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STOCK MARKET

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HISTORY OF STOCK EXCHANGE

The first stock exchange in India, Bombay stock Exchange (BSE) was established in 1875 as ‘The Native Share and Association’ and has evolved over the years into its present status as the premier stock exchange in the country. It may be noted that BSE is the oldest stock exchange in Asia, even older than the Tokyo stock Exchange, which was founded in 1878. The country’s second stock exchange was established in Ahmedabad in 1894, followed by the Calcutta stock Exchange (CSE). CSE can also trace its origin back to 19th century. From a get together under a ‘NEEM TREE’ way back in the 1830s, the CSE was formally established in May 1908.

Traditionally In stock Market, the investors invest their money in shares under the guidance of the Brokers of any stock broking company. This is convenient to those investors who are not familiar with the computer and the use of internet. But it requires more dealers to the share broking companies to give guidance related to investment. There was a chance of inaccuracy of price because it is a time consuming process. The cost of the company also increases due to more paperwork. The investor point of view, there was a problem of privacy. The information of investor may leak by the broker. So, to remove these limitations of traditional broking, there was an emergence of new concept e-Broking.

Stock exchange is a place where securities are bought and sold. Stock exchanges are exposed to high degree of volatility, price fluctuations and it is driven by the demand supply of stocks. Stock Brokers are the authorized person who is allowed to buy and sell stocks on behalf of individuals and institutions and the authority is granted by SEBI.

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E-BROKING

Today is world of technology. So, the person who adopt it, get the success. So, E-Broking means broking through electronic means. E-Broking is the broking in which the investors who are familiar with the use of computer and Internet they directly trade in stock market. They trade any time at any place when the stock market is open. The cost of transaction is also reducing with time. The investors have a large range of option for the trading. It is a paperless transaction so it reduces the cost of company. There was a facility of live streaming quotes, which give exact price of share which prevailing in the market at that time.

Discount online brokers allow you to trade via Internet at reduced rates. Some provide quality research, other don’t. Full service online brokerage is linked to existing brokerage. These brokers allow their client to place online orders with the option of talking/chatting to brokers if advice is needed. Brokerage rates here are higher. Online trading is still in its infancy stage in India.

INTERNET TRADING IN INDIA
In the past, investors had no option but to contact their broker to get real time access to market data. The Net brings data to the investor on line and net broking enables him to trade on a click. Now information has become easily accessible to both retail as well as big investors.

The development of broking in India can be categorized in 3 phases:

Stock brokers offering on their sites features such as live portfolio manager, live quotes, market research and news to attract more investors.

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Brokers offering on line broking and relationship management by providing and offering analysis and information to investors during broking and nonbroking hours based on their profile and needs, that is, customized services. Brokers (now e-brokers) will offer value management or services such as initial public offerings on line, asset allocation, portfolio management, financial planning, and tax planning, insurance services and enable the investors to take better and well-considered decisions.

OBJECTIVES OF INTERNET TRADING

Increase transparency in the markets.

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

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

Provide management information system (MIS).

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

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PROCEDURE FOR INTERNET TRADING
Step-1: Those investors interested in doing the trading over internet system, that is, NEAT-ISX, should approach the brokers and register with the Stock Broker. Step-2: After registration, the broker will provide to them a login name, password and a personal identification number (PIN). Step-3: Actual placement of an order. An order can then be placed by using the place order window as under: o First by entering the symbol and series of stock and other parameters such as quantity and price of the scrip on the place order window. o Second, fill in the symbol, series and the default quantity. Step-4: Thus, the investor has to review the order placed by clicking the review option. He may also re-set to clear the values. Step-5: After the review has been satisfactory; the order has to be sent by clicking on the send option. Step-6: The investor will receive an ``Order Confirmation'' message along with the order number and the value of the order. Step-7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a time lag of about ten seconds is there in executing the trade. Step-8: It is regarding charging payment, for which there are different modes. Some brokers will take some advance payment from the investors and will fix their trading limits. When the trade is executed, the broker will ask the investor for transfer of funds by the investor to his account.

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Some make sure you find the charges easily. The 6 . Speed of execution: System has to be fast and reliable that does just one job. All online brokers display their charges on their sites. Rate refresh: Rate refresh has to be real-time with no time lag.com are few sites with 128-bit encryption. 5paisa.FACTORS TO KEEP IN MIND WHILE SELECTING ONLINE BROKERS Brokerage cost: It is important to weigh up the subscription and trading costs charged by an online broker against benefits offered by the site. You normally get a secured Login id and password.executes your trades.com. The speed and reliability comes with huge investment in technology. Ideally online trading site should be fully integrated. ICICIDirect. while with others you will have to search a bit. Ideally broking account. demat account and bank account should be linked electronically. the better it is for the customer. It is always advisable to frequently change trading password. The last thing you need is a site that is heavily congested with the users who are downloading heavy jpeg graphs or pulling the latest story why market is moving. The greater the backward integration. Safety: Please make sure site has 128-bit encryption to ensure safety of transaction online. It is always advisable to check rates of online broking sites with BSE/ NSE terminal rates.

7 .site should be one click wonder where squaring off all your positions or canceling all your pending orders takes one click and a confirmation of action. all sites provide 4 times buy and sell limit against margin money put in by customer. Couple of sites also provides margin funding for buying of shares. Free trial period: Site should allow users free trial period to familiarize yourself with system before you decide to become trading member of the site. Lot of people trade based on charting packages. buying limit is equal to margin money put in by customer. Intraday chart/ historical chart: The site should provide intraday chart tick by tick time and price data / historical chart for technical analysis by investors of particular scrip. For delivery of shares. Trading limit: For trading.

(iii) Integration with third party systems: On the Net. Consequently. the application software should demonstrate intelligence in optimizing the available bandwidth by deploying advanced technologies such as streaming.SUCCESS FACTORS FOR E-BROKING There are three key success factors for e-broking. with information feeds available from multiple points. (i) Scalability and robustness of the trading system: The fundamental difference between the Internet as a transaction medium and the conventional closed user group network is that the Net is a universal platform providing concurrent access to infinite users at any given point in time. it becomes imperative for any Net-based application to have a proven capability for scalability and robustness which ensures the ability to handle and process requests from multiple users at any given point in time. (ii) Bandwidth optimization: In the Indian context where availability of a sufficient bandwidth is limited. 8 . it is prudent to deploy applications that are built on open architecture methodology for interfacing with third party systems in the new Net age.

This will not only ensure lower trading costs in terms of offering cross services but will also help in maximizing ROIs. Comprehensive technology strategy. etc. Total solutions would essentially mean offering interfaces with banks. depositories. it is both prudent and essential for a broker/intermediary to offer total solution to the clients at a single point. Concurrently. Some of the challenges are discussed: Transaction fulfillment--In the Net-based economy. the international securities marketplace is fast becoming a "global village" through the creation of a universal virtual equity market. exchanges worldwide are looking at striking strategic alliances such as the Global Equity Market (GEM). Therefore the challenge for the technology providers is to develop and deploy advanced e-trading tools and applications using electronic straight through processing technologies. The service providers will have to go beyond the stage of mere order execution and emerge as "informediaries" rather than "intermediaries". 9 . for efficiency in trade completion and reducing duplication of client information. A robust business model and 2. which are already contributing substantial business volumes to mainline exchanges such as NASDAQ and the NYSE. With Net trading in securities and rapid consolidation between multiple stock exchanges. A true Internet trading system should deliver cost effective transaction fulfillment at a single point. FUTURE OF INTERNET TRADING International marketplaces are already witnessing re-alignments and changes with the emergence of electronic communication networks (ECNs) such as INSTINET and ISLAND. it is imperative to have both – 1.CHALLENGES IN INTERNET TRADING For Internet trading to succeed. information feeds.

10 . the trades are netted to determine the obligations of the trading member’s securities/funds as per settlement cycle. Just because of this Transaction cycle. the business of Online Stock broking/ Online Trading/ EBroking has emerged. At the end of the trade cycle. And as an extension of stock broking. A securities transaction cycle is presented above.TRADING IN STOCK MARKET TRANSACTION Decision to trade Placing Order Funds or Securities Transaction Cycle Trade Execution Settlement of trades Clearing of Trades CYCLE: A person holding assets either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets decides to buy or sell the securities. He selects a broker and instructs him to place buy/sell order on an exchange. The order is converted to a trade as soon as it finds a matching sell/buy order. the whole business of Securities and Stock Broking has emerged. Buyer/seller delivers funds/ securities and receives securities/funds and acquires ownership of the securities.

such as IBM or the Ford Motor Company. and this first sale of stock to the public is called an initial public offering. These are called stock certificates. as each makes its own choice about how many pieces of ownership to divide the corporation into. the owners are not personally responsible or liable for any debts of the company if the company doesn't succeed. Later they may choose to "incorporate". while another. or IPO. As a corporation. The total number of shares will vary from one company to another. This transition from a privately held corporation to a publicly traded one is called going public. The expectation is that even though the owners have surrendered a portion of the company to them public. and each certificate represents a set number of shares.STOCK MARKET BASICS: What are Corporations? Companies are started by individuals or may be a small circle of people. One corporation may have only 2. Corporations are not allowed to sell shares of stock on the open stock market without the approval of the Securities and Exchange Commission (SEC). may issue over a billion shares.500 shares. or as a partnership with others who may wish to invest money. Corporations issue official-looking sheets of paper that represent ownership of the company. The business founders give up part of their ownership in exchange for this needed cash. A choice is made to organize the business as a sole proprietorship where one person or a married couple owns everything. their remaining share of stock will become increasingly valuable as the business grows. They pool their money or obtain loans. raising funds to launch the business. Companies sell stock (pieces of ownership) to raise money and provide funding for the expansion and growth of the business. Why do people invest in the stock market? 11 .

When you buy stock in a corporation. as in Small-Cap. The corporation's board of directors choose when to declare a dividend and how much to pay. you need a way to compare the movement of the market. For e. from day to day.000 x 20). Market Cap As you become familiar with stock and mutual fund investing. and Large-Cap. When a company pays out profits to the shareholder. If a company has 500 million shares trading at Rs. Older and larger companies pay a regular dividend. This is the total value of the company's stock. the capitalization of a company is calculated by multiplying the total number of shares by the current price per share. What is a stock market index? In the stock market world. you will encounter the term "Cap".000. What is usually responsible for increased interest in a company's stock is the prospect of the company's sales and profits going up. The average investor buys stock hoping that the stock's price will rise. Much of this perceived value is due to 12 .10 billion (500. so the shares can be sold at a profit.20 a share. its market cap is Rs. and from year to year. As a stock market term. you own part of that company. the money received is called a "Dividend". newer and smaller companies do not. up and down. the value that the world of stock market investors has placed on the company. This will happen if more investors want to buy stock in a company than wish to sell. An index is just a benchmark or yardstick expressed as a number that makes it possible to do this comparison. A company who is a leader in a hot industry will usually see its share price rise dramatically. This gives you a vote at annual shareholder meetings. and a right to a share of future profits.g. Cap is short for capitalization. S&P CNX Nifty is the index of NSE and SENSEX is the index of BSE. Mid-Cap.

When a stock is purchased. The DEMAND is the number of shares investors wish to buy at exactly the same time. "Listed" means how the corporation tracks the ownership of their stock. you pay a commission that is deducted from your account. If investors are selling a stock and there aren't enough buyers. Depending on who you listen to or how old your reference book is. What a share of a company is worth on anyone day or at any one minute. a small-cap from $250 million to $1 billion. or that it is small just because its stock price is low. Today. the price will go down. awaiting your orders to buy or sell stock. Some brokers will allow you to open an account with very little money. like opening an account at a bank. Supply and Demand A stock's price movement.the expectations of a company's future prospects. up and down until the end of the trading day is strictly the result of supply and demand. of shares offered for sale at anyone one moment. the ownership of the shares may be listed in one of two ways. A related point . is determined by all investors voting with their money. a mid-cap from $1 to $10 billion. If you 13 . or other securities such as bonds or mutual funds. the price will go up. When you buy or sell. You are required to open an account with the brokerage. The firm will then hold this money in an interest earning cash account.don't think a company is big just because it has a high stock price. and a company whose stock value is under $250 million as a micro-cap. SUPPLY is the no. Market cap is not dictated by how "big" a company is. If investors want a stock and are willing to pay more. How does one buy stocks? Buying stocks is not as simple as walking into a stockbroker's office and buying shares like you would a pair of shoes from a store. these definitions will vary. we define a large-cap company as one whose stock is valued at over $10 billion (some still say over $5 billion).

Most investors choose to have the ownership listed in the broker's name. But most probably the following are the reasons which play a great roll in case of selling of the stock. consolidated portfolio statements. and the ability to instantly sell and transfer the shares. Either way. with the broker keeping track of whose trading account the stock actually belongs to. Why do people sell their stock? The reasons people sell their stock are more complex. investors sell because they've watched the price fall. and so sell his stocks that aren't moving up. The benefits are reduced paperwork. Bad news concerning a company or its industry. A person may just need the money. any dividends are credited to your account. But usually. He or she may have watched the price go up. and have a hunch this is a good time to lock in their profit and sell some or all their shares. An investor may see better opportunities in another company. you will receive the actual stock certificates. Stocks held in street name are insured by the federal government against fraud or financial failure of the brokerage company. no concerns about storing and processing the paper certificates. called "held in street name". It is very subjective and can not work for all. 14 . or a disappointing earnings report is sure to prompt heavy selling. We can never say with full surety why people sell their stock. and just want to get out before they lose even more.choose to have the stock listed in your name.

Always invest for the long term. interest rates. Calculate “owner earnings” to get a true reflection of value. Focus on return on equity. the economy. Buy companies with strong histories of profitability and with a dominant business franchisee. focus on four or five year averages. Instead. Stop trying to predict the direction of the stock market. you should not be in the stock market. Be fearful when others are greedy and greedy when others are fearful. Concentrating on a few holdings can reduce risk. Unless you can watch your stock holding decline by 50% without becoming panic-stricken.Ten Golden rules for Investing Warren Buffet has suggested ten golden rules for investing which proves to be immense use to the investors who want a better investment in stock markets. Do not take yearly results too seriously. Motilal Oswal follows these rules which are as described below: Never invest in a business you cannot understand. Ask: Does the business have favorable long term prospects? The above mentioned ten principles provide a kind of guidance to the investors. not earnings per share (EPS). or elections. 15 . which prove to be helpful to give the investor maximum return for their investment. Look for companies with high profit margins.

”Motilal Oswal” gets incorporated as Motilal Oswal Securities Ltd. (1) Motilal Oswal Investment Advisors Pvt. (MOSt). (2) Motilal Oswal Commodities Broker (P) Ltd. Motilal Oswal Financial Services Ltd was declared as the Best Research House for Indian Stocks in 2006 as per AQ Research Motilal Oswal Financial Services Ltd. Both the young chartered accountants hailing from a rural & an unpretentious background had a common dream viz 'to build a professional organization with strong value systems. investment banking and venture capital. 16 . in the year 1995. Raamdeo Agrawal met each other as students in a Mumbai suburban hostel in the early eighties.00. The company has in the last year placed 9.New Vernon Private Equity Limited and Bessemer Venture Partners at post money company valuation of Rs.000 investors in over 360 cities.. Ltd. consists of four companies.48% with two leading private equity investors . UK. Thus was born their first enterprise called "Prudential Portfolio Services" in 1987. when Mr. (3) Motilal Oswal Venture Capital Advisors Private Limited (4) Motilal Oswal Securities Ltd.The institutional business unit has relationships with several leading foreign institutional investors in the US. (Rs. 1345 crore. Motilal Oswal and Mr. Motilal Oswal Financial Services is a well diversified financial services group having businesses in securities. Hong Kong and Singapore. 13.45 billion). commodities.Company profile The story of Motilal Oswal Securities Ltd (MOSt) goes back many years. Motilal Oswal Financial Services Ltd ties-up with State Bank of India to offer online trading. Motilal Oswal is well suited to handle all your wealth creation and wealth management needs. to provide reliable & honest investment advice to investors'.with 1160 Business locations and more than 2.

17 .Mission and Vision Motilal oswal core objective is to position ourselves as globally respected investment bank by assisting our clients in value creation. Motilal oswal are on the correct roadmap to pursue our mission with our Team inculcating the following values with utmost sincerity. Integrity Motilal oswal commitments and work on transactions keeping in mind long term interests of the clients Client Orientation Motilal oswal come out with solutions keeping in mind priorities and needs of the clients. Quality Motilal oswal endeavor to follow the best of the global service standards and processes results in outstanding execution support for transactions. Knowledge based solution offering Motilal oswal quest for solution offering supported by knowledge and research on underlying business and products. results in high quality financial and strategic advice. Motilal oswal Core Purpose To be a well respected and preferred global financial services organization enabling wealth creation for all our customers. Passion Motilal oswal are passionate about our transactions resulting in innovative solutions and enhancing probability of transaction closures .

likely to rule chosen niches. robust management credentials. but five to ten years graph bit unclear. Get in. Each cluster represents a certain profile in terms of business fundamentals as well as the kind of returns you can expect over a certain time horizons and return objectives. 18 . Could double in two to three years time. the niches could balloon into full-blow markets. Appleegreen: Potentially steady compound. Vulture’s Pick: Companies with valuable assets at throwaway prices. get out. Emerging Star: Young companies. Evergreen: Dominant players with strong brands.STOCK CLUSTER At Motilal Oswal. They will steadily compound 18-20% per year for next five to ten years. cash in. Startlingly high returns possible. could return 30-50% within six months. Buy & await predators. Ugly Duckling: Trading below fair value or at huge discount to peer group. Even better. Potentially ten-baggers if you’re patient. supernormal shareholder returns. They could gallop at 25-30 per-years over the next two to three years. Typically fast gainers in rising markets. all the scripts are divided under six categories and on that basis the company will give advice for the investment. But something’s cooking. Cannonball: Season’s favourites.

PRODUCTS AT MOTILAL OSWAL Motilal Oswal’s product Offline Online Other Services Freedom A/C Offline: ⇒ Value Investing A/C Easy A/C Offline A/c is the A/c for the investors who are not familiar with the use of computer. you have chosen one of the best E broking trading platforms in the country. real time reports makes it the most preferred product for active day traders. we bring you a trading terminal that allows you to maintain pace with complete market action. you also get the most competitive brokerage rates along with 19 . ⇒ The A/C opening charges Rs. tick by tick charting with advanced tool. jobbers What’s more. Online Types of Account Freedom Account High Volume Trader Value Investing Account . online technical calls. Our high performance EXE based trading platform with advanced features like integrated DP + bank account + trading account. 500 (One time) ⇒ For 1st Year Demat A/C is Free. single screen market watch for NSE & BSE cash and derivatives.High Value Investor Easy Account Freedom Account A combination of both If the ups and down of the stock market are simply irresistible for you to stay away from action and you want to do it all by yourself. On 2nd Year AMC charge is applicable. Having gone through rigorous testing in real market conditions.

This product is meant for our platinum customer who knows that money is made by sitting. Watch the live price movements. Other Services: Dial-n-Trade Depository Services Commodity Trading Derivative Trading Mutual fund Portfolio Management Services Online IPO Research Based Information Provided 20 . you also get access to our research reports and assistance in evaluating and restructuring your portfolio continuously through a highly qualified advisor. We specialize in providing our customers with Solid Research and Solid Advice. Easy Account If you like to go ‘easy’ with your equity investments explore the benefits of having online terminal on your desktop. online fund transfer facility along with a trading account linked with your demat and bank account giving you complete comfort while investing in equities. this is the right account for you. What more. Value Investing Account If you believe in value investing and want to pick only the best stocks amongst the 6000 listed on the stock exchanges.host of other benefits and the most trusted name making it the best proposition available in the country.

The screen-based trading is done on BOLT. Derivatives Digest. High Noon. The quarries regarding stock positions and other relevant matter of the branch heads of each branch is being solved through teleconference. while purchasing as well as selling. etc. 21 . There are two types of transactions executed on these terminals viz. through which the R&D department Head MR. Motilal Oswal Xclusive.BSE Online Trading and NEAT. i. Eagle eye. The R&D department Head Mr.National Exchange Automated Trading. Free Access to Investment Advice through R&D The Research and Development at Motilal Oswal is done at its Head office Mumbai.e. while in delivery based transaction the squaring up is not done on the same day.SERVICES AT MOTILAL OSWAL Online BSE and NSE Trading: Motilal Oswal is a registered Stock Broker with the Bombay Stock Exchange and National Stock Exchange to trade on behalf of clients. Valueline. Intraday transactions are those. From there it forwards the relevant data and tips on particular shares and scripts at the relevant time. while brokerage on delivery based transactions is 0. terminals. At the end of each trading day there is a Teleconference. The various publications of Motilal Oswal viz.10% single side.e. The Brokerage of Intraday transaction is 0. Hemang Jani forwards all the details regarding all stocks and scripts to all the branches through Internet. Commodity Trader’s corner. but the stock is to be traded on the basis of rolling settlement i. T+2.50% on both side. Hemang Jani talks with each Branch heads and discusses about each day’s closing position and shows their predictions about next day’s opening position. Investor’s Eye. are being prepared by the research team of Motilal Oswal made up of highly experienced people from diverse field. in which the squaring up of deal is done on the same day. Commodities Beat. intra-day and delivery based transactions.

rematerialized on behalf of beneficial owners with whom it has entered into an agreement. and Record of approval. Records of all the transactions entered into with a depository and with a beneficial owner: ISSUER AGENT CLEARING CORPORATION CLEARING MEMBER DEPOSITORY PARTICIPANT STOCK EXCHANGE TRADING MEMBER INVESTOR DEPOSITORY Details of security dematerialized. It is required that separate accounts shall be opened by every participant in the name of each of the beneficial owner and the securities of each beneficial owner shall be segregated and shall not be mixed up with the securities of other beneficial owners or with the participant’s own securities. The participants are obliged to reconcile the records with every depository on a daily basis. The participants are required to enter into an agreement with beneficial owners. (NSDL). 22 . notice. Records of instructions received from beneficial owners and statements of account provided to beneficial owners. entry and cancellation of pledge. Participants are required to maintain the following records for a period of five years.Depository Participation Motilal Oswal is a registered Depository Participant (DP) with National Securities Depository Ltd.

Classic Account and Speedtrade and SpeedTradePlus The online trading through Motilal Oswal website also comes with Dial-nTrade service that enables you to buy and sell shares by calling our dedicated toll-free number. viz. 23 . according to the norms and Guidelines given by the SEBI. The Clearing Member (CM) uses the trader workstation for the purpose of monitoring the trading member(s) for whom he clears the trades. not reaching in time. Additionally. Motilal Oswal provides the service of derivatives trading on NEAT F&O to its clients. Two types of users access the NEAT F&O trading system: The Trading Members and the Clearing Members. order and trade management. order matching. which a trading member can take. It is given on its web-site for helping the clients who are not able to collect the forms manually and the speed of filling and reducing the risk of misplacing of forms. etc. he can enter and set limits to position. Speedtrade and Speedtrade Plus: SPEEDTRADE is a next-generation online trading product that brings the power of the broker’s terminal to the client’s PC. The Trading Members (TM) has access to functions such as. Internet Based Online Trading The Online trading facilities provided by Motilal Oswal is basically divided into two types of accounts.Derivatives Trading Motilal Oswal is a Trading Member registered with the Stock Exchange. Online IPO Online IPO (Initial Public Offering) is a new service started by Motilal Oswal for providing the application form of any company’s issues of shares just like the TCS issue can be subscribed by filling an online form to reduce the paper work and the fund transfer facility is also provided to the clients for transferring the funds online. Through SPEEDTRADE PLUS the client is also allowed to trade on Derivatives.

Streamer: Streamer account is just for the new learners of market and is a new service offered by Motilal Oswal to give the view of the market online to the customers who don’t have any experiences of the stock market and it is software provided to see the ups and downs of market with the screen on your PC. Timely Advice: Make informed decisions with expert advice. bank and Demat account (auto pay-in and pay-out of securities) with digital contracts removes all paperwork. 24 . Instant Credit And Transfer: Instant transfer of funds from bank accounts of client’s choice to his/her Motilal Oswal trading account. It costs Rs. Trade Anywhere: Enjoy the ease of trading from any part of the world in a completely secure environment. which get executed as soon as markets open.2000 per quarter and there will not be any facility for trading and just you can see how trading is done on the market. Real-Time Portfolio Tracking: Benefit from real-time information of your investment and current portfolio value. Dial n Trade: Call Motilal Oswal on a toll free number to place orders through Motilal Oswal’s telebrokers. After-Hour Orders: The Client can place orders after the market hours. The various benefits the client gets from the online trading are: Freedom from Paperwork: Integrated trading. investment calls and live market commentary.

Refco Group Ltd.com Kotak Securities Ltd India Bulls Motilal Oswal Securities Ltd HDFC Securities Ltd Marwadi Finance Ltd BUYERS Small Investors Franchise/Business Partners HNI’s MF Companies HUF Institutional Investors SUBSTITUTES Mutual Funds Insurance Bank FD 25 . SUPPLIERS Web maintainers NSCL CSDL NSE BSE MCX NCDEX COMPETITORS ICICI Web Trade Ltd 5paisa.PORTER’S MODEL POTENTIAL ENTERANT Investmart Various Banks Geojit Cipher UTI Securities Ltd. Services Ltd. IDBI Capital Mkt.

COMPARISION OF ONLINE TRADING PRODUCTS Cos. Commodity. Insurance Ground A/c. PMS Ground A/c.com HDFC Motilal Oswal A/c Opening Charges Classic 750/-ST 1000/500 750 600 Up to 400 Deposits 10000 50000 --------5000 Indiabulls 5-Paisa. / Features Products Offered Ground A/c. Commodity. DP. PMS Ground A/c.MF E-Broking. One other best point of Motilal Oswal is –if a person is having a online/offline trading account as well as Demat account with Motilal Oswal. DP. Online A/c. MF. Online A/c. Online A/c. DP. EBroking Insurance. EBroking.com ICICI Direct. they won’t be charged any kind of Demat transfer charges. which are charged when the shares are sold from the Demat account.MF E-Broking Ground A/c. DP Online A/c. we can come to know that the rates of Motilal Oswal is quite competitive than other brokerage houses. Ground A/c Online BSE/ NSE Yes Yes Yes Yes Yes Online F&O Yes Yes Yes Yes Yes Online IPO Yes Yes No No Yes Share khan Kotakstreet. Commodity. 26 . E-Broking. Commodity.com Angel Broking IL&FS Yes Yes Yes Yes Yes Yes No Yes Yes No Yes Yes 250 500 500 500 ----5000 50000 ------ If we check the above table.

27 . Web maintainers are companies who make and maintain software’s for stock broking houses. etc. business partners. for which they have to take permission from NSE/BSE. they cannot go for forward integration. SHCIL. medium net worth investors. which includes investors like small investors. ICICIdirect. Here the bargaining power of stock broking houses depends on how big the investor is. Here stock broking houses like SSKI can have more bargaining power due to stiff competition among web maintaining companies. But here there is one advantage that NSE/BSE have i.com. that’s why stock broking houses like SSKI. BUYERS There are various types of investors who trade through stock broking houses like SSKI. NSE & BSE are under the purview of SEBI. So here we can say that bargaining power of stock broking houses is high in case of small investors & HUF. have low bargaining power. Web maintainers are companies which maintain web sites & technical aspects of the same. MCX & NCDEX are stock exchanges which trade in commodities and derivatives. So it is quite high switching cost. etc. Here again stock broking houses have to follow rules and regulation of the same. institutional investors and mutual fund companies. NSE & BSE are playgrounds where common an investor trade through stock broking houses. If say for example stock broking houses switches over to other web maintainers then that company cannot understand the mechanisms of software’s. Also these regulatory bodies have got an upper hand as the bargaining power stock broking houses like SSKI. would be less.SUPPLIERS NSDL & CSDL are the regulatory bodies for Depository Participants like SSKI.e.

Network: . It will take time for a new entrant to establish such a huge network. Thus.Obtaining a license is a tedious job. Technology: . For a stock broking houses to plunge into the stock broking industry.” 28 .” Network can come up as most difficult entry barrier to overcome.While the bargaining power is moderate in case of HNI (High New Worth Investors)/ MNI’s (Medium Net Worth Investors) and business partners. competitors are offering low brokerage and best services with added feature.Capital is necessary not only for fixed facilities but also for customer’s credit and absorbing start up losses. Also the most important thing which helps already established firms is-“TRUST” which people would be having on them. To start a stock broking house. one needs huge capital for technology up gradation and skilled manpower.Stock broking requires huge capital to make their products user friendly. fundamental as well as technical script analysis.The core competency in this industry is the services which are provided to the end-users and the research based activities which includes “TIPS”. NSDL. It should comply with the regulation of the governing bodies like SEBI. which says that. regulators constraints could be an entry barrier. which in turn requires capital to employ skilled manpower. Experience curve: . Regulatory Constraints: . So the buyer can easily switch over to competitors product. it needs to have some kind of financial background and expertise. There is competitive buzz in stock broking industry. So switching cost is pretty much less. But the in case of mutual fund companies and institutional investors bargaining power is less. ENTRY BARRIERS Huge capital: .The “Reach” to the customer is the key factor in the industry. The network of the companies Motilal Oswal is very efficient and spreaded all over India. etc.

If the use of this instruments increase this may be disadvantage for the stock broking houses.Whenever a new player comes in the industry.g. 29 . Bank Of Baroda. E.1000. Nationalized banks are also thinking to enter in this field by tying up with broking houses.com and Kotakstreet. E. POTENTIAL ENTRANTS The potential entrants in like Investmart.com.But due to competition. Motilal Oswal. the old companies have an option to reduce the prices of their product. mutual funds are the substitutes. The local players provide facility for off-line trading while the national players like ICICIdirect. The companies and banks which are having these instruments can plunge into this industry. they have come up with only one account speed trade plus with the account charges of Rs. Motilal Oswal was having two types of accounts viz. This kind of practice is called expected Retaliation which is possible in this industry in terms of less brokerage rates and reduced account opening charges. SUBSTITUTES Here substitutes are such instruments which can be used instead of investing in shares. There are also other big names like Indiabulls. HDFC Security provide online trading services. speed trade speed trade plus.Expected Retaliation: . 5paisa and Marwadi encircles the company form both the sides by providing online and off-line trading with competitive services. The instruments like Bank FD. Jeojit and Cipher which are coming in near future to Gandhinagar City.g. which were costing 1000 & 1500 account opening charges respectively. COMPETITORS The company is facing the competition from local as well as national level players. insurance.

com is a leader in the online account which is having 1.000 accounts in the country. Motilal Oswal challenges competitors by providing quality services and research based advice. HDFC Securities. Motilal Oswal. While in offline account Motilal Oswal is leading with 64.COMPETITIVE ANALYSIS Follower: The followers are those who just blindly follow the other player which are leader and challenges. Kotakstreet are the followers. Kotakstreet and Indiabulls come under this head. CHALLENGER: Motilal Oswal. The players like 5 paisa. NICHER: ICICIdirect.000 offline accounts. Indiabulls is also challenging with low brokerage rates and class one service.com are the two stock broking houses which are focusing only on online investors. LEADER: ICICIdirect. 30 .com and Kotakstreet.24.

♦ Back office contains: Client details Collection Request Ledger bal Pay out request Credit management 31 . the trading hours would not get disturbed. early in the morning the Back office is updated and the copy of the ledger balance of the client and the stock report are printed out so that the clients’ limit or the decision of the selling of delivery can be taken without disturbing the terminal and the working hours. So. At Motilal Oswal. The company gives lots of attention to the handling of all the details regarding the client and the information is provided by the staff members of the company. the back office is the main link and which is provided by the Head Office through Net. Back office is the main pool of information on which the company and the branch works on to decide how much limit should be given to the client. The branch is required to maintain it and update it all the times to get the data and other related information updated. the company also gives the guarantee for the privacy of the details that are stored in the back office.BACKOFFICE WORK AT MOTILAL OSWAL Motilal Oswal is very efficient company and it handles the back office work with great efforts. The back office work is generally carried out in the early morning and after the trading hours. So. So.

Generally the company wants to have the positive balance of the client. the copies of their required information such as pan card photocopy and bank statement etc. 32 . the money get easily tranfered to the Head Office. So. The other details of the client such as the bank details. and other things are maintained and updated at times.Client Details: Motilal Oswal maintains all the details regarding the customer which include the details of their address. the DP holding statement. if required. the reversal entry is made and the extra charge would be recovered for that from the account of the client. In this section the cheque information for Pay in and pay out are provided. Ledger Balance: This section gives idea about the balance of the client in the account of Motilal Oswal. Here the entry would be made as soon as the client pay the amount through cheque then the cheque is sent to the bank for clearing and if the amount is not transferred to the company’s account within two days. None can make the payment in cash. the pay out is given through Back office on which the Ahmedabad branch will give the cheque in the name of the client within two days. The client is given full authority to ask for pay out at any point of time if he has credit balance in his accont. But the company also allows trading on five times on the stock value and ten times on the balance in ledger. In Motilal Oswal. Collection request: This section handles the things like the collection and cheque request made by or to the client. Payout Request: The client who has the balance in his account can demand for the payment through cheque. Each and every client is required to make payment through cheque. That amount is required to be collected from the client within two days. their contact no.

33 . Sometimes the shortage of payment cause the terminal to be Hanged. Generally the margin on credit is Rs. Eg. the stock value of the client in his DP account is calculated and the ledger balance of the client in his account is deducted from that amount. 100000 ie. Suppose a client has following stock in the account of Motilal Oswal Reliance: worth TCS: ITC: worth worth 56000 41000 36000 133000 Now if the client has only 10000 balances in the account then the request for payment would be made. the branch is required to follow the credit management fully and strictly. For this calculation. If the client is unable to make payment within fifteen days then the his holding is sold in the market even at a loss to the client but the amount is recovered so that the shortage of payment to the terminal or to the branch does not occur.Credit Management: The credit management is done with great care to give the limit extension to the client. The resulted amount should be minimum one lack rupees. The resulted amount will decide the limit that would be allowed to the client. So.

we had come to know the Strengths – Weaknesses – Opportunities – Threats for the company and it is very useful for a company to analyze them. Weaknesses: The company is passing through the following weaknesses which can be the hurdle to the success of the company. The best investment advice correct up to 70-90 % through dedicated research and reports.t. The Motilal Oswal is not having a good reputation or recognition in the market. Therefore. the SWOT analysis is presented here and the suggestions for maintaining strengths and removing weaknesses are explained in detail. The company is following a rigid credit management system. The company has the record top provide best DP service and other facility. The brokerage is not the minimum but the company does not collect the other charges which do not exist like other competitors. So sometimes the limit problem or the compulsory selling of the securities happens. Infrastructure does not just include the office area but also the facilities present there. 34 .r.SWOT ANALYSIS During this training at Motilal Oswal. The marketing team is not much experienced and so the company can not make its stand in the mind of the investors. Lowest brokerage and other charges w. One of the best DPs in India. The R&D department of the company is very dedicated and the tips given by the company is on an average 97% right. Less awareness in the market. The more amd more awareness should be created. competitors. Strengths: Well-maintained infrastructure.

Normally the rigid credit policies of the company is playing a negative roll for the market.Opportunities: Opportunities are something that the company should grab to make the stand in the market against the competitors. Attract the customers who are dissatisfied with other broker & DPs. The opportunities for the stock broking industry are as follows: Slope of stock market towards delivery based transaction. 35 . Threats: The company should take care of the following points as they play a big roll in the success of the company. The company is having advantage in this volatile market because the investors are having the trading on the delivery basis. Decreasing rates of brokerage in the market. For that the company is preparing a list of customers. Large potential market for delivery and intra-day transactions. The competitors are getting sharp change on that. A threat of loosing clients for any kind of weakness of the company. Increasing competition against other brokers & DPs. Loosing the untapped market with the entry of the competitors.

M.COM ANGEL BROKING ICICI DIRECT IL&LS INVESTMENT UTI SECURITIES MOTILAL OSWAL KARVY KOTAK SECURITIES LIMITED HDFC SECURITIES LTD IDBI CAPITAL MARKET SERVICES LTD NUMBER OF TERMINAL IN INDIA.C. Global No of Terminal 5081 4179 3231 1051 970 999 3231 36 .MAJOR PLAYERS IN THE INDUSTRY INDIA BULLS 5PAISA. Broker Name Angle broker Motilal oswal Indiabulls Icici securities India infoline Anagram securities S.

NO OF SUB-BROKER IN INDIA COMPANY NAME Karvy stock broking Angle Broking S.M. Ashit c.C.C. maheta Anagram securities No of sub broker 15000 2408 800 638 587 320 964 37 . Global Motilal Oswal I.C.I.I.

The index is widely reported in both domestic and international markets through print as well as electronic media. the SENSEX has over the years become one of the most prominent brands in the country. good and bad. SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. in the period of its inception. . 38 . To formulate the measure rode for ups and downs BSE came with the stock index that has subsequently become the barometer for Indian stock market. STOXX. liquid and representative companies. S&P and Dow Jones use the Free-float methodology.CALCULATION OF SENSEX In 1875. Due to is wide acceptance amongst the Indian investors. there were 318 registered members in what we call today “Bombay Stock Exchange”. The base year of SENSEX is 1978-79 and the base value is 100. Up to the eighties there was no any barometer to set a standard for measuring the ups and down in share market. The index was initially calculated based on the “Full Market capitalization” methodology but was shifted to the free-float methodology with effect from 1st September 2003. Small wonder. it provides the time series data over a fairly long period of time (From 1979 onwards). SENSEX is regarded to be the pulse of the Indian stock market. Since that long period of time Indian stock market has seen lots of changes comprising both kind of experience i. SENSEX is a basket of 30 constituent stocks representing a sample of large.e. As the oldest index in the country. All major index providers like MSCI.The "Free-float Market Capitalization" methodology of index construction is regarded as an industry best practice globally. FTSE.

In other words. It keeps the Index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions. During market hours. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization The calculation of SENSEX involves dividing the Free-float market capitalization of 30 companies in the Index by a number called the Index Divisor. the level of index at any point of time reflects the Free-float market value of 30 component stocks relative to a base period. the market capitalization of each company in a Free-float index is reduced to the extent of its readily available shares in the market. The Divisor is the only link to the original base period value. Understanding Free-float Methodology Concept: Free-float Methodology refers to an index construction methodology that takes into consideration only the free-float market capitalization of a company for the purpose of index calculation and assigning weight to stocks in Index. 39 . It generally excludes promoters' holding. government holding. prices of the index scripts are used by the trading system to calculate SENSEX every 15 seconds. strategic holding and other locked-in shares that will not come to the market for trading in the normal course. replacement of scripts etc. As per this methodology.SENSEX Calculation Methodology SENSEX is calculated using the "Free-float Market Capitalization" methodology. Free-float market capitalization is defined as that proportion of total shares issued by the company that are readily available for trading in the market.

in the normal course come into the open market for trading are treated as 'Controlling/ Strategic Holdings' and hence not included in free-float. the concentration of top five companies in SENSEX has fallen under the free- 40 . For example. the following categories of holding are generally excluded from the definition of Free-float: Holdings by founders/directors/ acquirers which has control element Holding through Route of Foreign Direct Investment Holdings by persons/ bodies with "Controlling Interest" Government holding as promoter/acquirer Strategic stakes by private corporate bodies/ individuals Equity held by associate/group companies (cross-holdings) Equity held by Employee Welfare Trusts Locked-in shares and shares which would not be sold in the open market in normal course.Definition of Free-float: Share holdings held by investors that would not. Major advantages of Free-float Methodology: A Free-float index reflects the market trends more rationally as it takes into consideration only those shares that are available for trading in the market. The remaining shareholders would fall under the Free-float category. Free-float Methodology makes the index more broad-based by reducing the concentration of top few companies in Index. In specific.

For example. Being a perfectly replicable portfolio of stocks. NASDAQ-100. is also based on the Free-float Methodology. since only the free-float market capitalization of each company is considered for index calculation. a leading global index provider. This improves market coverage and sector coverage of the index. companies with large market capitalization and low free-float cannot generally be included in the Index because they tend to distort the index by having an undue influence on the index movement. which is followed by Foreign Institutional Investors (FIIs) to track Indian equities. FTSE. A Free-float index aids both active and passive investing styles. The MSCI India Standard Index. It aids active managers by enabling them to benchmark their fund returns vis-àvis an investable index.float scenario thereby making the SENSEX more diversified and broadbased. the Free-float Methodology of index construction is considered to be an industry best practice and all major index providers like MSCI. the underlying index to the famous Exchange Traded Fund (ETF) . it becomes possible to include such closely held companies in the index while at the same time preventing their undue influence on the index movement. a Free-float adjusted index is best suited for the passive managers as it enables them to track the index with the least tracking error. MSCI. This enables an apple-to-apple comparison thereby facilitating better evaluation of performance of active managers.QQQ is based on the Free-float Methodology. Free-float Methodology improves index flexibility in terms of including any stock from the universe of listed stocks. 41 . under the Free-float Methodology. Globally. S&P and STOXX have adopted the same. However. shifted all its indices to the Free-float Methodology in 2002. under a Fullmarket capitalization methodology.

15 0. the last traded price is taken for computation of the Index closure. If a SENSEX constituent has not traded in the last 30 minutes. 42 . Once the Free-float of a company is determined.60 0.40 0. then its last day's closing price is taken for computation of Index closure.25 0.30 0.35 0.75 0.85 0. If a SENSEX constituent has not traded at all in a day. A Free-float factor of say 0. it is rounded-off to the higher multiple of 5 and each company is categorized into one of the 20 bands given below.Determining Free-float factors of companies: BSE has designed a Free-float format.80 0.55 0.65 0. Free-float Bands: %Free-Float Free-Float Factor >0 – 5% >5 – 10 % >10 – 15% >15 – 20% >20 – 25% >25 – 30% >30 – 35% >35 – 40% >40 – 45% >45 – 50% 0.45 0. Free-float factor is a multiple with which the total market capitalization of a company is adjusted to arrive at the Freefloat market capitalization.95 1.05 0.55 means that only 55% of the market capitalization of the company will be considered for index calculation.70 0. which is filled and submitted by all index companies on a quarterly basis with the Exchange.90 0.50 %Free-Float Free-Float Factor >50 – 55% >55 – 60% >60 – 65% >65 – 70% >70 – 75% >75 – 80% >80 – 85% >85 – 90% >90 – 95% >95 – 100% 0. The Exchange determines the Free-float factor for each company based on the detailed information submitted by the companies in the prescribed format.10 0.00 Index Closure Algorithm The closing SENSEX on any trading day is computed taking the weighted average of all the trades on SENSEX constituents in the last 30 minutes of trading session.20 0.

which is used to alter market capitalization of the component stocks to arrive at the SENSEX value. a discontinuity would arise between the current value of the index and its previous value despite the non-occurrence of any economic activity of substance. prices of the index scrips. At the Index Cell of the Exchange. Adjustment for Bonus. additional issue of capital and other corporate announcements like 'rights issue' etc.The use of Index Closure Algorithm prevents any intentional manipulation of the closing index value. Maintenance of SENSEX One of the important aspects of maintaining continuity with the past is to update the base year average. 43 . are automatically used by the trading computer to calculate the SENSEX every 15 seconds and continuously updated on all trading workstations connected to the BSE trading computer in real time. The base year value adjustment ensures that replacement of stocks in Index. at which trades are executed. The Index Committee of the Exchange comprises of experts on capital markets from all major market segments. Fund-managers from leading Mutual Funds. The Index Cell ensures that SENSEX and all the other BSE indices maintain their benchmark properties by striking a delicate balance between frequent replacements in index and maintaining its historical continuity. the base value is adjusted. The beauty of maintenance lies in the fact that adjustments for corporate actions in the Index should not per se affect the index values. but problem arises when one of the component stocks pays a bonus or issues rights shares. If no adjustments were made. On-Line Computation of the Index: During market hours. FinanceJournalists. Rights and Newly issued Capital: The arithmetic calculation involved in calculating SENSEX is simple. do not destroy the historical value of the index. and Exchange administration. Independent Governing Board members. Market Participants. They include Academicians. The Index Cell of the exchange does the day-to-day maintenance of the index within the broad index policy framework set by the Index Committee.

is Rs. Other Issues: Base Market Capitalisation Adjustment is required when new shares are issued by way of conversion of debentures. issues right shares.4781 crores. The existing Base Market Capitalisation (Old Base Market Capitalisation). corporate restructuring etc. Adjustments for Bonus Issue: When a company. say Rs. the market capitalisation of that company does not undergo any change. Base Market Capitalisation Adjustment: The formula for adjusting the Base Market Capitalisation is as follows: New Base Market = Old Base Market Capitalization Market Cap Old Market Capitalisation To illustrate.100 crores. included in the compilation of the index. suppose a company issues right shares which increases the market capitalisation of the shares of that company by say. or when equity is reduced by way of buy-back of shares. say. the free-float market capitalization of that company is increased by the number of additional shares issued based on the theoretical (ex-right) price. only the 'number of shares' in the formula is updated. issues bonus shares. there is no change in the Base Market Capitalisation.2450 crores and the aggregate market capitalisation of all the shares included in the index before the right issue is made is. Rs. Therefore. An offsetting or proportionate adjustment is then made to the Base Market Capitalisation (see 'Base Market Capitalization Adjustment' below).The Index Cell of the Exchange keeps a close watch on the events that might affect the index on a regular basis and carries out daily maintenance of all the 14 Indices Adjustments for Right Issue When a company. The "New Base Market Capitalisation” will then be: x New Capitalisation 44 . mergers. spin-offs etc. included in the compilation of the index.

2501. minimum listing history would not be required.2450 x (4781 + 100) / 4781 = Rs. Final Rank: The scrip should figure in the top 100 companies listed by final rank. Exceptions can be made for extreme reasons like scrip suspension etc. Trading Frequency: The scrip should have been traded on each and every trading day in the last three months. a company is listed on account of merger/ demerger/ amalgamation. In case. 45 . the company should have an acceptable track record. Industry Representation: Scrip selection would generally take into account a balanced representation of the listed companies in the universe of BSE.Scrip selection criteria: The general guidelines for selection of constituents in SENSEX are as follows: Listed History: The scrip should have a listing history of at least 3 months at BSE. Exception may be considered if full market capitalisation of a newly listed company ranks among top 10 in the list of BSE universe. Track Record: In the opinion of the Committee.5% of the Index. Market Capitalization Weightage: The weightage of each scrip in SENSEX based on three-month average free-float market capitalisation should be at least 0.24 crore the index number from then onwards till the next base change becomes necessary. The final rank is arrived at by assigning 75% weightage to the rank on the basis of three-month average full market capitalisation and 25% weightage to the liquidity rank based on three-month average daily turnover & threemonth average impact cost. SENSEX .

46 . a respected economist and successful investor. Understanding how the crowd thinks and reacts in both normal circumstances and panic situations can deliver a big edge to investors willing to study individual and crowd psychology in relation to the stock market. Instead of using investment valuation techniques. It made no difference if a stock currently priced at $25 per share possessed intrinsic value of $30 per share if investors had a negative opinion of the company and their declining demand for the stock would drive its price down to the $20 per share level. if not major role in the determination of stock prices and market direction. Correctly anticipating that market sentiment and shorting the stock would be the proper investment move under the Castle-in-the-Air theory. He reported on how investors gravitated away from the hard work of determining intrinsic value to discern how the investing public will act in the future as they build ‘castles in the sky’ based on their hopes and dreams.Index Review Frequency: The Index Committee meets every quarter to review all BSE indices. Castle-in-the-Air Theory The Castle-in-the-Air Theory ignores investment intrinsic values and looks to the interpretation and prediction of investor sentiments and actions in order to make their investment positions before the crowd. Lord Maynard Keynes. followers of this theory tried to divine the psychology of the market and where it was headed. contrarians investing. consensus indicators. Market psychology and the herd instinct often play a leading. etc. the announcement of the incoming and outgoing scrips is made six weeks in advance of the actual implementation of the revision of the Index. In case of a revision in the Index constituents. expounded on the theory in 1936. Popular investment approaches that use investor psychology as a base include odd-lot theory.

Some strategists have even gone so far as to classify investors into specific investment personalities. Contrary to popular opinion. the most successful investors tend to concentrate their investments in a narrow range of investments or stocks. Dr. Another trait of the successful investor is the ability to stick with their investment choices and let their profits run. provides the success edge. based on personality characteristics such as exhibiting confidence. successful investors tend to invest in what they know industries and companies with which they are already familiar. a research psychologist and author of business-related books. If we think more practically all the valuation theories are used to predict the long term condition of a particular script but castle in the air theory is only theory that helps investors to have decision immediately. Of course. According to his theory. 47 . On the other hand. you must balance the degree of risk you are willing to assume with the opportunity for greater returns. At Motilal Oswal: Generally local traders are not well aware about the highly scientific techniques that need depth of the knowledge about the method of that theory and a particular script because all the data required about the company in research are not easily available and if available it is to hard to collect it. So instead of using the highly time consuming theories it is better to use castle in the air theory to take immediate decision. not diversification. or caution Knowing your own personality make-up and how it relates to the investment markets can also help improve your chances of success. Finally. Sully Blotnick. developed a profile of the successful investor. concentration. unsuccessful investors tend to follow fads and sell out too soon. anxiety. One such model considers investors falling into one of five classifications ranging from straight arrow to careful to confident to anxious to impetuous.

But the market price of a share has a direct relation with P/E (i. if P/E increases then the price of the shares also increases and vice versa. So for the investors who wants the regular income and also who can hold the scrip’s for long term should go for that companies having less P/E. Even the opinion of market researchers which are given on the basis of technical analysis are many time proved to be in inverse direction to the market trend so its more genuine to go with what we feel about the market based on personal observation which are supported by the current buying and selling pressure. On the bases of all above observation it can be concluded that to be the land mark in the field of share market you need to have immense passion and insight to generate profit and more importantly to avert loss.). P/E is one of the indicators.). There are many other factors. P/E Ratio and EPS (P/E is a price earning multiple) P/E = Market price of a share EPS The above formula shows that EPS has an inverse relation with P/E (i. The company with less P/E is more attractive in terms of valuation.e. It has also been observed that generally when a person is at profit poison it does not wait for more high in scripts but when he or she is at loss waits with the hop of increase in the share and unfortunately gets higher loss. but it is not the measure to know company fundamentals. Buying and selling pressure reveals the general tendency of all over investors about the market.e.In Motilal Oswal we have observed that most of the client keeps continuous watch over buying and selling pressure of selected scripts which they believes the best among all others. So it is totally psychological phenomenon that helps the investors to predict about the next movement of the index. if P/E increases then EPS will decreases and vice versa. which helps to know the performance of the company. Also the Sentiments of the 48 . which affects the company’s performance.

A P/E of 15 indicates. investors are paying Rs. for every Re. 49 . the P/E is often measured against the projected earnings growth rate.market affect the market price of the company but they are the technical of the company. For example. For high-growth stocks. or its growth rate.1 of pershare earnings.15. its peers. When its P/E ratio falls below that of the market. A company's P/E ratio should be measured against those of its competitors. which knows about the company for a short period of time. a stock may be attractive for purchase. price/earnings (P/E) ratio shows how much investors are willing to pay for a rupee of a company's earnings. so a company with annual earnings growth potential of 30% could warrant a P/E ratio of 30 or more.

Q. Equity shares are “High-Risk High-Return Investments.” The major distinction of Equity investment from all other investment avenues is that while the return from many avenues such as Bank Deposits. Yes. Debentures. the earnings from equity investments are highly uncertain and varied. What returns can I expect from my investments in equity shares? What are the risks? A. Capital Market enhances capital formation in the economy and comprises of a) Primary Market is a place where new offerings by Companies are made either as an Initial Public Offering (IPO) or Rights Issue. Whom should I contact for my Stock Market related transactions? A. What is the function of the Capital Market? A. you have to sign the “Member-Client agreement” for the purpose of engaging a broker to execute trades on your behalf from time to time and furnish details relating to yourself to enable the member to maintain Client Registration Form. A good scrip picked up at the right time could fetch fairly good returns else the return may be meager or it may even turn negative. Small Saving schemes. Q. 50 .QUESTIONS OF THE INVESTORS Q. Bonds etc are fixed and certain. b) Secondary Market is a market where securities are traded after being initially offered to the public in the Primary Market and/or listed on the Stock Exchange. Q. To be able to buy or sell shares in the stock markets a client would need to be registered with a stock broker like MOTILAL OSWAL who holds membership in stock exchanges and who is registered with SEBI. Am I required to sign any agreement with broker or sub-broker? A. Q. When the market goes up it is called a bullish trend and when the market goes down it is called a bearish trend. What is meant by bullish and bearish trend? A.

Professional money managers will always try to outperform the market. The shares will be sold and when the price falls they will be repurchased and given back and the difference is the where the investor profits. etc. There are two kinds of positions : a) Long positions are what most people do.e. An index is a stock-market indicator created as a statistical measure of the performance of an entire market or segment of a market based on a sample of securities from the market. they will always try to do better than the indices. and that is how you profit. you are anticipating a fall in the price and the fall is the source of your profits. you are taking a position. An index measures aggregate market movement. trade number. Apart from being a general market indicator. What is a Contract Note? A. An index is a means to evaluate the overall performance of a market or of a segment of the market. quantity and price of the trades. if the value of a portfolio moves up by 10% while the index moved up by only 5% then the portfolio is doing better than the market. When you act upon a stock and buy into it. Q. b) Short positions are the tricky ones. For example.Q. indices are used as a benchmark to evaluate individual portfolio performance. i. time of trade. What is taking a position? A. brokerage charged. It establishes a legally enforceable relationship between the client and Motilal Oswal with respect to the settlement of the trades. that means you are anticipating an upward movement in the price. 51 . Contract Note is a confirmation of trades done on a particular day on behalf of the client. What is an index? A. order number. The Contract Note would show settlement number. Q. A position is an amount of money committed to an investment in anticipation of favorable price movements. When you buy short. When you buy long.

What do you mean by ‘Market Trades’ and ‘Off Market Trades’? A. ‘Off Market Trade’ is one which is settled directly between two parties without the involvement of a clearing corporation.Q. Q. Normally. the trades pertaining to the rolling settlement are settled on a T+2 day basis. The non-delivery by the trading member could arise on account of short delivery. What is a Rolling Settlement? A. the member broker has the liberty to close out transactions by selling securities in case you fail to make full payment to the broker for the execution of contract before pay-in day as fixed by Stock Exchange for the concerned settlement period unless you already have an equivalent credit with the broker. The same delivery instruction slip can be used either for market trade or off-market trade by ticking one of the two options. The Exchange purchases the requisite quantity in the Auction Market and gives them to the buying trading member. What happens if I could not make the payment of money or deliver shares on the pay-in day? A. 52 . Q. In a Rolling Settlement trades executed during the day are settled based on the net obligations for the day. The securities are put up for auction by the Exchange on account of non-delivery of securities by the selling trading member to ensure that the buying trading member receives the securities due to him. These trades are done through stock brokers on a stock exchange. In case of purchase on your behalf. In both the cases any loss in transactions will be deductible from the margin money paid by you. What is an Auction? A. Q. The shortages in case of sales are met through auction process and the difference in price indicated in Contract Note and price received through auction is paid by member to the Exchange which is then liable to be recovered from the client. Any trade settled through a clearing corporation is termed as a ‘Market Trade’.

What happens if I do not get my money or share on the due date? A. Q. (a) Long term capital gains Long Term investments that are held for more than 12 months are termed as long term capital assets. you can file a complaint with the respective stock exchange. if shares are not offered for sale in the auction. Q. 2. Service tax as applicable. The brokerage and service tax is indicated separately in the contract note. Stamp duty and other charges directly attributable to the transaction. In case a broker fails to deliver to you in time and make the proper payment of money/shares or you have a complaint against the conduct of the broker. What are the additional charges other than brokerage that can be levied on the investor? A. the transactions are closed out as per SEBI guidelines. To resolve the dispute the complainant can also resort to arbitration as provided on the reverse of Contract Note /Purchase or Sale Note.Q. However. if the complaint is not addressed by the Stock Exchanges or is unduly delayed then the complaints along with supporting documents may be forwarded to Secondary Market Department of SEBI. The trading member can charge: 1. The exchange is required to resolve all complaints. Securities Transaction Tax. What happens if the shares are not bought in the auction? A. Tax rates on investments gains are categorized as long term & short term capital gains. The guidelines stipulate that “the close out price will be the highest price recorded in that scrip in the settlement in which the concerned contract was entered into and upto the date of auction/close out OR 20% above the official closing price on the exchange. What are the tax implications of investing in Indian equities? A. Profit on sale of such assets is termed 53 . 3. Q. If the shares could not be bought in the auction i. Transaction charges levied by NSE.e.

provided by SEBI to officially deal in portfolio. (b) Short term capital gains Shares that are held for less than 12 months are classified as short term capital assets which as per the latest Budget notification will attract 10% tax. Any person who pursuant to a contract or arrangement with a client. Who is a Portfolio Manager? A. advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or the funds of the client. as the case may be is a Portfolio Manager. Q. Each and every Portfolio manager should have the registered no. 54 .as long term capital gain (LTCG) which as per the latest Budget notification will attract nil tax.

it hasn’t gained much popularity in comparison Marwadi. than fixing up a standard service for all its customers.CONCLUSION The research conducted by me is summarized as under: From the research. It also needs to educate the people of Rajkot society. it could be concluded that Motilal Oswal in all ways as compared with the other stock broking houses has a good scope in the Rajkot city. It could come up with products which cater to all segments of the society after a little cost cutting. Karvy. But since it has just finished few years of inception in Rajkot. just that it needs to give more advertisement and fast services to the customers. Still in Rajkot city the brand name (Motilal Oswal) needs to be emphasized on. Indiabulls etc. especially the once who could afford a high deposits and wants a margin for his more trading. By this way company can get two folded benefits as it can generate a good amount of brokerage by high volume of trading and also earn the interest reate on the funding facilities given to the customers. Still the market is not 100% fully aware that what Motilal Oswal is. 55 . Motilal Oswal in all ways is good. whose needs vary diversely. while marketing & selling the product.

56 . The company should make the policies of credit not risky but to some extent more friendly. ° The infrastructure of the company should be given proper attention because. And if the above mentioned points are given proper attention. Motilal Oswal should educate the investors about Derivatives by organizing classes. Company should show the benefits of trading on Derivatives & Commodities Motilal Oswal should turn existing customers (who are trading in Equity only) towards Derivatives. corporate presentations. taking part in consumer fairs. Motilal Oswal can also use Newspapers and Local New Channels as a medium of advertising. Company may appoint special team for giving education & attracting people towards trading on Derivatives & Commodities. organizing events. Motilal Oswal may also use its helpline number for giving education on Derivatives. now a days the clients want facilities but not at the cost of the infrastructure. so. it will at least not lose the existing clients. The company is amongst the leading broking companies. the company will have the good image in the minds of the clients which will turn out to be in the form of the better turnover and better holdings.RECOMMENDATION Motilal Oswal needs to make its marketing team strong and also it should increase marketing activities such as promotional campaigns.

Motilal Oswal.com 2. www. www.com 3.com 57 .Google. www.nseindia. www.Bibliography Here is the list of sites through which I got the information related to my project. Websites: 1. I have used them as the primary information and has presented them in my own language.com 4.bseindia.