Summer Internship Project Report On (A STUDY OF INVESTOR AWARENESS ABOUT ETRADIN!"
Executed At (S#ARE$#AN %TD&"
By (AB#IS#E$ $U'AR A!RA#ARI" (P!)*+++"
Under Guidance of PROF& DENES# SIN!# A,,'AN INSTITUTE OF 'ANA!E'ENT -n. 'R& SA,#IN $U'AR T&'& S#ARE$#AN %TD& (BARA$#A'B#A BRAN,#"
Presented in Partial Fulfillment of the Requirements
For the Diploma of Post !r-.u-te Dip/om- in '-n-0ement
On (!"EAR#
$
At
A,,'AN Institute o5 '-n-0ement S#ARE$#AN %T %TD& D& %&E!' )*A+DE,A-A+ )*A+DE,A-A+ E./E+01O+ GROU+D F-OOR +EAR BA+2 OF 1+D1A +E, DE-*1
,ERTIFI,ATE
3ert 3ertif ifie ied d that that the the summ summer er inte intern rnsh ship ip pro4 pro4ec ectt repo report rt on 1A ST STUD UDY Y OF INVE INVEST STO OR the 5ona 5onafi fide de 6or7 6or7 of 1AB#IS#E$ AWARE AWARENESS NESS ABOUT ETRADIN!2 is the 1AB#IS#E$ $U'AR A!RA#ARI3 RO%% NO4 P!)*+++23 $st "ear PGD student of A,,'AN Institute o5 '-n-0ement3 )6A783 $no9/e.0e P-r: III3 !re-ter Noi.- 8+;+<3
carried carried out under my
super8ision durin9 :;<:=<>:$= to :;<:?<>:$=<
Place@
0i9nature of the 0uper8isor
Date
R< 0A3*1+ 2UAR
(/ERR1/OR" (/ERR1/O R" A+AGER# A+AGER #
>
At
A,,'AN Institute o5 '-n-0ement S#ARE$#AN %T %TD& D& %&E!' )*A+DE,A-A+ )*A+DE,A-A+ E./E+01O+ GROU+D F-OOR +EAR BA+2 OF 1+D1A +E, DE-*1
,ERTIFI,ATE
3ert 3ertif ifie ied d that that the the summ summer er inte intern rnsh ship ip pro4 pro4ec ectt repo report rt on 1A ST STUD UDY Y OF INVE INVEST STO OR the 5ona 5onafi fide de 6or7 6or7 of 1AB#IS#E$ AWARE AWARENESS NESS ABOUT ETRADIN!2 is the 1AB#IS#E$ $U'AR A!RA#ARI3 RO%% NO4 P!)*+++23 $st "ear PGD student of A,,'AN Institute o5 '-n-0ement3 )6A783 $no9/e.0e P-r: III3 !re-ter Noi.- 8+;+<3
carried carried out under my
super8ision durin9 :;<:=<>:$= to :;<:?<>:$=<
Place@
0i9nature of the 0uper8isor
Date
R< 0A3*1+ 2UAR
(/ERR1/OR" (/ERR1/O R" A+AGER# A+AGER #
>
A,$NOW%ED!E'ENTS 1t 9i8es me immense pleasure to express my inde5tedness and deep senses of 9ratitude to my esteemed super8isors Pro5& DENES# SIN!#3 faculty at A,,'AN Institute o5 '-n-0ement and 'R&SA,#IN Bac7 offi office ce Sh-re:h-n 'R&SA,#IN $U'AR3 T&'&3 T&'&3 Bac7 Sh-re:h-n %t.& for
their their
inno8at inno8ati8e i8e
9uidance and encoura9in9 attitude throu9hout the present in8esti9ation< 1t is only 5ecause of their consistent in8ol8ement easy accessi5ility painsta7in9 efforts and affectionate attitude that 1 ha8e 5een a5le to plan execute and finally present this 6or7< 1 6ish to record my sincere than7s to all mem5ers of the department of statistics and operations research for pro8idin9 incessant help and necessary facilities durin9 the tenure of my 6or7< 1 also extend my than7s to staff for their 8alua5le help as and 6hen required< On this occasion 1 sincerely remem5er my all friends for their support and in8alua5le help in many many 6ays 6ays at the the 8ari 8ariou ouss sta9e sta9ess of this this 6or7 6or7<< 1 into intone ne my than than7s 7s to all all my coll collea ea9u 9ues es particularly E+2A AA AA PROF< 0OURAB* B10*+O1 01R C RE+U AA AA for their co&operation and assistance durin9 the tenure of my research 6or7< /he eternal inspiration and unendin9 5lessin9s of my parents rs< and r< 0< -< AGRA*AR1 and my intense desire to fulfill their lon9 cherished dreams ha8e 5een the inspirin9 factors that 6or7ed at the 5ase of lon9 8enture< 1 am also than7ful to other mem5ers of family and relati8es for their encoura9ement and sincere 6ishes that al6ays 7ept me moti8ated and in a positi8e frame of mind< Final Finally ly the the acad academ emic ic en8i en8iro ronm nment ent and supp suppor ortt of my inst instit itut utee A33A 33A+ + 1nst 1nstit itut utee of ana9ement is 9reat&fully ac7no6led9ed< 0i9n of 0tudent AB*10*E2 2UAR AGRA*AR1
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%IST OF NOTATIONS AND SY'BO%S USED O/3 Other /radin9 3ontracts /e4i&mandi 3all options and Put options )ota phata7 0traddles Bha8&5ha8 0ta7e B0E Bom5ay 0toc7 Exchan9e +0E +ational 0toc7 Exchan9e 0EB1 0ecurities and Exchan9e Board of 1ndia PR10 Parallel Ris7 ana9ement 0ystem +033- /he +ational 0ecurities 3learin9 3orporation -td< F C O 0e9ment in +0E Futures and Options 0e9ment in +0E GDP Gross Domestic Products E3+ Electronic 3ontract +otes F11 Forei9n 1nstitutional 1n8estors -1BOR -ondon 1nter&Ban7 Offer Rate
;
E=E,UTIVE SU''ARY
3onceptually the mechanism of stoc7 mar7et is 8ery simple< People 6ho are exposed to the same ris7 come to9ether and a9ree that if anyone of the person suffers a loss the other 6ill share the loss and ma7e 9ood to the person 6ho lost< ,e also here o5ser8e the A 0tudy of 1n8estor A6areness a5out E&/radin9 and its related procedures< /he 1nitial part of the pro4ect focuses on the sales of types of the products of the company and also focuses on the acquisition of the customer< /he 4o5 profile is to create customer ma7in9 9ood relationship 6ith them to ha8e references and moti8atin9 to trade for the company 5enefit and their profit< 1t also enli9htens the strate9ies to acquire the customer 5ase< Further the pro4ect tells us a5out the profile of the company (0*ARE2*A+#< 1t pro8ides 7no6led9e a5out the companys history mission 8ision and customer 5ase and a5out the company in detail and mana9ement of the company< Also it 9i8es special emphasis on the sellin9 of products and mana9ement of the company< /his is de8oted to study the comparati8e analysis of the competitors and the 0,O/ analysis 6hich tells a5out the 0hare7han ed9e o8er its competitors< /his pro4ect leads us to6ards the 4o5 descriptions and difficulties faced 5y me<
/he pro4ect thro6s li9ht upon my findin9 and
analysis a5out the company and the su99estions for the company for 5etter performance< /his pro4ect 6ill help the people in 9ettin9 lot of their ans6ers related to in8estment options and the 6ays to analysis the mar7et< /he data in the pro4ect can also help the company in ma7in9 the strate9y for potential in8estors<
Table of Contents
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Student declaration……………………………………………………………………………i
Certificate from Guide……………………………………………………………………… ii
Acknowledgement……………………………………………………………………………
Executive Summary……………………………………………………………………………
3*AP/ER& $@ 1+/RODU3/1O+
3*AP/ER >@ -1/ERA/URE RE1E,
><$ -iterature Re8ie6
3*AP/ER %@ RE0EAR3* E/*ODO-OG" %<$ Purpose of the study<<<<< %<> Research O54ecti8es of the study<< %<% Research ethodolo9y of the study< %< %<$ Research Desi9n <<<<<< %<%<> Data 3ollection /echniques %<%<%<$Population<<
'
%<%<%<> 0ample siHe %<%<%<% 0amplin9 method<<< %<%<; ethod of data collection<< %<%<;<$ 1nstrument for data collection %<%<;<> Draftin9 of a questionnaire %<%<= -imitations
3*AP/ER ;@ A+A-"010C 1+/ERPRE/A/1O+ 3*AP/ER& =@ F1+D1+G0 3*AP/ER& '@ RE3OE+DA/1O+0 A+D 3O+3-U01O+ B1B-1OGRAP*" A++E.URE0
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INTRODU,TION4 ABOUT SS$I (Sh-re:h-n" !ROUP4
0021 9roup also comprises Institution-/ >ro:in0 -n. ,orpor-te Fin-nce& ,hile the 1nstitutional 5ro7in9 di8ision caters to the lar9est domestic and forei9n institutional in8estors the corporate finance di8ision focuses on niche areas such as infrastructure telecom and media< 0021 holds a siHea5le portion of the mar7et in each of these se9ments<
As the forerunner of in8estment research in the 1ndian mar7et 6e pro8ide the 5est research co8era9e amon9st 5ro7in9 houses in 1ndia< Our research team is rated as one of the 5est in the country< Vote. 5our times -s the Top Domestic Bro:er-0e #ouse >? Asi- mone? Sur@e?3 0021 is consistently ran7ed amon9st the top domestic 5ro7era9e houses in 1ndia<
/o cut a lon9 story short 0hare7han is an equities focused or9aniHation tracin9 its linea9e to 0021 (0<0<2A+/1-A-C10*,AR-A- 1+E0/E+/0 C0E3UR1/1E0 P/<-/D<# a 8eteran equities solutions company 6ith o8er decades of experience in the 1ndian stoc7 mar7ets<
1f you experience our lan9ua9e presentation style content or for that matter the online tradin9 facility youIll find a common threadJ one that helps you ma7e informed decisions and simplifies in8estin9 in stoc7s< /he common thread of empo6erment is 6hat 0hare7hanIs all a5outK
0hare 7han is also a5out focus< 0hare7han does not claim expertise in too many thin9s< 0hare7hanIs expertise lies in stoc7s and thatIs 6hat he tal7s a5out 6ith authority< 0o 6hen he says that in8estin9 in stoc7s should not 5e confused 6ith tradin9 in stoc7s or a portfolio&5ased
strate9y is 5etter than 5ettin9 on a sin9le horse it is somethin9 that is spo7en 6ith years of focused learnin9 and experience in the stoc7 mar7ets< And these 5eliefs are reflected in e8erythin9 0hare7han does for youK /o sum up 0hare7han 5rin9s to you a user& friendly online tradin9 facility coupled 6ith a 6ealth of content that 6ill help you stal7 the ri9ht shares<
/hose of you 6ho feel comforta5le dealin9 6ith a human 5ein9 and 6ould rather 8isit a 5ric7&and&mortar outlet than tal7 to a P3 youId 5e 9lad to 7no6 that 0hare7han offers you the facility to 8isit (or tal7 to# any of our share shops across the country< 1n fact 0hare7han runs 1ndiaIs lar9est chain of share shops 6ith around >=: outlets in $%? cities 6ith $=:::: customersK
0ome of the outlets are BRAN,#
'ANA!ER
UBA1(-O,ER PARE-# BA+GA-ORE&)A"A+AGAR BA+GA-ORE&GA+D*1 +AGAR 3A-13U/ 3*E++A1&3*E/PE/ 3*E++A1 3O1BA/ORE ERODE GOA&APU0A *"DERABAD )OD*PUR 2O-2A/A 2O3*1 +A0AR1 +E, DE-*1
r< 0A+DEEP )A1+ r< 3*A++ARA) 2<)< r< BA0APPA D<< r< GOPA2UAR r< RA)1 PURO*1/ r< <2R10*+AUR/*" r< <O*A+2R10*+A+ r< /<<+
L
DESI!NATION
NA'E
,EO
'R& TARUN S#A#
,FO
'R& S#AN$AR VA%IYA
,TO
'R& $ETAN PARIA# 'R& AIDEEP ARORA
E=E,UTIVE DIRE,TOR ,USTO'ER SERVI,E REPRESENTATIVE (,SR"
'RS& !EETA RA'ES#
SA%ES AND 'AR$ETIN!
'R& AAI BAT#IA
YOUR FRIEND%Y NEI!#BOUR#OOD STO,$ BRO$ER4
$:
0hare7han 1ndias leadin9 stoc75ro7er is the retail arm of 0021 an or9aniHation 6ith o8er ei9hty ei9ht years of stoc7 mar7et experience 6ith more than $: share shops in o8er L: cities and a presence on internet throu9h 666
0hare 7han offers your trade execution facilities on the B0E and the +0E for cash as 6ell as deri8ati8es depository ser8ices and most importantly in8estment ad8ice tempered 5y years of research and 5ro7in9 experience< /o ensure that your tradin9 experience 6ith share 7han is fast secure and hassle free 6e offer a suite of products and ser8ices pro8idin9 you 6ith mu/tich-nne/ -ccess to the stoc: m-r:ets&
BRO$IN!PERSONA%ICED4 1f you prefer the assurance and relia5ility of tradin9 throu9h a 5ro7er you can use our net6or7 of ;+ >r-nches -n. >usiness p-rtner out/ets in o@er <+ cities to tr-.e in euities -s 9e// -s .eri@-ti@es& ,e 6ill help you 6ith the in8estment process 9i8e you ad8ice 5ased on extensi8e
research and pro8ide you 6ith rele8ant and updated information to help you ma7e informed in8estment decisions<
TRADE ANYW#ERE4 FreedomM666
*o6e8er if you prefer the con8enience of tradin9 from 6here8er you are you can 9et yourself a 3lassic tradin9 account and en4oy en4o y the freedom that comes 6ith it< "ou "ou can no6 place orders e8en after the tradin9 hours and the orders are queued up to 5e executed as soon as the mar7et opens< 0har 0hare7 e7ha han
MISSION:
/o educate and empo6er the indi8idual in8estor to ma7e 5etter in8estment decisions throu9h quality ad8ice and superior ser8ice<
VISION:
/o 5e the 5est retail 5ro7erin9 Brand in the retail 5usiness of stoc7 mar7et<
STRATEGY: /he main strate9ies used in our trainin9 6ere as follo6< DATA ,A%%IN!
1n data callin9 6e 6ere pro8ided data of mo5ile num5ers and our 4o5 6as to 9enerate appointments< After that 6e 6ere required to con8ert that appointment into closure< Apart from 9i8en data 6e also 5rou9ht latest 5usiness directory< ,e called to different 5usiness people and tried to 9enerate appointments<
,A%%ED ,A%%IN!
3alled callin9 means to 9o at different corporate houses and to meet different $>
People and to 9et 9 et their 8isitin9 card 5y it 6e 9et lead and our immediate tas7 ,as to call them C to fix appointment
HIERARCHY IN SHAREKHAN: S-/es Si.e
De-/in0 Si.e
/rainees
)unior Dealer
0uper /rainees
Dealer
0ales Executi8es
Relationship mana9er
0enior sales executi8es
0enior Relationship mana9er
Equity ad8isor
Busi Busines nesss
de8e de8elo lopm pment ent
executi8e
Assistant sales mana9er
Assistant Branch ana9er
Deputy mana9er
Branch ana9er
/erritory mana9er
3luster *ead
Area sales mana9er! 3luster
Directors
3EO
mana9er
Re9ional sales mana9er
%$
Re9ional *ead
ice president
Directors
3EO
OFFERIN! OF T#E ,O'PANY
0hare7han pro8ides > in $ account<
$
$< De&mat a!c
>
>< /ra /radi din9 n9 a!c a!c Nfor Nfor cas cash h calcu calcula lati tion on
$;
GH Dem-teri-/i-tion -ccount4 DematerialiHation is the process of con8ertin9 physical shares (share certificates# into an electronic form< 0hares once con8erted into dematerialiHed form are held in a De&mat account 0hare7han is a depository participant< /his means that 6e can 7eep the shares in dematerialiHed form in 0hare7han< But for this one has to purchases the Demat account in 0hare7han< < 0hare7han pro8ides no openin9 char9e< 0hare7han pro8ide de&mat account free of char9e for first year Rs<;::! year from the next year 0er8ice /ax (year continued from the day of openin9#<
G8H Tr-.in0 Account4
1t is an electronic account 6hich ena5les customers to trade in share throu9h internet 6ithout help to 5ro7er<
$
+0E!B0E!FCO!3ommodity terminal li8e screen@& Pro8ides online fluctuations rate on computer screen
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Online Daily /ips@&
0hare7han is pro8idin9 tips throu9h mails in ; sessions Pre mar7et +oon session Post mar7et -ate e8enin9 0hare7han is pro8idin9 tips throu9h 00< 0hare7han is pro8idin9 tips throu9h email< • • • •
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1PO!F Online @& 0hare7han pro8ide 1PO and F facility for the customer<
FOR OPENIN! AN A,,OUNT4
$=
> passport siHe photo9raph 1dentity proof (PA+ card is compulsory# Residence proof 3heque ( in Rs<$:::: mar9in 5alance#
Proo5s o5 I.entit?
3ustomer can su5mit a photo copy of any one of the follo6in9 o
oter 1D
o
Passport
o
PA+ 3ard
o
Dri8in9 -icense
o
Photo 1 card issued 5y Employer re9istered under AP1+
o
3opy of Ration card
A..ress Proo5
3ustomer can su5mit a photo copy of any one of the follo6in9 o
oter 1D 3ard
o
Dri8in9 -icense
o
Passport
o
Ration 3ard
o
/elephone Bill
o
Electricity Bill
$'
o
-ea8e&-icense
o
Ban7 Pass5oo7
o
-atest Ban7 0tatement
PRODU,TS J SERVI,ES Sh-re:h-n /t.&
[email protected] .i55erent Pro.uct -s 5o//o9s
0hare onlineC offline Deri8ati8es utual fund online 3ommodities online 1PO online Portfolio ana9ement 0er8ices 1nsurance Fixed deposits Ad8isory products 3urrency tradin9 19nite
$?
SHARE ONLINE:
$
0hare7han pro8ide online facilities<
BENEFIT I
Free.om 5rom p-per9or:4 &1nte9rated tradin9 5an7 and de&mat account 6ith di9ital
contracts remo8ers all paper6or7< II
Inst-nt cre.it -n. tr-ns5er4 &instant transfer of funds from 5an7 account of the choice to
0hare7han tradin9 account< III
Tr-.e -n?9here4 &en4oy the ease of tradin9 from any part of the 6orld in a completely
secure en8ironment< IV
Di-/ n Tr-.e4 &call toll free num5er ($&::&>>&?:=:# to place orders throu9h tele5ro7ers<
V
Time? -.@ice4 ma7e informed decisions 6ith expert ad8ice in8estment calls and li8e
mar7et commentary< VI
Re-/time port5o/io tr-c:in0 @&5enefit from real&time information for in8estment and
current portfolio 8alue< A5terhour or.ers4 place order after mar7et hours 6hich 9et executed as soon as the mar7ets
opens<
TRADE TI!ER @ /rade ti9er is a next&9eneration online tradin9 product that 5rin9s the po6er of 5ro7ers terminal to customer pc< 1t is session to capitaliHe on intra&day price mo8ement< /rade ti9er is an internet 5ased application a8aila5le on a 3D 6hich pro8ides e8erythin9 a trader needs on one screen< $e? Fe-tures4
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•
A sin0/e p/-t5orm for multiple exchan9e B0E C +0E (3ash C FCO# 3. +3DE.
utual Funds 1POs •
'u/tip/e '-r:et W-tch a8aila5le on 0in9le 0creen
•
'u/tip/e ,h-rt s 6ith /ic7 5y /ic7 1ntraday and End of Day 3hartin9 po6ered 6ith
8arious 0tudies •
!r-ph Stu.ies include A8era9e Band& Bollin9er 2no6 0ure /hin9 A3D R01 etc
•
App/? stu.ies such as ertical *oriHontal /rend Retracement C Free lines
•
User c-n s-@e his o9n .e5ine. screen as 6ell as 9raph template that is sa8in9 the
layout for future use •
User.e5ine. -/ert settin0s on an input 0toc7 Price tri99er
•
Too/s -@-i/->/e to 0-u0e m-r:et such as /ic7 Query /ic7er ar7et 0ummary
Action ,atch Option Premium 3alculator 0pan 3alculator •
Shortcut :e? 5or FAST -ccess to order placements C reports
•
On/ine 5un. tr-ns5er acti8ated 6ith $$ Ban7s
S#ARE OFF%INE4
As the internet has ta7en o8er the physical trade the same is the situation in tradin9 in shares< E8en the internet has not spared tradin9 in shares and still the con8entional system of offline tradin9 continues in todays 6orld<
erits of offline tradin9
-o6 5ro7era9e >:
-ess mar9in Flexi5ility in credit period 3ustomiHed ad8ice
Demerits of offline tradin9
Pro5lems in 9ettin9 in touch 6ith the 5ro7er -imited clientele Pro5lem of attention from the 5ro7er due to load Reliance on the 5ro7ers information 3ustomer has to 5elie8e 6hat the 5ro7er says Bro7er i9ht not 9i8e the 5est price Reconciliation of account and cash settlements Paper6or7 Geo9raphical Restriction
DERIVATIES4 Deri8ati8es are financial contracts 6hose 8alue!price is depends on the 5eha8ior of price of one or more 5asic underlin9 assets< /hese contracts are le9ally 5indin9 a9reement made on the tradin9 screen of stoc7 exchan9e 5uy or sell an asset in future< /he assets can 5e share index interest rate 5ond rupee& dollar exchan9e rate su9ar crude oil soy5ean cotton coffee etc<
EQUITY FUTURE AND OPTION:
>$
Future4
An a9reement 5et6een t6o parties to 5uy or sell an asset at a certain time in the Future at a certain price< 0toc7 futures on certain specified securities and internet rate futures are a8aila5le for tradin9 at +0E (+A/1O+A- 0/O32 E.3*A+GE#
Options4
An Options is a contract 6hich 9i8es the ri9ht 5ut not 5ut or sell the underlyin9 at a stated price 6hich a 5uyer of an option pays the premium and Options are of t6o types calls and put< ,-//s 9i8e the 5uyer the ri9ht 5ut not the o5li9ation to 5uy a 9i8en quantity of the underlyin9
asset at a 9i8en price on or 5efore a 9i8en future date< 3alls also 7no6n as 5ulls< Puts 9i8e the 5uyer the ri9ht 5ut not o5li9ation to sell a 9i8en quantity of the underlyin9 asset at
a 9i8en price on or 5efore a 9i8en date< Puts also 7no6n as 5ears<
COMMODITIES ONLINE: 3ommodities are a9reements to 5uy and sell 8irtually anythin9 except for some reason onions< /he primary commodities that are traded are oil 9old and a9ricultural products< 3ommodity deri8ati8es comprise of ra6 materials and products that can 5e traded on special commodity exchan9es across the country< 3ommodities expands customer in8estin9 horiHon from in8estin9 in a metal company to tradin9 in the metal itself< /radin9 in commodity deri8ati8e pro8ides unique mar7et opportunities for a 6ider section of participants li7e@ in8estor hed9ers ar5itra9ers traders manufactures planters exporters and importers< ,hile tradin9 commodities throu9h an exchan9e there are no transportation char9es no insurance costs no stora9e char9es and complete security 6hen customer trade thou9h an exchan9e< 3ustomer can trade in
>>
commodities at nominal costs and carry the in8estment in paper from as customer 6ant< /he fundamentals for commodities are quite simple@ price is a function of demand and supply< 0hare7han pro8ides commodity facility< 0hare7han trades on t6o ma4or co mmodity exchan9es in 1ndia< $# 3. ># +3DE.
MCX: 3. (U-/1 3OOD1/" E.3*A+GE OF 1+D1A -/D# is a state&of&the&art electronic commodity futures exchan9e<3. is an independent commodity exchan9e 5ased in 1ndia< 1t 6as esta5lished in >::% and is 5ased in um5ai< /he turno8er of the exchan9e for the period Apr&Dec >:: 6as 1+R %> /rillion<3. offers futures tradin9 in A9ricultural 3ommodities Bullion Ferrous C +on&ferrous metals Pulses Oils C Oilseeds Ener9y Plantations 0pices and other soft commodities< 3. has also setup in 4oint 8enture the +ational0pot Exchan9ea purely a9ricultural commodity exchan9e and +ational Bul7 *andlin9 3orporation(+B*3# 6hich pro8ides 5ul7 stora9e and handlin9 of a9ricultural products<
NCDEX: +ational 3ommodity C Deri8ati8es Exchan9e -imited (+3DE.# is a professionally mana9ed online multi commodity exchan9e promoted 5y 13131 Ban7 -imited (13131 Ban7# -ife 1nsurance 3orporation of 1ndia (-13# +ational Ban7 for A9riculture and Rural De8elopment (+ABARD# and +ational 0toc7 Exchan9e of 1ndia -imited (+0E#< Pun4a5 +ational Ban7 (P+B# 3R101- -imited (formerly the 3redit Ratin9 1nformation 0er8ices of 1ndia -imited# 1ndian Farmers FertiliHers 3ooperati8e -imited (1FF3O# and 3anara Ban7 5y su5scri5in9 to the equity shares ha8e 4oined the initial promoters as shareholders of the Exchan9e< +3DE. is the only commodity exchan9e in the country promoted 5y national le8el institutions< /his unique parenta9e ena5les it to offer a 5ouquet of 5enefits 6hich are currently in short supply in the commodity mar7ets< /he institutional promoters of +3DE. are prominent players in their respecti8e fields and 5rin9 6ith them institutional 5uildin9 experience trust nation6ide reach technolo9y and ris7 mana9ement s7ills< +3DE. is a pu5lic limited company incorporated >%
on April >% >::% under the 3ompanies Act $L='< 1t o5tained its 3ertificate for 3ommencement of Business on ay L >::%< 1t has commenced its operations on Decem5er $= >::%< +3DE. is a nation&le8el technolo9y dri8en de&mutualiHed on&line commodity exchan9e 6ith an independent Board of Directors and professionals not ha8in9 any 8ested interest in commodity mar7ets< 1t is committed to pro8ide a 6orld&class commodity exchan9e platform for mar7et participants to trade in a 6ide spectrum of commodity deri8ati8es dri8en 5y 5est 9lo5al practices professionalism and transparency< +3DE. is re9ulated 5y For6ard ar7et 3ommission in respect of futures tradin9 in commodities< Besides +3DE. is su54ected to 8arious la6s of the land li7e the 3ompanies Act 0tamp Act 3ontracts Act For6ard 3ommission (Re9ulation# Act and 8arious other le9islations 6hich impin9e on its 6or7in9< +3DE. is located in um5ai and offers facilities to its mem5ers in more than %L: centers throu9hout 1ndia< /he reach 6ill 9radually 5e expanded to more centers< +3DE. currently facilitates tradin9 of thirty six commodities & 3ashe6 3astor 0eed 3hana 3hilli 3offee 3otton 3otton 0eed Oilca7e 3rude Palm Oil Expeller ustard Oil Gold Guar 9um Guar 0eeds Gur )eera )ute sac7in9 5a9s ild 0teel 1n9ot ul5erry Green 3ocoons Pepper Rapeseed & ustard 0eed Ra6 )ute RBD Palmolein Refined 0oy Oil Rice Ru55er 0esame 0eeds 0il7 0il8er 0oy Bean 0u9ar /ur /urmeric Urad (Blac7 atpe# ,heat "ello6 Peas "ello6 Red aiHe C "ello6 0oy5ean eal< At su5sequent phases tradin9 in more commodities 6ould 5e facilitated<
>;
MUTUAL FUNDS:
utual Fund is an in8estment company that pools money from shareholders and in8ests in a 8ariety of securities such as stoc7s 5onds and money mar7et instruments& ost open& end mutual funds stand ready to 5uy 5ac7 (redeem# its shares at their current net asset 8alue 6hich depends on the total mar7et 8alue of the fundIs in8estment portfolio at the time of redemption< ost open&end mutual funds continuously offer ne6 shares to in8estors<
0ecurity exchan9e 5oard of 1ndia is the re9ulatory 5ody for all mutual funds< All mutual funds must 9et re9istered 6ith the 0EB1<
Benefits of in8estin9 in mutual funds@
• • • • • •
0mall in8estment Professional fund mana9ement 0preadin9 ris7 /ransparency 3hoice re9ulation
IPO:-
1nitial
Pu5lic
Offerin9 the
first sale of stoc7 5y
a company to
the pu5lic<
3ompanies offerin9 an 1PO are sometimes ne6 youn9 companies or sometimes companies 6hich ha8e 5een around for many years 5ut are finally decidin9 to 9o pu5lic< 1POs are often >=
ris7y5ut often ha8e the potential for si9nificant 9ains< 1POs are often used as a 6ay for a youn9 company to 9ain necessary mar7et capital<
From an in8estor point of 8ie6 1PO 9i8es a chance to 5uy shares of a company directly from the company at the price of their choice (1n 5oo7 5uild 1POIs#< any a times there is a 5i9 difference 5et6een the price at 6hich companies decides for its shares and the price on 6hich in8estor are 6illin9 to 5uy share and that 9i8es a 9ood listin9 9ain for shares allocated to the in8estor in 1PO<
From a company prospecti8e 1PO help them to identify their real 8alue 6hich is decided 5y millions of in8estor once their shares are listed in stoc7 exchan9es< 1POIs also pro8ide funds for their future 9ro6th or for payin9 their pre8ious 5orro6in9s< 0hare7han pro8ides to their customer the Online 1PO facility< 1n this facility /he customer has to feel only the 5id price and the quantity for 6hich he!she 6ants to 5uy the stoc7<
PMS:
&
POR/FO-1O A+AGEE+/ 0ER13E0 (P0#@&
0hare7han unfolds for customer an ena5le of P0 to choose from that helps customer sit 5ac7 relax and see customer money 9ro6 6ithout 6orryin9 a5out the ups and do6ns at the stoc7 mar7et< /al7s to 0hare7han specialists and theyll help customer choose a P0 plan that suits customer ris7 ta7in9 appetite and expectation from the mar7et<
>'
FIXED DEPOSITES:-
Fixed deposits are loan arran9ements 6here a specific amount of funds is placed on deposit under the name of the account holder< /he money placed on deposit earns a fixed rate of interest accordin9 to the terms and conditions that 9o8ern the account< /he actual amount of the fixed rate can 5e influenced 5y such factors at the type of currency in8ol8ed in the deposit the duration set in place for the deposit and the location 6here the deposit is made< /he most unusual characteristic of a fixed deposit is that the funds cannot 5e 6ithdra6n for a specified period of time< 1n most cases fixed deposits carry duration of fi8e years< Durin9 that time the money remains in the account and cannot 5e 6ithdra6n for any reason< 1ndi8iduals corporate entities and e8en non&profit or9aniHations that 6ish to set aside funds and limit their access to the funds for a period of time often find that fixed deposits are a simple 6ay to accomplish this 9oal< As an added 5enefit the monies in the account 6ill earn a fixed rate of interest re9ardless of any fluctuations in interest rates that apply to other types of accounts< *o6e8er 5oth these 5enefits can also turn into disad8anta9es under certain circumstances< Because the money cannot 5e 6ithdra6n until the duration is complete the funds cannot 5e used e8en in emer9ency situations< 3han9es in the 9oin9 interest rate may also rise to a point a5o8e
>?
and 5eyond the interest rate applied to existin9 deposits< /his means account holders are actually earnin9 less interest 6ith fixed deposits than 6ith other types of loans and accounts< ,hile the interest rate on fixed deposits cannot 5e chan9ed there is sometimes a 6ay to 6or7 around the issue of o5tainin9 use of funds in an emer9ency situation< At times the lendin9 institution 6here the fixed deposit is placed may 5e 6illin9 to extend a separate loan to the account holder usin9 the fixed account as collateral< ,hile not ideal this can at least ma7e it possi5le to deal 6ith the current financial crunch< Fixed deposits are a credi5le 6ay to ma7e a return on in8estment that is some6hat hi9her than a standard sa8in9s account< /he use of fixed deposits can also 5e helpful 6hen 6or7in9 6ith 8arious types of currency< By esta5lishin9 6hat is 7no6n as a Forei9n 3urrency Fixed Deposit or F3FD it is possi5le possi5le to choose the type of currency in8ol8ed in8ol8ed in the deposit and loc7 in a rate of interest< 1f the choice of currency is a 9ood one this means the in8estor can en4oy a healthy fixed deposit currency rate for the duration of the deposit and earn more than 6ith a standard fixed deposit strate9y< *o6e8er 9oin9 6ith an F3FD does contain a sli9htly hi9her amount of ris7 since the funds deposited must 5e con8erted to the currency of choice and then con8erted 5ac7 6hen the deposit is fulfilled< 1f the currency did not fare 6ell in the interim there is some chance of o5tainin9 a loss due to the chan9es in the rate of exchan9e from the time the fixed deposit 6as acti8ated until the time the deposit is considered complete< 0hare7han has tie up 6ith Unitech -imited and *DF3 corporations limited<
ADVISORY PRODUCT:
0hare7han 0hare7han pro8ide Ad8isory Ad8isory Products Products 5y 6hich customer customer can 9et proper ad8ise for in8estin9 in8estin9 their money in proper 6ay 5y 6hich they can earn more profit< <
+eed of Ad8isory Ad8isory Products@&
>
,ide product ran9e to meet di8erse needs of clients Disciplined Approach Dedicated Product mana9er 5ac7ed 5y Research Performance trac7 record
AD10OR" PRODU3/0@&
• • • • • •
/op pic7s Portfolio $>% portfolios 0mart /rade Portfolio Deri8ati8es Portfolio +ifty Portfolio Portfolio Portfolio Doctor
EKUITY ON%INE
NSE: NSE:
/he national stoc7 exchan9e of the 1ndia 6as the promoted 5y leadin9 financial
institutions at the 5ehest of the 9o8ernment of 1ndia and 6as incorporated in +o8em5er $LL> as a tax payin9 company< 1n April $LL% it 6as reco9niHed as a stoc7 exchan9e under the securities contracts contracts (Re9ulation# (Re9ulation# Act $L='< +0E commenced its operation operation in the 6holesale De5t ar7et (,D# se9ment in )une $LL;< /he capital mar7et (Equities# se9ment of the +0E commenced operation in +o8em5er $LL;<
BSE:/he Bom5ay stoc7 exchan9e is the oldest stoc7 exchan9e in Asia< 1t is located at Dalal 0treet um5ai 1ndia< /he Bom5ay stoc7 exchan9e 6as esta5lished in $L=< /here are around %=:: 1ndian companies listed 6ith stoc7 exchan9e and has the si9nificant stoc7 8olume< As of >L may >::? the mar7et capitaliHation of the B0E is a5out Rs< ;:<= trillion< /he B0E 0E+0E. (0E+0iti8e indE.# also called the SB0E %:T is a 6idely used mar7et index in 1ndia and Asia< As of >::= it is amon9 the fi8e 5i99est stoc7 exchan9es in the 6orld in terms of transactions 8olume<
>L
A>out the In.ustr?4 INTRODU,TION TO STO,$ 'AR$ET
STO,$ 'AR$ET A stoc7 mar7et is a pu5lic mar7et mar7et for for the tradin9 tradin9 of of co comp mpan any ystoc7 and and deri8ati8es deri8ati8es at at an a9reed priceJ these are securities securities listed listed on a stoc7 exchan9e as exchan9e as 6ell as those only traded pri8ately< /he stoc7 mar7et is one of the most important sources for companies to raise money money<< /his allo6s 5usinesses to 5e pu5licly traded or raise additional capital for expansion 5y sellin9 shares of o6nership of the company in a pu5lic mar7et< /he siHe of the 6orld stoc7 mar7et 6as estimated at a5out %'<' trillion U0 at the 5e9innin9 of Octo5er >::< /he total 6orld deri8ati8es mar7et has 5een estimated at a5out ?L$ trillion face or nominal 8alue $$ times the siHe of the entire 6orld eco nomy<
0toc7 exchan9es are the perfect perfect type of mar7et for securities securities 6hether 6hether of 9o8ernment and semi& semi& 9o8t< 5odies or other pu5lic 5odies as also for shares and de5entures issued 5y the 4oint&stoc7 companies< 1n the stoc7 mar7et purchases and sales of shares are affected in conditions of free competition< Go8ernment securities are traded outside the tradin9 rin9 in the form of o8er the counter sales or purchase< /he 5ar9ains that are struc7 in the tradin9 rin9 5y the mem5ers of the stoc7 exchan9es re at the fairest prices determined 5y the 5asic la6s of supply and demand<
%:
DEFINITION OF STO,$ E=,#AN!E4 S0toc7 exchan9e means any5ody or indi8iduals 6hether incorporated or not constituted for the purpose of assistin9 re9ulatin9 or controllin9 the 5usiness of 5uyin9 sellin9 or dealin9 in securities
HISTORY OF STOCK EXCHANGE:/he only stoc7 exchan9es operatin9 in the $Lth century 6ere those of um5ai setup in $?= and Ahmada5ad set up in $L;< /hese 6ere or9aniHed as 8oluntary non&profit&ma7in9 associations of 5ro7ers to re9ulate and protect their interests< Before the control on securities under the constitution in $L=: it 6as a state su54ect and the Bom5ay securities contracts (control# act of $L>= used to re9ulate tradin9 in securities< Under this act the um5ai stoc7 exchan9e 6as reco9niHed in $L>? and Ahmada5ad in $L%?< Durin9 the 6ar 5oom a num5er of stoc7 exchan9es 6ere or9aniHed< 0oon after it 5ecame a central su54ect central le9islation 6as proposed and a committee headed 5y r< A
A depository is an entity 6hich holds securities of in8estors in electronic form at the request of the in8estors throu9h a re9istered Depository participant< 3urrently there are t6o depositories in 1ndia they are@ +ational 0ecurities Depository -imited (+0D-#
3entral Depository 0er8ices -imited (3D0-#
Depository pro8ides a safe and con8enient 6ay to hold securities and ena5les instant transfer of securities< 1t eliminates the ris7 associated 6ith physical certificates such as 5ad deli8ery fa7e securities Delays thefts etc< 1t also pro8ides ser8ices such as@ DematerialiHation Rematerialisation transfer of securities and chan9e of 5eneficial o6nership< Depository Participant (DP# acts as intermediaries 5et6een the depository and the in8estors< /he relationship 5et6een the DPs and the depository is 9o8erned 5y an a9reement made 5et6een the t6o under the Depositories Act< *ence a depository participant acts as a custodian of your securities held in dematerialiHed form and carries out your instruction to transfer the same< 3urrently 3D0- has ==% DPs 6hereas +0D- has only >L% DPs (VDepository participantT#<
'ET#ODO%O!Y OF T#E STYDY /he uncertainty and the rapid fluctuations in the 1ndian capital mar7et made many in8estors at home and forei9n 6ary a5out the future of their in8estments< 0o in order to lessen this uncertainty in the mar7et 0EB1 introduced many ne6 trends 5y ma7in9 chan9es in the 6ay the capital mar7et functions 5y introducin9 online tradin9 rollin9 settlement dematerialiHation of shares etc< /his pro4ect is only an attempt to find the effect of these trends on the 1ndian mar7et< /his
study
is
done
6ith
reference
of
0<0<2A+/1-A-
0E3UR1/1E0C1+E0/OR0 P8t< -td< (0021# so its scope is limited to 0021<
SI!NIFI,AN,E OF T#E SUDY
%%
10*,AR-A-
/he present study SA stu.? o5 in@estor -9-reness ->out Etr-.in0 T a case study of 0021 -td< As the exchan9e has chan9ed its tradin9 style from outcry to on&line (screen 5ased# on >: Fe5ruary $LL?<
OBE,TIVES OF T#E STUDY
$#
1t is to analyHe the chan9es in tradin9 after the exchan9e shifted from outcry to online tradin9 system<
>#
/o analyHe and conclude 6hat is customers a6areness to6ards online tradin9 its usefulness and its ease in a8aila5ility<
%#
1t is to study the functions of 0*ARE2*A+ and throu9h 8arious departments<
;#
/o 7no6 the online screen 5ased tradin9 system adopted 5y 0*ARE2*A+ and a5out its communication facilities< /he appropriate confi9uration to set the net6or7 6hich 6ould lin7 the 0*ARE2*A+ to indi8idual ! mem5ers<
=#
/o 7no6 a5out the latest and future de8elopment in the stoc7 exchan9e tradin9 system clearly definin9 each term of the stoc7 exchan9e procedure<
'#
/ostudy the effect of the chan9in9 trends in the capital mar7et on the in8estor the 5ro7er and on the country lar9ely particularly in *ydera5ad<
%;
?#
/o study the functions of 0021 throu9h 8arious departments and committees<
#
/o study the effect of the chan9in9 technolo9y on the 3apital ar7et<
NEED FOR T#E STUDY
0toc7 exchan9es are an inte9ral part of the capital mar7et< 1t is the perfect type of mar7et for securities 6hether of 9o8t< or semi 9o8t< 5odies or other 5odies as for share and de5entures issued 5y the 4oint stoc7 enterprises< 0toc7 exchan9es pro8ide liquidity to the listed companiesJ they 9i8e quotations to the listed companies and help in tradin9 and raisin9 funds from the mar7et< An exchan9e pro8ides ready mar7et for the sale and purchase of securities< 0toc7 mar7et in 1ndia is more than century old and has 5een functionin9 effecti8ely throu9h the medium of reco9niHed stoc7 exchan9es< /he stoc7 mar7et 6hich is inte9ral part of the capital has a ma4or impact on the functionin9 of the corporate sector in particular< 0ince the capital mar7et is playin9 ma4or role in the 1ndian economy from the past se8eral years there is an essential need to study the o8erall functionin9 of stoc7 exchan9e< /his method includes the data collected from the personal interaction 6ith authoriHed mem5ers of 0hare 2han 0ecurities limited<
S,OPE OF T#E STUDY4
%=
/he scope of the study analyses us to 7no6 ho6 the SA study of in8estor a6areness a5out E& /radin9T acti8ities are carried out in 0*ARE2*A+<
DATA ,O%%E,TION 'ET#ODS4 /he data collection methods include 5oth the primary and
secondary collection methods<
Primary method@ /his method includes the data collected from the personal interaction 6ith customers from different classes 9o8ernment employees corporate executi8es at +3s etc< A total of %:: people 6ere contacted throu9h 8arious mediums li7e phone e&mail personal inter8ie6s chats etc< $:: customers a9reed to share their perception to6ards this industry<
0econdary method@ /he secondary data collection method includes@ •
/he lecturers deli8ered 5y the superintendents of respecti8e departments<
•
/he 5rochures and material pro8ided 5y 0hare2han limited<
•
/he data collected from the ma9aHines of the +0E economic times etc<
•
arious 5oo7s relatin9 to the in8estments capital mar7ets and other related topics<
%I'ITATIONS OF T#E STUDY4
/he study is confined to the past >&% years and present system of the tradin9 procedure in the 0021 and the study is confined to co8er all the related issues in 5rief< Online&tradin9 procedure only exhausti8e analysis pro5lems of listin9 mana9ement of trade 0EB1 9uidelines relatin9 there to 5e not co8ered due to limited time and to 7eep the study in mana9ea5le limits<
%'
Fo//o9in0 .i-0r-m 0i@es the structure o5 In.i-n 5in-nci-/ s?stem4
%?
FINANCIAL MARKETS:
Financial mar7ets are helpful to pro8ide liquidity in the system and for smooth functionin9 of the system< /hese mar7ets are the centers that pro8ide facilities for 5uyin9 and %
sellin9 of financial claims and ser8ices< /he financial mar7ets match the demands of in8estment 6ith the supply of capital from 8arious sources<
Accordin9 to functional 5asis financial mar7ets are classified into t6o types< /hey are@ 'one? m-r:ets (shortterm" ,-pit-/ m-r:ets (/on0term"
Accordin9 to institutional 5asis a9ain classified in to t6o types< /hey are@ Or0-nie. 5in-nci-/ m-r:et Nonor0-nie. 5in-nci-/ m-r:et&
/he or9aniHed mar7et comprises of official mar7et represented 5y reco9niHed institutions 5an7 and 9o8ernment (0EB1# re9istered!controlled acti8ities and intermediaries< /he unor9aniHed mar7et is composed of indi9enous 5an7ers moneylenders indi8idual professional and non&professionals<
O+E" AR2E/@ oney mar7et is a place 6here 6e can raise short&term capital< A9ain the money mar7et is classified in to
1nter 5an7 call money mar7et
Bill mar7et and
Ban7 loan mar7et Etc< %L
E<9
3apital mar7et is a place 6here 6e can raise lon9&term capital< A9ain the capital mar7et is classified in to > types and they are
Primary mar7et and
0econdary mar7et<
E<9<@ 0hares De5entures and -oans etc<
'? emph-sis is more on c-pit-/ m-r:et&
PRI'ARY 'AR$ET
Primary mar7et is 9enerally referred to the mar7et of ne6 issues or mar7et for mo5iliHation of resources 5y the companies and 9o8ernment underta7in9s for ne6 pro4ects as also for expansion moderniHation addition and di8ersification and up 9radation< Primary mar7et is also referred to as +e6 1ssue ar7et< Primary mar7et operations include ne6 issues of shares 5y ne6 and existin9 companies further and ri9ht issues to existin9 shareholders pu5lic offers and issue of de5t instruments such as de5entures 5onds etc< /he primary mar7et is re9ulated 5y the 0ecurities and Exchan9e Board of 1ndia (0EB1 a 9o8ernment re9ulated authority#<
FUN,TIONS4
;:
/he main ser8ices of the primary mar7et are ori9ination under6ritin9 and distri5ution< Ori9ination deals 6ith the ori9in of the ne6 issue< Under6ritin9 contract ma7e the shares predicta5le and remo8e the element of uncertainty in the su5scription< Distri5ution refers to the sale of securities to the in8estors< /he follo6in9 are the mar7et intermediaries associated 6ith the mar7et@ $< erchant 5an7er!5oo7 5uildin9 lead mana9er >< Re9istrar and transfer a9ent %< Under6riter!5ro7er to the issue ;< Ad8iser to the issue =< Ban7er to the issue '< Depository ?< Depository participant
INVESTORS PROTE,TION IN PRI'ARY 'AR$ETS4
/o ensure healthy 9ro6th of primary mar7et the in8estin9 pu5lic should 5e protected< /he term in8estor protection as a 6ider meanin9 in the primary mar7et< /he principal in9redients of in8estors protection are
Pro8ision of all the rele8ant information
Pro8ision of accurate information and
/ransparent allotment procedures 6ithout any 5ias<
SE,ONDARY 'AR$ET4 ;$
/he primary mar7et deals 6ith the ne6 issues of securities< Outstandin9 securities are traded in the secondary mar7et 6hich is commonly 7no6n as stoc7 mar7et or stoc7 exchan9e< 1The secon.-r? m-r:et is - m-r:et 9here scrips -re tr-.e.2 < 1t is a mar7et place 6hich pro8ides
liquidity to the scrip issued in the primary mar7et< /hus the 9ro6th of secondary mar7et depend on the primary mar7et< ore the num5er of companies enterin9 the primary mar7et the 9reater is the 8olume of trade at the secondary mar7et< /radin9 acti8ities in the secondary mar7et are done throu9h the reco9niHed stoc7 exchan9es 6hich are >% in num5er includin9 O8er /he 3ounter Exchan9e of 1ndia +ational 0toc7 Exchan9e of 1ndia and 1nterconnected 0toc7 Exchan9e of 1ndia< 0econdary mar7et operations in8ol8e 5uyin9 and sellin9 of securities on the stoc7 exchan9e throu9h its mem5ers< /he companies hittin9 the primary mar7et are mandatorily Required to list their shares on one or more stoc7 exchan9es in 1ndia includin9 stoc7 exchan9es< -istin9 of scrips pro8ides liquidity and offers an opportunity to the in8estors to 5uy or sell the scrips< /he follo6in9 intermediaries in the secondary mar7et@ $< Bro7er!mem5er of stoc7 exchan9e 5uyers 5ro7er and sellers 5ro7er >< Portfolio ana9er %< 1n8estment ad8isor ;< 0hare transfer a9ent =< Depository '< Depository participants<
STO,$ 'AR$ETS IN INDIA
;>
0toc7 exchan9es are the perfect type of mar7et for securities 6hether of 9o8ernment and semi& 9o8t< 5odies or other pu5lic 5odies as also for shares and de5entures issued 5y the 4oint&stoc7 companies< 1n the stoc7 mar7et purchases and sales of shares are affected in conditions of free competition< Go8ernment securities are traded outside the tradin9 rin9 in the form of o8er the counter sales or purchase< /he 5ar9ains that are struc7 in the tradin9 rin9 5y the mem5ers of the stoc7 exchan9es re at the fairest prices determined 5y the 5asic la6s of supply and demand<
DEFINITION OF STO,$ E=,#AN!E4
S0toc7 exchan9e means any5ody or indi8iduals 6hether incorporated or not constituted for the purpose of assistin9 re9ulatin9 or controllin9 the 5usiness of 5uyin9 sellin9 or dealin9 in securities< Go8ernment securitiesJ and %< Ri9hts or interest in securities<
#ISTORY OF STO,$ E=,#AN!E4
/he only stoc7 exchan9es operatin9 in the $Lth century 6ere those of um5ai setup in $?= and Ahmada5ad set up in $L;< /hese 6ere or9aniHed as 8oluntary non&profit&mar7in9 associations ;%
of 5ro7ers to re9ulate and protect their interests< Before the control on securities under the constitution in $L=: it 6as a state su54ect and the Bom5ay securities contracts (control# act of $L>= used to re9ulate tradin9 in securities< Under this act the um5ai stoc7 exchan9e 6as reco9niHed in $L>? and ahemeda5ad in $L%?< Durin9 the 6ar 5oom a num5er of stoc7 exchan9es 6ere or9aniHed< 0oon after it 5ecame a central su54ect central le9islation 6as proposed and a committee headed 5y A
Region
Exchange -udhiana 0toc7 Exchan9e
Northern
Delhi 0toc7 Exchan9e
Region
Region
-udhiana Delhi
)aipur 0toc7 Exchan9e
)aipur
U
2anpur
*ydera5ad 0toc7 Exchan9e
Southern
City
Ban9alore 0toc7 Exchan9e
*ydera5ad Ban9alore
an9alore 0toc7 Exchan9e adras 0toc7 Exchan9e
an9alore
3hennai
3oim5atore 0toc7 Exchan9e 3oim5atore 3ochin 0toc7 Exchan9e
3ochin
Eastern
3alcutta 0toc7 Exchan9e
3alcutta
Region
Gauhati 0toc7 Exchan9e
Gauhati
a9adha 0toc7 Exchan9e
Patna
Bhu5anes6ar 0toc7 Exchan9e
Bhu5anes6ar
;=
estern
Bom5ay 0toc7 Exchan9e
um5ai
Region
+ational 0toc7 Exchan9e
um5ai
O/3E1 0toc7 Exchan9e
um5ai
1ndore
Pune 0toc7 Exchan9e
Pune
adodara 0toc7 Exchan9e
adodara
0aurashtra 0toc7 Exchan9e
Ra47ot
O!T OF THESE "A#OR STOCK EXCHANGES ARE:$
NSE
The Or0-ni-tion
/he +ational 0toc7 Exchan9e (+0E# of 1ndia -imited has 9enesis in the report of the *i9h Po6ered 0tudy Group on Esta5lishment of +e6 0toc7 Exchan9es 6hich recommended promotion of a +ational 0toc7 Exchan9e 5y financial institutions (F1s# to pro8ide access to in8estors from all across the country on an equal footin9< Based on the recommendations +0E 6as promoted 5y leadin9 Financial 1nstitutions at the 5ehest of the Go8ernment of 1ndia and 6as incorporated in +o8em5er $LL> as a tax&payin9 company unli7e other stoc7 exchan9es in the country<
On its reco9nition as a stoc7 exchan9e under the 0ecurities 3ontracts (Re9ulation# Act $L=' in April $LL% +0E commenced operations in the ,holesale De5t ar7et (,D# se9ment in )une ;'
$LL;< /he 3apital ar7et (Equities# se9ment commenced operations in +o8em5er $LL; and operations in Deri8ati8es se9ment commenced in )une >:::<
+0EIs mission is settin9 the a9enda for chan9e in the securities mar7ets in 1ndia< /he +0E 6as set&up 6ith the main o54ecti8es of@ •
Esta5lishin9 a nation&6ide tradin9 facility for equities de5t instruments and hy5rids
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Ensurin9 equal access to in8estors all o8er the country throu9h an appropriate communication net6or7
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Pro8idin9 a fair efficient and transparent securities mar7et to in8estors usin9 electronic tradin9 systems
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Ena5lin9 shorter settlement cycles and 5oo7 entry settlements systems and
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eetin9 the current international standards of securities mar7ets<
/he standards set 5y +0E in terms of mar7et practices and technolo9y has 5ecome industry 5enchmar7s and is 5ein9 emulated 5y other mar7et participants< +0E is more than a mere mar7et facilitator< 1tIs that force 6hich is 9uidin9 the industry to6ards ne6 horiHons and 9reater opportunities< BSE
INTRODU,TION4
/he 0toc7 Exchan9e um5ai popularly 7no6n as LBSEL 6as esta5lished in $?= as LThe N-ti@e Sh-re -n. Stoc: Bro:ers Associ-tionL& 1t is the oldest one in Asia e8en older
than the /o7yo 0toc7 Exchan9e 6hich 6as esta5lished in $?< 1t is a 8oluntary non&profit ;?
ma7in9 Association of Persons (AOP# and is currently en9a9ed in the process of con8ertin9 itself into demutualised and corporate entity< 1t has e8ol8ed o8er the years into its present status as the premier 0toc7 Exchan9e in the country< 1t is the first 0toc7 Exchan9e in the 3ountry to ha8e o5tained permanent reco9nition in $L=' from the Go8t< of 1ndia under the 0ecurities 3ontracts (Re9ulation# Act $L='< /he Exchan9e 6hile pro8idin9 an efficient and transparent mar7et for tradin9 in securities de5t and deri8ati8es upholds the interests of the in8estors and ensures redresses of their 9rie8ances 6hether a9ainst the companies or its o6n mem5er&5ro7ers< 1t also stri8es to educate and enli9hten the in8estors 5y conductin9 in8estor education pro9rammers and ma7in9 a8aila5le to them necessary informati8e inputs< A Go8ernin9 Board ha8in9 >: directors is the apex 5ody 6hich decides the policies and re9ulates the affairs of the Exchan9e< /he Go8ernin9 Board consists of nine elected directors 6ho are from the 5ro7in9 community (one third of them retire e8er year 5y rotation# three 0EB1 nominees six pu5lic representati8es and an Executi8e Director C 3hief Executi8e Officer (3EO# C a 3hief Operatin9 Officer (3OO#< /he Executi8e Director as the 3hief Executi8e Officer is responsi5le for the day&to&day administration of the Exchan9e and the 3hief Operatin9 Officer and other *eads of Departments assist him< /he Exchan9e has inserted ne6 Rule +o<$>' A in its Rules Byela6s pertainin9 to constitution of the Executi8e 3ommittee of the Exchan9e< Accordin9ly an Executi8e 3ommittee consistin9 of three elected directors three 0EB1 nominees or pu5lic representati8es Executi8e Director C 3EO and 3hief Operatin9 Officer has 5een constituted< /he 3ommittee considers 4udicial C quasi matters in 6hich the Go8ernin9 Board has po6ers as an Appellate Authority matters re9ardin9 annulment of transactions admission continuance and suspension of mem5er&5ro7ers declaration of a mem5er&5ro7er as defaulter norms procedures and other matters relatin9 to ar5itration fees deposits mar9ins and other monies paya5le 5y the mem5er&5ro7ers to the Exchan9e etc<
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RE!U%ATORY FRA'E WOR$ OF STO,$ E=,#AN!E4
/he S0ecurities 3ontract Re9ulation Act $L='T and S0ecurities Exchan9e Board of 1ndia $L=>T pro8ided a comprehensi8e le9al frame6or7< /hree tier re9ulatory structure comprisin9
inistry of finance
/he 0ecurities And Exchan9e Board of 1ndia
Go8ernin9 5ody
"E"%ERS OF STOCK EXCHANGE:$
/he securities contract re9ulation act $L=' has pro8ided uniform re9ulation for the admission of mem5ers in the stoc7 exchan9es< /he qualifications for 5ecomin9 a mem5er of a reco9niHed stoc7 exchan9e are 9i8en 5elo6@ /he minimum a9e prescri5ed for the mem5ers is >$ years< *e should 5e an 1ndian citiHen< *e should 5e neither a 5an7rupt nor compound 6ith the creditors< *e should not 5e con8icted for fraud or dishonesty< *e should not 5e en9a9ed in any other 5usiness connected 6ith a company< *e should not 5e a defaulter of any other stoc7 exchan9e< /he minimum required educational is a pass in $>th standard examination<
SE,URITIES AND E=,#AN!E BOARD OF INDIA MSEBI
;L
/he securities and exchan9e 5oard of 1ndia 6as constituted in $LL under a resolution of 9o8ernment of 1ndia< 1t 6as later made statutory 5ody 5y the 0EB1 act $LL> some of the po6ers and functions exercised 5y the central 9o8ernment in respect of the re9ulation of stoc7 exchan9e 6ere transferred to the 0EB1<
OBE,TIVES AND FUN,TIONS OF SEBI
1< /o protect the interest of in8estors in securities< 11< Re9ulatin9 the 5usiness in stoc7 exchan9es and any other securities mar7et< 111< Re9isterin9 and re9ulatin9 the 6or7in9 of intermediaries associated 6ith securities mar7et as 6ell as 6or7in9 of mutual funds< 1< Promotin9 and re9ulatin9 self&re9ulatory or9aniHations< < Prohi5itin9 insider tradin9 in securities< 1< Re9ulatin9 su5stantial acquisition of shares and ta7e o8er of companies< 11< Performin9 such functions and exercisin9 such po6ers under the pro8isions of capital issues (control# act $L;?and the securities to it 5 y the central 9o8ernment<
SEBI !UIDE%INES TO SE,ONDARY 'AR$ETS4 (STO,$ E=,#AN!ES"4
$< Board of Directors of 0toc7 Exchan9e has to 5e reconstituted so as include non& mem5ers pu5lic representati8es and 9o8ernment representati8es to the extent of =:W of total num5er of mem5ers< >< 3apital adequacy norms ha8e 5een laid do6n for the mem5ers of 8arious stoc7 exchan9es dependin9 upon their turno8er of trade and other factors< %< All reco9niHed stoc7 exchan9es 6ill ha8e to inform a5out transactions 6ithin >; hrs<
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T?pes o5 or.er4
Buy and sell orders placed 6ith mem5ers of the stoc7 exchan9e 5y the in8estors< /he orders are of different types<
%imit or.ers4 Orders are limited 5y a fixed price 5uy Reliance Petroleum at Rs<=:<*ere the
orders has clearly indicated the price at 6hich it has to 5e 5ou9ht and the in8estor is not 6illin9 to 9i8e more than Rs<=:<
Best r-te or.er4 *ere the 5uyer or seller 9i8es the freedom to the 5ro7er to execute the order at
the 5est possi5le rate quoted on the particular date for 5uyin9< 1t may 5e lo6est rate for 5uyin9 and hi9hest rate for sellin9<
Discretion-r? or.er4 /he in8estor 9i8es the ran9e of price for purchase and sale< /he 5ro7er can
use his discretion to 5uy 6ithin the specified limit< Generally the approximation price is fixed< /he order stands as this S5uy BR3 $:: shares around Rs<;:T<
Stop /oss or.er4 /he orders are 9i8en to limit the loss due to unfa8ora5le price mo8ement in the
mar7et< A particular limit is 9i8en for 6aitin9< 1f the price falls 5elo6 the limit the 5ro7er is authoriHed to sell the shares to pre8ent further loss< E<9< 0ell A+D*RABA+2 at Rs<$:= stops loss at Rs<$::< Bu?in0 -n. se//in0 sh-res4 /he to 5uy and sell the share the in8estor has to locate re9ister
5ro7er or su5 5ro7er 6ho render prompt and efficient to ser8ice to him< /he order to 5uy or sell specified num5er of shares of the company of in8estors choice are placed 6ith the 5ro7er< /he order may 5e of any of the a5o8e any mentioned type< After recei8in9 the order the 5ro7er tries
=$
to execute the order in his computer terminal< Once matchin9 order is found the order is executed< /he 5ro7er the deli8ers the contract note
/o the in8estor< 1t 9i8es the details re9ardin9 the name of the company num5er of shares 5ou9ht price 5ro7era9e and the date of deli8ery of share< 1n this physical tradin9 form once the 5ro7er 9ets the share certificate throu9h the clearin9 houses he deli8ers the share certificate alon9 6ith transfer deed to the in8estor< /he in8estor has to fill the transfer deed and stamp it< /he stamp duty is one of the percenta9e considerations the in8estor should lod9e the share certificate and transfer deed to the re9ister or transfer a9ent of the company< 1f it is 5ou9ht in the DEA/ form the 5ro7er has to 9i8e a matchin9 instruction to his depository participant to transfer shares 5ou9ht to the in8estors account< /he in8estor should 5e account holder in any of the depository participant< 1n the case of sale of shares on recei8in9 payment from the purchasin9 5ro7er the 5ro7er effects the payment to the in8estor<
Sh-re 0roups4 /he listed shares are di8ided into % cate9ories@
Group A shares B$ shares B shares< /he last > 9roups are referred to cleared securities or non specified shares< /he shares that come under the specified 9roup can a8ail the carry for6ard transaction< 1n A 9roup shares are selected on the 5asis of equity mar7et capitaliHation and pu5lic holdin9< Further it should ha8e 9ood trac7 record and di8idend payin9 company< 1t should ha8e 9ood 9ro6th potential too< /he tradin9 8olumes and the in8estors 5ase are hi9h in A 9roup shares< Any company 6hen it satisfies these criteria 6ould 5e shifted from B 9roup to A 9roup< 1n the B$ 9roup acti8ely traded share are included< 3arry for6ard transactions are not allo6ed in this 9roup< 0ettlement ta7es place throu9h the clearin9house alon9 6ith the A 9roup shares< /he settlement cycle and the procedure are identical to A 9roup security< /he rest of the company shares listed from the B 9roup< Ro//in0 sett/ement s?stem4
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Under rollin9 settlement system the settlement ta7es place n days (usually $ > % or =days# after the tradin9 day< /he shares 5ou9ht and sold are paid in for n days after the tradin9 day of the particular transaction< 0hare settlement is li7ely to 5e completed much sooner after the transaction than under the fixed settlement system< /he rollin9 settlement system is noted 5y /+ i::$< 0EB1 has introduced /= rollin9 settlement in equity mar7et from )uly >::$ and su5sequently shortened the cycle to /% from April >::>< After the /% rollin9 settlement experience it 6as further reduced to /> to reduce the ris7 in the mar7et and to protect the interest of the in8estors from $st April >::%<
Acti@ities on T4 conformation of the institutional trades 5y the custodian is sent to the stoc7
exchan9e 5y $$<:: am< A pro8ision of an exception 6indo6 6ould 5e a8aila5le for late confirmation< /he time limit and the additional chan9es for the exception 6indo6 are dedicated 5y the exchan9e< /he exchan9es!clearin9 house! clearin9 corporation 6ould process and do6nload the o5li9ation files to the 5ro7ers terminals late 5y $<%: p
funds until $:<%: am on /> from the 5ro7ers pool accounts< /he depository processes the pay in requests and transfers the consolidated pay in files to clearin9 *ouse!clearin9 3orporation 5y =%
$$<::am!on />< /he exchan9e!clearin9 house!clearin9 corporation executes the pay&out of securities and funds latest 5y $<%: p to the depositories and clearin9 5an7s< 1n the demat mode net 5asis settlement is allo6ed< /he 5uy and sale positions in the same scrip can 5e settled and net quantity has to 5e settled<
$EY FEATURES OF ON%INE TRADIN! WIT# S#ARE$#AN4 •
Freedom from paper6or7<
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1nstant credit and money transfer<
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/rade from any net ena5led P3<
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Online orders on the phone<
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/imely ad8ice and research reports<
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Real&time Portfolio trac7in9<
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After&hour orders<
TRADIN! PRO,EDURE
OUT,RY SYSTE'
/RAD1+G 1+ /*E 0/O32 E.3*A+GE@ T#E ,ONVENTION DAY
/he 5ro7er has to 5uy or sell securities for 6hich he has recei8ed the orders< For this the 5ro7er or his authoriHed representati8es 9oes to the stoc7 exchan9e< /his method is called the open outcry system< Basically the 5ro7ers shout 6hile 5uyin9 or sellin9 the securities< /he floor of the stoc7 exchan9e is di8ided into a num5er of mar7ets also 7no6n as post pit or 6in9 5ased on particular securities dealt there< 1n the post pit or 6in9 the 5ro7er usin9 open outcry method ma7es an offer or 5id price< For ma7in9 the necessary 5ar9ain he quotes his purchase or sale price also 7no6n as offer or 5id =;
price< /he dealer to 6hom the price is quoted quotes his o6n price 6hen the quotation of the dealer suits the 5ro7er he may lose the 5ar9ain< 1f he is not satisfied 6ith the quote price he may turn to some other dealer< On the close of the 5ar9ain the dealer as 6ell as the 5ro7er ma7es a 5rief not of the particulars of the deal< 0uch notes are made on some pad and on it the num5er of shares the price a9reed upon the name of the party 6hat mem5ership num5er etc< are noted<
DISADVANTA!ES OF OUT,RY SYSTE'4
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1t lac7s transparency<
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/he scope of manipulation speculation and mal practice more<
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/he time 9ap 5et6een many of the tradin9 operations used to 5e met quic7ly and easily<
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0i9nal 6ere more important in the outcry system any mem5er 6ho could not interpret the 5uy!sell si9nal correctly often landed himself in disastrous situation<
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1n audi5ility 6as another disad8anta9e of the outcry system<
Due to the a5o8e disad8anta9es of the outcry system the 0*ARE2*A+ has shifted from outcry system to online tradin9 from Fe5ruary >L $LL?<
'ANUA% TRADIN!
TRADIN! PRO,EDURE BEFORE INTRODU,TION OF ON%INE TRADIN!4
/radin9 on stoc7 exchan9es is officially done in the tradin9 rin9< 1n the tradin9 rin9 the space is pro8ided for specified and non&specified sections the mem5ers and their authoriHed assistants ha8e to 6ear a 5ad9e or carry 6ith them on identity card 9i8en 5y the exchan9e to enter the tradin9 rin9< /hey carry a sauda 5oo7 or confirmation memos duly authoriHed 5y the exchan9e ==
and carry a pen 6ith them< /he stoc7 exchan9es operations are floor le8el are technical in nature <+on&mem5ers are not permitted to enter in to stoc7 mar7et< *ence 8arious sta9es ha8e to 5e completed in executin9 a transaction at a stoc7 exchan9e
,#OI,E OF BRO$ER4
/he prospecti8e in8estor 6ho 6ants to 5uy shares or the in8estors 6ho 6ants to sell shares and transact 5usiness ha8e to act throu9h mem5er 5ro7ers only< /hey can also appoint their 5an7ers for this purpose as per the present re9ulations<
P%A,E'ENT OF ORDER4
/he next step is the placin9 order for the purchase or sale of securities 6ith a 5ro7er< /he order is usually placed 5y tele9ram telephone letter fax etc or in person< /o a8oid delay it is placed 9enerally o8er the phone< /he orders may ta7e any one of the forms such as At Best Orders -imit Order 1mmediate or 3ancel Order -imited Discretionary Order and Open Order 0top -oss Order<
E=E,UTION OF ORDER OR ,ONTRA,T4
Orders are executed in the tradin9 rin9 of the B0E< /his 6or7s from $$@%: to ><%: P< on all 6or7in9 days onday to Friday and a special one&hour session on 0aturday< /he mem5ers or the authoriHed assistants ha8e to 6ear a 5ad9e 9i8en 5y the exchan9e to enter into the tradin9 rin9< /hey carry a suada Bloc7 Boo7 or conformation memos 6hich are duly authoriHed 5y the exchan9e 6hen the deal is struc7J 5oth 5ro7er and 4o55er ma7e a note in their suada 5loc7 5oo7s< From the suada 5oo7 the contract notes are dra6n up and posted to the client< A contract note is 6ritten a9reement 5et6een the 5ro7er and his clients for the transaction executed< ='
DRAWIN! UP AND BI%%S4
Both sale and purchase 5ills are prepared alon9 6ith the contract note and it is posted on the same day or the next day< /his in a purchase transaction once the shares are deli8ered to the client effects payment for the purchases and pays the stamp fees for transfer a 5ill is made out 9i8in9 the total cost of purchase includin9 other expenses incurred 5y the 5ro7er in the price itself< ,ith this the process ends<
DE'ATER%ICATION4
DematerialiHation is the process 5y 6hich physical certificates of an in8estor are con8erted to an equipment num5er of securities in electronic from and credited in the in8estor account 6ith his DP< 1n order to dematerialiHation his certifies an in8estor has to first open an account 6ith a DP and then request for the DematerialiHation Request Form 6hich is DP and su5mit the same alon9 6ith the share certificates< /he in8estor has to ensure that he mar7s S0u5mitted for DematerialiHationT on the certificates 5efore the shares are handed o8er to the DP for demat< DematerialiHation can only 5e done to those certificates 6hich are already re9istered in your name and 5elon9 to the list of securities admitted for DematerialiHation at +0D-< ost of the acti8e scrips in the mar7et includin9 all the scrips of 0CP 3+.+1F/" and B0E 0E+0E. ha8e already 4oined +0D-< /his list is steadily increasin9< Briefly the process is as follo6s@ after completion of transfer the in8estor 9ets the option to dematerialiHe such shares< 1n8estors 6illin9 to exercise this option sends a Demat request alon9 6ith the option letter sent 5y the company to his DP< /he company or its RC/ a9ent 6ould confirm the Demat request on its receipt from the DP to reduce ris7 of loss in transit<
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DematerialiHed shares do not ha8e any distincti8e or certificate num5ers< /hese shares are fun9i5le&6hich means that $:: shares of a security are the same as any other $:: shares of the security< Odd lot shares certificates can also 5e dematerialiHed< DematerialiHation normally ta7es a5out fifteen to thirty days< /o 9et 5ac7 dematerialiHed securities in the physical form request DP for RematerialiHation of the same is made< RematerialiHation is the process of con8ertin9 electronic shares in to ph ysical shares<
BENEFITS OF DE'AT4
/ransactin9 the depository has se8eral ad8anta9es li7e
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1t reduces the ris7 of 5ad deli8eries in turn sa8in9 the cost and 6asta9e of time associated 6ith follo6 up for rectification< /his has lead to reduction in 5ro7era9e to the extent of :<=W 5y quite a fe6 5ro7era9e firms<
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1n case of transfer of electronic shares you sa8e :<=W in stamp duty< "ou a8oid the cost of courier ! notariHation< /he need for further follo6&up 6ith your 5ro7er for the 0hares returned for company o54ection<
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"ou can recei8e your 5onuses and ri9hts issues into your DA as a direct credit this eliminatin9 ris7 of loss in transit<
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"ou can also expect a lo6er interest char9e for loans ta7en a9ainst Demat shares as compared t internet for loans a9ainst physical shares<
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/here is no lost in transit thus the o8erheads of 9ettin9 a duplicate copy in such circumstances is reduced<
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RB1 has increased the limit of loans a9ainst dematerialiHed securities as collateral to Rs<$ per 5orro6er in case of loans a9ainst physical securities<
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RB1 has also reduced the minimum mar9in to >=W for loans a9ainst dematerialiHed securities as a9ainst =:W for loans a9ainst physical securities<
ON%INE TRADIN!
Before 9ettin9 in to the online tradin9 6e should 7no6 some thin9s a5out the internet e& commerce and etc<
& Wh-t is Internet
1nternet is a 6orld6ide self&9o8erned net6or7 connectin9 se8eral other smaller net6or7s and millions of computers and persons to me9a sources of information< /his technolo9y shrin7s 8ast distances acceleratin9 the pace of 5usiness reforms and re8olutioniHin9 the 6ay companies are mana9ed< 1t allo6s direct u5iquitous lin7s to anyone any6here and anytime to 5uild up interacti8e relationships< A com5ination of time and space called the 1nternet promises to 5rin9 unprecedented chan9es in our li8es and 5usiness< 1nternet or net is an inter&connection of computer communication net6or7s spannin9 the entire 9lo5e crossin9 all 9eo9raphical 5oundaries< 1t has re&defined the methods of communication 6or7 study education 5usiness leisure health trade 5an7in9 commerce and 6hat not it is 8irtually chan9in9 e8ery thin9 and 6e are li8in9 in dot::: percent in last decade and is currently 9ro6in9 at $: percent per month< 1n 1ndia 9ro6th of 1nternet is of recent times< 1t is expected to 5rin9 chan9es in e8ery functional area of 5usiness acti8ity includin9 mana9ement and financial =L
ser8ices< 1n offers stoc7 tradin9 at a lo6er cost< 1nternet can chan9e the nature and capacity of stoc7 5ro7in9 5usiness in 1ndia<
8& Ecommerce
Electronic commerce is associated 6ith 5uyin9 and sellin9 o8er computer communication net6or7s< 1t helps conduct traditional commerce throu9h ne6 6ay of transferrin9 and processin9 of information< 1nformation is electronically transferred from computer to computer in an automated 6ay< E&commerce refers to the paperless exchan9e of 5usiness information usin9 electronic data inter chan9e electronic technolo9ies< 1t not only automates manual processes and paper transactions 5ut also helps or9aniHation mo8e to a fully electronic en8ironment and chan9e the 6ay they operated<
ETRADIN! INTERFA,E
':
INVESTOR
STOCK B
SATELLITE LINK
DEPOSITORY
DEPOSITORY PARTICIPANT
P3s and net6or7in9 attempts to introduce 5an7s of the tools and technolo9ies required for electronic commerce< /he computers are either 6or7stations of indi8idual office 6or7s or ser8es 6here lar9e data5ases and information reside< +et6or7 connects 5oth cate9ories of computersJ the 8arious operatin9 systems are the most 5asis pro9ram 6ithin a computer< 1t mana9es the resources of the computer system in a fair and efficient manner< +o6 6e can enter in to the concept 7no6n as on/ine tr-.in0&
'$
STOCK
1n the past in8estors had no option 5ut to contact their 5ro7er to 9et real time access to mar7et data< /he net 5rin9s data to the in8estor on line and net 5ro7in9 ena5les him to trade on a clic7 of mouse< +o6 information has 5ecome easily accessi5le to 5oth retail as 6ell as 5i9 in8estor< Once in8estors learn to research on line they 6ill demand more mar7et information<
EVO%UTION OF BRO$IN! IN INDIA4
/he e8olution of a 5ro7in9 in 1ndia can 5e cate9oriHed in three phases $< 0toc75ro7ers 6ill offer on their sites features such as li8e portfolio mana9er li8e quotes mar7et research and ne6s etc< to attract more in8estors< >< Bro7ers 6ill offer on line 5ro7in9 and relationship mana9ement 5y pro8idin9 and offerin9 analysis and information to in8estors durin9 5ro7in9 and non&5ro7in9 hours 5ased on their profile and needs i
/he actual definition of SOn/ine Tr-.in02 is as explained 5elo6@
SOnline tradin9 is a ser8ice offered on the internet for purchase and sale of shares< 1n the real 6orld you place orders on your stoc75ro7er either 8er5ally (personally or telephonically# or in a 6ritten form (fax#
internet ena5led P3 and place orders throu9h the 5ro7ers internet 5ased tradin9 en9ine< /hese orders are routed to the stoc7 exchan9e 6ithout manual inter8ention an executed thereon in a matter of a fe6 seconds< /he net is used as a modem of tradin9 in internet tradin9< Orders are communicated to the stoc7 exchan9e throu9h 6e5site<
In In.i-4
1nternet tradin9 started in 1ndia on $ st April >::: 6ith ?L mem5ers see7in9 permission for online tradin9< /he 0EB1 committees on internet 5ased securities tradin9 ser8ices has allo6ed the net to 5e used as an Order Routin9 0ystem (OR0# throu9h re9istered stoc7 5ro7ers on 5ehalf of their clients for execution of transaction< Under the OR0 the client enters his requirements (security quantity price 5uy!sell# on 5ro7ers site< OBE,TIVES4
1nternet tradin9 is expected to •
1ncrease transparency in the mar7ets
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Enhance mar7et quality throu9h impro8ed liquidity 5y increasin9 quote continuity and mar7et depth
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Reduce settlement ris7s due to open trades 5y elimination of mismatches
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Pro8ide mana9ement information system
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1ntroduce flexi5ility in system so as to handle 9ro6in9 8olumes easily and to support nation6ide expansion of mar7et acti8ity<
Besides throu9h internet tradin9 three fundamental o54ecti8es of securities re9ulation can 5e easily achie8ed these are@ •
1n8estor protection
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3reation of a fair and efficient mar7et and '%
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Reduction of the systematic ris7s<
0ome of the 5ro7ers offerin9 net tradin9 include 13131 6e5 trade in8estment 1ndia Geo4it securities etc< REKUIRE'ENTS FOR NET TRADIN!4 •
For in@estors4
$< 1nstallation of a computer 6ith required specification >< 1nstallation of a mode %< /elephone connection ;< Re9istration for on&line tradin9 6ith 5ro7er =< A 5an7 account '< Depository account ?< 3ompliance 6ith 0EB1 9uidelines for net tradin9
The 5o//o9in0 shou/. >e pro.uce to 0et - .em-t -ccount -n. on/ine tr-.in0 -ccount4
As identity proof Caddress proof produce the follo6in9 thin9s@ •
oter 1D card
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Dri8in9 license
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PA+ card
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Ration card
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Ban7 pass 5oo7
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/elephone 5ill
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Other reuirements3 9hich -re necess-r?
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First pa9e of the 5an7 pass 5oo7 and last ' months statement<
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Ban7 mana9ers si9nature alon9 6ith 5an7s seal mana9er re9istration code on photo9raph<
For stoc: >ro:ers4
$< Permission from stoc7 exchan9e for net tradin9 >< +et 6orth of Rs< =: lac7 %< Adequate 5ac7&up system ;< 0ecured and relia5le soft6are system =< Adequate experienced and trained staff '< 3ommunication of order (trade confirmation to in8estor 5y e&mail# ?< Use of authentication technolo9ies < 1ssue of contract notes 6ithin >; hours of the trade execution L< 0ettin9 up a 6e5site<
/he net is used as a medium of tradin9 in internet tradin9< Orders are communicated to the stoc7 exchan9e throu9h 6e5site< 1nternet tradin9 started in 1ndia on $st April >::: 6ith ?L mem5ers see7in9 permission for online tradin9< /he 0EB1 committees on internet 5ased securities tradin9 ser8ices has allo6ed the net to 5e used as an Order Routin9 0ystem (OR0# throu9h re9istered stoc7 5ro7ers on 5ehalf of their clients for execution of transaction<
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Under the Order Routin9 0ystem the client enters his requirements (security quantity price and 5uy!sell# in 5ro7erIs site< /hey are chec7ed electronically a9ainst the clients account and routed electronically to the appropriate exchan9e for execution 5y the 5ro7er< /he client recei8es a confirmation on execution of the order< /he customerIs portfolio and led9er accounts 9et updated to reflect the transaction< /he user should ha8e the user id and pass6ord to enter into the electronic rin9< *e should also ha8e demat Account and 5an7 account< /he system permits only a re9istered client to lo9 in usin9 user id and Pass6ord < Order can 5e placed usin9 place order 6indo6 of the 6e5site<
PRO,EDUR FOR NET TRADIN!4
Step 4 /hose in8estors 6ho are interested in doin9 the tradin9 o8er internet system i
1.0 should approach the 5ro7ers and 9et them self&re9istered 6ith the 0toc7 Bro7er< Step 84 After re9istration the 5ro7er 6ill pro8ide to them a -o9in name Pass6ord and personal
identification num5er (P1+#< Step ;4 Actual placement of an order< An order can then 5e placed 5y usin9 the place order
6indo6 as under@ (a# First 5y enterin9 the sym5ol and series of stoc7 and other parameters li7e quantity and price of the scrip on the place order 6indo6< (5# 0econd fill in the sym5ol series and the default quantity<
Step )4 1t is the process of re8ie6< /hus the in8estor has to re8ie6 the order placed 5y clic7in9
the re8ie6 option< *e may also re&set to clear the 8alues< Step 4 After the re8ie6 has 5een satisfactory the order has to 5e sent 5y clic7in9 on the send
option< ''
Step 64 the in8estor 6ill recei8e an VOrder 3onfirmationV messa9e alon9 6ith the order num5er
and the 8alue of the order< Step 4 1n case the order is re4ected 5y the Bro7er or the 0toc7 Exchan9e for certain reasons such
as in8alid price limit an appropriate messa9e 6ill appear at the 5ottom of the screen< At present a time la9 of a5out $: seconds is there in executin9 the trade< Step <4 1t is re9ardin9 char9in9 payment for 6hich there are different mode< 0ome 5ro7ers 6ill
ta7e some ad8ance payment room the in8estor and 6ill fix their tradin9 limits< ,hen the trade is Executed the 5ro7er 6ill as7 the in8estor for transfer of funds 5y the in8estor to his account< 1nternet tradin9 pro8ides total transparency 5et6een a 5ro7er and an in8estor in the secondary mar7et< 1n the open outcry system only the 5ro7er 7ne6 the actually transacted price< 0creen 5ased tradin9 pro8ides more transparency< ,ith online tradin9 in8estors can see them slee8es the price at 6hich the deal ta7e place< /he time 9ap has narro6ed in e8ery sta9e of operation< 3onfirmation and execution of trade reaches the in8estor 6ithin the least possi5le time mostly 6ithin %: seconds< 1nstant feed5ac7 is a8aila5le a5out the execution< 0ome of the 6e5sites also offerJ •
+e6 and research report
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B0E and +0E mo8ements
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0toc7 analysis
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Free5ies
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1PO and mutual fund centers and
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o8ements of interaction stoc7 exchan9es<
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STEP BY STEP PRO,EDURE IN ON%INE TRADIN!4 Follo6in9 steps explain the step 5y step approach to on&line tradin9@ •
-o9 on to the stoc7 5ro7erIs 6e5site
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Re9ister as client!in8estor
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Fill the application form and client 5ro7er a9reement form on the requisite 8alue stamp paper
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O5tain user 1D and pass 6ord
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-o9 on to the 5ro7erIs site usin9 secure user 1D and pass6ord
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ar7et 6atch pa9e 6ill sho6 real time on&line mar7et data
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/rade shares directly yourself 5y enterin9 the sym5ol or num5er of the security
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Bro7ers ser8er 6ill chec7 your limit in the on&line accountant demat account for the num5er of shares and execute the trade
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Order is executed instantly ($:&%: seconds# and confirmation can 5e o5tained<
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3onfirmation is e&mailed to in8estor 5y 5ro7er
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3ontract note is printed and mailed in >; hours
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0ettlement 6ill ta7e place automatically on the settlement da y
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Demat account and the 5an7 account 6ill 9et de5ited and credited 5y electronic means<
ON%INE TRADIN! #AS %ED TO ADDITIONA% FEATURES SU,# AS4 -imit ! stop orders@ orders that can 5e 9o unfilled 5ut there is an extra 3har9e for this lee6ay facility since one need to hold a price< ar7et orders@ orders can 5e filled at unexpected prices 5ut this type is much more ris7y since you ha8e to 5uy stoc7 at the 9i8en price< 3ash account@ 6here funds ha8e to 5e a8aila5le prior to placin9 the order< ar9in account@ 6here orders can 5e placed a9ainst stoc7s to increase Purchasin9 po6er<
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ADVANTA!ES OF ON%INE TRADIN!4
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Online tradin9 has made it possi5le for anyone to ha8e easy and efficient access to more reports and charts than it 6as pre8iously possi5le if one 6ent to any 5ro7ersI office< /hus 6e ha8e access to a lot more information online to self teaches our 5ro7ersl8es<
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Online tradin9 has let room for smaller or9aniHations to compete 6ith multinational or9aniHations since is no lon9er a le9it issue< Bein9 online does not identify the siHe of any particular or9aniHation therefore this additional po6er to the und erdo9s<
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Online tradin9 has allo6ed companies to locate themsel8es 6here they 6ant as physical location is not an issue anymore< 3ompanies can esta5lish themsel8es accordin9 to their 9ains and losses for instance 6here tax (sales and 8alue added taxes# is 5est suited to them<
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Online tradin9 9i8es control to indi8iduals and they can exercise it o8er accounts thus comprehend 6hat is 9oin9 on 6hen they trade< 1t is li7e 9oin9 5ac7 to school and re& educatin9 oneself on ho6 to trade online<
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1ndi8iduals 5enefit 5y sa8in9 comparati8ely a lot more 6hen tradin9 online as the cost per trade is less<
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1ndi8iduals can in8est in a 8ariety of products unli7e earlier 6hen people 5ou9ht 5onds mutual funds and stoc7 for lon9&term 5asis and sat on them< +o6 they can in8est in stoc7s stoc7 and index options mutual funds indi8idual 9o8ernment and e8en insurance<
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Online tradin9 has made it possi5le for one fid in8estment options that 6ere not a8aila5le on a re9ular 5asis li7e off5eat net stoc7s eccentric unique thin9s and tradin9 in 9lo5al mar7et<
INVESTORS REASONS TO TRADE ON%INE4
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/hey ha8e control o8er their accounts can ma7e their o6n decisions and dont ha8e to 9i8e reasons for their actions< /hey are independent< /hey ha8e a reason to participate in the mar7et and learn a5out it< 1t interestin9 cheap easy fast and con8enient< A lot of information is online so they can 7eep up&to&date 6ith 6hat is happenin9 in the tradin9 6orld< 1t is the interest of the small in8estors 5ecause rates 6ill 5e a8aila5le immediately across the country execution 6ill 5e immediately across the country and execution 6ill 5e immediate< 1t 6ill 9i8e in8estors a 9reater choice and 5etter realiHation< /he immediate impact 6ill 5e competition and 5enefits 6ill accrue to the in8estors< 1t 6ill lead to 5ro7era9e commissions 9oin9 do6n and 5ro7ers stri8in9 to increase 5usiness afloat< 1n8estors 6ill no6 9o to place 6hich ha8e 5etter tradin9 conditions and also mem5ers to offer them 5etter facilities< /hey ha8e access to numerous tools to in8est and can create their o6n portfolio<
#ERE ARE T#E POSSIB%E DISADVANTA!ES4
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,hen net6or7 crashes there 6ill 5e pro5lems and delays due to a lar9e influx of rapid online tradin9 criteria<
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1ndi8iduals are restricted to first&hand financial 9uidance< /his simply means that the indi8idual is himself ! herself alone to<
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A tax (sales tax and 8alue added tax# e8aluation 5ecomes an issue especially 6hen you are tradin9 internationally<
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3hances are that one has no idea 6ho one is dealin9 6ith on the other end so it is ad8isa5le to 9ather all the possi5le information a5out the party one is dealin9 6ith< 1n short do the home 6or7 and 5e prepared<
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Online tradin9 has left indi8iduals open to too much information< /his is harmful since it lea8es 5ro7era9es 6ide open to sensiti8e data<
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Accordin9 to a study conducted 5y ary Ro6land careful in8estor@ is online tradin9 5ad for your portfolio the more one trades the less returns one 9ets meanin9 that an addicted trader 9ets carried a6ay online and 5e9ins to trade for too much 6hich causes losses for him ! her<
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/he study also sho6s that smart in8estment is 5etter than fast in8estment< 0imply put speed should 5e considered to 5e a ma4or factor 6ould lead any online trader to thin7 they 7no6 the mar7et<
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1ndi8iduals thin7 that they are tradin9 6ith the mar7et directly and 7no6 6hat they are doin9 5ut the truth is that e8en throu9h technolo9y has ta7en o8er the 5asic rules of tradin9 are the same< 1t seems that the middleman has 5een remo8ed 5ut that is not so< ,hen the indi8iduals clic7 on the mouse his trade 9oes throu9h a 5ro7er< /he commissions online pertain to the intermediary<
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/here is a need for more effecti8e communication lin7s o8er the 1nternet and the a5ility of the ser8er to deal 6ith a lar9e 8olume of 8isitors<
TRADIN! AND SETT%E'ENT AT S#ARE $#AN
/he +0E first introduced online tradin9 in 1ndia< /he Online tradin9 system imparted a 9reater le8el of transparency and in8estors preferred exchan9es that offered Online tradin9 5ecause of the follo6in9 factors@
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/he ease of operation from the 8ie6 of the 5oth mem5ers and the in8estors<
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1ncrease in the confidence of the in8estors 5ecause at hi9her le8el of transparency<
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Facilities 5etter monitorin9 of the mar7et 5y the exchan9e<
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/he 5est price achie8ed in 5uyin9 and sellin9<
All these resulted in e8er&increasin9 8olumes on the exchan9es offerin9 the online tradin9< ?$
TRADIN! PRO,EDURE AT S#ARE $#AN STO,$ BRO,$IN!
0hare 2han deals in 5uyin9 and sellin9 equity shares and de5entures on the +ational 0toc7 Exchan9e (+0E# the Bom5ay 0toc7 Exchan9e (B0E# and the O8er&/he&3ounter Exchan9e of 1ndia (O/3E1#< 0hare 2han is pro8ided 6ith a computer and required soft6are from their re9istered stoc7 exchan9es< /hese centers are called SBro7er ,or7 0tationsT< /hese computers are connected to the ser8er at the stoc7 exchan9es throu9h ca5le< /he mem5er or 5ro7er sittin9 in his office can send the quotations orders ne9otiations deals in& house deals auction orders etc< throu9h the computer< /he central tradin9 system (3/0# 6ill accept these orders and send it for match< 1f there is any mista7e in the order 3/0 6ill re4ect the orders and send respecti8e error messa9e to the mem5er concern< All these operations are in 5uilt< /he main o54ecti8e of 3/0 is to monitor the 0toc7 Exchan9es operations< Order placed 5y the 5ro7er 6ill 5e sent for a match and if the match is found suita5le the transaction 6ill 5e executed< Other6ise the order 6ill 5e deleted automatically after completion of tradin9 time the carry for6ard transactions (Good /ill cancellation# are for6ard to the next day< E8en if the match is not found 6ithin the prescri5ed period the order 6ill not cancel<
TRADIN! SESSION
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/radin9 timin9s are from L@== A<< to %@%: P<< on all = days of the tradin9 period< onday to Friday is the tradin9 period in all the stoc7 exchan9es< 0EB1 has stipulated that all the stoc7 exchan9es in 1ndia must ha8e same tradin9 period<
BRO$ER WOR$ STATION4
At the 5ro7er 6or7station the 5est BBOs the last traded price the day s openin9 price pre8ious days closin9 price hi9hest and lo6est prices the 6ei9hted a8era9e price the total trade 8alue and total trade 8alue 6ill 5e a8aila5le continuously as the BBO for each scrip< Other information 6ill 5e a8aila5le on query from the B,0< /hese include top 9ainers !losers of the day< /rader&6ise scrip 6ise net position client 6ise net position top scrip 5y the 8olume!8alue mar7et summary etc< /he B,0 as a po6erful profilin9 future 6hich ena5les each trader to customiHe his!her screens layouts as is con8enient profiles may 5e set at the B,0 5y the indi8idual users for the scrips that he!she is interested in 6atchin9 columns of information a8aila5le etc< Bro7ers are also pro8ided 6ith information relatin9 to the companies in the matter of Boo7 closure Di8idend declarations resolutions in 5oard meetin9 information a5out liquidated companies company report etc< Bro7er can 8isualiHe his personal details relatin9 to trade done he can ha8e scrip 6ise details su5&5ro7er 6ise details and client&6ise details and can also ta7e the point of daily 8olume reports and ad4ustment reports< ORDERS4
Orders can 5e done one at a time or in a 5atch mode<
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/he su5mitted order 6ill 5e accepted at the 3/0 after 8alidation if found any in8alid reason the order is return 5ac7 to the B,0 6ith the appropriate error messa9e< 1f Accepted at the 3/0 it 6ill 5e added to the local pendin9 order 5oo7< /he order 6ill then 5e ta7en up for matchin9 if it is a 5uy order the system tries to find a sell order 6hich fits the requirement of the 5uy order 6hen such match is found a trade 9ets executed< Each trade in8ol8es t6o 5ro7ers and respecti8e traders 6ho sent the order< Both these traders are informed of the trade 5ein9 executed at their respecti8e B,0< At the B,0 the trade is added to the local trade 5oo7 land the pendin9 quantity decreased 5y the trade quantity in the local pendin9 order 5oo7< Orders sent 5y the 5ro7ers are t6o types@
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Good For the Day (GFD#
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Good /ill 3ancellation(G/3#
!oo. 5or the D-?4
/his also called as Smar7et orderT< For an order if the mem5er selects the deal as 9ood for day the order is treated as mar7et order< 1f a S5est 5idT founds match 6ith S5est orderT then the transaction executes< 1f the match is not found then after trade time the order is cancelled that day< +ext day he has to place a ne6 order< For example if a mem5er 6ants to purchase $::: shares of satyam info M ;:: each throu9h Good for Day order< 1f the correct match is not found order is cancelled automatically and ne6 quotation has to 5e placed the next day<
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!oo. ti// ,-nce//-tion4
/his order is for6arded to the last tradin9 day of that settlement period< /his is also called as carry for6ard order li7e GF/J 5ro7er has to select the option of G/3 for the order< 1f the order finds match 6ith in the tradin9 settlement period the order is executed< 1f no match is found the order is cancelled on the last day of settlement period< /his order is not carried for6ard to the next settlement period< For example if a mem5er places a purchase order of =:: shares of 0B1 M 'L: per share selects the order as G/3 and places an order< 1f the match is not found on that day it 6ill 5e for6arded to the next day until tradin9 settlement period day<
SETT%E'ENT OF TRANSA,TIONS4
3learin9 of transaction in the form of shares and cash is called settlement 6hich 6as held in clearin9 house of stoc7 exchan9e (for example 0*ARE2*A+ is a clearance house is mem5er in +0D- (+ational 0ecurities Depository -imited#< Buyers 6ill ta7e the deli8ery of shares throu9h the Depository Participants (DP0# li7e S#ARE $#AN and others< Finally the settlement is made 5y means of deli8erin9 the share certificates alon9 6ith the transfer deeds< /he transferor (or the seller# duly si9ned transfer deed< 1t 5ears a stamp of the sellin9 5ro7er< /he 5uyer then fills up the certificates fills up the particulars in the transfer deed< 0ettlement can 5e done in the follo6in9 6ay<
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Spot sett/ement4 under this method the deli8ery of securities and payment for them are affected
on the day of the contract itself<
Ro//in0 sett/ement4 Under this rollin9 settlement the tradin9 is on S/>T5asis i
tradin9 day then ,ednesday is the payin9 day < 1n case on non&deli8ery the securities 6ill 9o for auction< •
DE/A1-0 OF PRO3EDURE0@
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De/i@er? in 4 /he mem5ers 6ho is in PA"&OU/ position deli8ers share certificates in to
clearin9 house 6ith in the settlement period alon9 6ith the deli8ery 3helan filled in 6ith the details of share certificates 6hich has folio num5ers or distincti8e num5ers etc< • •
De/i@er? out4 /he 5uyer of shares 6ho made pay in position 6ill ta7e deli8ery of shares
from the clearin9house< • •
P-?in4 /he mem5er 6ho is in payin9 position shall pay for 8alue of shares 6ith in the
tradin9 settlement period (/>#< • •
P-?out4 /he cheques paid in the clearin9house 6ill 5e paid mem5ers 6ho are in payin9
position< • •
All disputes arisin9 5et6een mem5ers re9ardin9 non&deli8eries non&payments 9ood and 5ad deli8eries pertainin9 to the settlement 6ill 5e here 5y 0hare 2han and settled 5y the settlement committee of the exchan9e<
BRO$ERA!E STRU,TURE AT S#ARE$#AN • • • •
/radin9 & :<$: W( on each side# Deli8ery & :<=:W Exposure & ; times of deposit 0hare7han pro8ides offline tradin9 too< For this share7han is pro8idin9 a toll&free num5er i:'$!'>!'%<
The 0i@en 5/o9 ch-rt c/e-r/? eQp/-ins the process o5 on/ine tr-.in04 ?'
T#E WINDOW W#I,# DISP%YAS IS BUYIN! S#ARES ON%INE T#ROU!# S#ARE$#AN&,O'
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T#E WINDOW W#I,# DISP%YAS IS SE%%IN! S#ARES ON%INE T#ROU!# S#ARE$#AN&,O'
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SURVEI%%AN,E4
0ur8eillance can 5e done durin9 the continuous tradin9 session for monitorin9 the 5ro7er scrip and the mar7et this is referred to as online may 5e used for analysis< Analysis and monitorin9 reports that can 9enerate< For the continuous tradin9 session the sur8eillance 6or7station user can set up a mem5er of alerts any scrip 5ro7er or index the 6or7station profile 6ill 5e automatically reported to the user< /he mar7et e8ent list 6ill 5e a8aila5le to the B,0 user< Durin9 the continuous tradin9 session details of the scrip 5ro7er or index that pass the alert or 8iolate their circuit 5rea7ers are displayed on messa9e 6indo6< /here are three messa9es 6indo6s i
PROB%E' AREAS4 ,hen internet tradin9 6as first launched in Fe5< >::: the stoc7 mar7ets 6ere experiencin9 an unprecedented 5oom and it held out a lot of promise< *o6e8er t6o years do6n the line 6e find the system as failed to deli8er up to its potential< /he main reasons for declinin9 8olume of tradin9 are@
Be-rish m-r:et4 /he poor performance in the on line mar7et se9ment can 5e attri5uted to lac7 of Bull Run in the stoc7 mar7et< /his is the reason for 6hich the o8erall tradin9 as come do6n< Almost e8er since internet tradin9 has started the mar7ets ha8e remained 5earish< /his relationship 5et6een the mood of the mar7et and the internet in tradin9 indeed 9ets reflected in the 8olumes<
Poor penetr-tion o5 the internet4
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Besides the 5earishness in the equity mar7et another reason for lo6 acceptance of net tradin9 could 5e poor penetration of the internet< 1n 1ndia it is a fact that internet has not 5een a5le to spread its tentacles in rural areas and small to6ns<
/he 8ery 5asis of net tradin9 is 5ased on t6o factors@ $< An equity mar7et in 9ood shape< >< Deep penetration of the internet<
Poor internet connecti@it?4
1n the 1ndian context the quality of internet connections also comes into play for determinin9 the reasons for the lac7 in response< *ere 6e ha8e connecti8ity pro5lems and there are instances of clients panic7in9 as they could not execute their trades< any times at particularly at places other than um5ai sudden stoppa9e of electricity results in disconnection<
%on0 supp/? ch-in4
1n case of con8entional or offline tradin9 the chain is small as the clients directly interact 6ith the 5ro7ers< *o6e8er in case of internet tradin9 the chain is quite lon9 as it in8ol8es a client an internet ser8ice pro8ider ser8er stoc7 exchan9e depositor and a 5ro7er and a pro5lem can rise up at any sta9e of the chain 5rea7in9 do6n the entire system< A ,ost/? A55-ir4
Other than the technolo9ical hassles there is an element of cost as 6ell< For acti8e traders doin9 online tradin9 he has to remain connected all the time and the cost of connectin9 throu9h dial up can 6or7 out to Rs %=:: per month 6hich is o8er and a5o8e the 5ro7era9e and other ser8ice char9es< /his is the reason offerin9 online tradin9 facility
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Allo6s the clients to use the con8entional system as 6ell in order to retain them< A part from a dealin9 room most 5ro7in9 houses ha8e a separate room for the clients< ,here the stoc7 exchan9es terminals are 7ept for their use<
%o9 In@estor ,on5i.ence4
1n8estor confidence in the country has 5een 5adly hurt due to the escalatin9 1ndoPa7 tensions< /his sentiment has 9ot reflected in the stoc7 mar7ets 6hich ha8e 9one do6n< /he 9lo5al recession has also dampened the mood of the stoc7 mar7et< Althou9h the U0 economy is sho6in9 si9ns of reco8ery 5ut any tan9i5le outcome is yet to 5e felt<
DATA ,O%%E,TION4
PRI'ARY DATA as the decision of the in8estor 7eeps on chan9in9 from time to time<
3ollection of primary data is relia5le as it a8oids self report 5ias and cannot record 6hat cannot 5e said< Due to time and financial constraint ar7etin9 Research is done throu9h 0amplin9< 0ample offers 8arious 5enefits as@ $# 1t sa8es time< ># 1t helps in cuttin9 expense<
SE,ONDARY SOUR,ES /he data had 5een collected throu9h Boo7s )ournals and ,e5sites<
;&;&; SA'P%E DESI!N ;&;&;& POPU%ATION @$:: people
>
;&;&;&8 SA'P%E SICE @ /he sample siHe is ': persons<
;&;&;&; S-mp/in0 'etho.4 )ud9ment samplin9 and 3on8enience 0amplin9 /echnique )ud9ment samplin9 is mainly done on the 5asis of the 7no6led9e of the respondent a5out stoc7 mar7et and 3on8enience 0amplin9 is the technique in 6hich the researcher 4ust simply pic7s up the respondents on the 5asis of their a8aila5ility<
;&;&) 'etho.s o5 D-t- ,o//ection4
;&;&)& Instrument 5or .-t- co//ection4
/he study to 5e conducted is a5out the Deri8ati8e ar7et in 0ha7arpur( +irmaanFihar and -axmi +a9ar and mem5ers of 0hare 2han so the method of data collection used is S0URFE" E/*ODT 6ith the help of Questionnaire< ;&;&)&8 Dr-5tin0 o5 - uestionn-ire4
/o frame questionnaire or schedule 6e ha8e at first to decide re9ardin9 8arious questions to 5e incorporated< /his decision of the selection of questions depends upon the purpose of enquiry< 1n this re9ard precaution should 5e adopted to a8oid irrele8ant or unnecessary questions<
;&;& %I'ITATIONS $# For performin9 these 7in9 of research lar9e data 5ase is required< /he data collected for this study is not sufficient to analyHe the in8estment pattern of retail in8estors in 1ndia< ># /here may 5e many 8aria5les 6hich influences the result 5ut this analysis re8eals only fe6 8aria5les< %# /here can 5e some de8iations in the data as the human psycholo9y chan9es from time to time< ;# /he feed5ac7 6e 9ot may not 5e correct as the respondent mi9ht ha8e filled in the information 6ith no interest or in hurry< %
=# 0cientific research on the part of research is also required< '# Accuracy le8el may 5e effected 6hen data is su54ected to 6e i9hin9< ?# /ime 6as the 5i99est constraint as these studies cannot 5e completed 6ith accuracy in t6o month< # Understandin9 the psycholo9y of human is not the cup of e8ery one tea so mi9ht 5e some interpretations 9o 6ron9< L# 0ome respondents mi9ht ha8e ta7en the question in different sense 6hich can chan9e the data collected< $:# 3ost 6as also the constraint as collection of Primary data required hu9e amount of spendin9<
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ANA%YSISJ INTERPRETATION /here are certain questions 6hich ha8e 5een as7ed to the people for the completion of this pro4ect and find the result matchin9 to the O54ecti8e<
& PEOP%E W#O INVEST AND DONT INVEST
No 17% Yes No Yes 83%
Interpret-tion4 /his sho6s that thou9h the slo6do6n has affected many people financially and
mentally 5ut then also there is lar9e portion of population 6ho in8est their money in one or the other financial instrument in hope of 9ettin9 some handsome return< /he people 6ho dont in8est can 5e the client of the company as these people are the fresh mar7et for the company and the challen9e for the mar7eters to find out the reasons 5ehind their decision and pull them to6ards the 9ro6in9 in8estment sector<
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8& REASON FOR NOT INVESTIN!
Interpret-tion4 /his chart ans6ers the 6hy part of not in8estin9 the money< /he company
should concentrate on these reasons and try to sol8e the issues li7e impartin9 7no6led9e a5out the 8arious in8estment options and the share mar7et< /hose ha8in9 financial constraint can also 5e con8erted to the clients as the company should pro8ide them the options 6hich are in the client reach of in8estment< /he people 6ith time constraint and financially sound can 5e 9i8en an option of Portfolio ana9ement 0er8ices<
'
;& TRADER OR INVESTOR
Interpret-tion4 /his chart sho6s that ?:W of the people 5elie8e in short term tradin9 i
in8estin9 their money for less than $ year< /hese short term in8estors 5elie8e in 9ettin9 their return quic7 as they dont 6ant to par7 their money for lon9er time< /he company can attract them to6ards the share mar7et as this mar7et 9i8e hi9h return in short span com5inin9 6ith ris7 factor< /he company should identify the ris7 ta7er and then play the role of increasin9 their client 5ase 5y a5sor5in9 the clients in their company< For lon9 term in8estors aspirin9 hi9h return on their in8estment Portfolio ana9ement 0er8ices can 5e a 9ood options and attractin9 them to6ards the in8estment in 5lue chip companies in share mar7et for more than a year<
?
)& PREFEREN,E OF INVEST'ENT
Interpret-tion4 1n this chart 6e can see that the preference for 0hare ar7et is more 5ut the
preference for 1nsurance is not less< 1nsurance sector is an upcomin9 sector< /he company should see this as an opportunity and should ta7e a step to6ards di8ersification to 1nsurance sector< utual Fund is also a limited ris7y platform to in8est in 6ith 9ood return and the company should step for6ard to tell more a5out this instrument<
& W#AT 'OVES T#E S#ARE 'AR$ET
Interpret-tion4 /his helps in understandin9 the psycholo9y of the in8estor and helps the
company in ma7in9 the research reports for the clients (this is a 7ind of additional ser8ice to retain the customer to6ards share mar7et#< /he 3ompany can pro8ide the technical and fundamental analysis so that those reports help them in their analysis of share mar7et and they can ma7e their o6n company portfolio for in8estment purpose accordin9 to the mar7et forecastin9 and their o6n analysis<
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6& PER,ENTA!E OF T#E EARNIN! INVESTED BY T#E PEOP%E
Interpret-tion4 /his statistical data is 8ery important for the company as this is an estimation of
ho6 much 5usiness the company can 9et in their court< /he company could cate9ories the in8estors accordin9 to their capacity to in8est and pitch them the ri9ht product to in8est in< /he in8estors 6ho are ready to in8est more than %:W of their earnin9 should 5e treated under special cate9ory as they can 5e *i9h +et 6orth 1ndi8idual for the company<
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& APPETITE FOR RIS$
Interpret-tion4 /his data sho6s the capacity of the in8estors to ta7e ris7< /hose 6ho are ready
to ta7e hi9h ris7 see7 hi9h return on their in8estment from the mar7et< /hese data 6ill help the company to tar9et the customer 6ith ri9ht 7ind of product offerin9 to them and cate9oriHe the client under different heads< /his data 6ill also cross chec7 certain other data in the research 6hether client is true to the questionnaire or not<
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<& RE,ESSION4 T#E BEST TI'E TO PUR,#ASE S#ARE
Interpret-tion4 /his chart sho6s that in recession phase also around ;:W people do not lose
hope to earn or in8est< /he company should ta7e an initiati8e to hold the faith of these people in recession< /he rest not ha8in9 faith in the recession time should 5e pro8ided 6ith financial consultancy to do the ri9ht in8estment in the critical phase of economy<
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*& BEST FINAN,IA% INSTRU'ENT TO INVEST DURIN! BOO' P#ASE
Interpret-tion4 /his chart sho6s the proportion of people in8estin9 in different financial
instruments durin9 5oom phase< /his helps the company in 7no6in9 the psycholo9y of the in8estors as ho6 they s6itch on their in8estin9 decision from 5oom phase to normal or sta9nant phase to recession phase< 1t is expected durin9 5oom phase that there are more chance of hi9h return from share mar7et and sectors 6hich in8est their ma4or portion of money in share mar7et so =?W of people are tilted to6ards share mar7et<
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+&BEST
FINAN,IA%
INSTRU'ENT
TO
INVEST
DURIN!
RE,ESSION P#ASE
Interpret-tion4 /his chart sho6s the contrastin9 data from the earlier one< /his is ho6 the
economic situation chan9es the decision of the in8estor< As 6e can see that durin9 5oom period share mar7et 6as the most li7ed one 5ut in recession the people see the security and most of their in8estment 9oes to 9o8ernment securities and 5onds as they are safer than any other instrument< 1n recession time people usually lose faith in the economic 9ro6th and their 8ision to 9et 9ood return is 8ery short and chan9e their decision or some of them either dont in8est and 7eep their money 6ith them 6hich 9i8e them Hero in return< /he people should 5e a6are of the difference L;
5et6een recession and depression and this can 5e done 5y any company consultant to their clients<
Fin.in0s 5rom the Sur@e? After the analysis follo6in9s are the main points 6hich come o ut 5y the sur8ey@ •
• • •
0till there are people 6ho do not 6ant to 9o for the deri8ati8es mar7et 5ecause they thin7 it is ris7y and hard to understand and also due to financial constraints< ostly Professional and post 9raduates are the participant of the deri8ati8es mar7et< Deri8ati8es need continuously in8ol8ement of the in8estors< Respondents still prefer to 9o for the equity mar7et< For in8estment purpose people 9o for
•
the equity mar7et< a4ority of in8estors in8est for short term period< +ormally near a5out >:W part of the income people in8est in 8arious sectors< 0till people thin7 that mar7et is more ris7 prone and opt for 9o8ernment securities durin9
•
recession period and durin9 5oom phase they 9o for share mar7et< ain reasons for not usin9 deri8ati8es re8eals from the sur8ey are that people ha8e less
• •
• •
7no6led9e and they are una5le to understand the deri8ati8e mar7et concept< ain purpose to in8est in deri8ati8es mar7et is to hed9e them from the future ris7< ain factor 6hich people consider 5efore in8estin9 money in mar7et is condition in the mar7et< Other reasons are also there li7e profit of the company 9ro6th of the company pre8ious return on the stoc7 capital return etc<
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OBSERVATIONS AND FINDIN!S Fluctuations more in secondary mar7et than any other mar7et<
•
•
•
/here are more speculators than in8estors<
•
1nformation plays a 8ital role in the secondary mar7et<
Pre8iously rollin9 settlement is /= days no6 it chan9ed to /> days and further it 6ill 5e chan9in9 to /$ day<
•
Accordin9 to r< anish 0u7hla of otilal Os6al 0ecurities many clients 6ho re9istered themsel8es for online tradin9 ended up usin9 the offline system<
•
1t 6as also o5ser8ed that many 5ro7in9 houses offerin9 internet tradin9 allo6 clients to use their con8entional system as 6ell 4ust ensure that they do not loose them and this instead of offerin9 e&5ro7in9 ser8ices they 5ecomes ser8ice pro8iders<
•
/he num5er of players is increasin9 at a steady rate and today there are o8er a doHen of 5ro7era9e houses 6ho ha8e opted to offer net tradin9 to their customers and prominent amon9 them are 0*ARE 2*A+ 1ndia 5ulls 7ota7street otilal Os6al securities and 9eo4it<
•
/he Bom5ay stoc7 exchan9e 0ensex Hoomed past the 'L:: 5arrier for the first time in history to achie8e ne6 all&time hi9h of '';<'> intraday trade and ended at a historic close of ';L<; points<
•
0EB1 reconstruct the retail in8estors limit i
,onc/usion
•
/hin9s ha8e chan9ed for the 5etter 6ith the 0*ARE2*A+ 9oin9 on&line coupled 6ith endea8or to stream line the 6hole tradin9 system thin9s ha8e chan9ed dramatically o8er the last % to ; years< +e6 and ad8anced technolo9ies ha8e 5reached 9eo9raphical and cultural 5arriers and ha8e 5rou9ht the country6ide mar7et to doorstep< BRO2ER0 ha8e suddenly 5een thro6n to intense competition from their counter parts across the country<
•
/he Re9ional 0toc7 Exchan9es ha8e their o6n ad8anta9es li7e 5ein9 nearer to the retail in8estors and to let the Bro7ers perish 6ould 5e detrimental to stoc7 mar7et system there is no 5ro7era9e firms 6ith in 1ndia 6ith national reach<
•
1n the present scenario and to compete the BRO2ER0 6ould require sound infrastructure and tradin9 as per international standards< /he concepts of 5usiness ha8e chan9ed and today this has 5ecome ser8ice to client or to pro8ide the 5est possi5le ser8ice to client or to en9a9e into ne6 5usiness from the re9ional center to the metro centers and to impart liquidity introduction of on&line tradin9 is necessary<
•
/he introduction of on&line tradin9 6ould influence in the in8estors resultin9 in an increase in the 5usiness of the exchan9e< 1t has helped the 5ro7ers handlin9 a 8ast amount of transactions and this can 5e an efficient tradin9 deli8erin9 settlement system 6ith adequate protection to in8estors< /he tradin9 of 0*ARE2*A+ of the first day 6as Fs< $< crores<
•
Due to in8ention of online tradin9 there has 5een 9reater 5enefit to the in8estors as they could sell ! 5uy shares as and 6hen required and that to 6ith online tradin9 it 6ill inspire confidence in in8estors resultin9 in increase 5usiness of the exchan9e<
•
/he BRO2ER0 has a 9reater scope than compared to the earlier times 5ecause of in8ention of online tradin9<
•
/he concept of 5usiness has chan9ed today this is a ser8ice oriental industry hence the sur8i8al 6ould require them to pro8ide the 5est possi5le ser8ice to the client<
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•
/he lon9er tradin9 time had helped the in8estors as 6ell as the 5ro7er to ta7e much interest in the tradin9 of the securities as they had extra time to ta7e in the security mar7et<
•
/he existin9 system can 5e further impro8ed 5y introduction of stop loss facility that 6ill help to reduce in8estors losses<
•
Also there is need for an exchan9e to setup standin9 committee into 5rea7do6n of online tradin9<
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SU!!ESTIONS4 •
1 su99est the exchan9e authorities to ta7e steps to educate 1n8estors a5out their ri9hts and duties< 1 su99est to the exchan9e authorities to increase the in8estors confidences<
•
1 su99est the exchan9e authorities to 5e 8i9ilant to cur5 6ide fluctuations of prices<
•
/he speculati8e pressures are responsi5le for the 6ide chan9es in the price not attractin9 the 9enuine in8estors to the 9reater extent to6ards the mar7et<
•
Genuine in8estors are not at all interested in the speculati8e 9ain as their in8estment is 5ased on the future profits therefore the authorities of the exchan9e should 5e more 8i9ilant in imposin9 to cur5 the speculati8e of securities<
•
+ecessary steps should 5e ta7en 5y the exchan9e to deal 6ith the situations arisin9 due to 5rea7 do6n in online tradin9<
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