchase in the first two stages and disinvest at the maturity stage it is better to invest in evergreen industries. Results of cyclical industries are volatile. Investors should consider competition as the greater than competition the lower the It is safer to invest in industries not subject to govt. control. Export oriented currently favored by the govt.

company performance. growth, stabilization or maturity and decline or sunset stages.

profits.

Step-3: Company Analysis 1. 2. Final stage of fundamental analysis is company analysis. Areas to be examined are the company, the results, ratios and cash flow.

Management 1. 2. 3. Management is the single most important factor to consider in a company. Upon its In India two main types of management-family and professional. Investors must check on integrity of managers, proven competence, how high is it rated

quality rests the future of the company.

by its peers, how it performed at times of adversity, the man agents depth of knowledge, its innovativeness and professionalism.

The Company

1. 2. 3.

It is important to check how company is perceived by its competition and whether it is The investors must determine the policy a company follows and its plans for growth. Labor relations are important.

the market leader in its products or in its segment.

The Annual Report 1. 2. 3. The annual report is the primary and most important source of information on a The investors must read between and beyond the lines of an annual report to determine The annual report is broken into the directors `report, the auditors report, the financial

company. the state of the company being considered. statement and the schedules. The Directors Report 1. 2. 3. 4. This report gives investors insights into the company. It explains the performance of the company, the industry and the political situation. It explains the performers of the company, its plans for diversification, modernization The report, if read properly, can give the investor a good grip of the working of the

and expansion. It discusses the profits earned and states the dividends proposed. company The Auditors Report

1. 2. 3. with. 4. report.

The auditor represents shareholders and report to them on the stewardship of the Auditors will comment on any changes made in accounting principles and the effect of Auditors will also comment on any action or method of accounting they do not agree Investors must read the auditors report in detail and in depth as the results can

directors and whether the accounts presents do present a true and fair view of the company. these changes on the results.

materially change if adjustment is made based on the notes or comments in the auditors

Financial Statements 1. 2. Financial statement of a company in an annual report consists of the balance sheet and The balance sheet details all the assets and liabilities a company has on particular date.

the profit and loss account. These detail the financial health and performance of the company. Assets are those that the company owns such as fixed assets (buildings, cars etc.), investments and current assets (stock, debtors and cash).Liabilities are those that the company owes (trade creditors, loans, etc.)And the shareholder investment in the company (share capital and reserves. 3. 4. The profit and loss account details numerically the activities the company had Contingent liabilities are also details. These are liabilities that may arise on the happing undertaken during the accounting period and the result of these activities (profit and loss). of an event that may never arise (guarantees, bills discounted).The liabilities crystallize on the happening of the event. 5. The profit and loss account also details the dividend given (interim) and proposed.

Schedules and Notes to the Account 1. report. Schedules and notes to the account are found after the financial statement in an annual

2. 3.

The schedules detail pertinent information about the items of the balance sheet and the notes are even more important as they give very important information such as the

profit and loss account. accounting policies that the company has followed the contingent liabilities of the companies and the like. 4. It is imperative that the schedules and notes to the accounts be read for a clearer understanding of the companys financial condition.

Ratio 1. 2. 3. 4. No investment should be made without analyzing the financial statements of a company Ratios express mathematically the relationship between performance figures and/or No single ratio tells the complete story. Ratio can be broken into 4 broad categories: and comparing the companys result with that of earlier year. assets/liabilities in a form that can be easily understood and interpreted.

(a) Profit and loss ratio (b) Balance sheet ratio (c) Balance sheet and profit and loss ratio, and (d) Financial statement to market ratio. 5. Ratios may also be grouped into categories that will enable investors to easily determine the companys strengths and weaknesses . would take an

(a) Market value ratios reflect the market regards for a share and the period it market to book ratio.

investor to recover his investment .The common indicators are the price/earning ratio and the (b) Earning ratio are used to determine the fair market value investment .The ratio calculated are earning per share ,cash earning per share ,dividend per share and dividend payout ratio. (c) Profitability is of prime importance and these ratios, return on total assets, return on equity, pre-interest return on assets, pre-interest after tax return on assets and return on total

invested capital, assistant investor in determining how well a company is doing vis--vis other companies within the same industry and with reference to its own performance in previous years. (d)Liquidity ratio determines how liquid the companys assets are and whether it can easily meet its obligation. The ratios calculated are the current ratio, the quick or asset test, net current assets, defensive interval and current liability coverage. (e)Leverage ratio indicates the extent a company is dependent on borrowings in the form of debentures, short/long term loans and bank overdraft. The ratios calculated to determine leverage are liabilities to assets ratio, debt to assets ratio, debt to net worth ratio liabilities to net worth and incremental gearing. (f)Debt services capacity ratio indicate whether a company can service its debts. The ones commonly computed are debt coverage, liability coverage, interest cover, fixed charge cover and cash flow surplus. (g)Assets management ratio s is used to determine how efficiently a company is managing its assets. The more important determents are the stock utilization ratio, the average collection period, the average payment period, net working investment ratio, total asset utilization and fixed asset utilization. (h)Margins indicate the earning a company makes on its sales. The margins calculated are the gross margin, operation margin, and breakeven margin, refinancing margin, pretax margin and the net profit margin.

Cash Flow 1. 2. Cash flow statement will enable investors to determine how the companys cash is The statement begins with the cash in hand at the beginning of the period. It then

earning, how the company is being financed and how it uses the finance received. details the sources and amount of funds received and the manner they were applied ending with the final cash in hand. 3. Its main use is that it strips the accounting statement of creative accounting.

Fundamental Analysis: Quick Check List 1. 2. 3. 4. 5. Check the political situation. Is it safe? Are there problems? Could the govt. be What is revealed by the economic indicators? Is the growth rate reasonable? Have Check the industries or industries in which the company operates. At what stage of the Than check the company. The factors one should look at are its management and its Finally, before purchasing or selling a share, check its intrinsic value. a decision should

overthrown and could there be difficulties as a consequence? exports improved? How comfortable is the balance is the balance of payments position? cycle is the company in? What is its competition? How easy is it to enter or exit the business? annual report. The ratios should be analyzed and the cash flow checked. only be taken after this is done.

FINANCIAL BANKS

Inaugurated by father of the Nation at the onset of 20th century, Union Bank of India has traversed the long road of successful Banking of 85 years. We trace our origin to the profound thoughts of Mahatma Gandhi. We should have the ability to carry on a big bank, to manage efficiently crores of rupees in the course of our national activities. Though we have not many banks amongst us, it doesnt follow that we are not capable of efficiently managing crores and tens of crores of rupees.

Union Bank of India is committed to maintain its identity as a leading innovative commercial Bank, alive to changing need of the society. Union Bank has offered vast and varied services to its entire valuable clientele taking care of there needs. Today, with its efficient customer services, consistent profitability & growth, adoption of new technologies and value added services, Union Bank truly lives up to the image of, GOOD PEOPLE TO BANK WITH. Anticipative banking is an integral part of value based services. This ability to gauge the customers needs long before he realizes, best reduces the gap between expectations and deliverance. Corporate Mission

A logical extension of the vision statement is the Mission of the Bank, which is to gain market recognition in the chosen areas. To build a sizeable market shares in each of the chosen areas of business through effective strategies in terms of pricing, product packaging and promoting the product in the market.

To facilitate a process of restructuring of branches to support a greater efficiency in the retail banking field. To sustain the mission objective through harnessing technology driven banking and delivery channels. To promote confidence and commitment among the staff members, to address the expectations of the customer efficiently and handle technology with ease. MANAGEMENT PROFILE

CHAIRMAN & MANAGING DIRECTOR Shri M.V. Nair DIRECTOR EXECUTIVE DIRECTOR Mr. A.N. Rao R.S. Readdy

STATE BANK OF INDIA

The origin of the State Bank of India goes back to first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June1806. Three years later the Bank received its charter and was re-designed as the bank of Bengal (2 January 1809). A unique institution, it was first joint stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15April1840) and the Bank of Madras (1July1843) followed the bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27January 1921.

On 1st July State Bank of India was constituted under the State Bank of India Act 1955, for the purpose of taking over the understanding and business of the Imperial Bank of India. The Imperial Bank of India was founded in 1921 under the Imperial Bank of India Act 1920. The Bank transacts general banking business of every description including, foreign exchange, merchant banking and mutual funds. All the branches of the Bank are now fully computerized. There are 5290 ATMs on the ATM Network. These ATMs are located in 1721 centers spread across the length and breadth of the country, thereby creating a truly national network of ATMs with an unparalleled reach.

MANAGEMENT PROFILE

CHAIRMAN MANAGING DIRECTOR MANAGING DIRECTOR DIRECTOR

Mr. Arun Kumar Purwar Mr. K. Ashok Kini Mr. Shri T.S. Bhattacharya Mr. K.P. Jhunjhunwala

HDFC was incorporated in 1977 with the primary objective of meeting a social need- that of promoting home ownership by providing long-term finance to households for their housing needs. HDFC was promoted with an initial share capital of Rs. Million. The primary objective of HDFC is to enhance the residential housing stock in the country through the provision of housing finance in systematic and professional manner, and to

promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets.

The Housing Development Finance Corporation (HDFC) was amongst the first to receive an in principle approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBIs liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1955.

RECENT AWARDS GOT BY THE BANK


* Asian money award- Best local cash management bank for the large and medium segment. * European award for the Best Bank of India. * HDFC bank has won the 'Dun & Bradstreet -American Express Corporate Best Bank Award * The Bombay Stock Exchange and Nasscom Foundation's Business for Social Responsibility Awards * Best Corporate Social Responsibility Practice' Award MANAGEMENT PROFILE

CHAIRMAN MANAGING DIRECTOR

Mr. Jagdish Capoor Mr. Aditya Puri

EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR

Mr. Venkat Rao Gadwal Mrs. Renu Karnad

THE SCOREBOARD Sector- Finance Bank

Information Company
FACE VALUE (In Rs.) BOOK VALUE RETURN ON (in NET Rs

STATE BANK OF INDIA


10 457.4 19.4 41227.96 7.41 4406 13.65 .79 .87 16.4 1209.25

HDFC
10 145.3 18.5 5599.32 4.95 870.78 10.75 .68 1.49 34.7 1086.4

UNION BANK OF INDIA


10 68.2 25.1 6488 13.11 675.18 11.41 .84 1.56 9.2 132.90

WORTH(%) TOTAL INCOME

crores) INCOME VARIANCE (In %) NET PROFIT (In Rs Crores) CAPITAL ADEQUACY

RATIO RETURN ON ASSETS NON PERFORMING

ASSETS (in %) PRICE EARNING RATIO CURRENT PRICE(In Rs MARKET As On

30/3/2008 ) EARNING PER SHARE(Rs) 52 WEEK HIGH(In Rs As On 30/3/2008 ) 52 WEEK LOW(In Rs As On 30/3/2008 ) PROMOTERS HOLDING (In Percentage) INSTITUTIONAL HOLDING

67.52 1244 684 59.73 11.95 28.32

26.33 1150 620 21.90 39.99 38.1

14.58 142 81 55.43 26.49 18.08

(In Percentage) OTHERS HOLDING (In Percentage)

THE ANALYSIS
Three companies which were taken from each sector were provided to me by the company guide. 1. STATE BANK OF INDIA 2. HDFC BANK

3. UNION BANK OF INDIA The face value of their share is Rs 10 each.

ON THE BASIS OF BOOK VALUE


Book Value per share is derived by dividing Sum Total of Equity Capital and reserves by the number of Equity shares. Its a kind of guarantee to shareholders that in any case their share will not fall below the book value of the shares as they as they have the right to the Capital and reserves of the Company as they are the owners of the company. The Book Value of State Bank of India is Rs 457.4 The Book Value of HDFC Bank is Rs 145.3 The Book Value of Union Bank of India is Rs 68.2 Now if we take a worst case of the winding up of these companies the biggest losers will be the shareholders of the HDFC Bank Ltd because the current market price of the HDFC Bank Ltd. is Rs 678 and the Book Value is Rs 145.3. Similarly the loss of the State Bank of India and Union Bank of India will be 51.59% and 49.10% respectively. RETURN ON NET WORTH BASIS Return on Net worth is calculated when only the latest full year annual report is available. It is derived by dividing the difference of Net Profit and Preference share dividing by the sum of Equity Share Capital and Free Reserves except Revaluation Reserve. Union Bank of India is leading with 25.1% Return on Net worth. State Bank of India is following at 19.4%, HDFC Bank is at third place with 18.5% Return on Net Worth.

SALES BASIS State Bank of India has registered highest sales of Rs 41227.96 crores.

Union Bank of India is at the second place with sales of Rs 5863 crores. HDFC Bank is at the third place with sales of Rs 5599.32 crores.

NET PROFIT BASIS State Bank of India is at first place with the Net Profit of Rs 4406 crores. HDFC Bank is second place with the Net Profit of Rs 870.78 crores. Union Bank of India is at last place with the Net Profit of Rs 2020.48 crores.

EARNING PER SHARE BASIS The earning per share (EPS) ratio indicates the earning of the common share in a year this ratio enables investors to actually quantify the income earned by a share and to determine whether it is reasonably priced. The ratio is arrived at by dividing the income attributable to common shareholders by the weighted average of the common shares. In countries including India where employees are given stock options, investors check a companys fully diluted earning per share. This is the earning per share of the company after all shares options, warrants and convertible securities outstanding at the end of an accounting period are exchanged for shares. State Bank of India is the first place with the EPS of Rs 67.2 HDFC Bank is the second place with the EPS of Rs 26.33 and Union Bank of India is the last place with the EPS of Rs 14.58. PRICE EARNING RATIO BASIS This indicates the no of times the earning per share is covered by its market price.

It is derived by dividing market price per Equity share by earning per share. This is the most commonly quoted ratio it is because it reduces to an arithmetical figure the relationship between the market price & earning per share & thereby allows one the opportunity to determine whether the share is under priced & over priced. In addition it Reflects the opinion of the investing public about the company i.e. whether the company is growing or declining & will happen with the price.

The P.E Ratio of the companies is as follows:

HDFC Bank State Bank of India Union Bank of India

34.7 16.4 9.2

INSTITUTIONAL HOLDING BASIS Institutional holding shows the faith of the institutions like Mutual Fund, Unit Trust Of India, Banks, Financial Institutions, Insurance Companies and Foreign Institutional Investors. It even effects the intra day trading also whenever any institution buys any shares the intra traders

also start buying with the believe that if the institution has bought this shares they would mantel.

While State Bank of India enjoys the faith of the institutional buyers 11.95% holding is in the hands of the institutions. HDFC Bank enjoys the faith of the institutional buyers 39.9% holding is in the hands of the institutions. Union Bank of India has 26.49% of their holdings in the hands of the institutions buyers.

CONCLUSION Although the whole Banking sector is seeming attractive for the year 2006-07. But among the three stocks discussed above I will suggest to buy SBI which has highest EPS at Rs 67.52. While institutions have faith in HDFC Bank.

ANALYSIS & INTERPRETATION OF THE DATA

Knowing the awareness and perception of the provide insight into the customer behavior and his expectation from the industry players. A proper understanding of the awareness and perception would definitely benefit the players. This survey attempt to know the Stock market investor better. It examines some interesting choices of the investor including the reasons behind investing in stock market and the risk tolerance levels of the investors. The investor knowledge about the stock market and what according to him are customers is very important in any industry. This kota city survey was conducted to know the investor awareness and perception about stock market. The total sample for the study was 100 across Kota city.

Salary of the respondent:


less than 10000 10000 to 20000 20000 to 30000 more than 30000 23% 19% 24% 34%

less than 10000 10000 to 20000 20000 to 30000 more than 30000

Interpretation: Above table shown that no. of the respondents belonging to different income groups like 23% of persons belongs to the income level of below 10000 rupees per month. Maximum Percent of investors are those who lies in the income group of above 30000.

How much portion of your saving do you invest /would invest in share market?

up to 20% 20%-40% 40%-60% above 60%

30% 32% 25% 13%

upto 20% 20%-40% 40%-60% above 60%

Interpretation: Majority of respondent say that they would like to invest in share market up to 20% to40% of their savings.

You invest/would invest in stock market because

Higher returns faster returns easy returns depends on market

47% 10% 25% 18%

Higher returns fas ter returns easy return depends on market

Interpretation: Majority of respondent say that they would like to invest in share market because of higher returns

Taking the factors like securities, rates of returns and time in

consideration which among the following you rate as per the best option?

Bank FD's Small saving schemes Bond Equities/derivatives Mutual fund

13% 5% 15% 42% 25%

Bank FD's Small saving schemes Bond Equities/derivatives Mutual fund

Interpretation: Majority of respondent rated equities/ derivatives as the best option among the factor like securities, rate of return and time consideration.

What are the bases upon which people decide to invest in stock

market?

Technical analysis Market calls/tips Popularity of security Goodwill of the company

32% 13% 8% 47%

Technicasl analysis Market calls/tips Popularity of security Goodwill of the company

Interpretation: Majority of respondent took goodwill of the company as the basis to decide to invest in stock market.

Which one you prefer most?

Technical analysis Market tips/Market calls

70% 30%

Technical analysis Market tips/Market calls

Interpretation: Majority of respondent preferred technical analysis the most than the market tips.

How much you believe on technical analysis of stock or how much

right result can be acquired by doing the technical analysis of any scrip?

up to 40% 40%-50% more than 50% does not believe at all

13% 17% 62% 8%

up to 40% 40%-50% more than 50% does not believe at all

Interpretation: Majority of respondent believe on technical analysis of stock about more than 50%.

If your base to choose the scrip is market calls/market tips, and then

what are the sources you trust upon most?

Market tips by securities based cos on mobiles TV channels like CNBC Stock brokers 8% 45% 47%

M arket tips by s ecurities based c o.s on m obiles TV c hannels lik e CNB C

S toc k brokers

Interpretation: Majority of respondent say that if their base is to choose the scrip is market call/market tips, then the sources they will trust upon are share broker

Up to what percent market tips are correct according to you?

30%or less 30%-50% 40%-50% more than 60%

67% 10% 10% 13%

30% or less 30% -50% 50% -60% m ore than 60%

Interpretation: Majority of respondent say that 30% or less percent of market tips are correct according to them.

Do you think will securities market grow as the awareness of equity

research will be more popular?

Yes No

80% 20%

yes no

Interpretation: More of the respondents believe that securities market will grow as the awareness of equity research will be more popular.

QUESTIONNAIRE

Name: _______________________ Mobile No.:___________________ Address: ______________________ ______________________. Salary 1) Less than 10000 3) 20000 to 30000

Age: _______________ landline no.:___ Occupation: _______________

2) 10000 to 20000 4) More than 30000

Q.1 How much portion of your saving do you invest /would invest in share market? a) 20% c) 40%-60% b) 20%-40% d) Above 60%

Q.2 you invest/would invest in stock market because a) Higher returns c) Easy returns b) faster returns d) depends on market

Q.3 taking the factors like securities, rates of returns and time in consideration which among the following you rate as per the best option? a) Bank FD's c) Bond e) Mutual fund Q.4 what are the basis upon which people decide to invest in stock market? b) Small saving schemes d) Equities/derivatives

a) Technical analysis c) Popularity of security Q.5 which one you prefer most? a) Technical analysis

b) Market calls/tips d) Goodwill of the company

b) Market calls/tips

Q.6 How much you believe on technical analysis of stock or how much right result can Be acquired by doing the technical analysis of any scrip? a) Up to 40% c) More than 50% b) 40%-50% d) does not believe at all

Q.7 if your base to choose the scrip is market calls/market tips, and then what Are the sources you trust upon most? a) Market tips by securities based co on mobiles b) TV channels like CNBC c) Stock brokers

Q.8 Up to what percent market tips is correct according to you?

a) 30% or less c) 40%-50%

b) 30%-50% d) more than 60%

Q.9 Do you think will securities market grow as the awareness of equity Research will be more popular? a) Yes b) no

Strength

Quality provider Advisory service Reputation of company Strong management

Weakness
In the sense of weakness no one is complete, and mostly in this sector, it is a booming sector, earlier it was not like now. It is growing like rising moon. Weakness is only that every company has a wide product range.

Opportunity
Top equity broking house in branch expansion 3rd in terms of trading account 6th in term of trading terminal

Threats
Tough competition in sector Same service provider companies Reduction in prices by various competitors

Conclusion

This securities market is about to grow in future very much with the growth of equity research. There is very high competition in this market , there are many companies which are providing different type of services to there clients and, this market is centre of attraction to new entrepreneur because it is already successful market and it is for sure that it will grow further, and there are many opportunities lying ahead in the way. Bonanza portfolio Limited is an active and well known participant of this securities market, this is achieving great success by working very hard with dedication. There is very good staff in this organization so it may facilitate its clients in many ways, although there is competition but still it is doing its own work and providing services to their clients up to the best extent. Equity analysis is very important service of Bonanza Portfolio Ltd that it is providing to its client .It provides the suggestion that which security is good for the purpose of investment. For this project purpose, i have been gone through with a research that has been conducted in Jaipur with a sample size of 160 investors and on the basis of this research; I can conclude that most of the people believe that technical analysis can provide more suitable and desirable results to them .People are interested to now about this technical analysis part, for this we just need to aware and encourage them.

There should be more awareness made about the portfolio management services by giving more advertisement. The bonanza PMS should go for tie-ups with the corporate to increase business. Bonanza portfolio limited should organize some events to build its Brand Image in the minds of the people towards PMS. As per customers point of view, they feel that bonanza portfolio limited should open more number of branches for the convenience of people.

Books:

NCFM books: Capital market Derivatives

Newspaper & Magazines: Economic times Business standard Business world Business today Money times

Websites :
www.nseindia.com www.google.com www.yahoo.com www.bonanzaonline .com