The money we earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment. One may invest in:   Physical assets like real estate, gold/jewellery, commodities etc. and/or Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance/provident/pension fund etc. or securities market related instruments like shares, bonds, debentures etc. Securities market has essentially three categories of participants, namely the issuer of securities, investors in securities and the intermediaries, and two categories of products, namely the services of the intermediaries, the securities including derivatives. The securities market has two interdependent and inseparable segments, the new issues (primary market) and the stock (secondary market). The primary market provides the channel for sale of new securities while the secondary market deals in securities previously issued. An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers‟ Association at Bombay in 1875, the precursor of the present-day Bombay Stock Exchange. This was followed by the formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently.

Sharekhan is one of the leading retail brokerage of SSKI Group which was running successfully

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



Introduction to Securities Market
The securities markets in India have witnessed several policy initiatives, which has refined the market micro-structure, modernized operations and broadened investment choices for the investors. The irregularities in the securities transactions in the last quarter of 2000-01, hastened the introduction and implementation of several reforms. While a Joint Parliamentary Committee was constituted to go into the irregularities and manipulations in all their ramifications in all transactions relating to securities, decisions were taken to complete the process of demutualization and corporatization of stock exchanges to separate ownership, management and trading rights on stock exchanges and to effect legislative changes for investor protection, and to enhance the effectiveness of SEBI as the capital market regulator. Rolling settlement on T+5 basis was introduced in respect of most active 251 securities from July 2, 2001 and in respect of balance securities from 31s t December 2001. Rolling settlement on T+3 basis commenced for all listed securities from April 1, 2002 and subsequently on T+2 basis from April 1, 2003. All deferral products such as carry forward were banned from July 2, 2002. At the end of March 2008, there were 1,381 companies listed at NSE and 1,236 companies were available for trading. The Capital Market segment of NSE reported a trading volume of Rs.35,51,038 cr. during 2007-08 and at the end of March 2008, the NSE Market Capitalization was Rs.48,58,122 cr.


The derivatives trading on the NSE commenced with the S&P CNX Nifty Index Futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on individual securities commenced on July 2, 2001. Single stock futures were launched on November 9, 2001. Thereafter, a wide range of products have been introduced in the derivatives segment on the NSE. The Index futures and options are available on Indices - S&P CNX Nifty, CNX Nifty Junior, CNX 100, CNX IT, Bank Nifty and Nifty Midcap 50. Single stock futures are available on more than 250 stocks. The mini derivative contracts (futures and options) on S&P CNX Nifty were introduced for trading on January 1, 2008 while the Long term Options Contracts on S&P CNX Nifty were launched on March 3, 2008. Due to rapid changes in volatility in the securities market from time to time, there was a need felt for a measure of market volatility in the form of an index that would help the market participants. NSE launched the India VIX, a volatility index based on the S&P CNX Nifty Index Option prices. Volatility Index is a measure of market‟s expectation of volatility over the near term. Other than the introduction of new products in the Indian stock markets, the Indian Stock Market Regulator, Securities & Exchange Board of India (SEBI) allowed the direct market access (DMA) facility to investors in India on April 3, 2008. To begin with, DMA was extended to the institutional investors. In addition to the DMA facility, SEBI also decided to permit all classes of investors to short sell and the facility for securities lending and borrowing scheme was operationalised on April 21, 2008. The Debt markets in India have also witnessed a series of reforms, beginning in the year 2001-02 which was quite eventful for debt markets in India, with implementation of several important decisions like setting up of a clearing corporation for government securities, a negotiated dealing


The settlement system for transaction in government securities was standardized to T+1 cycle on May 11. Participants and Functions Transfer of resources from those with idle resources to others who have a productive need for them is perhaps most efficiently achieved through the securities markets. As a result of the gradual reform process undertaken over the years. an anonymous order matching trading platform (NDS-OM) was introduced in August 2005. an active secondary market. electronic trading and settlement technology that ensures safe settlement with Straight through Processing (STP). development and strength of the emerging market economy of India. takes a review of the stock market developments since 1990. As a result. the Indian G-Sec market has become increasingly broad-based and characterized by an efficient auction process. „When issued‟ (WI) trading in Central Government Securities was introduced in 2006. hold out necessary impetus for growth. securities markets provide channels for reallocation of savings to investments and entrepreneurship and thereby decouple these two activities. finance the exploitation of new ideas and facilitate management of financial risks. Short sale was permitted in G-secs in 2006 to provide an opportunity to market participants to manage their interest rate risk more effectively and to improve liquidity in the market. Products. These developments in the securities market. however. Stated formally. which support corporate initiatives.system to facilitate transparent electronic bidding in auctions and secondary market transactions on a real time basis and dematerialization of debt instruments. there was adoption of modified Delivery-versus-Payment mode of settlement (DvP III in March 2004). the savers and investors 5 . This chapter. To provide banks and other institutions with a more advanced and more efficient trading platform. Further. 2005.

which inevitably enhances savings and investment in the economy. (2) Government securities. as the case may be. (d) Units or any other such instrument issued to the investors under any mutual fund scheme. and acknowledging beneficial interest of such investor in such debt or receivable. (c) Security receipt as defined in clause (zg) of section 2 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act. including mortgage debt. (a) Derivatives. but by the economy‟s abilities to invest and save respectively. debenture stock or other marketable securities of a like nature in or of any incorporated company or body corporate. 1956 to include: (1) Shares. scrip. debentures. 6 . bonds. assigned to such entity. Savings are linked to investments by a variety of intermediaries through a range of complex financial products called “securities” which is defined in the Securities Contracts (Regulation) Act. (a) Such other instruments as may be declared by the Central Government to be securities. stocks. and (3) Rights or interest in securities. including mortgage debt. (b) Units of any other instrument issued by any collective investment scheme to the investors in such schemes. (e) Any certificate or instrument (by whatever name called).are not constrained by their individual abilities. issued to an investor by any issuer being a special purpose distinct entity which possesses any debt or receivable. 2002.

under competitive market conditions in both goods and securities market. they incur substantial search costs to find each other. The market does not work in a vacuum. sell their own securities to suppliers to book profit. liquidity and maturity characteristics of the securities issued by the issuer may not match preference of the supplier. adjusted for risks and also prices of funds. help suppliers and users in creation and sale of securities for a fee or buy the securities issued by users and in turn. The amount of funds supplied by the supplier may not be the amount needed by the user. It is. It is not that the users and suppliers of funds meet each other and exchange funds for securities. it requires services of a large variety of intermediaries. In such cases. Similarly. It is difficult to accomplish such double coincidence of wants. 7 . thus.There are a set of economic units who demand securities in lieu of funds and others who supply securities for funds. the prices of securities which reflect the present value of future prospects of the issuer. a misnomer that securities markets disinter mediates by establishing a direct relationship between the savers and the users of funds. These intermediaries may act as agents to match the needs of users and suppliers of funds for a commission. These demand for and supply of securities and funds determine. it is a risk-less intermediation. the risk. The disintermediation in the securities market is in fact an intermediation with a difference. A large variety and number of intermediaries provide intermediation services in the Indian securities market as may be seen from Table 1. where the ultimate risks are borne by the savers and not the intermediaries.

Table 1: Market Participants in Securities Market Market Participants Number as on March 31 2007 2008 1 4 2 Securities Appellate Tribunal Regulators* Depositories Stock Exchanges With Equities Trading With Debt Market Segment With Derivative Trading Brokers Corporate Brokers Sub-brokers FIIs Portfolio Managers Custodians Primary Dealers Merchant Bankers Bankers to an Issue Debenture Trustees Underwriters 1 4 2 21 2 2 9443 4110 27541 996 158 15 17 152 47 30 45 19 2 2 9487 4183 44073 1319 205 15 16 155 50 28 35 8 .

investors in securities and the intermediaries.manipulated demand for them in the market. often enforced by the regulator. Securities Market and Financial System 9 . 90 78 40 0 106 97 40 0 The securities market. This reassurance is provided by the law and by custom. DEA. The regulator develops fair market practices and regulates the conduct of issuers of securities and the intermediaries so as to protect the interests of suppliers of funds. RBI & SEBI. has essentially three categories of participants. Those who receive funds in exchange for securities and those who receive securities in exchange for funds often need the reassurance that it is safe to do so. thus. They educate and guide them in their dealings and bring them together. The issuers and investors are the consumers of services rendered by the intermediaries while the investors are consumers (they subscribe for and trade in securities) of securities issued by issuers. The regulator ensures a high standard of service from intermediaries and supply of quality securities and non. In pursuit of providing a product to meet the needs of each investor and issuer.Venture Capital Funds Foreign Venture Capital Investors Mutual Funds Collective Investment Schemes * DCA. namely the issuers of securities. the intermediaries churn out more and more complicated products.

the issuance is done to select people. The price signals. Majority of the trading is done in the secondary market.). There are two major types of issuers who issue securities. The primary market issuance is done either through public issues or private placement. 10 . They may issue the securities at face value. Secondary Market Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. 1956. to raise resources to meet their requirements of investment and/or discharge some obligation.The securities market has two interdependent and inseparable segments. This means an issue resulting in allotment to less than 50 persons is private placement. In terms of the Companies Act. Primary market provides opportunity to issuers of securities. Primary Market The primary market provides the channel for sale of new securities. treasury bills). which subsume all information about the issuer and his business including associated risk. They may issue the securities in domestic market and/or international market. the new issues (primary market) and the stock (secondary) market. an issue becomes public if it results in allotment to more than 50 persons. government as well as corporates. debt etc. debentures. etc. generated in the secondary market. Secondary market comprises of equity markets and the debt markets. help the primary market in allocation of funds. or at a discount/premium and these securities may take a variety of forms such as equity. while the governments (central and state governments) issue debt securities (dated securities. The corporate entities issue mainly debt and equity instruments (shares. A public issue does not limit any entity in investing while in private placement.

The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risk and return. Trades executed on the leading exchange (National Stock Exchange of India Limited (NSE) are cleared and settled by a clearing corporation which provides novation and settlement guarantee. OTC markets are essentially informal markets where trades are negotiated. All the spot trades where securities are traded for immediate delivery and payment take place in the OTC market. i. are settled together after a certain time (currently 2 working days). namely the overthe-counter (OTC) market and the exchange-traded market. Closest to spot market is the cash market where settlement takes place after some time. Trades taking place over a trading cycle. The exchanges do not provide facility for spot trades in a strict sense. Table 2: Savings of Household Sector in Financial Assets (In per cent) Financial Assets Currency 2004-05 8.e. OTC is different from the market place provided by the Over The Counter Exchange of India Limited. Most of the trades in government securities are in the OTC market.6 11 . The secondary market has further two components. a day under rolling settlement. NSE also provides a formal trading platform for trading of a wide range of debt securities including government securities.7 2006-07 8. They also sell securities for cash to meet their liquidity needs. Nearly 100% of the trades settled by delivery are settled in demat form.5 2005-06 8.

7 24. The absence of conditions of perfect competition in the securities market makes the role of regulator extremely important. The SROs like stock exchanges have also laid down their rules and regulations. The regulator ensures that the market participants behave in a desired manner so that securities market continues to be a major source of finance for corporate and government and the interest of investors are protected. The responsibility for regulating the securities market is shared by Department of Economic 12 .2 84.6 2.5 4.2 3.4 1.4 4.2 100 4. guidelines.9 47.8 55. Government and SEBI issue notifications.7 100 12.9 89.9 6.3 7.5 6.8 0. and circulars which need to be complied with by market participants.2 1. Regulations and Regulators The Government has framed rules under the SCRA. insider trading.4 37 28. Under these Acts.2 19. SEBI Act and the Depositories Act.Fixed income investments Deposits Insurance/Provident/Pension Funds Small Savings Securities Market Mutual Funds Government Securities Other Securities Total 85.5 100 Rules.4 24. SEBI has framed regulations under the SEBI Act and the Depositories Act for registration and regulation of all market intermediaries. etc.9 0.0 0. and for prevention of unfair trade practices.

money market securities and securities derived from these securities and ready forward contracts in debt securities are exercised concurrently by RBI. or underlying securities. risk instrument or contract for differences or any other form of security. Derivatives Market Trading in derivatives of securities commenced in June 2000 with the enactment of enabling legislation in early 2000. The SEBI Act and the Depositories Act are mostly administered by SEBI. All these are administered by SEBI. The powers under the Companies Act relating to issue and transfer of securities and non-payment of dividend are administered by SEBI in case of listed public companies and public companies proposing to get their securities listed. loan whether secured or unsecured. The SROs ensure compliance with their own rules as well as with the rules relevant for them under the securities laws. The powers of the DEA under the SCRA are also con-currently exercised by SEBI. Reserve Bank of India (RBI) and SEBI. The rules under the securities laws are framed by government and regulations by SEBI.Affairs (DEA). The powers in respect of the contracts for sale and purchase of securities. and (b) a contract which derives its value from the prices. Derivatives are formally defined to include: (a) a security derived from a debt instrument. The orders of SEBI under the securities laws are appealable before a Securities Appellate Tribunal (SAT). Most of the powers under the SCRA are exercisable by DEA while a few others by SEBI. or index of prices. Derivatives trading in India are legal and valid 13 . gold related securities. share. The activities of these agencies are coordinated by a High Level Committee on Capital Markets. Department of Company Affairs (DCA).

SEBI permitted the derivative segment of two stock exchanges. and their clearing house/corporation to commence trading and settlement in approved derivative contracts. Nifty Midcap 50. i. 2008 while the long term option contracts on S&P CNX Nifty were introduced for trading on March 3. Single stock futures were launched on November 9. Bank Nifty Index. SEBI-RBI approved the trading on interest rate derivative instruments. CNX Nifty Junior. 2001. SEBI approved trading in index futures contracts based on S&P CNX Nifty Index and BSE-30 (Sensex) Index. In June 2003. The derivatives trading on the NSE commenced with S&P CNX Nifty Index futures on June 12. Here we take a brief look at various derivatives contracts that have come to be used. CNX IT Index. Single stock futures and options are available on more than 200 stocks. Index futures and options are available on Indices-S&P CNX Nifty. At NSE. 2001 and trading in options on individual securities commenced on July 2. 14 . Types of Derivatives The most commonly used derivatives contracts are forwards. 2008. thus precluding OTC derivatives. The trading in S&P CNX Nifty Index options commenced on June 4. Derivatives trading commenced in India in June 2000 after SEBI granted the approval to this effect in May 2000. India is one of the largest markets in the world for single stock futures. futures and options which we shall discuss in detail later. This was followed by approval for trading in options based on these two indices and options on individual securities. The Mini derivative Futures & Options contract on S&P CNX Nifty was introduced for trading on January 1. NSE and BSE. 2000. 2001.e. CNX 100.only if such contracts are traded on a recognized stock exchange. To begin with.

LEAPS: The acronym LEAPS means Long Term Equity Anticipation Securities. at a given price on or before a given future date. These are options having a maturity of up to three years. Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset.Forwards: A forward contract is a customized contract between two entities. where settlement takes place on a specific date in the future at today‟s pre agreed price. The two commonly used swaps are:  Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency. 15 . Options: Options are of two types – calls and puts. Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. Puts give the buyer the right. Warrants: Options generally have lives of up to one year. the majority of options traded on options exchanges having maximum maturity of nine months. The underlying asset is usually a moving average or a basket of assets. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts. They can be regarded as portfolios of forward contracts. but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Equity index options are a form of basket options. Baskets: Basket options are options on portfolios of underlying assets. Longer-dated options are called warrants and are generally traded over-the-counter.

The forward contracts are normally traded outside the exchanges. Swaptions: Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Forward Contract .  Each contract is custom designed. the swaptions market has receiver swaptions and payer swaptions A receiver swaption is an option to receive fixed and pay floating. and hence is unique in terms of contract size. Thus. forward contracts are popular on the OTC market. swaptions is an option on a forward swap. Other contract details like delivery date. expiration date and the asset type and quality. Rather than have calls and puts.A forward contract is an agreement to buy or sell an asset on a specified date for a specified price. The salient features of forward contracts are:  They are bilateral contracts and hence exposed to counter–party risk. derivatives have become increasingly important in the field of finance. The other party assumes a short position and agrees to sell the asset on the same date for the same price. 16 . price and quantity are negotiated bilaterally by the parties to the contract. Futures and Options In recent years. One of the parties to the contract assumes a long position and agrees to buy the underlying asset on a certain specified future date for a certain specified price. Currency Swaps: These entail swapping both principal and interest between the parties. While futures and options are now actively traded on many exchanges. A payer swaption is an option to pay fixed and receive floating. with the cash flows in one direction being in a different currency than those in the opposite direction.

The standardized items in a futures contract are:  Quantity of the underlying  Quality of the underlying  The date and the month of delivery  The units of price quotation and minimum price change  Location of settlement 17 . the contract has to be settled by delivery of the asset. A futures contract may be offset prior to maturity by entering into an equal and opposite transaction.  If the party wishes to reverse the contract. More than 99% of futures transactions are offset this way.  On the expiration date. Futures Futures markets were designed to solve the problems that exist in forward markets. To facilitate liquidity in the futures contracts. The contract price is generally not available in public domain. the futures contracts are standardized and exchange traded. a standard quantity and quality of the underlying instrument that can be delivered. A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. the exchange specifies certain standard features of the contract. It is a standardized contract with standard underlying instrument. But unlike forward contracts. it has to compulsorily go to the same counterparty. which often results in high prices being charged. (or which can be used for reference purposes in settlement) and a standard timing of such settlement.

However futures are a significant improvement over the forward contracts as they eliminate counterparty risk and offer more liquidity. The confusion is primarily because both serve essentially the same economic functions of allocating risk in the presence of future price uncertainty.Distinction between futures and forwards contracts: Forward contracts are often confused with futures contracts. Table 3 lists the distinction between the two. Distinction between futures and forwards ______________________________________________________________ Futures Trade on an organized exchange Standardized contract terms Hence more liquid Requires margin payments Follows daily settlement Forwards OTC in nature Customized contract terms Hence less liquid No margin payment Settlement happens at end of period Futures terminology Spot price: The price at which an asset trades in the spot market. 18 . Futures price: The price at which the futures contract trades in the futures market.

On the Friday following the last Thursday. The index futures contracts on the NSE have one month. Initial margin: The amount that must be deposited in the margin account at the time a futures contract is first entered into is known as initial margin. Thus a January expiration contract expires on the last Thursday of January and a February expiration contract ceases trading on the last Thursday of February. Basis: In the context of financial futures. Also called as lot size. at the end of which it will cease to exist. 19 .month expiry is introduced for trading. In a normal market. This reflects that futures prices normally exceed spot prices. basis can be defined as the futures price minus the spot price. two-month and three month expiry cycles which expire on the last Thursday of the month. Contract size: The amount of asset that has to be delivered under one contract. Expiry date: It is the date specified in the futures contract. basis will be positive. the margin account is adjusted to reflect the investor‟s gain or loss depending upon the futures closing price. at the end of each trading day. This is the last day on which the contract will be traded.Contract cycle: The period over which a contract trades. This measures the storage cost plus the interest that is paid to finance the asset less the income earned on the asset. There will be a different basis for each delivery month for each contract. Marking-to-market: In the futures market. Cost of carry: The relationship between futures prices and spot prices can be summarised in terms of what is known as the cost of carry. a new contract having a three. This is called marking–to– market.

An option gives the holder of the option the right to do something. Like index futures contracts. index options contracts are also cash settled. This is set to ensure that the balance in the margin account never becomes negative. Buyer of an option: The buyer of an option is the one who by paying the option premium buys the right but not the obligation to exercise his option on the seller/writer. If the balance in the margin account falls below the maintenance margin. Stock options: Stock options are options on individual stocks. the purchase of an option requires an upfront payment. The holder does not have to exercise this right.Maintenance margin: This is somewhat lower than the initial margin. Some options are European while others are American. Options Options are fundamentally different from forward and futures contracts. in a forward or futures contract. the two parties have committed themselves to doing something. Options currently trade on over 500 stocks in the United States. 20 . In contrast. the investor receives a margin call and is expected to top up the margin account to the initial margin level before trading commences on the next day. Options terminology Index options: These options have the index as the underlying. Whereas it costs nothing (exc ept margin requirements) to enter into a futures contract. A contract gives the holder the right to buy or sell shares at the specified price.

American options: American options are options that can be exercised at any time upto the expiration date. European options are easier to analyse than American options. Option price: Option price is the price which the option buyer pays to the option seller. Strike price: The price specified in the options contract is known as the strike price or the exercise price. the exercise date. There are two basic types of options. It is also referred to as the option premium. the strike date or the maturity. Call option: A call option gives the holder the right but not the obligation to buy an asset by a certain date for a certain price. and properties of an American option are frequently deduced from those of its European counterpart. Put option: A put option gives the holder the right but not the obligation to sell an asset by a certain date for a certain price. Expiration date: The date specified in the options contract is known as the expiration date. A call option on the index is said to be 21 . In-the-money option: An in-the-money (ITM) option is an option that would lead to a positive cash flow to the holder if it were exercised immediately.Writer of an option: The writer of a call/put option is the one who receives the option premium and is thereby obliged to sell/buy the asset if the buyer wishes to exercise his option. call options and put options. Most exchange-traded options are American. European options: European options are options that can be exercised only on the expiration date itself.

a put option on index is OTM if the value of index is above the strike price. The longer the time to expiration. spot price = strike price). spot price < strike price). its intrinsic value is zero. A call option on the index is said to be out-ofthe-money when the value of current index stands at a level which is less than the strike price ( when the current value of index stands at a level higher than the strike price (i. An option that is OTM or ATM has only time value. If the index is much lower than the strike price. the call is said to be deep OTM. all else equal. The intrinsic value of a call is the amount when the option is ITM. On the other hand. If the call is OTM. On the other hand. an option 22 . At expiration. the maximum time value exists when the option is ATM. An option on the index is at-the-money when the value of current index equals the strike price (i.e. the call is said to be deep ITM.e. if it is ITM. a put option on index is said to be ITM if the value of index is below the strike price. Out-of-the-money option: An out-of-the-money (OTM) option is an option that would lead to a negative cash flow it was exercised immediately. Intrinsic value of an option is the difference between the market value of the underlying security/index in a traded option and the strike price. At-the-money option: An at-the-money (ATM) option is an option that would lead to zero cash flow if it were exercised immediately. Both calls and puts have time value. the greater is an option‟s time value. spot price > strike price).e. Intrinsic value of an option: The option premium can be broken down into two components– intrinsic value and time value. If the value of index is much higher than the strike price. Time value of an option: The time value of an option is the difference between its premium and its intrinsic value. Usually.

Non-linear payoff. price moves. strike price moves Price is zero Linear payoff Both long and short at risk Options Same as futures. but the problem wasn't solved until the emergence of Black-Scholes theory in 1973. Only short at risk. Historically. Price is always positive. Strike price is fixed. Trading System Introduction The futures & options trading system of NSE. Distinction between futures and options ______________________________________________________________ Futures Exchange traded. Various option pricing methodologies were proposed. time value is more difficult to calculate. this made it difficult to value options prior to their expiration.should have no time value. stock futures & options and futures on interest rate on a 23 . While intrinsic value is easy to calculate. with novation Exchange defines the product Price is zero. provides a fully automated screen-based trading for Index futures & options. Same as futures. called „National Exchange for Automated Trading‟ NEAT-F&O trading system.

time and quantity. it is an active order. a trade is generated. are first time stamped and then immediately processed for potential match. wherein orders match automatically. as and when they are received. Orders are stored in price-time priority in various books in the following sequence: Best Price Within Price. Order matching is essentially on the basis of security. by time priority. The exchange notifies the regular lot size and tick size for each security traded on this segment from time to time. then the orders are stored in different 'books'. 24 . The software for the F&O market has been developed to facilitate efficient and transparent trading in futures and options instruments. Keeping in view the familiarity of trading members with the current capital market trading system. If it finds a match. It is similar to that of trading of equities in the cash market segment. Orders. its price. All quantity fields are in units and price in rupees. The lot size on the futures and options market is 50 for Nifty. Trading mechanism The NEAT F&O system supports an order driven market. It supports an order driven market and provides complete transparency of trading operations. If a match is not basis as well as an online monitoring and surveillance mechanism. When any order enters the trading system. modifications have been performed in the existing capital market trading system so as to make it suitable for trading futures and options.

Professional clearing members: professional clearing members is a clearing member who is not a trading member. 25 .  It is a tax-paying company unlike other stock exchanges in the country. The National Stock Exchange of India Ltd  The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. The exchange assigns a Trading member ID to each trading member. banks and custodians become professional clearing members and clear and settle for their trading members. Clearing members: Clearing members are members of NSCCL. 3. Trading members: Trading members are members of NSE. 4. Each trading member can have more than one user. These clients may trade through multiple trading members but settle through a single clearing member. They can trade either on their own account or on behalf of their clients including participants. They carry out risk management activities and confirmation/inquiry of trades through the trading system. Participants: A participant is a client of trading members like financial institutions. 2.Entities in the trading system There are four entities in the trading system: 1. Typically.  NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992.

 The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. there are over 5. share volume in NSE is typically two times that of BSE. is a widely used market index in India and Asia. As of June 2011. Though many other exchanges exist. The BSE SENSEX. making it the 4th largest stock exchange in Asia and the 8th largest in the world.085 listed Indian companies and over 8. While both have similar total market capitalization (about USD 1.63 trillion as of December 2010. the Bombay Stock Exchange has a significant trading volume. The equity market capitalization of the companies listed on the BSE wasUS$1. 1956 in April 1993. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act. Bombay Stock Exchange Of India Ltd. Bombay) is a stock exchange located on Dalal Street. BSE and the National Stock Exchange of India account for the majority of the equity trading in India.6 trillion). 26 . The Bombay Stock Exchange (BSE) (formerly.196 scrips on the stock exchange. The BSE has the largest number of listed companies in the world. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. Mumbai and is the oldest stock exchange in Asia. The Stock Exchange. also called "BSE 30".

Hemander Aggarwal : .jaison.Mr. telephone and retail outlets and is present in 225 cities through a network of 615 locations.Mr. Sharekhan provides trade execution services through multiple channels . . Mr. derivatives and commodities brokerage execution on the National Stock Exchange of India Ltd. It was developed on 17 Oct. Mr.head  Cluster head  National head :.Mr.Tarun Shah  Directors of company : . Tarun Shah. Mr.COMPANY PROFILE Sharekhan Limited is the second largest broker of share market.Hemander Aggarwal 27 . 1922 in MUMBAI. (NSE). (BSE). Jaideep Arora . Bombay Stock Exchange Ltd. .Prem. Shankar Walia  D. Share khan Limited is a retail financial services provider with a focus on equities. TEAM OF SHARE KHAN LIMITED  Owner of company  CEO of company : .Mr.Mr. . : .Mr. (MCX). : . National Commodity and Derivatives Exchange India (NCDEX) and Multi Commodity Exchange of India Internet platform.P. Shripal Morakhiya.

the SSKI group ventured into 28 . of which 32 are fully-owned . like Sun Microsystems. Nexgenix.sharekhan. Sharekhan has always believed in investing in technology to build its business.was launched on Feb 8. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks. Spider Software Pvt Ltd. The site gives access to superior content and transaction facility to retail customers across the country. The number of trading members currently stands at over 3 Lacs. Cambridge Technologies. The Morakhiya family holds a majority stake in the company. The content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. to build its trading engine and content. With a legacy of more than 80 years in the stock markets. Vignette. On April 17. 2002 Sharekhan launched Speed Trade. Sharekhan alone accounts for 32 per cent of the volumes traded online. While online trading currently accounts for just over 2 per cent of the daily trading in stocks in India. Intel & Carlyle are the other investors. The company has used some of the best-known names in the IT industry. Microsoft.The firm‟s online trading and investment site . 2000. In the last six months Speed Trade has become a de facto standard for the Day Trading community over the net. Verisign Financial Technologies India Ltd. This was for the first time that a net-based trading station of this calibre was offered to the traders. Known for its jargon-free.www. HSBC. investor friendly language and high quality research. a net-based executable application that emulates the broker terminals along with host of other information relevant to the Day Traders. Oracle. the site has a registered base of over one lakh customers. Sharekhan‟s ground network includes over 588 centres in 148 cities in India.

in terms of the size of deal. SSKI‟s institutional broking arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country. The Corporate Finance section has a list of very prestigious clients and has many „firsts‟ to its credit. It tie ups with 11 banks:  ICICI  HDFC  IDBI  OBC  Yes bank  Axis bank  City bank  Indian bank  Bank of India  Centurian bank of Punjab  Indian overseas bank 29 . Far East.institutional broking and corporate finance 18 years ago. SSKI holds a sizeable portion of the market in each of these segments. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. Foreign Institutional Investors generate about 65% of the organization‟s revenue. It has 60 institutional clients spread over India. UK and US. with a daily turnover of over US$ 2 million. sector tapped etc.

Please bring the originals along. please bring photocopies of the relevant documents.  Mutual funds. Bank passbook. Pan Card and Election ID card.Portfolio Management Services. 4. 3. The same will be returned to you immediately after verification. Driving licence.NEAT for Online Trading. These are mandatory requirements by the Securities and Exchange Board of India. Investment Options in Securities Market  Shares/Equities. Passport. 2. Products offered by Sharekhan 1.BOLT for Offline Trading. 30 . Agreement copy and Tariff sheet) and bring it to any of the offices of Sharekhan.Offline Trade in Commodities.  Commodities. Please download and sign all three documents together (ie Account opening form.  While submitting the Account opening form.  Derivatives.Agreements   The agreement must be printed on an Rs20-stamp paper. viz ration card.

3) Accessibility Sharekhan provides ADVICE. You will get access to our powerful online trading tools that will help you take complete control over your investment in shares. In the Asia Money broker's poll held recently. Ever since it launched Sharekhan as its retail broking division in February 2000.5. SSKI won the 'India's best broking house for 2004' as well as over the Voice Tool. Reasons to choose Sharekhan Ltd. 1) Experience SSKI has more than eight decades of trust and credibility in the Indian stock market.sharekhan. you get 31 . 2) Technology With our online trading account you can buy and sell shares in an instant from any PC with an internet connection. TOOLS AND EXECUTION servies for investors. These services are accessible through our centres across the country (Over 588 locations in 148 cities) over the internet (through the website www.Mutual Fund Advisory. EDUCATION. it has been providing institutuonal-level research and broking services to individual invcestors. 4) Knowledge In a business where the right information at the right time can translate into direct profits.

You will also get a useful set of knowledge-based tools that will empower you to take informed decisions. Our analysts constantly track the pulse of the market and provide timely investment advice to you in the form of daily research emails. email or live chat on www. demat and other queries. 7) Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical printed reports and SMS on your mobile phone. sharekhan. SERVICES OFFERED BY SHAREKHAN 1) Portfolio Management 32 . billing.access to a wide range of information on our content-rich portal. online chat. 6) Customer Service Our customer service team will assist you for any help that you need relating to transactions. 5) Convenience You can call our Dial-N-Trade number to get investment advice and execute your transactions. Our customer service can be contracted via a toll-free number. We have a dedicated call-centre to provide this service via a Toll Free Number 1800-22-7500 & 1800-22-7050 from anywhere in India.sharekhan.

submit the form and our representative will get in touch with you.. The portfolio will mostly have large capitalization stocks City: Pincode: Nearest Sharekhan Office: AHMEDABAD Sharekhan client? Yes No *Min Investment for PMS is 10 Lacks based on sectors & themes that have medium to long term growth potential. steady and sustainable returns  Margin of Safety  Low Volatility 33 .. This portfolio consists of a blend of quality blue chip and growth stocks ensuring a balanced portfolio with relatively medium risk profile.Product Offerings For more details or to open an account. Email : Phone: The Balanced Scheme: Name: Ideal for investors looking at steady and superior returns with low to medium risk appetite. Submit Product Approach Investment are based on 3 tenets:  Consistent.

2) SHARE SHOPS Get everything you need at a Sharekhan outlet! 34 .  Profit withdrawal in multiples of 25000 after lock in period.  Charges: 2. quaterly reporting of portfolio holdings/transactions.  Reporting: Online access to portfolio holdings. independent fundamental research  High quality companies with relatively large capitalization.  Disciplined valuation approach applying multiple valuation measures  Medium to long term vision.5% per annum AMC charged every quarter. 0. resulting in low portfolio turnover Product Details  Minimum Investment: Rs 10 lakhs.  Minimum Investment: Rs 10 lakhs.5% brokerage 20% profit sharing after 15% hurdle is crossed-chargeable at the end of the fiscal year.Product Characteristics  Bottom up stock selection  In-depth.  Lock in period: 6 Months.

A Sharekhan outlet offers the following services:    Online BSE and NSE executions (through BOLT & NEAT terminals) Free access to investment advice from Sharekhan's Research team Sharekhan Value Line (a monthly publication with reviews of recommendations. stocks to watch out for etc)           Daily research reports and market review (High Noon & Eagle Eye) Pre-market Report (Morning Cuppa) Daily trading calls based on Technical Analysis Cool trading products (Daring Derivatives and Market Strategy) Personalized Advice Live Market Information Depository Services: Demat & Remat Transactions Derivatives Trading (Futures and Options) Commodities Trading IPOs & Mutual Funds Distribution 35 .All you have to do is walk into any of our 640 share shops across 280 cities in India to get a host of trading related services .our friendly customer service staff will also help you with any accounts related queries you may have.

2007. which goes to show that the central banks would rather overlook inflation concerns than jeopardize growth. Market Outlook is a premium content available absolutely free of cost to only our trading customers. To know how to make the most of the resulting opportunity read our latest Market Outlook report.3) FUNDAMENTAL RESEARCH Global liquidity to dictate markets We have seen a sustained one-way rise in our stock market after the Fed cut the key short-term rate on September 18. The other important central banks in Europe have also kept their policy rate steady. Thus. If you don‟t have a trading account with us. which would find its way into the emerging markets like India. open one right here right now. an easing monetary policy in the developed markets is likely to free up a lot of liquidity. 4) EQUITY TRADING & DERIVATIVE 36 . Global liquidity to dictate markets.

Been in the business for over 80 years.Online Services to Suit your Needs . Sharekhan can provide you with the assistance and the advice like no one else could.the Classic Account for most investors and Speed trade for active day traders. you can trust Sharekhan to be your true guide to the financial jungle. to help answer any queries you may have. Your Classic Account also comes with Dial-n-Trade completely free. We've created special information tools for you. 37 . you can buy and sell shares in an instant! Anytime you like and from anywhere you like! You can choose the online trading account that suits your trading habits and preferences .     Freedom from paperwork Instant credit and money transfer Trade from any net enabled PC After hour orders     Online orders on the phone Timely advice and research reports Real-time Portfolio tracking Information and Price alerts Sharekhan as your guide . which is an exclusive service for trading shares by using your telephone. All you have to do is sign up to receive all the tools you need to understand the markets and invest in shares! From the right tools and right information at your disposal to the host of services besides training.With a Sharekhan online trading account.

. All you have to do is dial any one of our two dedicated numbers (1-800-22-7050 or 30307600). 38 . Get Speed Trade . enabling you to buy shares using your telephone. enter your TPIN number (which is provided at the time of opening your account) and on authentication you'll be directed to a telebroker who will buy and sell shares for you.Speed Trade is a next-generation online trading product that brings the power of your broker's terminal to your PC. we also have a Reliance number (Your Local STD Code) 30307600 which is charged at as a local call.The Classic Account enables you to trade online on the NSE through our website. It's the perfect trading platform for active day traders. 5) DIAL n TRADE Trade in Equity by using your phone! Free with your Sharekhan Classic Account. Feature of Dial-n-Trade that enables you to trade effortlessly!  TWO dedicated numbers for placing your orders with your cell phone or landline.. For people with difficulty in accessing the toll-free number. gives you access to all our research content and also comes with Dial-n-Trade. Toll free number: 1-800-22-7050. the Dial-n-Trade service enables you to place orders for buying and selling shares through your telephone.Classic Account .

either a landline or a cell phone: (the type of phone doesn't matter)   If calling from a cell phone. 6) DEMYSTIFYING COMMODITIES Most of the commodity exchanges of today were started in the late 19th century and the early 20th century.00 am to 9. To understand how the Commodities market works in India. we need to understand how it works outside India. Simple and Secure Interactive Voice Response based system for authentication No waiting time. professional advice of our telebrokers After hours order placement facility between 9. Enter your TPIN to be transferred to our telebrokers You also get the trusted. wherever you are.30 am If you are dialing from a PULSE phone please press “*” before entering your Phone ID/T-Pin. please dial your local STD code and then 30307600 After hour order timings:9. That is because the ever-increasing pressure on the other global markets to integrate with each other and with the US markets. Requirements All you need is access to a phone .00 am and 9.30 am (timings to be extended soon)     Reliable service. and the liberalization process that 39 .

evolved as the farmers (sellers) and the dealers (buyers) began to commit to future exchanges of grain for cash. to exchange cash for immediate delivery of wheat. Around the same time. The Midwest farmers brought their wheat to Chicago hoping to sell the same at a good price. Let us thus take a look at how it all began.e. who. in turn. The year 1848 saw the opening of a central place where the farmers and dealers could meet to deal in "spot" grain. a farmer would agree with a dealer on a price to deliver to the latter 5. the McCormick reaper was invented which eventually led to higher wheat production. 40 . The farmer would know how much he would be paid for his wheat while the dealer would know his costs in advance.000 bushels of wheat at the end of June. i. the farmers were often at the mercy of the dealers. a là the equities market.” However the generation next exchanges like the NCDEX and the MCX are technology driven. The futures contract. Farmers from the Midwest came to Chicago to sell their wheat to dealers. These exchanges trade on an electronic platform. The two parties would even exchange a written contract to this effect along with perhaps a small amount of money representing a "guarantee. as we know it today. The city had few storage facilities and no established procedures either for weighing grains or for grading the same.started in our country in the early 90s necessitate the study of global markets. In short. It started in an American city called Chicago. In the 1840s. The bargain would suit both the parties. having consciously moved away from the ageold traditional platform in order to provide a pan-India network and improved transparency in deals. Chicago had become a commercial centre with railroad and telegraph lines connecting it with the East. These exchanges allow trading in almost all commodity futures. shipped it all over the country. For instance.

 Public Financial Institutions. ICSI. ICWAI.  Photocopy of Valid Driving License (Page containing the date of expiry also to be attached).  Public Sector Undertakings.  Professional Bodies such as ICAI.(Provided the entire address written on the form matches with the proof)  Photocopy of Ration card. (Copy of expiry date also to be submitted) 41 .  Photocopy of Valid Passport (Page containing the date of expiry also to be attached).  Proof of Address: (Any one of the following) .  Photocopy of Pan card(compulsory)  Photocopy of MAPIN card  Identity card/document with applicant‟s Photo.  Scheduled Commercial Banks. Bar Council etc. and  Credit cards/Debit cards issued by Banks.  Statutory/Regulatory Authorities. issued by  Central/State Government and its Departments. to their Members.D-mat account opening requirements  Proof of Identity: (Any one of the following)  Photocopy of Valid Passport (Page containing the date of expiry also to be attached)  Photocopy of Voters Identity card..

 Photocopy of Voters Identity card.  Guardian‟s Proof of Address. The Guardian has to sign on behalf of the Minor. Further there can be no nominee for minor account.  Photocopy of Valid Driving License (Page containing the date of expiry also to be attached).  Identity card/document with address. Bar Council etc. 42 . (Copy of expiry date also to be submitted)  Photocopy of Telephone or Electricity bill. to their Members. Public Financial Institutions and Professional Bodies such as ICAI. Public Sector Undertakings.  Self-declaration by High Court & Supreme Court judges.  Guardian‟s Proof of Identity. giving the new address in respect of their own accounts.  Photocopy of Voters Identity card. Statutory/Regulatory Authorities. (Government entity only & should not be more than 3 months old)  Photocopy of Leave-License / Purchase Agreement.  Birth Certificate of the Minor.  Photocopy of Bank Passbook or latest Bank statement. For Minor The account opened in the name of the minor cannot have second and third holders.. ICWAI. issued by Central/State Government and its Departments.  Photograph of the Minor & Guardian. Scheduled Commercial Banks.

 Photocopy of Valid Passport (Page containing the date of expiry also to be attached)  Proof of Local Address  Proof of Foreign Address  Photocopy of cheque leaf of bank account number (NRE or NRO) mentioned on the form to verify the Bank MICR No. Features 43 . Photocopy of cheque leaf For N.It has to be opened in the name of the partners.  Cheque for classic a/c and for Speed Trade in the favour of "SHAREKHAN LIMITED".R. Dematerialization Dematerialization is the process by which a client can get physical certificates converted into electronic balances maintained in his account with the DP. (Non Resident Indian) Client  Latest photograph signed by the client. For Partnership Firm The account cannot be opened in the name of a partnership firm.I. as an individual account.

 Holdings in only those securities that are admitted for dematerialization by National Securities Depository Ltd (NSDL) can be dematerialized. Physical shares which have not been transferred and are still there with a transfer deed cannot be dematted. then these shares can be dematerialized in this account. Now shares in different order of names can also be dematted.  Only those holdings that are registered in the name of the account holder can be dematerialized. However if the shares are in the name of X first and Y second.  Structure of holding in the securities should match with the account structure of the depository account. The list of these companies can be viewed here. Rematerialization Rematerialization is the process by which a client can get his electronic holdings converted into physical certificates. Trades 44 .  If the shares are in the name of X and Y. The client has to submit the dematerialization request to the DP with whom he has an account along with a Remat request form. and the account is in the name of Y first and X second. The physical shares will be posted by the company directly to the clients. Only a few companies have been given the permission to offer Transfer-cum-Demat. the same cannot be dematerialized into the account of either X or Y alone.

the shares will have to be given to the broker. interest etc or non-monetary benefits like bonus. rights etc. Also it's important to give the instructions to your DP as early as possible. Pledge Pledge enables you to obtain loans against your dematerialized shares. you and not the bank (pledgee). Bonus and Rights--accrue to the holder. For that it's essential that the shares be transferred to the account of the broker well before the deadline date. Corporate benefits Corporate benefits are benefits given by a company to its investors. The pledged securities continue to be reflected in the DP account of the clients (pledgor) but the concerned securities are "blocked" and cannot be used for any transactions. NSDL facilitates distribution of corporate benefits. A very big advantage of using pledges in the electronic mode is that the securities continue to be in your account and therefore all benefits viz Dividend. so that the Pay In can be made by the broker to the stock exchange concerned.e. You must confirm with your broker the settlement date and settlement number and then submit instructions to your DP. As and when the pledge is to be removed. So you get liquidity without having to sell your shares. It's important to mention your correct MICR 45 .For all sales made by clients. based on confirmations received from both the pledgor and the pledgee. These may be either monetary benefits like dividend. the blocked securities will be released to "Free Balance" of the account holder. i. A highly simplified procedure may be availed of for pledging of securities in the electronic mode.

No and attach copy of the cheque leaf with your account opening form. Instead of delivering physical securities to the broker.  The investor receives payment from the broker for the sale in the same manner payment is received for a sale in the physical mode. you instruct your DP to debit your account with the number of securities sold by you and credit your broker's clearing account. NSDL is planning to distribute all cash corporate benefits to bank accounts directly. Can I freeze my account? 46 . This delivery instruction has to be given to your DP using the delivery instruction booklet received from the DP at the time of opening the account. The procedure for selling securities is given here below:  Investor sells securities in any of the stock exchanges linked to NSDL through a broker.  Before the pay-in day.  The broker receives payment from the stock exchange (clearing corporation). What is the procedure for selling dematerialized securities? The procedure for selling dematerialized securities in stock exchanges is similar to the procedure for selling physical securities. investor's broker gives instruction to his DP for delivery to clearing corporation.  Investor gives instruction to DP to debit his account and credit the broker's (clearing member pool) account.

Softer. till the time it is de-freezed. no debits will be permitted from the account.Yes. Services like online trading facility. Through 47 . SMS alerts (allowing traders and investors to make the most of the available opportunities). This is the additional security feature for the benefit of the investors. customized research reports with almost 80% efficiency etc give Sharekhan an edge over its competitors. Sharekhan provides other support services that make retail investors more confident and assured with their trading. examining strengths and weaknesses in the internal environment and opportunities and threats in the external environment. “SWOT” ANALYSIS A SWOT analysis focuses on the internal and external environments. equity driving preference. In an account which is "freezed for debits". intangible features like imagery. The depository system provides the facility to freeze the depository accounts for any debits or for both debits and credits. STRENGTHS 1) Services . institutional and domestic broking.As a product Sharekhan is a extremely innovative product with very less cost.

Sharekhan is a product of SSKI. user friendly online trading services etc. So when he says that investing in stocks should not be confused with trading in stocks or a portfoliobased strategy is better than betting on a single horse. Many broking house catering to heavy investors or small segment of the market can afford 48 . 2) Distribution Network . 4) Products .Company‟s product line is quite flexible in the sense that there is a product for every kind of investors. a veteran equities solutions company with over decades of experience in the Indian stock markets. advice and transaction services.As far as customer satisfaction goes Sharekhan has to tighten their socks. In near future expect to make 200000+ retail customers being serviced through centralized call centre / web solution. Sharekhan does not claim expertise in too many things. Weaknesses 1) Customer Satisfaction . Share khan‟s expertise lies in stocks and that's what it talks about with authority. Also all the products cover all the loop holes of all the products offered by the other competitors like low cost. it is something that is spoken with years of focused learning and experience in the stock markets. strong advisory role through Fundamental & technical research and new initiatives are being made in Portfolio Management Services & Commodities trading. 250 independent investment managers/franchisees servicing 50000 highly valued clients. do all the information seeking and basically own the investing process.Sharekhan with almost 250 branches spread across 123 cities beefed up by comprehensive online research.60 branches/semi branches servicing affluent/aggressive traders through highly skilled financial advisors.efficient trading processes Investors can place their orders directly on the Internet. 3) Marketing .

1) Ever-increasing market . and advise accordingly. Also banks like HDFC Bank and ICICI Bank have the advantage of linking the trading accounts of their customers to saving accounts. However. good and transparent practices also play a major role in imbibing confidence in and does provide relationship managers for their customers. So they enjoy the liberty of huge database and customers find it more reliable to trade their rather than with a unknown broker.After the NSE brought the screen based trading system stock markets are now more secured which has attracted lot of retail investors and the demand is 49 .Though the company has a efficient products but large part of investment interested population does not know the company. and at the same time a trader withdraws exactly as much money from his account as is needed to complete the trade. Though this confidence in the broker comes with time and experience. which caters to the mass segment. Similarly sales proceeds are credited directly to saving account. Opportunities The external environment analysis may reveal certain new opportunities for profit and growth. is in no position to provide relationship managers for individual customers. who can understand the trading needs of individual customers. 2) Branding . The most basic expectation for a trader or investor when one begins trading is that one must get timely delivery of shares and proceeds from sale of shares. a broking house like Sharekhan. 3) Competition from banks .Most of the banks due to good branding have the faith of the customers of their banking database. Also ones cash balances with the broker must be safe and secure. This makes trading easier.

It has been dynamic enough to move with the times and capture the opportunities that the market throws up from time to time. And. With that the understanding of the stock market is also increasing and a lot of 50 . and many established players may not have systems (technology. 3) Unfulfilled needs of the customers . the future alone can answer such queries. Some have the problem of lack of information or some were scared of volatility of the stock markets. customer service. as it offers an extremely hassle-free investing platform. The traditional business model is highly dependent on a large network of sub-brokers. 2) Improving Technology . It is also known for putting big deals through and enjoys good networking with the FIIs. This original idea by Sharekhan itself was born out of the consumer's need for a more transparent. 4) Education Level . Sharekhan has been a mega player and is known for being a mover of stocks. Also with SEBI lying down some strict guidelines small brokers are finding it harder to retain the customers with no research department and small capital. This has resulted in improved liquidity and heavy volumes on transactions. etc.The education level in the country is improving year after year as far as technology goes. Sharekhan hopes to fully utilize and capitalize on this platform. easy to understand and convenient option of investing in stocks.) capable of directly servicing so many retail customers.In country like India technology is always improving which gives the company a chance to keep on improving their product with time whereas for the small players like local brokers it will be difficult to keep the same pace as the changing technology.With so many competitors offering their products in the market but no one is able to completely satisfy the customers. Sharekhan has the opportunity to tap this unsatisfied set of customers and to make hold in the market. Sharekhan is one of the early entrants here. As to how much it will roar and how swift it can swoop on the market. The Internet serves to break all barriers to information.increasing day by day.

Online trading is totally based on the technology which is quite complex. Also many banking firms are entering into the market with huge investment. Threats 1) New Competitors . and give the 'Go/No go' advice to the trade.A lot of new competitors are trying to enter the market in this bullish run to taste the flavor of this cherry. calculate client risk at that point in time. 5-paisa etc. kotak. Competitors like icici. 51 . 2) Technology based business . Then it needs to get into the 'middle tier' of risk management systems that assess data from banks and depository participants (DP). hdfc.retail investors are steeping in the markets which is being shown by increasing volumes. This is creating a lot of competition for large players like Sharekhan and it is creating little confusion in the minds of the customers about the services provided by the broker. are posing a lot of threats to the company. the technology solution has to start from the Internet front-end (or the screen that you see when you begin trading). So technology is a kind of threat because unless until it is working properly it is good but internet is not that safe. Typically. transactions and indices. Though a lot of cyber laws are being made but not yet executed.

 Evaluation of preferred investments in various mode and industry.  To understand the problem faced by customers and finding way to solve the queries.RESEARCH OBJECTIVE  To learn about securities market  Checking the awareness level of online share trading.  Checking the satisfaction level of the customers towards preferred broking house. 52 .

Data collection method To achieve the primary data of 'Investors‟ Behaviour towards Shares provided by Sharekhan Ltd. After completion of survey. This questionnaire contains questions with 2 to 5 options. 1. 4. SAMPLE AREA : Rohini SAMPLE SIZE : 100 53 . At the end of all the information was compiled in the form of a Project Report.RESEARCH METHODOLOGY To fulfill these objectives i. Investors‟ Behaviour towards Shares provided by Sharekhan Ltd. Investor's survey was conducted through a questionnaire. Data collection was also done with help of Personal Interviews. Bank Employees. Interviews of investors with Sharekhan Ltd. the data was analysed & conclusions were drawn. 2. Army Personnel who were investing in various financial products and services at that time. I visited almost 100 investors. the researcher interacted with the Businessman. to find out..e. A pilot survey was conducted before finalizing the questionnaire. 3.

1 Did you invest your money? Invest Yes No No. 54 .of Respondents 90 80 70 60 50 40 30 20 10 0 0 c Yes No Investment of Money Analysis: The above diagram shows that 100% respondents invest a part of their revenue somewhere according to my survey.ANALYSIS Q. of Respondents 100 0 100 100 No.

of Respondents 6 8 3 12 15 26 16 8 6 55 . Securities Bonds Gold Insurance Property Shares IPO Mutual Funds No.2 Where you have invest? Investment Options Bank Govt.Q.

3 Do you have d-mat account? 56 .Investment Options for Respondents Govt. 12% respondents invest in Gold. Q. 3% respondents invests in Bonds. 8% respondents invest their money in Govt. 15% respondents invests in Insurance. Securities. 16% invests in Shares. 8% invest in IPO‟s and 6% invests in Mutual Funds respectively. Securities 8% Shares 16% IPO 8% Mutual Funds 6% Bank 6% Bonds 3% Property 26% Gold 12% Insurance 15% Analysis: The above diagram shows that 6% respondents deposit their money in Bank. 26% invest in Property.

of Respondents 95 5 Demate Account of Respondents No 5% Yes 95% Analysis: The above diagram shows that 95% respondents has d-mat accounts in different companies and 5% respondents has not d-mat accounts with any company but they are willing to open the d-mat accounts.D-mat Account Yes No No. 57 .

Q.4 What is the source of your investment information ? Source No. of Respondents Consultants Friends Family Any other 22 38 12 28 38 40 35 28 30 No.of Respondents 25 20 15 10 5 0 Consultants Friends Sources Family Any other 22 12 58 .

38% respondents said that they got information from their Friends.Analysis: This diagram depicts that 22% respondents said that they got information from consultants. of Respondents 42 28 30 42 45 40 35 No. 12% respondents got information from their family members and 28% respondents got information from other sources.5 In which company you have your d-mat account? Companies Sharekhan India bulls Any Other No.of Respondents 30 25 20 15 10 5 0 30 28 Sharekhan Indiabulls Others Companies 59 . Q.

Q.7 How much you interesting to invest in shares? Capacity Rs. consortium.2 lacs Above 2 lacs No. ICICI. 28% respondents have their d-mat accounts with Indiabulls Securities and 30% respondents have their d-mat accounts with other companies i.5000-50000 Rs. HDFC Bank.1 lac .50001-1 lac Rs. of Respondents 33 37 18 12 60 . local brokers.e.Analysis: The above diagram shows that 42% respondents have their d-mat accounts with Sharekhan.

Q.of Respondents 25 20 15 10 5 0 Rs.1lac.50000. 37% respondents said that they can investing capacity above Rs. 18% respondents said that they can invest above Rs.50000 but less than Rs.1 lac to Rs.2 lacs Above 2 lacs Capacity Analysis: 33% respondents said that they can invest upto Rs.50001-1 lac Rs.2 lacs and 12% respondents has the investing capacity above Rs.8 What is the duration of your investment ? 61 .5000-50000 37 18 12 Rs.2 lacs.40 33 35 30 No.1 lac .

Duration 0-6 months 6 months-1yr 1 yr . of Respondents 48 22 19 11 48 50 45 40 No.of Respondents 35 30 25 20 15 10 5 0 0-6 months 6 months-1yr 1 yr . 22% respondents investment period has 6months to 1 year.2 yrs Above 2 yrs 11 22 19 Investment Duration Analysis: This diagram shows that 48% respondents invest maximum for 6 months. 19% respondents has investing capacity 62 .2 yrs Above 2 yrs No.

above 1 year but maximum for 2 years and 11% respondents has investing capacity more than 2 years.9 In which you deal with your broker? Trading Off-line On-line No. of Respondents 12 88 Trading Pattern of Investors Off-line 12% On-line 88% 63 . Q.

Q.10 What type of investor you are? Type Regular Once in Time Sometimes No.Analysis: This diagram shows that 88% respondents deals in On-line trading and 12% respondents deals in off-line trading with Investment companies. of Respondents 55 18 27 64 .

11 How much risk involved in share market? 65 .60 55 50 No. 18% respondents said that they has invest Once in Time and 27% respondents said that they has invest sometime in share market. Q.of Respondents 40 27 30 18 20 10 0 Regular Once in Time Investment Type Sometimes Analysis: The above diagram shows that 55% respondents has regular investor in share market.

19% respondents said that there is risk factor is medium and 14% respondents said that there is low risk factor in the market.Risk High Moderate Low No. 66 .of Respondents 50 40 30 20 10 0 High Moderate Low 19 14 Risk Analysis: This diagram shows that 67% respondents said that there is high risk in market. of Respondents 67 19 14 67 70 60 No.

18% respondents said for easy 67 . of Respondents 39 18 15 28 39 40 35 28 30 No.12 Why you have your d-mat account with anyone? Reasons Better Service Easy Available Near to Operate Any other No.of Respondents 25 18 20 15 10 5 0 Better Service Easy Available Near to Operate Any other 15 Reasons Analysis: The above diagram shows that 39% respondents said that they have their d-mat account with their present company because they provide better services.Q.

available. of Respondents 71 29 Updation with Information No 29% Yes 71% 68 . 15% respondents said for Near to Operate and 28% respondents said for other reasons they have their d-mat accounts with their present companies. Q.13 Are you updated with information relating to your investing pattern? Updation Yes No No.

of Respondents 27 73 69 .14 Did you face any problem dealing with broker? Faced Problem Yes No No. Q.Analysis: This diagram depicts that 71% respondents said that they are updated with the latest information from their present trading companies and 29% respondents said that they are not updated timely with their companies.

Problem Faced Yes 27% No 73% Analysis: 27% respondents said that they face many problem with their present d-mat holder companies and 73% respondents said that they has not face any problem with their present companies.15 What type of problem you faced? Problem Type Brokerage Updation No. Q.of Respondents 9 24 70 .

24% respondent faced updation problem. 35% respondents said they faced better service problem and 32% respondents faced other problem with their present companies.of Respondents Types of Problem Analysis: This diagram shows that 9% respondents said that they face the problem of brokerage with their present company. 71 .Better Service Any other 35 32 35 35 30 24 25 20 15 9 10 5 0 Brokerage Updation Better Service Any other 32 No.

 Many of people don‟t know about various Shares provided by Sharekhan as a distribution house or Shares investing servicing. For an average investor the concept of Shares is like an irritating riddle.  As far as Shares investor services and distribution of Shares is concerned. and total customer focus has positioned it to as emerging giant. latest technology. this is because sagas of US-64 and Morgan Stanley may have rendered a bad name to the Shares industry. Those who know are not having adequate knowledge of various schemes and plans.  Investors want proper.  Its highly competitive manpower.FINDINGS After studying the data obtained from the respondents and other sources I am able to say following thing or various findings of my study are as follows…….  Sharekhan has a very good reputation in the minds of the investors as integral service provider and offering a large variety of the services. Sharekhan is known by majority of the public for its services. the response of investors towards share market is not so satisfactory. All these factors have made it possible to diversify its services to such a large extant and attracting a huge database of the investors. 72 .. comprehensive infrastructure. fair and timely guidance for various investments because it is their hard earned money and safety of the investment is the major issue.  Investors like to invest in the equity schemes and short term plans because they have risk taking ability and want quick returns on their investment.

Understanding the different needs of different customers and serving each customer individually i. Complete like “value for money”. mass customization should be the approach of the company. “convenience” etc. companies should try to remove these shortcomings. 73 . CREATING A COMPETITIVE POSITION:. SEGMENT THE CUSTOMERS:.Company should know its strengths as well as its weakness and accordingly try to take a position at which it can sustain. it should serve like a competitive advantage for the company. Customer services during before and after the transaction should be of world class and companies should embrace the latest technology to serve the customers because it reduces the cost.Customer should be aware of the cost and benefits of different services. POSITION THE SERVICE IN THE MARKET PLACE :. its supremacy can be challenged by any new entrant at any times so many challenge before the companies is to continuously innovate. Although Sharekhan is a leader at this point of time but with the entrance of so many groups in India.e. This is the strategy on which different cos.SUGGESTIONS 1) FOR COMPANY Besides focusing on the weakness. keep the old ones happy because the cost of acquiring a new customer is much higher than the cost of retaining the old one (nearly 5 times).

CHANGING PERCEPTION THOUGH ADVERTISING :. Sometimes. following strategies may be followed :     Product variations Modifying the timings and location of the delivery Pricing strategies Communications efforts CUSTOMER LOYALTY :. not just frequency. however weaknesses are perceptual rather than and real and hence can be changed through advertising. you‟ll add an additional 10 percent to your growth rate.According to the changes in demand of the product. management should consider the possibility that one or more of the competitors might pursue the same market position.Improving product features and correcting weakness may be expensive. UNDERSTANDING THE DEMAND PATTERN :. or any exiting competitors may feel threatened by the new strategy and take steps to reposition its own service so as to complete more effectively. 74 .If you currently retain 70 percent of your customers and you start a program to improve that to 80 percent.ANTICIPATING COMPETITIVE RESPONSE :. Rewarding frequent users of the services. Creating and maintaining valued relationship with customers :-    Realizing the full profit potential of a customer relationship. Rewarding value of use.Before embarking on a specific plan of action.

75 . Building customers loyalty will be a lot easier if you have a loyal workforce. It is especially important for you to retain those employees who interact with customers such as sales people. USE COMPLAINTS TO BUILD BUSINESS :. They really should be handled with the same attention and focus that sales calls get because in a way they are sales calls for repeat business. Many companies give a lot of attention to retaining sales people but little to support people. the customer might be even more likely to do business then the average customer who didn‟t have a complaint. these interactions are the ones that are really going to matter. They find that if they promptly follow up and resolve a customer‟s complaint. or customer support people than they did with the sales people.When customers are not happy with your business they usually won‟t complain to you instead. I have been fortunate to have the same great people in customers‟ services for years and the compliments from customers make it clear that they really appreciate specific people in our service function. they‟ll probably complain to just everyone else they know – and take their business to your competition next time. That‟s why an increasing number of businesses are making follow-up calls or mailing satisfaction questionnaires after the sale is made. and customer-services people. services.not at all a given these days. technical support. you might want to reflect upon your current business strategy. the customer will have many more interactions after the sale with technical. So if you‟re serious about retaining customers or getting referrals. In many business situations.Particularly because of the high cost of landing new customers versus the high profitability of a loyal customer base.

These come in handy for there is every possibility of losing what one has if due care is not taken. One last thing-don‟t tell your customers your 800 line phone number is for orders only! 2) FOR INVESTORS Moses gave to his followers 10 commandments that were to be followed till eternity. Before you go this route. one will make more mistakes in putting money in right places than otherwise. It is thus 76 . This builds no personal .loyalty and probably lass loyalty for the firm. In order to avoid any confusion it is better to go through the literature such as offer document and fact sheets that Shares companies provide on their funds. Try to understand where the money is going: It is important to identify the nature of investment and to know if one is compatible with the investment. Otherwise I‟d assign a specific support person to every customer. expectations and risk profile is of prime importance failing which.The increasing trend today is to send customer-service and technique. Don't rush in picking funds. One should identify the degree of risk bearing capacity one has and also clearly state the expectations from the investments. The world of investments too has several ground rules meant for investors who are novices in their own right and wish to enter the myriad world of investments. One can lose substantially if one picks the wrong kind of Shares. think first: one first has to decide what he wants the money for and it is this investment goal that should be the guiding light for all investments done. be sure this is what your customers calls into queue for the next available person. Irrational expectations will only bring pain. ASSESS YOURSELF: Self-assessment of one‟s needs.

Both have their share of critics but both philosophies work for investors of different kinds. Excessive exposure to any specific sector should be avoided. even investors of equity should be judicious and invest some portion of the investment in debt. This might reduce the maximum return possible. One would do well to remember that nobody can perfectly time the market so staying invested is the best option unless there are compelling reasons to exit. It is thus of key importance that there is thought given to the process of investment and to the time horizon of the intended investment. Don‟t put all the eggs in one basket: This old age adage is of utmost importance. debt) is good. but will also reduce the risks. No matter what the risk profile of a person is. One should take a look at the portfolio of the funds for the purpose. So putting one‟s money in different asset classes is generally the best option as it averages the risks in each category. it is good to place money in the hands of several fund managers. 77 . Identifying the proposed investment philosophy of the fund will give an insight into the kind of risks that it shall be taking in future. as it will only add to the risk of the entire portfolio.important to know the risks associated with the fund and align it with the quantum of risk one is willing to take. Thus. One should abstain from speculating which in other words would mean getting out of one fund and investing in another with the intention of making quick money. Not all fund managers have the same acumen of fund management and with identification of the best man being a tough task. DON’T SPECULATE: A common investor is limited in the degree of risk that he is willing to take. Shares invest with a certain ideology such as the "Value Principle" or "Growth Philosophy". it is always advisable to diversify the risks associated. INVEST. Diversification even in any particular asset class (such as equity.

The Automatic investment Plans offered by some funds goes a step further. DO YOUR HOMEWOK: It is important for all investors to research the avenues available to them irrespective of the investor category they belong to. Finding the right funds is important and one should also use these funds for tax efficiency. Asking the intermediaries is one of the ways to take care of the problem. as the fee charged ultimately goes from the pocket of the investor.BE REGULAR: Investing should be a habit and not an exercise undertaken at one‟s wishes. he would stand a better chance of generating more returns than the market for the entire duration. This is even more important for debt funds as the returns from these funds are not much. 78 . As we said earlier. if one has to really benefit from them. Investors of debt will be charged a tax on dividend distribution and so can easily avoid the payout options. Funds that charge more will reduce the yield to the investor. as the amount can be directly/electronically transferred from the account of the investor. FIND THE RIGHT FUNDS: Finding funds that do not charge many fees is of importance. All that one needs to do is to give post-dated cheques to the fund and thereafter one will not be harried later. Investors of equity should keep in mind that all dividends are currently tax-free in India and so their tax liabilities can be reduced if the dividend payout option is used. since it is extremely difficult to know when to enter or exit the market. The SIPs (Systematic Investment Plans) offered by all funds helps in being systematic. The basic philosophy of Rupee cost averaging would suggest that if one invests regularly through the ups and downs of the market. it is important to beat the market by being systematic. Having identified the risks associated with the investment is important and so one should try to know all aspects associated with it. This is important because an informed investor is in a better decision to make right decisions.

then investors of equity too will benefit by switching to debt funds as the losses can be minimized. One can always switch back to equity if the equity market starts to show some buoyancy. 79 . If the market is beginning to enter a bearish phase.KEEP TRACK OF YOUR INVESTMENTS: Finding the right fund is important but even more important is to keep track of the way they are performing in the market.

Despite a great care was taken to choose sample size and sample unit. 80 . Some respondents may have distorted the figures / facts or may have not disclosed the true information because of the hesitation to tell the right data. These drawbacks may be due to following reasons :      The questionnaire was exclusively close –ended.LIMITATIONS Though special care was taken to find out realistic picture of the present scenario for what the research was conducted still the study may suffer from some drawbacks. No tool for the cross-checking of the facts / figures was employed. it might not be accurate to my desire or perception. So they may not have been able to give the exact figures / facts. As most of the times respondents were busy and were unable to spend a considerable amount of time. so respondents might not be able to give exact facts what they wanted because they were having only limited choice.

it is not just growth that should be the focus area but also better management of all risks and hence. They should understand that the investors forget the high returns posted in any specific period very soon but they take hell lot of time to forget the burns they get during periods of losses. The Shares industry worldwide is based on this premise. Hence for maintaining the confidence of the retail investors it is very important to control wild fluctuations in the NAVs. Poor performance. poor servicing to clients and failure of third party service providers. AMCs would do well to keep the investor and his interest in mind before taking any decision. It is unfortunate that the fund managers are not taking due care for minimizing the risk and are in a race to post higher and higher returns during the phase of bull-run. are the three major risk factors identified in the survey.CONCLUSION The basic objective of Shares is to provide a diversified portfolio so as to reduce the risk in investments at a lower cost. and they get an optimum portfolio of securities that match their risk appetite. 81 . Under this setting. Investors who take up Shares route for investments believe that their risk is minimized at lower costs. These are also going to be crucial in a rapidly growing competitive scenario.

 Abarbanell, J. S. (1997). Fundamental analysis, future earnings, and stock prices. Accounting Research (Spring) , 1-24.  Jablonsky, S. F. (2001). The Manager's Guide to Financial Analysis. John Wiley & Sons.  Kothari, C. (2005). Resaerch Methodology (2nd Edition ed.). New Delhi: New Age International Pvt.Ltd.  M.Y.Khan. (2007). Financial Management. New Delhi: Tata McGraw-Hill.  “Research on the Indian Capital Market: A Review”,Vikalpa, 19(1), January-March 1994, 1531 (with S.K. Barua and V. Raghunathan)  “Indian Money Market: Market Structure, Covered Parity and Term Structure”, ICFAI Journal of Applied Finance, 3(2), July 1997, 1-10.





Did you invest your money? Yes No


Where you have invest? Bank Gold Shares IPO Govt. Securities Insurance Bonds Property


Do you have d-mat account? Yes No


What is the source of your investment information ? Consultants Family Friends Any Other


In which company you have your d-mat account? Sharekhan Karvy Any Other


Where you got information about Sharekhan? Newspaper Friends Magazine Local Channel


How much you interesting to invest in shares?

Rs.5000 – 50000 Rs.1 Lac – 2 Lacs Q.8

Rs.50001- 1 Lac Above 2 Lacs

What is the duration of your investment ? 0-6 months 1 yr – 2 yrs 6 months – 1 yr Above 2 yrs


In which you deal with your broker? On-line Off-line


What type of investor you are? Regular Once in time Sometimes


How much risk involved in share market? High Moderate Low


Why you have your d-mat account with anyone? Better Service Near to operate Easy available Any other


Are you updated with information relating to your investing pattern? Yes No


Did you face any problem dealing with broker? Yes No


What type of problem you faced? Brokerage Better Service Updation Any other


List of abbreviations

ADRs - American Depository Receipts AI - Approved Intermediary AMC - Asset Management Company ATM - At-the-Money BOLT - Bombay Online Trading BSE Bombay Stock Exchange of India Ltd.

CDSL - Central Depository Services (India) Ltd. CM - Clearing Members CRISIL - Credit Rating Information Services of India Ltd. DCA - Department of Company affairs DEA - Department of Economic Affairs DIP - Disclosure and Investor Protection DMA - Direct Market Access DP Depository Participant

F&O - Futures and Options FIIs - Foreign Institutional Investors GDRs - Global Depository Receipts ICAI - Institute of Chartered Accountants of India ICSE - Inter-connected Stock Exchange of India Ltd. ICICI - Industrial Credit & Investment Corporation of India Ltd. IDBI - Industrial Development Bank of India IEPF - Investor Education & Protection fund

IISL . NSDL .Overseas Corporate Bodies OTCEI .Securities and Exchange Board of India SLB .Secondary Market Advisory Committee S&P .Standard and Poor VIX .Wholesale Debt Market 86 .Securities Appellate Tribunal SCRA .Initial Public Offer ITM .National Stock Exchange Automated Trading NCDEX .National Securities Depository Ltd.National Securities Clearing Corporation of India Ltd.Securities Contracts Regulation Act SEBI . IPO .Over the Counter Exchange of India Ltd.National Commodity and Derivatives Exchange India NSCSL .Securities Lending & Borrowing SMAC . OCBs .India Index Services & Products Ltd.Volatility Index of NSE WDM .Out-of the-Money RBI .Reserve Bank of India SAT . NSE National stock exchange of India Ltd.Multi Commodity Exchange of India Ltd.In-the-Money MCX . OTM . NAV Net Asset Value NEAT .

87 .

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