Summer Training Report On
“COMPETITIVE ANALYSIS OF SHAREKHAN WITH OTHER MAJOR PLAYERS IN SECURITY MARKET” SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA) To
MAHARSHI DAYANAND UNIVERSITY, ROHTAK Submitted by:Name: Pawan Kumar Institute Roll No. 2527 Semester: MBA (3rd Sem)
AMITY BUSINESS SCHOOL, MANESAR AUGUST, 2006 SESSION – 2005-07 1
DECLARATION
I, Pawan Kumar, Roll No. 2527, M.B.A (3rd Sem) of the Amity Business School, Manesar hereby declare that the Summer Training Report entitled “Competitive Analysis of Sharekhan with other major players in Security Market” is an original work and the same has not been submitted to any other institute for the award of any other degree. A seminar presentation of the Training Report was made on 9th August and the suggestions as approved by the faculty were duly incorporated.
Presentation In-charge
Signature of the candidate
Signature: Faculty: Mr. Ashish Manchanda
Countersigned Director of the Institute
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ACKNOWLEDGEMENT The project report entitled, “Competitive Analysis of Sharekhan Securities with other Major Competitors” demanded a lot of research and a proper methodology to be followed. For that matter I needed a proper guidance and support to be able to come up with true picture of the market. I, hereby, express a sincere and deep gratitude to Dr. R. C. Sharma, Professor & Adviser, Amity Business School, Manesar who has always acted as a guiding force in all my problems and without whose kind support guidance I would not have been able to do full justice to this project. I would also like to extend my gratitude to Mr. Manash Pratim, (Territory Manager) without his help it would have been impossible for me to carry out the project successfully. I would also like to extend my thanks to Mr. Bhupender Arya (Assistant Manager) who has given me every support as an industry guide for my project as well as the practical experience of the market. Finally I would extend my gratitude to my faculty guide Mr. Ashish Manchanda who has provided me guidance and support at each and every step.
Pawan Kumar
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PERFACE Emerging Stock Markets recently has been of great importance to the worldwide investment community. The fate of the economy of a country is intertwined with the performance of its stock markets. This is especially true for the emerging economies and their stock markets. The development process undergone by these emerging economies as clearly demonstrated that today’s investors are unlikely to invest in what appear to be a profitable company if the economic fundamental of the country are in question. India is considered as one of the fastest emerging markets in the world. It has a well established stock market with a long history of organized trading in securities. It has 24 stock exchanges spread across the country and has a total population of more than 45 million. After the Liberalization policy of the government in 1991 a number of measures were initiated which have had a direct or indirect impact on the growth of the stock market. Now a day there are various broking houses in India who helps the investors to invest in capital market easily. In the light of above, the present study has been conducted to make the competitive analysis of various major players of broking houses. The whole study has been divided into 7 chapters.
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The 1st chapter deals with the introduction about the project like company profile, objective of the study, limitations, focus of the problem and signification of the study.
The 2nd chapter deals with the industry profile. It reveals the idea of the whole industry that how it works and what it includes.
The 3rd chapter deals with the company profile in which it has been contained the various services as well as the areas and company management with organization structure.
The 4th chapter deals with the Research methodology; in it we covers research design, universe and survey population, sample design, collection of data, etc.
The 5th chapter deals with the analysis and interpretation part. This is the crucial part which tells the study results and the various information about the research.
The 6th chapter deals with conclusions of the study and gives the suggestions to improve or solve the present problems.
The 7th chapter deals in the annexure which comprises the bibliography and the questionnaires. It tells the path from where the material has been collected.
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Table of Contents Page No. I
Declaration Acknowledgement
II
Preface
III-IV
Chapter 1-Introduction of the Study
1-5
Introduction to the project
1
Significance of the study
2
Focus of the problem
3
Objectives of the study
4
Limitations of the study
5
Chapter 2- Industry Profile
6-12
Industry Profile
6
Depository (NSDL & CDSL)
7-9
Market Intermediaries
10
BSE Stock Market
11-12
Companies listed in BSE
13
Chapter 3-Company Profile
14-32
Introduction
14-15
Vision & Mission
16
Company group and Structure
17
Highly Rated Research
18
Network of Sharekhan
19 6
Management Team
20
Services offered by Sharekhan
21
Different Areas of Trading
22-23
Trading Procedure
24-32
Chapter 4- Research Methodology
33-38
Introduction
33
Research Design
34-35
Universe and Survey population
36
Data Collection
37-38
Chapter 5- Analysis and Interpretations
39-54
Company’s Background
39-43
Comparison of Depository Participant
44-54
Chapter 6-Conclusions
55-60
Findings
55-56
Recommendations
57-58
Chapter 7- Annexure
59-63
Bibliography
59
Questionnaire
60-63
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INTRODUCTION TO THE PROJECT This project is a very good task for the analyze of the company’s market share and the satisfaction level of the customers of various companies. Sharekhan Securities
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Pvt. Ltd. Is a brand name in the field of securities. The major other players in this field are Indiabulls, ICICI Direct. Com, Karvy, India Infoline, etc. This project includes the various services provided by the company like research mails, online trading, online terminal, etc. In my project I have covered the various functions of the company mainly taking into consideration the share broking. The comparison of various companies will help in the study to make a clear cut idea of the market demand of the company as well as this will provide the base to improve the strategies to make the company more competitive.
In the project I have also analyzed the customer perception about the various services offered by the company and the market scenario. It will help in comparison of the companies from the point of view of the customers. There is a need of this study because customers have the veto power to accept or reject a product or a service.
SINIFICATION OF THE STUDY
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The study of comparing the services offered by the company and the market share will be helpful for the company in making future decisions to increase its market share as well as its client satisfaction level.
This study will be helpful for the company in this respect also that what are the strategies used by other major competitors and at what extent they get success.
This study also helps the students who want to study the share market and various broking houses. It is helpful for customers also because by reading it carefully it they can choose a good broking house which can fulfill their needs.
FOCUS OF THE PROBLEM
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Every research work is based on some problems. If there is not a problem then there is no need for a research. So to make a research 1st of all make the problem clearly defined and then we can start any study. For this very study I have made the focus on Equities. It is the 1st step for a person who wants to enter in the share market. In it I have taken the services offered by various companies as well as their brokerage and other charges.
OBJECTIVES OF THE STUDY
11
Setting objective is very important for any research or a project. The project is decided to compare the services offered by various broking houses with taking consideration of client satisfaction. To obtain this main objective, I have divided it into sub objectives .These are as: 1. The 1st objective is to find out the various services offered by the company. 2. To get knowledge about the market share of the company. 3. To get familiar with the services offered by other major players in securities. 4. To check the satisfaction level of the people.
LIMITATIONS
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In making any research work a researcher has to face many problems which fix the boundary of any research. So a researcher has to make his study carefully to obtain good and fruitful results. In my project also I have to face many limitations which are as:
1.
The data was collected from various sources which are not
equally reliable 2.
To collect data I have to visit so many places
3.
People were not cooperative in providing data
4.
The market was taking high fluctuations at that time
5.
Many other companies are also entering in the market which up
to some extent affected the study
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INDUSTRY PROFILE SEBI has regulated the whole capital market in which investor’s trade. All the transactions are controlled and executed by the SEBI. It has established 2 depositories named NSDL and CDSL. These now make the transactions in various stock exchanges like Bombay stock exchange, National stock exchange and various
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other Regional stock exchanges. These 2 depositories directly don’t interact with the clients. Clients and the depository have at least 1 intermediate depository participant who makes all these transactions possible and generate the brokerage. The depository participant opens the Demat a/c and provides base to the clients to do trade and give them guidelines also. NSE and BSE are the 2 major stock exchanges which have established their index named by NIFTY and SENSEX, which shows the market’s position of 50 and 30 big companies respectively. BSE is the oldest stock exchange in India and the SENSEX of the last financial year was more volatile than previous years. But the value of shares in the BSE is going up .the trend of it is increasing. For this vary reason more and more investors from domestic country and FII’s are trading in it. SEBI has regulated all the transactions and make it compulsory to have the PAN card for operating the share trading. It also has made the transactions easier by providing the facility of dematerialization of shares. Earlier the shares were in physical form but now they are in electronic form and it takes less than 1 minute to execute an order.
DEPOSITORY The depositories are important intermediaries in the securities market that makes the scrip-less trading. In India, the Depositories Act defines a depository as:
"A
company formed and registered under the Companies Act, 1956 and which has
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been granted a certificate of registration under sub-section (IA) of section 12 of the Securities and Exchange Board of India Act, 1992." Dematerialization of securities occurs when securities, issued in physical form, are destroyed and an equivalent number of securities are credited into the beneficiary owner's account. In a depository system, the investors stand to gain by way of lower costs and lower risks of theft or forgery, etc. They also benefit in terms of efficiency of the process. But the implementation of the system has to be secure and well governed. A depository established under the Depositories Act can provide any service connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository. A depository cannot directly open accounts and provide services to clients. Any person willing to avail of the services of the depository can do so by entering into an agreement with the depository through any of its Depository Participants.
Type of Depository 1. NSDL 2. CDSL
NSDL Although India had a vibrant capital market, which is more than a century old, the paper-based settlement of trades caused substantial problems like bad delivery and
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delayed transfer of title till recently. The enactment of Depositories Act in August 1996 paved the way for establishment of NSDL, the first depository in India. The depository promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standard that handles most of the trading and settlement in dematerialized form in Indian capital market. Using innovative and flexible technology systems, NSDL works to support the investors and brokers in the capital market of the country. In the depository system, securities are held in depository accounts, which is more or less similar to holding funds in bank accounts.
CDSL Central depository of stock limited is also a depository for keeping record of the clients. This is helpful in reducing the time spend and the money for transaction. It
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has eliminated the paper work completely and keeps the record of shares and other transactions in electronic form. The main reason of Indian capital market growth is the depository establishment. FII’s are also taking benefit from it. It has increased the safety as well as the soundness in the transactions. CDSL works with the help of depository participant like Indiabulls which is an intermediate between investors and the depository. Transfer of ownership of securities is done through simple account transfers. Consequently, the cost of transacting in a depository environment is considerably lower as compared to transacting in certificates.
MARKET INTERMEDIARIES
There are several institutions, which facilitate the smooth functioning of the
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securities market. They enable the issuers of securities to interact with the investors in the primary as well as the secondary arena. These intermediaries are very important for any company because all the money is not provided by the customers at the time of applying of IPO’s. So a company uses the benefits of these intermediaries to fulfill their daily needs and for the growth of the company. The various intermediaries are as follow: •
MERCHANT BANKERS
•
CREDIT RATING AGENCIES
•
STOCK BROKERS
•
CUSTODIANS
•
MUTUAL FUND
•
DEPOSITORY PARTICIPANTS
BSE STOCK MARKET (Apl 2005- Mar 2006) 19
12000 10000 8000
H IG H
6000
LO W
4000
C LO S E
2000 0 5 - A5 p- Mr 5 a- Jy 5u -n J 5u - lA 5 u- Sg 5 e- Op 5 c- Nt 5 o- Dv 6 e - cJ 6a -nF 6 e - bM a r
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as “BSE”, it was established as “The Native Share & Stock Brokers Association” in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange’s pivotal and preeminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide.
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The trend of sensex in the financial year 2005-2006 has increased in a great extent. It reached the point of 6606.41 high and 6134.86 at low in the month of April 2005. In March 2006 it reached the point high and low at 11307.04 and 10508.85 resp. this shows its volatility. Sensex closed at the end of period at the point 11279.96 with a rising trend. This increasing trend of the market also affected the mind set of the customers. Earlier they were thinking about the share market as an uncertainty but now it is considered as a calculated risk.
COMPANIES LISTED IN BSE SENSEX Company Code
Company Name
500410 500490
Associated Cement Companies Bajaj Auto Ltd. 21
500103 532454 500087 500124 500300 500425 500010 500180 500182 500440 500696 532174 500209 500875 500510 532500 532555 500312 500359 532712 500390 500325 500376 500112 532540 500570 500470 507685
Bharat Heavy Electricals Ltd. Bharti Airtels Cipla Ltd. Dr Reddy’s Laboratories Ltd. Grasim Industries Ltd. Gujarat Ambuja Cements Ltd. HDFC HDFC Bank Ltd. Hero Honda Motors Ltd. Hindalco Industries Ltd. Hindustan Lever Ltd. ICICI Bank Ltd. Infosys Technologies Ltd. ITC Ltd. Larsen & Toubro Ltd. Maruti Udyog Ltd. National Thermal Power Corporation Ltd. ONGC Ltd. Ranbaxy Laboratories Ltd. Reliance Communications Reliance Energy Ltd. Reliance Industries Ltd. Satyam Computer Services Ltd. State Bank of India Tata Consultancy Services Ltd. Tata Motors Ltd. Tata Steel Ltd. Wipro Ltd.
The companies listed in BSE sensex are 30 which show the trend of the market. On 12-06-2006 TATA POWERS LTD. Was removed from the list and a new one is added named RELIANCE COMMUNICATION VENTURES LTD.
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INTRODUCTION Sharekhan is the retail broking arm of S S Kantilal Ishwarlal securities pvt. Ltd. It is India’s leading retail financial Services provider Company. It is in the Indian securities business since 1927. Its institutional Research team is rated as one of the
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best in the industry and rated 1st by Asia Money .Its research team covers more than 100 stocks spread over 20 sectors.
The company has over 331 share shops across 117 cities excluding franchisees in India. While our size and strong balance sheet allow us to provide you with varied products and services at very attractive prices, our over 750 Client Relationship Managers are dedicated to serving your unique needs.
Sharekhan is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides our clients with real-time service & 24/7 access to all information and products.
Our Sharekhan Professional Network offers real-time prices, detailed data and news, intelligent analytics, and electronic trading capabilities, right at your fingertips. This powerful technology complemented by our knowledgeable and customer focused Relationship Managers. It creates a world of Smart Investor. Sharekhan offers a full range of financial services and products
ranging
from
Equities
to
Derivatives which
enhance our wealth. Relationship Managers are available to help with financial planning and investment needs. To provide the highest possible quality of service, Sharekhan provides full access to all our products and services through multichannels.
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In starting it was only a research house but now it has got increased its area and deals in every field of trading like shares, commodity, mutual fund, PMS, etc.The main aim of the company is to provide quality services at the least cost. Sharekhan security has established now a brand name which provides the clients useful and timely information about the future at their home. The vision and mission of the company proves all these facts clearly and very soon it will achieve its mission.
VISION The vision of any company plays a key role for the success in the long term. It is decided by the key persons at the beginning of the organization. The vision of Sharekhan is to be the best retail broking brand in the Indian Equity market.
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MISSION The vision is decided by the company for the long run but it is not possible for any organization to fulfill its vision which is decided in the beginning. For the very reason it divides its vision into small period Missions. So a mission is a short term target where a company wants to reach. The mission of Sharekhan is to educate and empower the individual investors to make better investment decisions through quality advice and superior service which leads the growth of the organization.
SSKI GROUP COMPANIES
•
SSKI Investor Services Ltd (Share khan)
•
S.S. Kantilal Ishwarlal Securities
•
SSKI Corporate Finance
•
Idream Productions
26
SSKI – CORPORARE STRUCTURE
HIGHLY RATED RESEARCH
Research team ranks very high in fund-manager surveys. At the time of establishment of S.S.Kantilal Ishwarlal Securities Pvt. Ltd. It was only a research house. After this it extended its area and came into the share trading. Many surveys tell the story of the growth of the company like:
Best Domestic Securities House
27
•
Euromoney Survey July 1995
•
Euromoney Survey July 1996
Top ranked Domestic Brokerage House •
Asiamoney Survey September 1994
•
Asiamoney Survey September 1995
•
Asiamoney Survey September 1996
•
Asiamoney Survey October 1998
•
Asiamoney Survey October 2004
NETWORK OF SHAREKHAN
331 branded share shops across 117 cities in India
From sharekhan.com to India’s largest chain of branded retail share Shops 28
The network of the Sharekhan Securities is very wide. It has emerged as a back bone for the whole country. The area of its network is 331 share shops in 117 cities of the country excluding franchisee. It has the largest chain of share shops with a brand name of Sharekhan which serves more than 100,000 clients.
MANAGEMENT TEAM
29
Excluding these key persons there are other persons like: Regional sales manager
Mr. Amar Pal Singh
Branch Manager
Mr. Manoj Sharma
Territory Manager
Mr. Manash Pratim
Various others Research Managers and Sales persons are working there permanently.
SERVICES OFFERED BY SHAREKHAN
30
Research Based Investment Training and Seminars
Investment and Trading Services EQUITIES DERIVATIVES COMMODITIE S PMS
Technology Based Investment Tools
Integrated Demat Facility
In the field of securities the brand name Sharekhan provides various services to the investors which help them to get more and more return with less amount of money. For this very purpose it provides research mails, online trading facility, online money transfer and makes training and seminars on frequent bases which makes the investors self dependent.
DIFFERENT AREAS OF TRADING
31
Equity Sharekhan provides the services in equity trading. For this it opens the Demat a/c with trading a/c, which provide the investors a base from there they can make the share trading. Sharekhan deals in NSE and BSE both which gives the investors more choices. To help new investors it also provides the research mails.
Derivatives Sharekhan deals in derivatives also in which an investor can play with future and option. This is a more advanced feature in trading but there is a need of full knowledge. Without the proper knowledge it may be harmful for the investor.
Mutual Fund Sharekhan deals in Mutual Funds, the funds of small investors are collected and then the total amount is invested by the company in some beneficial shares. Small investors can’t get benefit individually from their small investment but the company can provide them more return by making a collective amount of the various investors.
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Initial Public Offer Sharekhan also deals in Initial Public Offers. These are the first offering to the public of a company's shares on the stock market. Earlier it was very difficult task to apply for an IPO but now it is as easy as the purchase of a share. All the information relating to the IPO is provided by the company online to its customers.
Commodity Sharekhan deals in commodity also which is a booming sector now a day. It is right that the commodity market is not so popular but the investment is going quickly increasing. To invest in commodity it opens the a/c and also gives research mails.
Portfolio Management Sharekhan also provide the services of portfolio management service which is managed by the company itself and the investor has to do nothing. All the decisions are taken by the company to buy or sell the shares taking into consideration the market scenario. This facility is provided by the company to the big investors who can invest more than 5 lakhs.
TRADING PROCEDURE
33
To make the trading in the stock market we have to fulfill some formalities according to the SEBI. These formalities includes the account opening form, verification of the documents, PAN card compulsory, address proof, etc. After we can make the trade in he shares and commodities.
Account Opening Form Any investor who wishes to avail depository services must first open an account with a depository participant of NSDL or CDSL. The process of opening a demat account is very similar to a bank account. The investor can open an account with any depository participant. There are several DPs offering various depository-related services. Each DP is free to fix its own fee structure. Investors have the freedom to choose a DP based on criteria like convenience, comfort, service levels, safety, reputation and charges. After exercising this choice, the investor has to enter into an agreement with the DP. The form and contents of this agreement are specified by the business rules of NSDL and CDSL. When the account is opened an investor can buy or sell the shares. The record is kept by the depository. The depository participant charges its brokerage for providing the various services like research mails, portfolio management services, online facility, etc. the charges of brokerage is cut down automatically by the DP so that any fraud does not exist.
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If an investor wants to change his account, he can do it and can apply for the other one. For closing the account he has to give an application in the office and the charges of transferring the shares is deducted only, which are very less.
Document for Verification For the purpose of verification, all investors have to submit the following documents along with the prescribed account opening form:
PAN Card PAN card is mandatory after the date of 31st may, so any person who wants to open an account has to get first of all his PAN card. After getting this he can apply for the D-MAT account. It has reduced the fraud cases also.
Proof of Address The account opening form should be supported with proof of address also. Without this the application is not accepted. The documents for the verification may be any one of them such as: •
Verified copy of ration card
•
Passport
•
Voter ID card
•
Driving license
•
Telephone bill
•
Bank statement
•
Rent agreement
•
Electricity bill
. 35
Common Information The processes of opening an account with a depository (NSDL /CDSL), nature of such an account, and other various factors for opening a depository account are essential. Some details are common to all types of accounts. These are: •
Name of the holder
•
Father’s name
•
Date of birth (for individual accounts)
•
Occupation
•
Address & phone/fax number
•
E-mail address
•
Verified photo
•
Bank details like name of bank, saving account, account number, branch address, etc.
•
PAN number
•
Details of nomination (if required)
•
Verified signature
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Closure of Client’s A/C A DP can close a depository account on receipt of an application in the prescribed format. The application should be made by the account holder or by all the jointholders. An account can be closed only when there is no balance in the account. In case there is any balance in the account sought to be closed, the following steps are necessary. (a) Re-materialization of all securities standing to the credit of the account at the time of making the application for closure; or (b) Transferring the balance to the credit of another account opened by the same account holder(s) either with the same participant or with a different participant. Before closing the account the DP should ensure that all pending transactions have been settled. The request for closure should be processed only after ensuring that there is unbalance lying in the account. The DP may also initiate closure of a client's account if the client has defaulted in performing its obligations laid out in the client-participant agreement. The participant should give sufficient notice to the client before initiating closure of his account. The notice should clearly state the reasons for closure of account. The process of closing account in such a case is the same that of client-initiated closure.
Shifting of the A/C
37
A member may transfer its clearing account from one DP to another DP. For this, simultaneously applications have to be made for closure of account to the earlier DP and for opening of new clearing member account to the new DP. On receipt of the application, the new DP forwards the application to the depository for approval and allotment of a new A/C. Once the new A/C is allotted, the new DP opens a new clearing account and intimates the depository about the new client-ID. On receipt of intimation from the new participant, the depository advises the old DP to close the account. The old DP then closes the account and intimates the clearing member. All pay-out of securities, subsequent to closure of old clearing account, take place in the new account.
Freezing of Account 38
Account freezing means suspending any further transaction from a depository account till the account is de-frozen. A depository account maintained with a DP may be frozen in certain cases. 1. If a written instruction is received from the client by the DP, requesting freezing of account; or 2. If written instructions are received from the depository pursuant to an order of the Central or State Government, SEBI, or any order by the court, tribunal, or any statutory authority. An account may be frozen only for debits (preventing transfer of securities out of the account). By freezing an account for debits only, no securities can be debited from the account; however, the client can receive securities in his account. An account can also be freezed for debits as well as credits (preventing any movement of balances out of the account). No transaction can take place in such an account until it is reactivated.
A frozen account may be de-frozen or re-activated, by taking the reverse steps: 1. On the valid written request of the account holder where he had requested freezing, 2. On directions of depository made in pursuance of the order of the appropriate authority. The DP should immediately inform the client about change in status of the account from 'active' to 'suspended' and vice versa.
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Changes in Client Details A client may change any of the following particulars in the depository system. All he has to do is to submit the changes in writing to the DP. 1. Father's/Husband's Name (change from father's name to husband's name may be necessary on account of marriage). 2. Standing instruction facility (an investor can activate/deactivate it) 3. Address, telephone number (clients may make this change at any time depending on their need). Clients have to provide proof of new address while submitting application for change of address. 4. Occupation details 1. 5: Nominee details (the DP has to obtain the required form from the client duly filled and effect the changes) 5. Bank details (clients may revise the bank details given by him before record date to ensure that the dividend/interest warrants bear the correct bank details) 6. PAN Number details 7. In case of NRIs, the Reserve Bank of India Reference number and approval date. However, the names of the account holders cannot be changed after opening of demat account.
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Trading Process After opening the demat a/c an investor can trade in the securities and commodities. He has to 1st of all transfer money in his a/c for purchase of shares and then he can buy the shares at the market rate. He has no need to go anywhere because all the information is provided to him on the interne which can be easily accessible from anywhere in the country. He has been provided an online terminal which shows the per second up and downs of the market. In addition he has been given the research mails which guide him to invest in he particular shares for more and more profit. On these bases he chooses the best suitable securities and uses in equity or derivative. Share trading can be in equity or in derivative form. In equity an investor deals in the current prize or he can make a bid. In derivatives he can choose the options of share prize of the future. He can also have the option of nullifying the contract in future if he thinks that it is not beneficial for him. The various types of derivatives are as:
Derivative Definition under SEBI Act: The term “Derivatives” indicates that it has no independent value, i.e. its value is entirely “derived” from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, live stock or anything else. In other words, derivative means a forward, future, option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities.
Types of Derivatives
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Derivatives are very important for the investor. An investor can get benefits by investing through derivatives. It gives an investor more options to invest like future contracts, etc. various type of derivatives are as:
Forwards A forward contract is customized contract between two entities, where settlement takes place on a specific date in the future at today’s pre-agreed price.
Futures A future contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Future contracts are special types of forward contract in the sense that the former are standardized exchange-traded contracts.
Options Options are of two types- calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of an underlying asset, at a given price on or before a given future date. Puts gives the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.
Swaps Swaps are private agreements between two parties to exchange cash flows in the future according to a pre arranged formula. They can be regarded as portfolios of forward contracts.
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INTRODUCTION Research
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In common words research is known as a search for knowledge. Research is also known as a movement, a movement from the known to the unknown. It is actually a voyage of discovery. To make any project or study work there is a need of research. Without this any work can’t be completed. According to Advanced Learner’s Dictionary,” It is a careful investigation or enquiry especially through search for new facts in any branch of knowledge.” According to Redman and Mory,” It is a systematized effort to gain new knowledge.”
Research Process The process of a research work goes through different stages. By going through these stages one by one a work becomes very easy and attractive. These stages are as followed
Formulation of problem uuuuuk
Interpretation of data
Literature survey
Develop hypotheses
Prepare research design
Analysis of data
Collection of data
Determine sample design
RESEARCH DESIGN
44
It is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact, research design is the conceptual structure within which research is conducted.
Types of Research Design Exploratory The main aim of this research is to formulate the problem in the more precise manner. The major emphasis is on the collection of related data and insights more and more. In it the researcher review and build upon the work, which is already done by others.
Descriptive and Diagnostic These are the studies, which are related with describing the characteristics of a particular individual, or of a group. In Diagnostic research studies determine the frequency with which something occurs. In these research works it must be clearly defined that what to measure and how to measure with predefined ‘population’.
Experimental In this research work the hypothesis of casual relationship between variables are tested. It makes the study more reliable and unbiased. It is sure that it will require more hard and mentally work but it also provides good and extraordinary results many a times. In my project work I have used the Analytical research. In the project I want to make the critical evaluation of the Sharekhan Security. For these I have used the primary as well as secondary data. By using the 45
data and making comparison with other companies I would find out the market share as well as the growth and services of Sharekhan Security. I have also analyzed critically the services offered by the various companies and what the customer demands.
UNIVERSE AND SURVEY POPULATION Universe
46
All items in any field of inquiry constitute a universe or population. A complete enumeration of all items in the total population is known as census inquiry. It can be presumed that in search an inquiry when all items are covered, no element of chance is left and highest accuracy is obtained. But when the field of inquiry is large, this method becomes difficult to adopt because of the resources involved. In this position this method is practically beyond the reach of ordinary researcher. In this case we use the survey population method in which we use the randomly selected items who represents the whole population. In my research study I have not used the total population because there are hundreds of depository participants and to analyze them is not so easy. So I have used the survey method.
Sample Design Sample Design is an effective technique for obtaining a sample from a given population. It refers the procedure a researcher uses for analyzing the whole big population. Sample design is determined before data are collected. For the study I have used the sample survey method in which I have used the 6 major competitors in securities. To analyze the satisfaction level of the customers I have also used this technique in which my sample size is 50 customers of different depository participants. These are chosen randomly from various places in Gurgaon.
DATA COLLECTION
47
To make any research work collection of reliable and valid data is very important. Without data any research comparison is not possible. There are 2 types of data, which can be used for the study. These are 1 Primary 2 Secondary A researcher who is conducting a survey or comparison has to decide in advance that what short of data he is using for his study. These data can be collected by various sources but the need is that there should be authenticity of the data otherwise it will provide a meaning less and funny result.
Primary Data These are the data, which are collected afresh and for the 1 st time. This type of data is not available earlier so have to collect by the researcher himself/herself. These are original in character and collected by various sources like: 1. Questionnaire 2. Interview 3. Schedule 4. Expert opinion
Secondary Data
48
These are the data, which have already been collected by someone else, and they have been used for the different study. This type of data can be taken from various sources according to the researcher’s choice and motive. The main issue is that validity and authenticity of the data is in a big question so the data should be used carefully for the better result. The various sources of secondary data collection are as follows: 1. Books, magazine and newspapers 2. Various publications 3. Researcher’s report 4. Historical documents 5. Various published journals 6. Diaries and letters 7. Unpublished biographies, etc
49
COMPANY’S BACKGROUND 5 PAISA.COM
50
5 Paisa.Com is also known as India Infoline and was founded in 1995 and positioned as a research firm in 2000. E-broking was started under the brand name of 5 Paisa.com. Apart from offering online trading in stock market the company offers mutual funds online. It also acts as a distributor of various financial services i.e. GOI securities, Company Fixed Deposits, Insurance. Limited ground network, present in 20 Cities. It deals in shares, commodities, and derivatives also of NSE and BSE both. It has established as a major player in the market in a very short period. The company targets only the potencial customers and provides them more and more facility at the least cost. The motto of the company is to become a country wide organization with target customers. It has increased its client base from last 1 year in a rapid growth rate. Company is now in the major competitors in the industry and no research work is completed without it. To make the comparison with other companies we will consider all the services it provides to the customers and in response what it charges from them.
INDIABULLS
Indiabulls is a retail financial service provider company present in 70 locations Covering 62 cities and having more than 150 branches in India.. It offers a full 51
range of financial services and Products ranging from Equities to Insurance. More than 450 Relationship Managers who act as personal financial advisors to the clients. Indiabulls is a brand name in the DP. It gives online and offline services to its customers. The cliental area of the company is very wide and it is listed with the CDSL depository. The clients of Indiabulls are very selective and really work in the share market whole heartedly. Company provides them more and more facilities but its cost is some high. This company has established its standards in the market and having a good brand image. The people in the share market are very familiar with it. Company provides research mails and online terminals also to its clients. The a/c opened by it is pooled a/c and it is enlisted in CDSL. It s a major market player in the
industry
and
it
was
very
necessary
to
focus
on
it.
ICICI DIRECT.COM
ICICI Web Trade Limited (IWTL) maintains ICICI direct.com. IWTL is an Affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank Limited. The Direct.Com started in the year of 1998. It has increased very fast because it 52
provides saving account with the D-mat account. Actually it provides a 3 in 1 account which are D-mat, trading and saving a/c. it is also a major competitor in share market. It provides online money transfer and the online trading. The company is in the market by its brand name. the name of ICICI is very famous in the Indian market and the company spends a much more portion of their profit in the advertising. The reason of being in the major players in the securities is that its marketing skills. It attracts the customers by its ad and then it provides him a full kit of 3 in 1 a/c which is more beneficial or easy for an investor to make trading.
HDFC SECURITIES The HDFC Bank started its functioning as a depository participant in the year of 1993 with the name of HDFC Securities. It has gained the benefit of association of bank which provides it many services like online money transfer and free saving a/c, etc.It deals in shares, commodity, and mutual fund, insurance and loans all major fields. The investor can get with these facilities online trading and dial and
53
trade facility. It is a major player in the security market as well as in the banking sector also. It provides the investors saving a/c also which helps him to transfer the money online in a/c. This is the main strength of the company. It has increased very fast in the industry and now and then it is growing and growing. The target of the company is to capture all its clients of its bank. The main focus of the company is to provide a full package of benefits to the customers so that they don’t have to go anywhere else.
KARVY SECURITIES
Karvy stock broking depository participant is a famous and big player in the security market. It has incorporated in the year of 1975. Since then it is growing very fast and became the 1st depository participant in Andhra Pradesh in January, 1998. The total branches in India of Karvy are 558 in more than 390 cities. It also
54
provides services of mutual fund and loans with commodity and share trading. Karvy also helps in making the PAN card which is the main necessity of having a demat a/c. Karvy has the client base services which helps the company to retain its clients. The company gives more and more benefits to the customers for making its area wide and overall accepted. In the south side it has a very good name and fame. Now it is increasing its area in the whole country but till now it is a leader of security market in south.
COMPARISON OF DEPOSITORY PARTICIPANTS
The comparison of different companies is not so easy but I have covered it up to some extent by taking into consideration various crucial factors. I have compared the depository participants on the 2 basis which are company based and client based
55
of various companies. It includes that what a company provides to the clients at what charges and what the clients demand.
CHARGES OF THE COMPANIES
Brokerage Intraday Delivery
Trading a/c Charges 1st year Afterwards
D-mat a/c charges Equity Commodity
Sharekhan
0.10
0.50
0
300
750
200
Indiabulls
0.10
0.70
0
0
1000
750
Karvy
0.05
0.50
100
0
0
0
HDFC Sec.
0.05
0.15
799
0
500
500
ICICI Direct.com 5 Paisa. com
0.10
0.75
0
500
750
500
0.05
0.50
0
240
555
555
BROKERAGE CHARGES
56
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0
B rok erage Intraday
Sh ar e
kh a I nd n iab ull s Ka rvy HD FC IC IC Se ID c. ire c 5 P t.co ais m a. co m
B rok erage D elivery
The main factor which influences the decision of investor’s is brokerage. ICICI direct. Com is charging the highest brokerage for Intraday and Delivery. lowest brokerage is charged by the HDFC Securities.
TRADING A/C CHARGES
57
The
1000 800 600 400 200 0
Afterwards
Sh ar ek ha n In dia bu lls Ka rv HD y FC IC IC I D Se c . ire ct. 5 Pa co m isa .c om
1st y ear
The charges for the opening of the trading a/c are also an important factor. Indiabulls charges no money for taking a demat a/c. it is free of cost for the whole life.
The
highest charges are made by the HDFC Securities for operating a demat a/c.
D-MAT A/C CHARGES
58
1200 1000 800 600 400 200
5
P
ai sa .
co m
m ire ct .c o
c.
Equity
IC IC ID
H D
FC
S e
ar vy K
ul ls In di ab
S
ha re kh
an
0
Commodity
There are the charges for opening the demat a/c also. Although this is not very high, it plays a very important role. Yet at this time government has not allowed Karvy to open a demat a/c for some security reason. The highest charges for this are charged by Indiabulls and the lowest are charged by Sharekhan in Commodity and by HDFC in equities.
CUSTOMER’S PRECEPTION
59
To make any comparison it is not right to see only one side of the coin. So to make the comparison between the various companies I have tried to see the perception and demands of the customers also. Now a day the whole power is in the hand of customers to accept or reject a proposal so it is very necessary to analyze them indifferently. The various bases have been chosen for the differentiation. These are as under:
AWARENESS
60
Awareness 60 50
50
47
44
43
37
40 30
21 20
15
10 0 share market
sensex/nifty
demat
equity/derivative
broking house
depository
SEBI
The awareness among the customers is high but not perfect. The survey made on the 50 customers and everybody was having the basic knowledge about the share market. There was a lack of knowledge among the customers in the area of depository like NSDL and CDSL up to some extent.
FREQUENCY OF TRADE
61
Frequency of Trade
daily
IP O, 3 m onthly , 12
week ly daily, 27
week ly , 8
m onthly IP O
The frequency of the trading in share market is very important for making any comparison. If we don’t care of it, it will provide us false results.
There are mostly people who are interested in the intraday trading. The 2nd number is of monthly basis or long term investors. There are very few who apply for IPO’s only or want to make trading in weeks
OPINION ABOUT CURRENT SCENARIO
62
O p in io n a b o u t C u rren t S c e n a rio 50 40
ris k y
30
c om llex volatile
20
ex pens ive
10
favourable
0
The share market is a market about which nothing can be guessed so it is very important for the companies to see that what is the thinking of the customers about the market scenario.
In the survey of 50 customers it was discovered that people think that the market is more volatile than other periods of last 1 or 2 years. They are feeling that it can give more benefits to them if the investment is done consciously. Very few people say that the market is risky and they do not want to invest because 35 of afraid of loss. 30
31 25
25 20 15 10
BASIS OF INVESTMENT
4
5 0
11
9
Research Friend's Mail Advice
63 Try & Error
Market Personal Opinion Analyse
Basis of investment is the criteria on which clients invest in the particular company. There are various options with the clients for this and it depends on him that what criteria he/she uses. In the survey I got that mostly people invest on the basis of research mails. Of course they utilize their own sense also, but the criterion of try & error is not much favorable among the clients.
PREFERENCE OF INVESTMENT
64
Preference of Investment
7% 10%
equity
3%
derivative PMS 58%
22%
mutual fund commodity
Preference of investment means that in which field investors want to invest their money. It is very important for a company to study the behaviour and needs of an investor. In the survey I got that mostly people want to invest in equities by one or another reason. The investment in PMS is very low because in it they have to invest a big money and their money is invested by the company itself.
VOLUME OF TRADE/ MONTH
65
V o lu m e o f t ra d e /m o n th
12% 16%
b e lo w 1 la k h 42%
1 la k h -5 la k h 5 la k h -1 0 la k h m o re t h a n 1 0 la k h
30%
It means the total of the trade made by the individual on an average per month. This tells the level of investor that how much he/she can invest and the interest in the market. The number of investors is high for those who invest between the range of zero to 1 lakh. The number of investors is very few who have invested in the market more than 10 lakh per month.
66
FINDINGS
67
Based on the real data collected by primary and secondary sources and the information, we can get the following findings: 1. The broking charges are charged maximum by the ICICI Direct. Com and the minimum are charged by HDFC Securities. 2. Annual charges for the trading a/c are highest in HDFC Sec. and Indiabulls charges no money for it. 3. D-Mat a/c charges are highest in Indiabulls and the lowest in the Sharekhan Securities. 4. Awareness about the basic share market is very high among the customers and for the Depositories it is very less. 5. Frequency of trade made by the customers is very high on intraday basis and it is very low for IPO’s applications only. 6. The opinion about the current scenario of the market is volatile more than previous years and very few people think that it is risky to invest at this time. 7. Mostly investment is made on the basis of research mails provided by the relationship managers and there are very few who want to play try and error. 8. Customers 1st preference of investment is in the equity and the least preference is PMS.
68
9. Volume of investors who trade less than 1 lakh per month is very high and it is very low for the investment more than 10 lakh on an average per month.
RECOMMENDATIONS
69
1. The brokerage charges are the main income for any depository participant and it is almost same for the companies except one or two. These one or two companies are also not providing other same type of good and beneficiary services to customers so Sharekhan Securities should not change its brokerage charges to capture the market. The reason for this is that one side it will reduce the income and the other side it will not increase the customers in a large extent. 2. Annual charges play a key role for the customers and they consider it very seriously so the company should reduce its charges from 300 rupees. This type of charges not plays a significant role in the overall income of the company. 3. D-Mat a/c opening charges are also a key point for the investors so it should be reduced up to zero so that new customers can be attracted, 4. The trading made by the customers is mostly on the intraday basis so it will generate the more and more brokerage. Along the other facility company should provide more exposure to lure the trading more and more. 5. The current scenario is a very good time to catch the customers because they think more volatility but less risk in the market. So it is very easy to get new clients as well as more trading in the current time. So it is very necessary for an organization not to think that current scenario is not good for investors and traders. It will bring a good and surely result. 6. Investment is based mostly on the research mails provided by R.M.’s so provide timely information more and more to get new and increased
70
investment. The relationship managers can play a crucial role in it so appoint them more and provide them more facilities but on commission basis. It will increase their potential. 7. Provide information about commodity and derivatives also, it will increase their investment and tap the customers between the range of 1-10 lakh investment per month. This is the range which can be motivated to invest in the bulk. But this is possible only after providing the timely information. People doesn’t care for money spending after the profit, they consider only the information which leads to profit so provide them exact possible information.
71
BIBLIOGRAPHY Books:
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1. Kothari, C.R., “Research Methodology”, New Age International Publishers, 2nd Edition. 2. Zikmund William G. (2004), “Business Research Methods,” Thomson Asia Pvt. Ltd., Singapore.
Newspapers & Magazines: 1. Economics Times 2. Dalal Street
Websites: 1. www.sharekhan.com 2. www.nsdl.com 3. www.bseindia.com 4. www.nseindia.com 5. www.icicidirect.com 6. www.karvy.com 7. www.hdfcsec.com 8. www.indiabulls.com 9. www.5paise.com 10.
www.google.com
QUESTIONNAIRE 1 (company) Company Name:
Location:
73
Year of Incorporation: Trading provided by the company: NSE
BSE
Total branches in India ------Total number of locations ------Dealing in: Share broking
Insurance
Mutual Fund
Loans
Commodities
D-mat a/c opening charges: Equity -------
Derivative -------
Trading a/c charges: 1st year -------
Afterwards -------
Brokerage charges: Equity Intraday -----
Delivery -----
Commodity Intraday -----
Delivery -----
Since when your branch is operating ------Volume of clients of your branch ------Volume of investment made by investors/day ------Services provided by the company: Online broking
Online fund transfer
74
Dial & trade
Online terminal
Research mail
Online IPO
Exposure money provided: 4 times
6 times
8 and more times
Saving a/c provided by the company: Yes
No
Suggestions (if any) --------------------------------------------------------
QUESTIONNAIRE 2 (customers) Are you aware about the terms:
75
Share market
Sensex/nifty
Dematerialization
Equity/derivative
Broking house
Depository participant
SEBI How frequently you trade in share market: Daily
Weekly
Monthly
Only IPO
Name of broking house ------Brokerage charges: Equity Intraday -------
delivery -------
Commodity Intraday -------
delivery -------
D-mat a/c charges ------Trading a/c charges: 1st year -------
Afterwards -------
Investment made in mostly: Intraday Delivery Opinion about current scenario of the market: Risky Highly volatile
Expensive
Complex
Suitable for investment
Basis of investment: Research Mail
Market Opinion 76
Friend’s advice
Personal Analyze
Try & Error
Preference of investment field: Equity
Derivative
Mutual Fund
Commodity
PMS
Volume of trade on an average/month ------What is your other preference for investment ------Satisfied with company: Yes
No
What services you want to avail: (Please give rank) 1. ----------2. ----------3. ----------Name:
Age:
Income:
Occupation:
77
78
