A REPORT ON

ONLINE TRADING

AT

BONANZA PORTFOLIO LIMITED

Project report Submitted in the

Partial fulfillment for the award of

MASTER OF BUSINESS ADMINISTRATION

By

HIMANSHU SHARMA

GOVT. ENGEENERING COLLEGE JHALAWAR( RAJ.)

( RAJASTHAN TECHNICAL UNIVERSITY, KOTA)

 CONTENTS PAGE NO.S

CHAPTER-1 Y

INTRODUCTION OF STUDY 1

CHAPTER-2 6

• LITERATURE REVIEW 42

CHAPTER-3

• COMPANY PROFILE 46

CHAPTER-4

• DATA & INTERPRETATION ANALYSIS

CHAPTER-5 60

• OBSERVATIONS
• CONCLUSIONS
• SUGGESTIONS

CHAPTER-6

• BIBLIOGRAPHY 64
 CHAPTER – 1

INTRODUCTION TO STUDY
DEMATERIALIZATION:

Dematerialization is the process of converting the physical form of shares into electronic
form. Prior to dematerialization the Indian stock markets have faced several problems like
delay in the transfer of certificates, forgery of certificates etc. Dematerialization helps to
overcome these problems as well as reduces the transaction time as compared to the
physical segment. The article discusses the procedures, advantages and problems of
dematerialization.

The Indian Stock markets have seen a major change with the introduction of depository
system and scrip less trading mechanism. There were various problems like inordinate
delays in the transfer of share certificates, delay in receipt of securities and inadequate
infrastructure in banking and postal segments to handle a large volume of application and
storage of share certificates .To overcome these problems physical dealing in securities
should be eliminated . The Indian stock market introduced the system of dematerialization
recognizing the need for scrip less trading.

According to the Depositories Act, 1996, an investor has the option to hold shares either in
physical or electronic form .The process of converting the physical form of shares into
electronic form is called dematerialization or in short demats. The converted electronic data
is stored with the depository from where they can be traded. It is similar to a bank where
an investor opens an account with any of the depository participants. Depository participant
is a representative of the depository .The DP maintains the investors securities account
balances and intimates him about the status of holdings.

ONLINE TRADING

Online Trading is an easy way to buy and sell shares from the comfort of one’s place instead of
trading through individual stockbroker and broking firms, the customer can transact with the help
of mouse click and his visits to the neighborhood broker will become a thing of the past. Even
the older generation is adapting the online trading route.
Find the right depository to provide with an online trading account can be difficult, but many
banks and companies offer excellent services for online trading. Our needs will determine which
online broker is best for us. Online trading brings in total transparency between broker an
investor in case of secondary market operation.
Whether we are buying a mutual fund, investing in commodities market or any other transaction
can be performed with minimal fuss. In India presently online trading can take place through
order routing system, which will route client orders to exchanges trading system for execution of
trade on stock exchange (NSE and BSE).
One of the measure attractions of online trading is the wealth of free commentary and analysis
about stock market and global economy. Any investor with an ounce of market saviness can
extract all the data needed to make trading decisions and complete the trades. An important
catalyst behind the emergence of thriving online brokerage system has been the buoyant stock
market. One can trade online with e-brokerage such as ICICI Direct, HDFC Securities, India
Bulls, Kotakstreet and India Info line’s 5paisa.com.
NEED OF STUDY:

With the emergence of the internet in everyday business, the significance of the online
stock market trading broker has gone up.

• It can be done from home at any desired fixed hours of the investor.

• The processing of the order is executed at proper timings as the servers of the online
trading portal are linked to the selected banks and stock exchanges though out twenty
four hours.

• The investments made are safe and secured and profit is earned at proper time without
any dispute.

• Online trading updates are also provided to the investors and also about the present grade
of their orders either through the interface or e-mail.

• The investors increase shares and make development to the company..

OBJECTIVES OF STUDY:

• To Study & understood the concept of Online trading.

• To know the time information & importance & the role played by the stock exchanges in
the process of online trading.
• To know the reasons for the introduction of online trading and their Benefits.
• To review the changes that Online trading brought when compared with the previous
systems.

RESEARCH METHODOLOGY OF THE STUDY:

DATA COLLECTION METHODS

The data collection methods include both the primary and secondary
collection methods
 Primary collection methods: This method includes the data collection from
the personal discussion with the authorized clerks and members of the
Net worth.
 Secondary collection methods: The secondary collection methods includes
the lectures of the superintend of the department of market operations
and so on. Also the data collected from the news, magazines of the Net
worth and different books issues of this study.

SCOPE OF STUDY:
The study is limited to “Demat and Online Trading”.
And since the year 2000, a big boom has been witnessed in the Indian stock Market when the
market showed the coming up of Online Trading System. Many Online stock trading
companies came but initially due to lack of Online Trading some Companies Vanished and
some survived. The Companies which are survived are getting the handsome returns also
attracting the foreign Investment Companies. Now a days this sector is facing cut-throat
Competition. And also provides huge growth prospects.

LIMITATIONS OF STUDY:

A good report tells us the results of the study. But every project has its own Limitations. These

Limitations can be in terms of:

• There is lack awareness among people about investing in stock market. So people who
are aware of such things were found in specific areas for survey purposes.
• Most people are comfortable with traditional system in small towns and like to trade from
their respective brokers, hence not providing their true opinions.
• Most of people are not using technology and Internet is growing still it is not at the
required level.
• Some of the respondents who did not do Online trading were able to respond only to
some questions.
• Limitations towards Demat and online trading confined to keep the study in manageable
limits.
REVIEW OF LITERATURE
 INTRODUCTION
India Financial Market the India Financial market comprise of talks about the
primary market, FDIs, alternative investment options, banking and
insurance and the pension sectors, asset management segment as well.
With all these elements in the India Financial market, it happens to be
one of the oldest across the globe and is definitely the fastest growing
and best among all the financial markets of the emerging economies.
The history of Indian capital markets spans back 200 years, around the
end of the 18th century. It was at this time that India was under the rule
of the East India Company. The capital market of India initially
developed around Mumbai; with around 200 to 250 securities brokers
participating in active trade during the second half of the 19th century.

Scope of the India Financial Market –The financial market in India at

present is more advanced than many other sectors as it became
organized as early as the 19th century with the securities exchanges in
Mumbai, Ahmedabad and Kolkata. In the early 1960s, the number of
securities exchanges in India became eight – including Mumbai,
Ahmedabad and Kolkata. Apart from these three exchanges, there was
the Madras, Kanpur, Delhi, Bangalore and Pune exchanges as well.
Today there are 23 regional securities exchanges in India.

The financial market used to give financial services to the Industries

The NSE provides exposure to investors into two types of financial Markets:

1. Capital market.

2. Money market.
Capital market: Refers to all the facilities and Institutional arrangements for
borrowing and lending of term funds. It does not deal in capital goods but is
concerned with the raising of money capital. It consists of term lending institutions
and investing Institutions which mainly provide long term funds.

Capital market has its growth includes:

1) Gilt-edged Securities Market

2) Industrial Securities Market

3) Development Banks and

4) Financial Services.

Industrial Securities Market has been further divided into two markets they are:

A. Primary Market.

B.Secondary Market.

Primary Market: Refers to the raising of new capital in the form of shares and
debentures, while Secondary Market deals with securities already issued by
companies. Both the markets are important, but the new issues market is much more
important from the point of view of economic growth.

Secondary Market: The market where securities are traded after they are
initially offered in the primary market. Most trading is done in the secondary
market. To explain further, it is trading in previously issued financial
instruments. An organized market for used securities. Bombay Stock
Exchange (BSE), National Stock Exchange NSE, bond markets, over-the-
counter markets, residential mortgage loans, governmental guaranteed
loans etc

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

18 Joint stock company came into existence

50

18 Speculation and feverish dealing in securities

60

18 Formulation of stock exchange of Mumbai

75

18 Formulation of Ahmadabad stock exchange

94

Money market: Money Market is a market for short-term funds, which can be used for
overnights to one year duration. It also deals with the financial assets that constitute
near money which means that the assets can be converted into cash quickly with
minimum transaction cost and without a loss in value. It consists of commercial
banks, co-operative banks and other agencies which supply only short term funds. It
consists of

• Organized Money Markets. And Un Organized money markets

• The Call Money Market, Treasury Bill Market, Collateral Money market,
Commercial paper and Certificate of deposits.

INDIAN CAPITAL MARKET AT GLANCE

20th century

19 Formulation of Calcutta stock exchange

08

19 Formulation of Lahore and madras stock exchange

39

19 Formulation of U.P and Delhi stock exchange

40

19 Securities contract and regulation act enacted

56

19 Scam of Haridas Mundhra

57

19 Securities and exchange board of India set up

88

19 Scam of MS Shoes
91

19 SEBI given power Under SEBI act,1992

92

19 Formation of National stock exchange

93

19 HARSHAD MEHTA Scam

95

19 SESA GOA Scam

95

19 CRB scam
97

19 BPL And Videocon Scam

98
21 st century

200 Depositories came into existence

0 (electronic form of shares)

200 Ketan Parekh scam

1

200 Start of rolling settlement and banning of Badla

2 trading

200 Introduction of T+3 settlement in April

2

200 Introduction of T+2 settlement in April

3

200 BSE Sensex touches all time high 6954 in January

5

200 BSE Sensex touches all time high 12500,the

6 highest intraday fall of 1100

200 BSE reaches the level of

7

200 BSE touches all time high in January 2008

8

200 Sensex saw its highest ever loss of 1,408

8 points at the end of the session.

200 Sexsex saw its 15 month low,from its all time

8 high

200 Sexsex saw its down trend & highest ever loss
9 because of Satyam case.

STOCK MARKETS IN INDIA:

A stock market is a marketplace where organized exchange (buying
and selling) of stocks or equities takes place. Indian stock markets
are one of the most dynamic and efficient stock markets in Asia. In
terms of the make up and overall dynamics, the Indian stock
markets are at par with international standards. The two national
exchanges operating in India are the National Stock Exchange (NSE)
and the Bombay Stock Exchange (BSE). These exchanges are well
equipped with electronic trading platforms and handle large volume
of transactions on a daily basis.

DEFINATION OF STOCK EXCHANGE:

Stock exchange is an organized market place where securities are traded. These
securities are issued by the government, semi-government bodies, public sector
undertakings and companies for borrowing funds and raising resources. Securities are
defined as any monetary claims (promissory notes or I.O.U) and also include shares,
debentures, bonds and etc., if these securities are marketable as in the case of the
government stock, they are transferable by endorsement and alike movable property.
They are tradable on the stock exchange. So are the case shares of companies.

Under the Securities Contract Regulation Act of 1956, securities’ trading is

regulated by the Central Government and such trading can take place only in stock
exchanges recognized by the government under this Act. As referred to earlier there
are at present 23 such recognized stock exchanges in India. Of these, major stock
exchanges, like Bombay Stock Exchange National Stock Exchange,Inter-Connected
Stock Exchange, Calcutta, Delhi, Chennai, Hyderabad and Bangalore etc. are
permanently recognized while a few are temporarily recognized. The above act has
also laid down that trading in approved contract should be done through registered
members of the exchange. As per the rules made under the above act, trading in
securities permitted to be traded would be in the normal trading hours (09:15 A.M to
3.30 P.M) on working days in the trading ring, as specified for trading purpose.
Contracts approved to be traded are the following:

A. Spot delivery deals are for deliveries of shares on the same day or the next day
as the payment is made.
B. Hand deliveries deals for delivering shares within a period of 7 to 14 days from
the date of contract.
C. Delivery through clearing for delivering shares with in a period of two months
from the date of the contract, which is now reduce to 15 days.(Reduced to 2
days in demat trading)
D. Special Delivery deals for delivering of shares for specified longer periods as
may be approved by the governing board of the stock exchange.
 Except in those deals meant for delivery on spot basis, all the rest are
to be put through by the registered brokers of a stock exchange. The securities
contracts (Regulation) rules of 1957 laid down the condition for such trading, the
trading hours, rules of trading, settlement of disputes, etc. as between the members
and of the members with reference to their clients.

HISTORY OF STOCK EXCHANGE IN INDIA

The origin of the Stock Exchanges in India can be traced back to the later half of
19th century. After the American Civil War (1860-61) due to the share mania of the
public, the number of brokers dealing in shares increased. The brokers organized an
informal association in Mumbai named “The Native Stock and Share Brokers
Association in 1875”.later evolved as Bombay stock exchange.

Increased activity in trade and commerce during the First World

War and Second World War resulted in an increase in the stock trading. The Growth of
Stock Exchanges suffered a set after the end of World War. World wide depression
affected them most of the Stock Exchanges in the early stages had a speculative nature
of working without technical strength. After independence, government took keen
interest to regulate the speculative nature of stock exchange working. In that
direction, securities and Contract Regulation Act 1956 was passed, this gave powers
to Central Government to regulate the stock exchanges. Further to develop secondary
markets in the country, stock exchanges established at Mumbai, Chennai, Delhi,
Hyderabad, Ahmedabad and Indore. The Bangalore Stock Exchange was recognized
in 1963. At present there are 23 Stock Exchanges.

Till recent past, floor trading took place in all Stock Exchanges. In the floor
trading system, the trade takes place through open outcry system during the official
trading hours. Trading posts are assigned for different securities where by and sell
activities of securities took place. This system needs a face – to – face contact among
the traders and restricts the trading volume. The speed of the new information
reflected on the prices was rather than the investors.

The Setting up of NSE and OTCEI (Over the counter exchange of India with the
screen based trading facility resulted in more and more Sock exchanges turning
towards the computer based trading. BSE introduced the screen based trading system
in 1995, which known as BOLT (Bombay on – line Trading. System).
 FUNCTIONS OF STOCK EXCHANGE

Maintain Active Trading: Shares are traded on the stock exchanges, enabling the
investors to buy and sell securities. The prices may vary from transaction to
transaction. A continuous trading increases the liquidity or marketability of the shares
traded on the stock exchanges.

Fixation of Prices: Price is determined by the transactions that flow from investors
demand and the supplier’s preferences. Usually the traded prices are made known to
the public. This helps the investors to make the better decision.

Ensures safe and fair dealings: The rules, regulations and bylaws of the Stock
Exchanges provide a measure of safety to the investors. Transactions are conducted
under competitive conditions enabling the investors to get a fair deal.

Aids in financing the Industry: A continuous market for shares provides a

favourable climate for raising capital. The negotiability and transferability of the
securities, investors are willing to subscribe to the initial public offering (IPO). This
stimulates the capital formation.

Dissemination of Information: Stock Exchanges provide information through

their various publications. They publish the share prices traded on their basis along
with the volume traded. Directory of Corporate Information is useful for the
investor’s assessment regarding the corporate. Handouts, handbooks and pamphlets
provide information regarding the functioning of the Stock Exchanges.

Performance Inducer: The prices of stocks reflect the performance of the traded
companies. This makes the corporate more concerned with its public image and tries
to maintain good performance.

Self-regulating organization: The Stock Exchanges monitor the integrity of the

members, brokers, listed companies and clients. Continuous internal audit safeguards
the investors against unfair trade practices. It settles the disputes between member
brokers, investors and brokers.
 REGULATORY FRAME WORK

This Securities Contract Regulation Act, 1956 and Securities and Exchange
board of India (SEB1) Act, 1992, provides a comprehensive legal framework. A 3-tier
regulatory structure comprising the ministry of finance, SEB1 and the Governing
Boards of the Stock Exchanges regulates the functioning of Stock Exchanges.

Ministry of finance: The Stock Exchange division of the Ministry of Finance

has powers related to the application of the provision of the SCR Act and licensing of
dealers in the other area. According to SEBI Act, The Ministry of Finance has the
appellate and the supervisory power over the SEBI. It has powered to grant recognition
to the Stock Exchange and regulation of their operations. Ministry of Finance has the
power to approve the appointments of executives chiefs and the nominations of the
public representatives in the government Boards of the Stock Exchanges. It has the
responsibility of preventing undesirable speculation.

The Securities and Exchange Board of India

 The Securities and Exchange Board of India even though established in the
year 1988. Received statutory powers only on 30th January 1992. Under the SEBI Act,
a wide variety of powers are vested in the hands of SEBI. SEBI has the powers to
regulate the business of Stock Exchanges, other security and mutual funds. Registration
and regulation of market intermediaries are also carried out by SEBI. It has
responsibility to prohibit the fraudulent unfair trade practices and insider dealings.
Takeovers are also monitored by the SEBI has the multi pronged duty to promote the
healthy growth of the capital market and protect the investors.The Governing Board of
stockexchanges: The Governing Board of the Stock Exchange consists of elected
members of directors, government nominees and public representatives. Rules, by laws
and regulations of the Stock Exchange substantial powers to the executive director for
maintaining efficient and smooth day-to day functioning of Stock Exchange. The
Governing Board has the responsibility to maintain and orderly and well-regulated
market.

The Governing body of the Stock Exchange consists of 13 members of which

A. Six members of the Stock Exchange are elected by the members of the Stock
Exchange.
B. Central Government nominates not more than three members.
C. The board nominates three public representatives.
D. SEBI nominates persona not exceeding three and
E. The Stock Exchange appoints one Executive Director.

One third of the elected members retire at annual general meeting (AGM).
The retired member can offer himself for election if he is not elected for two
consecutive years. If a member serves in the governing body for two years
consecutively, he should refrain offering himself for another two years.
 The members of the governing body elect the president and vice-president. It
needs to approval from the Central Government or the Board. The office tenure for the
president and vice-president is on year. They can offer themselves for re-election, if
they have not held for two consecutive years. In that case they can offer themselves for
re-election after a gap of one-year period.

VARIOUS STOCK EXCHANGES IN INDA:

List of Stock Exchanges in India

» Bombay Stock Exchange

» National Stock Exchange
» Regional Stock Exchanges

» Ahmedabad
» Bangalore
» Bhubaneshwar
» Calcutta
» Cochin
» Coimbatore
» Delhi
» Guwahati
» Hyderabad
» Jaipur
» Ludhiana
» Madhya Pradesh
» Madras
» Magadh
» Mangalore
» Meerut
» OTC Exchange Of India
» Pune
» Saurashtra Kutch
» UttarPradesh
» Vadodara

AMONG THESE STOCK EXCHANGES THERE ARE TWO IMPORTANT, THEY ARE:
 1) NSE
2) BSE

NATIONAL STOCK EXCHANGE

The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most
advanced exchange with 1016 companies listed and 726 trading members. Capital market
reforms in India and the launch of the Securities and Exchange Board of India (SEBI)
accelerated the incorporation of the second Indian stock exchange called the National Stock
Exchange (NSE) in 1992. After a few years of operations, the NSE has become the largest stock
exchange in India.

Three segments of the NSE trading platform were established one after another. The Wholesale
Debt Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment
was opened at the end of 1994. Finally, the Futures and Options segment began operating in
2000. Today the NSE takes the 14th position in the top 40 futures exchanges in the world.

In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior
Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50
stocks from 25 different economy sectors. The Indices are owned and managed by India Index
Services and Products Ltd (IISL) that has a consulting and licensing agreement with Standard &
Poor's.

In 1998, the National Stock Exchange of India launched its web-site and was the first exchange
in India that started trading stock on the Internet in 2000. The NSE has also proved its leadership
in the Indian financial market by gaining many awards such as 'Best IT Usage Award' by
Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine
(1999).

The NSE is owned by the group of leading financial institutions such as Indian Bank or Life
Insurance Corporation of India. However, in the totally de-mutualized Exchange, the ownership
as well as the management does not have a right to trade on the Exchange. Only qualified traders
can be involved in the securities trading.

The NSE is one of the few exchanges in the world trading all types of securities on a single
platform, which is divided into three segments: Wholesale Debt Market (WDM), Capital Market
(CM), and Futures & Options (F&O) Market.
 The main objectives of NSE are as follows
1). To establish a nation wide trading facility for equities, debt and hybrid instruments
2). To ensure equal access investors all over the country through appropriate
communication network.
3). To provide a fair, efficient and transparent securities market to investors using an
electronic communication network.
4). To enable shorter settlement cycle and book entry settlement system.
5). To meet current international standards of securities market.
Promoters of NSE: IDBI, ICICI, IFCI, LIC, GIC, SBI, Bank of Baroda. Canara Bank,
Corporation Bank, Indian Bank, Oriental Bank of Commerce. Union Bank of India, Punjab
National Bank, Infrastructure Leasing and Financial Services, Stock Holding Corporation fo India
and SBE capital market are the promoters of NSE.

NSE Nifty:

The S&P CNX Nifty (nicknamed Nifty 50 or simply Nifty), is the leading index for large
companies on the National Stock Exchange of India. S&P CNX Nifty is a well diversified 50
stock index accounting for 22 sectors of the economy. It is used for a variety of purposes such as
benchmarking fund portfolios, index based derivatives and index funds.

Nifty was developed by the economists Ajay Shah and Susan Thomas, then at IGIDR. Later on,
it came to be owned and managed by India Index Services and Products Ltd. (IISL), which is a
joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon
the index as a core product. IISL have a consulting and licensing agreement with Standard &
Poor's (S&P), who are world leaders in index services.

CNX stands for CRISIL NSE Indices. CNX ensures common branding of indices, to reflect the
identities of both the promoters, i.e. NSE and CRISIL. Thus, 'C' stands for CRISIL, 'N' stands for
NSE and X stands for Exchange or Index. The S&P prefix belongs to the US-based Standard &
Poor's Financial Information Services.

NSE other indices:

• S&P CNX Nifty

• CNX Nifty Junior
• CNX 100
• S&P CNX 500
 • CNX Midcap
• S&P CNX Defty
• CNX Midcap 200

BOMBAY STOCK EXCHANGE:

The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai; popularly
called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia. It is located
at Dalal Street, Mumbai, India.

Bombay Stock Exchange was established in 1875. There are around 5,600 Indian companies
listed with the stock exchange, and has a significant trading volume. As of October2006, the
market capitalization of the BSE was about Rs. 33.4 trillion (US $ 730 billion). The BSE
SENSEX (Sensitive index), also called the BSE 30, is a widely used market index in India and
Asia. As of 2005, it is among the 5 biggest stock exchanges in the world in terms of transactions
volume.

History:

An informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall
of Bombay from the mid-1850s, 1875, was formally organized as the Bombay Stock Exchange
(BSE).In January 1899, the stock exchange moved into the Brokers’ Hall after it was inaugurated
by James M MacLean. After the First World War, the BSE was shifted to an old building near
the Town Hall. In 1956, the Government of India recognized the Bombay Stock Exchange as the
first stock exchange in the country under the Securities Contracts (Regulation) Act.1995, when it
was replaced by an electronic (eTrading) system named BOLT,or the BSE Online Trading
system. In 2005, the status of the exchange changed from an Association of Persons (AoP) to a
full fledged corporation under the BSE (Corporatization and Demutualization) Scheme , 2005
(and its name was changed to The Bombay Stock Exchange Limited).

BSE Sensex:

The BSE SENSEX (also known as the BSE 30) is a value-weighted index composed of 30
scrips, with the base April 1979= 100. The set of companies which make up the index has been
changed only a few times in the last 20 years. These companies account for around one-fifth of
the market capitalization of the BSE.

SENSEX, first compiled in 1986 was calculated on a "Market Capitalization-Weighted"

methodology of 30 component stocks representing a sample of large, well-established and
financially sound companies. The base year of SENSEX is 1978-79. The index is widely
reported in both domestic and international markets through print as well as electronic media.
SENSEX is not only scientifically designed but also based on globally accepted construction and
review methodology. From September 2003, the SENSEX is calculated on a free-float market
capitalization methodology. The "free-float Market Capitalization-Weighted" methodology is a
widely followed index construction methodology on which majority of global equity benchmarks
are based.
The growth of equity markets in India has been phenomenal in the decade gone by. Right from
early nineties the stock market witnessed heightened activity in terms of various bull and bear
runs. More recently, the bourses in India witnessed a similar frenzy in the 'TMT' sectors. The
SENSEX captured all these happenings in the most judicial manner. One can identify the booms
and bust of the Indian equity market through SENSEX.

The values of all BSE indices are updated every 15 seconds during the market hours and
displayed through the BOLT system, BSE website and news wire agencies.

SENSEX calculation:
SENSEX is calculated using a "Market Capitalization-Weighted" methodology.

As per this methodology, the level of index at any point of time reflects the total market value of
30 component stocks relative to a base period. (The market capitalization of a company is
determined by multiplying the price of its stock by the number of shares issued by the company).
An index of a set of combined variables (such as price and number of shares) is commonly
referred as a 'Composite Index' by statisticians. A single indexed number is used to represent the
results of this calculation in order to make the value easier to work with and track over time. It is
much easier to graph a chart based on indexed values than one based on actual values. .

BSE - other Indices:

Apart from BSE SENSEX, which is the most popular stock index in India, BSE uses other stock
indices as well:

• BSE 500
• BSE PSU
• BSE MIDCAP
• BSE SMLCAP
• BSE BANK

The Securities and Exchange Board of India

The Securities and Exchange Board of India even though established in the
year 1988. Received statutory powers only on 30th January 1992. Under the
SEBI Act, a wide variety of powers are vested in the hands of SEBI. SEBI has
the powers to regulate the business of Stock Exchanges, other security and
mutual funds. Registration and regulation of market intermediaries are also
carried out by SEBI. It has responsibility to prohibit the fraudulent unfair
trade practices and insider dealings. Takeovers are also monitored by the
SEBI has the multi pronged duty to promote the healthy growth of the capital
market and protect the investors.

The Governing Board of stock exchanges:

The Governing Board of the Stock Exchange consists of elected

members of directors, government nominees and public
 representatives. Rules, by laws and regulations of the Stock Exchange
substantial powers to the executive director for maintaining efficient
and smooth day-to day functioning of Stock Exchange. The Governing
Board has the responsibility to maintain and orderly and well-regulated
market

The Governing body of the Stock Exchange consists of 13 members of

which Six members of the Stock Exchange are elected by the
members of the Stock Exchange.

F. Central Government nominates not more than three members.

G. The board nominates three public representatives.
H. SEBI nominates persona not exceeding three and
I. The Stock Exchange appoints one Executive Director.

One third of the elected members retire at annual general meeting (AGM).
The retired member can offer himself for election if he is not elected for two
consecutive years. If a member serves in the governing body for two years
consecutively, he should refrain offering himself for another two years.

The members of the governing body elect the president and vice-president. It
needs to approval from the Central Government or the Board. The office tenure for the
president and vice-president is on year. They can offer themselves for re-election, if
they have not held for two consecutive years. In that case they can offer themselves for
re-election after a gap of one-year period.

SEBI GUIDELINES TO SECONDARY MARKETS:

The Securities and Exchange Board of India even though

established in the year 1988. Received statutory powers only
on 30th January 1992. Under the SEBI Act, a wide variety of
powers are vested in the hands of SEBI. SEBI has the powers to
regulate the business of Stock Exchanges, other security and
mutual funds. Registration and regulation of market
 intermediaries are also carried out by SEBI. It has responsibility
to prohibit the fraudulent unfair trade practices and insider
dealings. Takeovers are also monitored by the SEBI has the
multi pronged duty to promote the healthy growth of the
capital market and protect the investors

MANUAL MODE OF TRADING:

TRADING PROCEDURE BEFORE ONLINE

THE TRADING RING:

 Trading on stock exchanges is officially done in the ring for a few hours from
11.00 A.M to 2.30P.M. Trading before or after official hour is called KERB TRADING.
In the trading ring space is provided for specified and non-specified sections. The
members of their authorized assistants have to wear a badge or carry with them identify
cards given by the exchange to enter the trading ring. They carry a Sauda book or
confirmation memos duly authorized by exchange. The stock exchanges operations at
floor level are highly technical in nature. Non-members are not permitted to enter into
stock market. Hence, various stages have to be completed in executing a transaction at a
stock exchange. The steps involved in the methods of trading have been given below:
A.CHOICE OF BROKER:
The prospective investor who wants to buy shares or the investor who wants to sell
his shares cannot enter into hall of the exchange and transact business. They have to act
through only member brokers. They can also appoint their bankers for this purpose.
Since, bankers can become members of stock exchange as per the present regulations.
So, the first task in transacting business on stock exchanges is to choose a broker of
repute or banker. Such people’s can ensure prompt and quick execution of a transaction
at the possible price.
At present there are 4500 authorized brokers in ISE.
PLACEMENT OF ORDER:

The next step in planning of order for the purchase or sale of Securities with
the broker. The order is usually by telegram, telephone, letter, fax etc., or in person. To
avoid delay it is placed generally over the phone. The orders may take any one of the
forms such as at best order, limit order, immediate or cancel order, discretionary order,
limited discretionary order, open order and stop loss order.
ENTRY OF ORDER INTO THE BOOKS:
 After receiving the order, the member enters them in his books and the
purchase and sale orders are distributed among his assistants to handle them separately
in non-specified and odd-lots.

EXECUTION OF ORDER:
Big brokers transact their business through their authorized clerk. Small ones
out their business personally. Orders are executed in the trading ring of the
ISE.Thisworks from 12:00 noon to 2:00 p.m discretionary order on all working days
from Monday to Friday and a special hour session on Saturday.
The floor of the stock exchange is divided into number of markets (pits)
according to the nature of security deal in. The authorized clerk/broker goes to the pit
and jobbers offer two way quotes for the scrips they deal in. they act as market makers
and provide liquidity to the market. The system has been designed to get the bet lids and
offers from the jobber’s book as well as the best buy and sell orders from the book. If
the quotation is not acceptable to the brokers, he may make a counter bid/offer.
Ultimately the bargains may be closed at a price mutually acceptable to both
the parties. In case the quotation is not acceptable to him, the broker may go to another
dealer and make a bargain. All bargains on the stock exchanges are settled by word of
mouth and there is no written contract signed immediately by the parties concerned.
Once the transaction is finalized, the deals are recorded in a Chaupri Rough notebook or
transaction note or confirmation memos. Soudha block books or confirmation memos
are provided by the stock exchange. The details are recorded in these books also. The
prices at which different scrips are traded on a particular day published on the next day
in the newspapers. An authorized representative of the stock exchange is also present in
the hall to supervise the trading.

PREPARATION OF CONTRACT NOTES

 Usually, the authorized clerks enter the particulars of the business transacted
during a particular day in ‘Kacha Sauda Book’ they are transferred to ‘Pucca Sauda
Book’, which are maintained separately for the ready delivery contracts. Then the
broker/authorized clerk prepares a contract note. A contract note is a written agreement
between the broker and his client for the transaction executed. It contains the details of
the contract made for the purchase/sale of Securities, the brokerage chargeable, name of
the company, number of shares bought/sold, net rate, etc., it is prepared in a prescribed
from and a copy of it is also sent to the client.

PLACING ORDER WITH THE BROKER:

 The next step is placing an order for the purchase/sale of securities with the
broker. The order is usually placed over telephone, fax. It can also take the form of
telegram or letter or in person. The order placed may be any of the following
varieties (largely classified on the basis of price limits that it imposes.).

 AT BEST ORDER (OR) BEST RATE ORDER:

“Buy 1000 XYZ ltd.”, it does not specify any price. It means buy XYZ Ltd. Securities at
the prevailing market price. These are executed very fast as there is no price limits.

 LIMIT ORDER:
“Buy 100 XYZ Ltd. At Rs 100”, it is an order for the purchase of shares at a specified
price by the client.(Rs 100)
  LIMITED DISCRETIONARY ORDER:
“Buy 1000 XYZ Ltd., around Rs.100”. it gives discretion to the broker. The price can be
a little above Rs 100. How much discretion is implied depends on how the broker and
client define around.

 OPEN ORDER:
It is an order to buy or sell without fixing any time or price limit on the execution of the
order.
 STOP LOSS ORDER:
“Buy 100 XYZ Ltd. @ Rs 12 to stop Rs 10”. It means buy 100 XYZ Ltd securities at
the market rate of Rs. 12 but if on the same day the price falls to Rs. 10 immediately sell
of the securities /shares. Thus an attempt is made to limit the loss of sudden unfavorable
shift in the market.

 NET RATE ORDER:

“Buy 1000 XYZ Ltd. @Rs.30 net “would mean that the client is willing to buy 1000
XYZ Ltd. For no more than Rs.30 per security inclusive of brokerage payable to the
broker. Net rate is purchase or sale rate minus brokerage.
 MARKET RATE ORDER:
Market rate is net rate plus brokerage for purchase and net minus brokerage for sale. So,
“Buy 1000 XYZ Ltd. @Rs.30 market” would mean that the client is willing to pay
Rs.30 plus brokerage for each security of XYZ Ltd.

DISADVANTAGES OF MANUAL TRADING:

1) Manual records are very difficult to be maintained safe

2) Manual records are subject to greater human error
3) Business can see itself in fines and penalties if records are lost
 4) Manual records are easier to be falsified, modified, altered or vanished, as compared
to computerized records which become very safe when using passwords, firewalls,
and back-ups.

DEPOSITORY SYSTEM:
A "Depository" is a facility for holding securities, which enables securities transactions to be processed
by book entry. To achieve this purpose, the depository may immobilize the securities or dematerialise
them (so that they exist only as electronic records).India has chosen the dematerialisation route. In
India, a depository is an organisation, which holds the beneficial owner's securities in electronic form,
through a registered Depository Participant (DP). A depository functions somewhat similar to a
commercial bank. To avail of the services offered by a depository, the investor has to open an account
with a registered DP.

BENEFITS OF DEPOSITORY SYSTEM:

In the depository system, the ownership and transfer of Securities takes place by
means of electronic book entries. At the outset, this system rids the capital
market of the danger related to handling of paper. NSDL provides numerous
direct and indirect benefits, like:

 Elimination of bad deliveries-in the depository environment, once holding of

an investor are Dematerialized, the question of bad delivery does not arise i.e.
they cannot be hold “under objection”.
 Elimination of all risks associated with physical certificates-dealing in physical
Securities have associates security risks of stocks, mutilation of certificates, loss
of certificates during movements through and from the registrars, thus exposing
the investor to the cost of obtaining duplicate certificates and advertisement,
etc.., This problem does not arise in the depository environment.

SERVICES AVAILABLE IN DEPOSITORY SYSTEM:

NSE AND BSE.

NSDL: NATIONAL SECURITY DEPOSITORY LIMITED

Although India had a vibrant capital market which is more than a century
old, the paper-based settlement of trades caused substantial problems
like bad delivery and delayed transfer of title till recently. The enactment
of Depositories Act in August 1996 paved the way for establishment of
NSDL, the first depository in India. This depository promoted by
institutions of national stature responsible for economic development of
the country has since established a national infrastructure of international
standards that handles most of the securities held and settled in
dematerialized form in the Indian capital market.

Using innovative and flexible technology systems, NSDL works to support

the investors and brokers in the capital market of the country. NSDL aims
at ensuring the safety and soundness of Indian marketplaces by
developing settlement solutions that increase efficiency, minimize risk
and reduce costs. At NSDL, we play a quiet but central role in developing
products and services that will continue to nurture the growing needs of
the financial services industry.

In the depository system, securities are held in depository accounts,

which is more or less similar to holding funds in bank accounts. Transfer
of ownership of securities is done through simple account transfers. This
method does away with all the risks and hassles normally associated with
paperwork. Consequently, the cost of transacting in a depository
environment is considerably lower as compared to transacting in
certificates.

Promoters / Shareholders

NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the largest
development bank of India, Unit Trust of India (UTI) - the largest mutual fund in India and
National Stock Exchange of India Limited (NSE) - the largest stock exchange in India. Some of
the prominent banks in the country have taken a stake in NSDL.

Promoters

• Industrial Development Bank of India Limited (Now, IDBI Bank Limited)

• Unit Trust of India (Now, Adminstrator of the Specified Undertaking of the Unit Trust of
India)
• National Stock Exchange of India Limited

Other Shareholders
 • State Bank of India
• Oriental Bank of Commerce
• Citibank NA
• Standard Chartered Bank
• HDFC Bank Limited
• The Honkong and Shanghai Banking Corporation Limited
• Deutsche Bank
• Dena Bank
• Canara Bank
• Union Bank of India

CDSL: CENTRAL DEPOSITORY SERVICES LIMITED:

A Depository facilitates holding of securities in the electronic form and enables securities
transactions to be processed by book entry by a Depository Participant (DP), who as an agent of
the depository, offers depository services to investors. According to SEBI guidelines, financial
institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is
known as beneficial owner (BO) has to open a demat account through any DP for
dematerialization of his holdings and transferring securities.

The balances in the investors account recorded and maintained with CDSL can be obtained
through the DP. The DP is required to provide the investor, at regular intervals, a statement of
account which gives the details of the securities holdings and transactions. The depository
system has effectively eliminated paper-based certificates which were prone to be fake, forged,
counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of
securities.CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading
banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard
Chartered Bank, Union Bank of India and Centurion Bank.

Promoters &shareholders

CDSL was promoted by Bombay Stock Exchange Limited (BSE) in association with Bank of
India, Bank of Baroda, State Bank of India and HDFC Bank. BSE has been involved with this
venture right from the inception and has contributed overwhelmingly to the fruition of the
project. The initial capital of the company is Rs.104.50 crores. The list of shareholders with
effect from 11th December, 2008 is as under.

•
Sr. Name of shareholders Value of % terms
No. holding (in to total
Rupees Lacs) equity
1 Bombay Stock Exchange Limited 3,825.46 36.61
2 Bank of India 1,000.00 9.57
3 Bank of Baroda 1,000.00 9.57
4 State Bank of India 1,000.00 9.57
5 HDFC Bank Limited 1,500.00 14.36
6 Standard Chartered Bank 750.00 7.18
7 Canara Bank 674.46 6.45
8 Union Bank of India 200.00 1.91
9 Bank of Maharashtra 200.00 1.91
10 The Jammu and Kashmir Bank 200.00 1.91
Limited
11 The Calcutta Stock Exchange 100.00 0.96
Association Limited
12 Others 0.08 --
TOTAL 10,450.00 100.00

•
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•
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•
•
•

DEMATERIALIZATION
 Dematerialization is a process by which physical shares of investors are converted to an
equivalent number of Securities in electronic form and credited in the investor’s account with his
Depository Participant.

Dematerialized trading is now compulsory for all investors. Beginning

of first week of January 1999, investor can trade in specific scripts in the
Demoralization form. They can provide and receive delivery only in a
Dematerialized form and share certificate will not be changed for these scripts.

A depository is an organization where Securities of shareholder are held in the

electronic form at the request of the shareholder through Depository Participant
(DPs). The system is comparable to that in a bank. If an investor wants services
offered by a depository, he would have to open an account with it through a DP-
similar to opening an account with any other branches of the bank in order to
avail of its services.

Dematerialization is a process by which physical certificates of an investor are

taken back by the company/registrar and actually destroyed and an equivalent
number of Securities are credited in the depository account of those investors. A
Depository Participant is investor’s agent in the system. He maintains investor’s
Securities account and intimates the status of holdings from time to time to the
investor.

FEATURES OF DEMAT:

• In case you want to convert your existing shares into Demat format, you can view
securities available for Demat
• You can view the details of your transactions including settlement date, pay in date, pay
out date using the View Settlement calendar option

OPENING CLEARING ACCOUNTS FOR SETTLEMENT OF TRADES:

 All the trades executed at the exchanges are settled by the
clearing member (CM), as in the case of Securities in the physical
form. To settle trades in Demat segment each CM should open one
clearing account with any of the DP.

The procedure for opening clearing accounts is:

 Approach a DP.
 Fill up an account opening form.
 Sign on an agreement with the DP.
 Application is forwarded to NSDL by DP.
 NSDL allots a number identified as CM-BP-ID.

DP opens account and an account number is providing along with

CM-BP-ID to the clearing member.
• After opening an account with the DP the investor should surrender the physical
certificates held in his name to a depository participant. These certificates will be
sent to the respective companies where they will be cancelled after dematerialization
and will credit the investors account with the DP. The securities on dematerialisation
will appear as balances in the depository account. These balances can be transferred
like the shares held in physical form. Dematerialised shares are in the fungible form
and do not have any distinctive or certificate numbers .The securities in the demat
can again be converted into physical form which is called as rematerialisation.

Safety to the investor

* Securities Exchange Board of India (SEBI) has laid down certain rules and regulations for
getting registered as a depository participant. With the recommendation of the Depository
and SEBI's own independent evaluation a DP will be registered under SEBI.

* The investors account will be credited/debited by the DP only on the basis of valid
instruction from the client.

* The system driven mandatory reconciliation is done between the DP and NSDL.

* Periodic inspections of both DP and R&T agent are conducted by NSDL

* The data interchange between NSDL and its business partners is protected by standard
protection measures such as encryption.

* No direct communication links exist between two business partners and all
communications are routed through NSDL.

* A statement of account is received periodically by the investors. NSDL sends statement of

account to a random sample of investors a s a counter check.

* The investor has the right to approach NSDL if the grievances of the investors are not
resolved by the concerned DP.

Advantages of dematerialization:

• There is no risk due to loss on account of fire, theft or mutilation.

• There is no chance of bad delivery at the time of selling shares as there is no
signature mismatch.
• Transaction costs are usually lower than that in the physical segment.
• The bonus /rights shares allotted to the investor will be immediately credited into
his account.
• Share transactions like sale or purchase and transfer/transmission etc. can be
effected in a much simpler and faster way.
• A safe and convenient way to hold securities
• ; Immediate transfer of securities;
• No stamp duty on transfer of securities;
• Elimination of risks associated with physical certificates such as bad delivery, fake
securities, delays, thefts etc.;

• - Reduction in paperwork involved in transfer of securities;

• - Reduction in transaction cost;
- No odd lot problem, even one share can be sold;
• - Nomination facility;
• - Change in address recorded with DP gets registered with all companies in which
investor holds securities electronically eliminating the need to correspond with each of
them separately;
• - Transmission of securities is done by DP eliminating correspondence with companies;
• - Automatic credit into demat account of shares, arising out of
bonus/split/consolidation/merger etc.
• - Holding investments in equity and debt instruments in a single account.

• Disadvantages of Demat account -

• There is no as such disadvantage of Demat account. And even if there is any
disadvantage of Demat account than by law, In India we Must have to use Demat
accounts to do share transactions.

A. Procedure for purchasing dematerialized securities

The procedure for purchasing dematerialized securities is also similar to the
procedure for buying physical securities.
 1. Investor instructs DP to receive credits into his account in the prescribed
form. There may be one time standing instruction or separate instruction
each time to receive credits.
2. Investor purchases securities in any of the stock exchanges linked to
depository through a broker.
3. Broker receives payment from investor and arranges payment to clearing
corporation.
4. Broker receives credit to securities in clearing account on the payout day.
5. Broker gives instructions to DP to debit clearing account and credit client’s
account. Investor receives shares into his account by way of book entry.

B. Procedure of selling dematerialized securities

The procedure for selling dematerialized securities in stock exchanges is similar as
selling physical securities. The only major difference is that instead of delivering
physical securities to the broker, the investor instructs his DP to debit his demat
account with the number of securities sold by him and credit the brokers clearing
account. The procedure for selling dematerialized securities is given below:

1. Investor sells securities in any of the stock exchange linked to

depository through a broker.
2. Investor instructs his DP to debit his demat account with the number of
securities sold and credit the broker’s clearing account.
3. Before the pay-in-day, broker of the investor transfers the securities to
clearing corporation.
4. The broker receives payment from the stock exchange.
5. The investor receives payment from the broker for sale of securities in
the same manner as received in case of sale of physical securities.
The Evolution of Stock Brokers with Online Trading

An online stock broker is an investor’s means of buying and selling shares via the Internet, just
like a regular stock broker, wherein an individual or a brokerage firm acts as one’s link to
the stock exchange. Are such services necessary? Is it, after all, not true that anyone can
engage in online trading today, and that it is possible to invest in stocks with one’s own
computer?

The fact is, only a registered (SEBI) stock broker can buy and sell shares in the stock market. Such an
individual is registered on one or many stock exchanges and is authorized to transact on behalf of
others. Apart from that, an online stock broker is very valuable to investors who are not
technically inclined and have no or little prior knowledge of stock trading. Such investors
can use their own online stock trading accounts to obtain necessary information and place
online trades at any time of the day. Others, however, still require a human interface - a real
person who will place trades on their behalf.

. INTRODUCTION TO ONLINETRADING

The Internet revolution has been changing the fundamentals of our society. It shapes the way we
communicate and the way we do business. It brings us closer and closer to vital sources of
information. It provides us with means to directly interact with service-oriented computer
systems tailored to our specific needs; therefore, we can serve ourselves better by making our
own decisions. This prevailing shift of the business paradigm is reshaping the financial industry
and transforming the way people invest.

In the old days, because of the limitations of communications technology, Wall Street was the
center for most of the Stock Exchange and Brokerage firms. Today, at this millennial transition,
investors can use revolutionary Internet Client-Server technology to trade stocks nearly
anywhere, anytime, independent of brokers' fees and service limitations.

Definition: Online Trading

The act or practice of buying and selling securities over the Internet.
Generally speaking, online trading occurs when an investor makes an order
to a broker online; the broker then executes the order through the ordinary
means. Online trading became more common in the 1990s as more
brokerages offered their services online, often for a small fee rather than a
commission on the trade.

Online trading should be distinguished from electronic trading, which occurs

on an exchange. See also: Discount brokerage. Online trading in India is the internet
based investment activity that involves no direct involvement of the broker. There are many
leading online trading portals in India along with the online trading platforms of the biggest
stock houses like the National stock exchange and the Bombay stock exchange. The total portion
of online share trading India has been found to have grown from just 3 per cent of the total
turnover in 2003-04 to 16 per cent in 2006-07

Facilities of the online trading in India:

The investor has to register with an online trading portal and get into an agreement with the firm
to trade in different securities following the terms and conditions listed down on the agreement.
The order processing is done in correct timings as the servers of the online trading portal are
connected to the stock exchanges and designated banks all round the clock. They can also get
updates on the trading and check the current status of their orders either through e-mail or
through the interface. Brokerage also provides research content on their websites, such that the
clients can take their own decisions on stocks before investing.

Products and services of the online trading in India:

Varieties of financial products and services of the online trading are available in India such as:

• Life insurance
• Equities,
• Portfolio management
• Mutual funds
• Loans
• General insurance
• Share trading
• Commodities trading
• Financial planning.

National stock exchange and Bombay stock exchange: In spite of many private stock
houses at present involved in online trading in India, the NSE and BSE are among the largest
exchanges. They handle huge daily trading volumes, supporting large amounts of data traffic,
and possessing a countrywide network. The automated online systems used for trading by the
national stock exchange and the Bombay stock exchange are the NIBIS or NSE's Internet Based
Information System and NEAT for the national stock exchange and the BSE Online Trading
system or BOLT for the Bombay stock exchange.

• .Online trading is termed as selling products or good services through Internet.

• Customers willing to purchase the product should provide the credit card details and
personal contact information online and once the payment is being made the product is
shipped to the address of the customer as provided earlier generally after two business
days.

• The product is shipped to the customer from the retailer only.

 • Online trading is treated as the most effective process to make money with the help of
Internet by sitting at home only.
• But is not easy and simple as it requires constant supervision and once people attains the
appropriate skill can gain profit in huge amount.
• In order to make a business successful a plan need to be prepared first then multiple
sources of income policy should be opened so that the plan at later time should be
incorporated in to the business.

Companies provide Online Trading in India:-

Online Trading in India

:: India Stock :: BSEIndia

:: A1 Technology Online Trading :: JV Financial Online

:: Best online trading :: Kotak Securities Online Trading

:: Bonanza Online Trading :: Mansukh Securities Online Trading

:: BullishIndian.com Online Trading :: Quote.com Online Trading

:: Express Computer Online Trading :: SHCL Online Trading

:: Geojit Securities Online :: STC Online Trading

:: ICICI Online Trading :: Technical Analysis Trading

:: Indiabulls Online :: Union Bank of India Online Trading

:: India Insurance :: Best Online Trading

FEATURES OF ONLINE TRADING: The Online Trading is having many

features which make it most suitable for the investors to go for. Some of these
features are as follows:

Features of information.

The Internet can provide a new sense of control over your financial future. The
amount of investment information available online is truly astounding. It's one of
the best aspects of being a wired investor. For the first time in history, any
individual with an Internet connection can:
 • Know the price of any stock at any time
• Review the price history of any stock in chart format
• Follow market events in-depth
• Receive a wealth of free commentary and analysis about stock
markets and the global economy
• Conduct extensive financial research on any company

Control of your money:

One of the great appeals of using an online trading account is the fact that the
account belongs to you, and is under your direct control. When you want to buy or
sell stock, you no longer need to call your broker on the phone; hope that he is in
the office to place your order; possibly argue with the broker about the order; and
hope that the transaction is executed instantly.

Access to Market:

At the most basic level, an online trading account gives you more agility in buying
and selling stocks. This is through sophisticated information streams, dedicated
trading platforms and sophisticated tools for accessing the markets.

Ensures the best price for Investor:

Every broker house aims at providing the investor with the best price available. Also
due to the high level of transparency with regard to display of information relating
to the specific stocks

and company profiles, you will be able to get the best quote for your orders.

Offers grater transperancy:

Online trading offers you greater transparency by providing you with an audit trail.
This involves a complete integrated electronic chain starting from order placement,
to clearing and settlement and finally ending with a credit into your depository
account. All these stages are subject to inspection, thus bringing in transparency
into the system.

Enables hassle free trading:

Online trading integrates your bank account, your trading account and your demat
accounts, which leads to easy and paperless trading for you.

You as an Investment online customer will be able to execute the entire trading
transaction, right from logging on to our site, to the execution and settlement of
your bank account, in a very short period of time.

Trading on the net, gives even the smallest retail investor access to information
that earlier was available only to the big traders. This provides a level playing field
for all investors in the securities market.

This method of trading reduces the settlement risk for the investor, as in this case
all short sell orders are squared off at the specified cut-off time and not allowed to
be carried forward.

In the case of a demat account your demat account is checked by us before

executing your sell transaction. This reduces the settlement risk for the buyer, who
is assured of the delivery of the securities and for you as a seller of the securities

Every trade is confirmed immediately and you will receive an on-screen

confirmation following every trade with full details for your records. This avoids
costly errors that would have been discovered when it is too late.

Your Bank, Depository and online account are integrated for your convenience.
Various broking houses provide access to many of the popular banks.
Broking houses work hard to keep our account and personal information secure.
From updated security technology to advanced fraud prevention measures, they
have the people and tools in place to provide a strong defense against electronic
scams and fraud.

BENEFITS OF ONLINE BROKING

1) Less Costly:

The most significant advantage of the Online broking is the cost reduction in the
brokerage. Due to the power of the Internet one has the privilege of becoming the
clients of really large brokerages with the benefits of enjoying the low charges
hithelio before enjoyed only by the big players. As the DP account has got linked to
the trading account most players do not charge a minimum transaction cost thus
truly allowing one to buy a single share and achieve meaningful rupee price
averaging whatever be your buying power.

2) Peace of Mind:

One can never have complete peace of mind but online investing does away with
the hassles of filling up instruction slips, visits to the broker for handing over these
slips and consequent costs.

3) Keeping Records:

The site one trades on keeps a record of all transactions down to unexecuted orders
and cancelled orders thus keeping one abreast of all your transactions 24 hours a
day. No paperwork means more time at one’s disposal for research and analysis.

4) Access to Information and investment Tools:

Most online investing sites have a wealth of information for their registered
members. This includes research reports, results, analysis and even gossip and the
buzz in the market.

5.) Unparalleled Liquidity:

The. bank account linked with the trading account invariably has an A TM free. Most
partner banks offer Internet banking as well. This results in one’s money becoming
available to him whenever he like from his trading account. Conversely in case he
spot an opportunity in the market he can immediately allocate money from his

savings account to his trading account and make profits.

6.) Unparalleled Safety:

Most sites are secure using 128-bit algorithms -highest available commercially
anywhere in the world. Moreover even if somebody broke in and tampered with
one’s account the money from the stocks he sold or the stock bought from the
money in his account is in his account only.

7.) Reduces the settlement risk:

This method of trading reduces the settlement risk for the investor, as in this case
no Short sale is possible i.e. the seller will not be able to sell the securities unless he
has their actual possession. In the case of a demat account (required for an online
transaction), when a seller wants to sell the securities, his demat account is
checked by the Depository Participant before executing the sale transaction. This
reduces the settlement risk for the buyer, who is assured of the delivery of the
securities.

8.) Offers greater transparency:

Online trading gives greater transparency to the investors by providing them an

audit trail. This involves a complete integrated electronic chain starting from order
placement, to clearing and settlement and finally ending with a credit to the
depository account of the investor. All these stages are subject to inspection, thus
bringing in transparency into the system.

9.) Ease of trade:

It is the ease of doing the trade through net, with a click of mouse, one can buy or
sell any share that is dematerialized.

Other than the above-mentioned advantages, Internet trading provides some

additional advantages to the investors, brokers and also helps the nation to
channelize the resources. Net trading would increase competition in the market
hence increase in the bargaining power of the investors. The entire communication

between the investor, broker and exchange would take place within milliseconds.
 PROBLEMS OF ONLINE BROKING

There is a flip side to everything and online trading is no exception.

Chart
Source:- www.lse.co.in

27% Loyality is of traditional broker

23% people says that online trading is more costly than manual trading.

21% people not prefer online trading because of lack of knowledge.

So, the main problems of online trading are as follows:

1.) "Server not found":

This may appear on one’s screens when he is desperately trying to get out of an
unprofitable position. Some of the online sites are providing a telephone number for
use in case their sites are overloaded or their server down.

2.) Connectivity of the Broker with NSE:

Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours
during trading hours. This problem is rare but be alive to its possibility.

3.) Cyber attack:

In the event of a malicious attack on the systems of one’s broker he is protected

only if the company is taking proper precautions against such attacks and if proper
backup is regularly been taken. He may like to choose a brokerage that has a stated
security policy and contingency plan in place.

4.) Non-availability of a seamless interface:

As a client one will access the NSE through a server of the online brokerage and this
may involve queuing delays. If a number of client access the server the server takes
its own time sending the orders to the NSE server. He must check out the
seamlessness of this interface before selecting an online brokerage. The faster the
orders are processed the more seamless is the interface.

5.) Non- availability of personalized advice:

If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do
so. If he want advice on a particular stock in his portfolio he may not even be able
to get that.

6.) Margin:

If Internet trading alone is not fast and furious enough; many people are trading on
margin. That is where the brokerage firm lends you money by leveraging his
account, allowing him to buy a large amount of securities by putting up only a small
amount of money. He may have forgotten what he read in the small print of his
agreement, but the brokerage firm has the right to change the maintenance margin
requirements without any warning or notice to him. In fact, the firm has the right to
liquidate his securities holdings (and it can pick and choose which ones) without any
notice to one if he fail to meet the margin call. And there he was leveraged to the
hilt, hoping to hit a home run when he discovered that he is required to make a
large deposit that he cannot make. The next thing one know, the firm is selling off
his securities at a point in time that is not the best for him. These are the perils of
trading on margin.

7.) Little use of advisory services:

The advisory services being promised by the brokers would be of little use to
investors looking for an insight into the market. Many would not like to rely on
research reports, which are there for all. So, net investors will have to do their own
research and take their own decision, whether wild or wise.

8.) Increased charges:

Some of the brokers are of the view that they would have to provide advisory
services to the customers. But with increased volumes, they will have to follow the
international practice of charging a little more than the normal charges from a
customer looking for personal advice.
 WHY PEOPLE ARE BENDING TOWARDS ONLINE TRADING

Several broking houses now offer online trading facilities. You can trade online with
e-brokerages such as ICICI Direct, Kotakstreet, India bulls, India info line’s
5paisa.com and HDFC securities.

If you are already comfortable trading with your regular broker, here are few
reasons why you may consider switching to trading online, or at least another
avenue of trading. an obvious advantage of online trading is that your transaction
would be virtually paperless. Your trading account would be linked to your demat
and bank account, ensuring a smooth transaction process. This is especially helpful
in the extent T+2 settlement system, where you have just two days to settle your
transaction.

The normal process of issuing of delivery note, in case of a sale, or arranging for a
payment in case of purchaser of shares, is all taken care of the minute your order is
executed online. The absence of manual intervention ensures that you are
completely in control of all transaction.

There is also little room for error, as your order is always confirmed before it is
executed. You can also make better decision as you have a clear record of all your
previous transaction. When you trade offline, a demat statement is normally sent to
you only on a quarterly basis .keeping track of your portfolio can be a hassle in such
a case. The inter net can provide a new sense of control over your financial future.
The amount of investment information available online is truly astounding. Its one
of the best aspect of being a wired investor for the first time in history, any
individual with an internet connection can:

• Know the price of any stock at any time

• Review the price history of any stock in chart format
• Follow market events in-depth
• Receive a wealth of free commentary and analysis about stock markets and
globe economy.
• Conduct extensive financial research on any company
• Talk with other investors around the world
At investsmart you can get real-time stock quotes, daily roundups of the stock
market, experts commentary, and a deep community of fellow investors.

Convenience is probably the greatest advantage online trading offers investors. if

don’t have time to trade during market hours ,perhaps you are at work, you can log
on the web-trading site and place your order offline, during off market hours. Your
order would join the queue and be expected the next day. You would need to enjoy
a good relationship with your broker, for you to be able to reach him in the late
hours. For non-resident Indians (NRI), trading online is perhaps their easiest option
to invest in the Indian stock markets.

What is more, the time difference, in some cases, can work to their advantage
.Antony, an NRI-based in New York, places his order in the evening after work, when
it is day time India and the markets are open. We also have access to considerable
information online. By just logging on to ICICI direct online, for instance, we can get
the latest news, market information and company research.

Moreover, if our connection is maddeningly slow and we want to get your order
executed immediately, most e-brokerages also provide a facility to trade offline by
placing our order via the phone.

PROCEDURE FOR ON-LINE TRADING:

An Investor interesting in trading through Internet shall such as filling the

account opening form of -broker, copies of identity proof have to, firstly
register himself with an Internet brokerage firm. Some formalities, copy of
residence proof are made to register himself with the e-trader. Secondly, the
investor would be required to open a bank account with a scheduled bank
and sufficient balance should be kept in the account. Thirdly he would be
required to open account with a depository participant because only
dematerialized shares can be traded on Internet.

The client places order via the net by logging on to his

Broker’s site.

The broker accepts and executes the order and

places it with the exchange

The exchange accepts the order after checking the share

limit for the day.

The broker makes the payment either directly via the client
bank account or pays through its own account and recovers
it later from the client.

The exchange receives money and completes the

settlement.

The client is intimated about the settlement

either through the demat or via e-mail.

So, generally following steps are followed while doing the trading through
the Internet:
Step-I:

Those investors interested in doing the trading over Internet system, that
is,NEAT - ISX (NSE), should approach the brokers and register with the Stock
Broker.

Step-2:

After registration, the broker will provide to them a login name, password
and a personal identification number (PIN).

Step-3:

Actual placement of an order, Using the place order window as under can
then place an order:

(a) First by entering the symbol and series of stock and other parameters
such as quantity and price of the scrip on the place order window.

(b) Second, fill in the symbol, series and the default quantity.

Step-4:

It is the process of review. Thus, the investor has to review the order placed
by clicking the review option. He may also re-set to clear the values.

Step-5:

After the review has been satisfactory; the order has to be sent by clicking
on the send option.

Step-6:

The investor will receive an "Order Confirmation" 'message along with the
order number and the value of the order.

Step- 7:In case the order is rejected by the Broker or the Stock Exchange for
certain reasons such as invalid price limit, an appropriate message will
appear at the bottom of the screen. At present, a time lag of about ten
seconds is there in executing the trade.

Step-8:

It is regarding charging payment, for which there are different modes. Some
brokers will take some advance payment from the, investors and will fix their
trading limits. When the trade is executed, the broker will ask the investor
for transfer of funds by the investor to his account.

When was online trading introduced in INDIA?

Online trading started in India in February 2000 when a couple of brokers started
offering an online trading platform for their customers.

THE MECHANICS OF ONLINE TRADING

CLIENT BROKER STOCK EXCHANGE

Accepts the Accepts the order

Places an order on order, Checks after checking the
the net on the the client’s scrip limit of the
broker’s website Identity and broker for the day
through the places the
distinctive I.D. order with the
code stock Executes the
exchange order
The settlement of
the deal (buy/sell
order) gets
reflected in his
Demat account.
Pays the

Exchange
The client is
though his
intimated about Receives the
owns account
the benefits
The execution of
of investor due to Online Investing:it money and
and receives
the deal by e-mail. completes the
from the client
Pays the broker settlement
account.
pending physical
delivery.
a) Independence and freedom due to enjoyed by an individual access to the markets: This is
conceivably the greatest advantage of online brokerages. A novice investor with an Internet
connection can know there all time stock quotes, historical stock price trends, have a handle
on market events, access vast amounts of economic and market analysis, do research on firms,
and interact with other investors via forums or chat rooms. This, in combination with time, can
transform even the most novice investor with an active interest in investments into a
knowledgeable and powerful investor.

b) Elimination of the “middle man”:

Investing online gives the investor a sense of control over their wealth. Buying and selling of
stock no longer requires another individual to carry it out. It saves the investor the added worries
that come with busy phone lines; broker not being in, etc. when wanting to do an important trade.
It can be done whenever and wherever by the Investor themselves.
c) Elimination of Losses on account of Brokers: Most brokers live on commissions, hence the
tactics used by them are in the favor of the broker first, the brokerage house next and finally the
client. Online brokerages pay financial advisors a fixed salary, thus eliminating the chance for an
investor doing unnecessary trades for the benefit of the brokerage firm and the broker.
d) Inexpensive and affordable commission charges: Commissions per trade online are much
lower than when compared to that charged by traditional brokerage houses like Merrill Lynch,
etc. This is the fulcrum on which online brokerages leverage. Cheap transaction costs along with
the immense amount accessible online are the biggest reasons for the clients to move online.
Traditional brokerage houses
e) Internet as an InformationSuperhighway: Information related to stocks, company
Fundamentals, etc., which were once only available to licensed brokers, are now at the finger tips
of anyone and everyone. Online brokerages are inconstant endeavor to bridge the gap between
the investor and the market.
f) Diverse range of investment products and choices: Online brokerages are offering more
Products to the consumer, so as to give the consumer a wider choice and also to accommodate
consumers that have niche tastes. Investors can invest in stocks, bonds, mutual funds, mortgages.

g) Speed of trade execution: Keeping time in mind, online trading is much quicker – as far as
accessibility and availability to investment information and execution of trades areconcerned.
Online have decreased the time for total completion of a trade from the regular T+3 days to a
matter of minutes.

The costs borne by an Individual Investor from Online Investing

a) Technical Reliability: The greatest disadvantage of online trading is the inability of a

network to be fail-safe. Computers in spite of the technological advances are by no means
perfect. There are various things that could go wrong like failure to log on to the network,
network blackout due to failure power, server crash resulting in site failure, traffic overload thus
causing site freeze. Site freeze can happen on extremely demanding days with large amounts of
orders going over the networks.
b) The investor is alone: Another disadvantage may be the penalty of a bad investment.
The do it yourself attitude that empowers the investor over his own money, can give a sense of
autonomy previously not experienced when dealing with traditional brokerages. But it can also
spell investment failure.

The Limitations of Online Investing to an individual investor:

Besides advantages and disadvantages, there exists the possibility of limitations of what online
brokerages can do for an individual investor. Though the Internet has allowed more players into
the investment playing field, some investors like the institutional investors still have an
advantage over the individual investors in spite of the Internet and all its advantages. It can be
assertively said, “Size does matter”.

Firstly, because of the sheer size of resources and contacts, institutional investors almost always
get exclusive access to the hottest Initial Public Offering (IPO) deals before it goes into the
markets. Individual investors usually gain access to these stocks after the initial price gain is
already lost. Online brokerages do offer IPO deals –provided the trading account has between
$100,000 to $500,000.

Client Broker Relationship

Know Your Client:

The stock Exchange must ensure that brokers have sufficient, verifiable information
about clients, which would facilitate risk evaluation of clients.

Broker- Client Agreement:

Brokers must enter into an agreement with clients spelling out all obligations and
rights. This agreement should also inter alia, the minimum service standards to be
maintained by the broker for such service specified by SEBI/Exchange for the
internet based trading from time to time. Exchange will prepare a model agreement
for this purpose. The broker agreement with clients should not have any clause that
is less stringent/contrary to the conditions stipulated is the model agreement.

Investor Information:
The broker web site providing the internet based trading facility should contain
information meant for investor protection such as rules and regulations affecting
client broker relationship arbitration rules, investor protection rules etc. The broker
web site providing the Internet based trading facility should also provide and display
prominently, hyper link to the web site/page on the web site of the relevant stock
exchange (s) displaying rules/ regulations/ circulars. Ticker/quote/order book
displayed on the web-site of the broker should display the time stamp as well as
source of such information against the given information.

Order/Trade Confirmation: Order/Trade confirmation should also be sent to

the investor through email at client’s discretion at the time specified by the client in
addition to the other made of display of such confirmation of real time basis on the
broker web site. The investor should be allowed to specify the time interval on the
web site itself within which he would like to receive this information through email.
Facility for reconfirmation of orders which are larger than that specified by the
member's risk management system should be provided on the internet based
system.

Handling Complaints by Investors:

Exchanges should monitor complaints from investors regarding service provided by

brokers to ensure a minimum level of service. Exchange should have separate cell
specifically to handle Internet trading related complaints. It is desirable that
exchanges should also have facility for on-line registration of complaints on their
web site.

Risk Management:

Exchanges must ensure that brokers have a system-based control on the trading
limits of clients, and exposures taken by clients. Brokers must set predefined limits
on the exposure and turnover of each client. The broker systems should be capable
of assessing the risk of the client as soon as the order comes in. The client should
be informed of acceptance/rejection of the order within a reasonable period. In case
system based control rejects an order because of client having exceeded limits etc.,
the broker system may have a review and release facility to allow the order to pass
through.

Contract Notes:

Contract notes must be issued to clients as per existing regulations, within 24 hours

of the trade execution.

Cross Trades:

As a matter of abundant precaution, the committee seeks to reiterate that as III the
case of existing system, brokers using Internet based systems for routing client
orders will also not be allowed to cross trades of their clients with each other. All
orders must be offered to the market for matching.

It is emphasized that in addition to the requirements mentioned above, all existing

obligations of the broker as per current regulation will continue without changes.
Exchanges may also like to specify more stringent standards as they may deem fit
for allowing Internet based trading facilities to their brokers.

Enforcement: A separate working group has been set to look into the
surveillance and enforcement related issues arising due to Internet based securities
trading. However, general anti-fraud provisions (SEBI Fraudulent and Unfair Trade
Practices Regulations, 1995) would apply to all transactions involving securities or
financial services, regardless of the medium.

STOCK MARKET TRADING ON INTERNET

The major events that will take place in the Indian Capital Market are introduction of
index-based futures trading on internet. Trading on internet means that the
investor’s will actually buy and sell the stocks on-line through the net. A committee
was setup by SEBI to develop regulatory parameters for use internet trading. SEBI
approved the report on the committee. SEBI decided that internet trading could
take place in India within the existing legal framework through use of order routing
system, which will route order from client to brokers, for trade execution on
registered stock exchanges. The broad also took note of the recommended
minimum technical standards for ensuring safety and security of transaction
between clients and brokers, which will be forced by the respective stock
exchanges.

Easier transaction processing

Profit in time: Investor can make profits by selling shares when the going is good.
They do not have to instruct their brokers on the cut off price to sell shares.

Ease and transparency: Since the broking, bank and demat account are all
electronically connected, all transaction get updated, demat account shows the
latest stockholding statement while the bank account shows the balance amount
after buying or selling of shares.

Precaution: Check for hidden costs of broker’s age. Beware of net seamstress.
Never double click the mouse during execution of trade avoids cyber cafes and
change password regularly.

Less fees: shares traded online require no human intervention to match buys and
sells. This means that commission costs are cut dramatically for the frequent
investor.

Market timings:
Trading on the derivatives segment takes place on all days of the week
(except Saturdays and Sundays and holidays declared by the
Exchange in advance). The market timings of the derivatives
segment are:

Normal Market / Exercise Market Open time : 09:55 hours

Normal market close :
15:30 hours
Set up cut of time for Position limit/Collateral value : till
15:30 hrs
Trade modification end time / Exercise Market :
16:15 hours

Internet Based Trading through Order Routing

Systems

Internet based trading on conventional exchanges, uses the Internet as a medium

for communicating client orders to the exchange, through broker web sites. Broker’s
web sites may serve a variety of functions. These may include;

• Allowing the clients to directly trade through investors;

• Advertise the broker dealers’ services to potential investors;
• Offer market information and investment tools similar to those offered by
information vendor or SRO web sites;
• Offer real-time or delayed quote information, continuously update quotes
while the user visits other sites, or allow investors to create a personal
stock ticker;
• Provide market summaries and commentaries, analyst reports and trading
strategies and market data on currencies, mutual funds, options, market
indices and news; and
 • Offer investors access to portfolio management tools and analytic
programs;
• Information on commission and fees; and
• Account information and research reports.

In an Order Routing system, a broker offering Internet trading facility

provides an electronic template for the customer to enter the name of the security,
whatever it is to be bought or sold, the quantity and whatever the order is a market
or limit order. Once the broker’s system receives this information.
 COMPANY PROFILE

COMPANY PROFILE

Bonanza a leading Financial Services & Brokerage House working diligently since
1994 can be described in a single word as a "Financial Powerhouse". With
acknowledged industry leadership in execution and clearing services on

Exchange Traded Derivatives and cash market products. Bonanza has spread its
trustworthy tentacles all over the country with more than 1025 outlets spread
across 340 cities.
It provides an extensive smorgasbord of services in equity, commodities, currency
derivatives, wealth management, distribution of third party products etc. Keeping in
par with the modern tech-savvy world , Bonanza makes an integrated and
innovative use of technology; it also enables its clients to trade online as well as
offline and the strategic tie-ups with the latest technology partners has earned
Bonanza this prestigious place in one of the top brokerage houses in the country.
Client -focused philosophy backed by memberships of all principal Indian Stock and
Commodity Exchanges makes Bonanza stand apart from its competitors and a
preferred service provider in the industry for value-based services.

To add to our ever-growing achievements, a study by Dun and

Bradstreet has rated Bonanza as the SIXTH largest broking house in terms of equity
terminal listings in the country. If this is not enough, Bonanza Portfolio Ltd was
recently nominated amongst the Top 3 Retail Financial Advisors of the country in an
event conducted by CNBC-TV18 and OptiMix Financial Advisor Awards 2008. Also
Bonanza has been awarded by BSE the "Major Volume driver for the year 2004-
2005, 2006-2007 and 2008-2009".

ACHIEVEMENTS

1. Top Equity Broking House in terms of branch expansion for 2008*.

2. 3rd in terms of Number of Trading Accounts for 2008*.

3. 6th in terms of trading terminals in for two consecutive years 2007- 2008*.

4. 9th in terms of Sub Brokers for 2007*

5. Awarded by BSE 'Major Volume Driver 04-05, 06-07, 07-08’.

6. Nominated among the Top 3 for the "Best Financial Advisor Awards '08" in the category
of National Distributors - Retail instituted by CNBC-TV18 and OptiMix.

* As per the survey by DUN & BRADSTREET.

CORPORATE TIE UPS

The company has Corporate Tie ups with Birla Sunlife ,Bajaj Allianz, ICICI
Prudential, SBI , Aviva , Kotak Mahindra and Reliance for Life Insurance and
General Insurance.

In General Insurance, Bonanza provides Insurance for Motor, Health,

Travel, Housekeeper, Shopkeeper, Marine, Personal and Group Insurance.

SERVICE PROVIDED BY BONANZA

1. Mutual Funds

2. Insurance
• Life Insurance
• General Insurance

3. PMS

4. Share Broking

5. IPO

6. Currency Derivatives

7. Share Broking

8. Commodity Broking

.
COMPETITORS
 RESEARCH METHODOLOGY

The basic task of research is to generate accurate

information for use in decision making. Research can be defined as the

systematic and objective process of gathering, recording and analyzing data

for aid in making business decisions.

There are basically two techniques adopted for obtaining information:

Primary Data.

Secondary Data.

Primary Data is gathered specifically for the project at hand through

personal interviews with the accounts officers.

Secondary data is previously collected and assembled for some

project other than the one at hand. It is gathered and recorded by someone

else prior to current needs of the researcher. It is less expensive than the

primary data.

SECONDARY DATA
Secondary data was collected from Ludhiana Stock Exchange

Scope of study:

The study is limited to Ludhiana Stock Exchange , Firoz Gandhi Market Ludhiana

Data Collection:

Data is collected from secondary sources.

Sources of data collection are:

1) Ludhiana Stock Exchange

2) www.nseindia.com

3) www.bseindia.com

4) www.on-linetrading.com

For the successful research the manipulation of certain things, concepts, and
symbols for the purpose of generalization is inevitable. Research is simply the pursuit of
truth with the help of the study.
Analysis and Interpretation

1. For how long you have been trading with on line-trading?

(a)1 year (b) 2 year

(c) 3 year (d) 4 year

Sample size 100

According to this survey we find that 44% people says that we

are investing the money online from one year and 26% people
says that we are investing the money online from 2 years and
19% to 11% people says that we are investing money online
from 3 to 4 year. so we can say that now online trading is very
popular in the modern market.
 2. How will you describe your experience with on-line trading till
date?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

(d) Any other

Sample size 100

According to this survey we find that 60% of people find very easy to
operate and 15% people find diffcuilt two operate and 10% and 15%
people find no secure and any other. so we can say that online trading
is very simple to operate and easy to understand.
3. what amount of money you invest normally ?

(a) 50000 (b) 100000 to 150000

(c) 150000 to 2000000 (d) Any other amount

Sample size 100

35
30
25
50000
20
100000to150000
15 150000to200000
10 AnyOther
5
0
Money

According to this survey we find that 35% of people invest

money normally 50000 and 28% of people invest money
100000to150000 and 23% and 14% of people invest money
between 150000to200000 and any other. So we can say that the
people are not invest more money in the share market because
there is a great risk involved while doing the trading.
4 . How often do you trade?

(a)Daily (b) Weekly

(c) Monthly (d) More than one month

Sample Size 100

According to this survey we find that 10% of people do trade Daily

and 40% people do trade weekly and 32% and 18% people do trade
month and more than month. So we can say that people are
generally invest in stock market weekly basis.
5. which trading you prefer?

(a) On line trading (b) Manual trading

(c) Both

Sample Size 100

According to this survey we find that 20% people prefer online

trading and 32% people prefer offline trading rest of 48% people
prefers both. So we can say that mostly people are awareness
about the on line trading and because of this reason the mostly
people are optimizing offline trading.
6. Whether online trading settled in Indian investor psyche

(a) Yes (b) No

Sample Size 100

According to this survey we find that 30% people says yes and 70%
people says no. so we can find that on line trading is not settled in
the Indian psyche because some people are not experience towards
online trading.
7. What shortcomings do you feel in Indian On-Line trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

(c) any other

Sample Size 100

According to this survey we find that 15% of people says lack of

awareness 49% says Shortage of expertise and 14% people says
Shortage Of Infra structure and 22% says any other. So we can
say that mostly people are shortage of experience about the
Indian derivatives market or share market.

8. Which media would you prefer the most for investment?

 (a) T.V (b) Newspaper

(c) Magazines (D) Journals

According to this survey we find that 55% people Prefer T.V and 25%
people prefer newspaper and 10% people prefer magazines and 10%
people prefer journals. So we can suggest that mostly people are very
easily grapped the knowledge through T.V.

FINDINGS
1. For how long you have been trading with on line-trading?

According to this survey we find that 44% people says that we

are investing the money online from one year. 11% people says
that we are investing money online from 4 year. so we can say
that now online trading is very popular in the modern market.

2. How will you describe your experience with on-line trading till date?

According to this survey we find that 60% of people find very easy
to operate. and15% people find no secure. so we can say that online
trading is very simple to operate and easy to understand

3. what amount of money you invest normally ?

According to this survey we find that 35% of people invest

money normally 50000. 14% of people invest money between
150000to200000. So we can say that the people are not invest
more money in the share market because there is a great risk
involved while doing the trading.

4. How often do you trade?

According to this survey we find that 10% of people do trade Daily.

18% people do trade more than month. So we can say that people
are generally invest in stock market weekly basis.

5. which trading you prefer?

According to this survey we find that 20% people prefer online

trading and 32% people prefer offline trading. So we can say that
mostly people are awareness about the on line trading and because
of this reason the mostly people are optimizing offline trading.

6. Whether online trading settled in Indian investor psyche

 According to this survey we find that 30% people says yes and 70%
people says no. so we can find that on line trading is not settled in
the Indian psyche because some people are not experience towards
online trading.

7. What shortcomings do you feel in Indian derivatives market?

According to this survey we find that 37% of people says lack of

awareness 49% says Shortage of expertise and 14% people says
any other. So we can say that mostly people are shortage of
experience about the Indian derivatives market or share market.

8. Which media would you prefer the most for investment?

According to this survey we find that 41% people Prefer T.V

and 39% people prefer newspaper and 20% people prefer magazines.
So we can suggest that mostly people are very easily grapped the
knowledge through T.V.

9.How did you come to know about Bonanza Portfolio Ltd.?

.
10. The USP of Bonanza Portfolio Ltd.
11.Biggest Competitor of Bonanza Portfolio Ltd.

12.The most preferred product at Bonanza

13.The areas of improvement for Bonanza Portfolio Ltd.

14. How often do you attend the training Session organized in the company?
15.The Reasons for not attending the Training Sessions
CONCLUSION

Online trading is the new concept in the stock market. In India, online trading is still
at its infancy stage. Online trading has made it easy to trade in the stock market as
now people can trade while sitting at their home. Now stock market is easily
accessible by the people. There are some problems while doing the trade through
the internet. Major problem faced by online trader is that the investors are loyal to
their traditional brokers, they rely upon the suggestions given by their brokers.
Another major problem is that the people don't have full knowledge regarding
online trading. They find it difficult to trade themselves, as a wrong entry made by
them, can bring them huge losses.

Nevertheless to say that online trading has the bright future as the percentage of
the trade done through online trading is increasing day by day.
 LIMITATIONS

Despite of the training my level best, there were still some limitation
which I think remains there to draw fruitful conclusion. There were
some practical problem which come across and could not be properly
death with

 The advisory services being promised by the brokers would be of

little use to investors looking for an insight into the market.

 As a client one will access the NSE through a server of the online
brokerage and this may involve queuing delays

 If one like to ask his broker "Aaj kya achcha lag raha hai" he may not
be able to do so. If he want advice on a particular stock in his portfolio
he may not even be able to get that.
 Suggestions

The introduction of the Internet has surprisingly changed our way of life as a
society. It has defined the way we do business and the way we correspond.
The Internet has opened many opportunities for online trading. The financial
industry revolves around the Internet. Every thing is just a few clicks away.
This makes online trading most convenient. But there are still investors who
prefer the old fashion way of offline trading and they mainly prefer offline
trading for security reasons.

Internet has introduced a way for consumers to manage their money online.
Not to mention, Internet has transformed the way investment companies
operate their business and has made it easy for private investors to gain
straight access to a range of different markets and online tools that were at
one point only reserved by the use of investment professionals. Consumer
investing and online trading has dramatically changed over the last decade.
Online trading dynamically continues to be redefined. Services have
expanded to include integrated management of additional financial
accounts. Not to mention, it has subsequently expanded in conjunction with
ground-breaking improvements to the traditional trading interface, such as
telephone interface systems.

Of course, online trading has many pros. There are several wonderful
reasons to invest online and consider online trading.
1. Money saving opportunities The amount of money you save depends
primarily on the online brokerage firm that you choose. No two firms are the
same. There may be different regulations, similar to bank regulations. There
are minimum deposits required that must be maintained. As mentioned
above, this will depend on the online brokerage firm.

2. Instant online access You can gain instant access to your account, the
value of your portfolio updates immediately before your eyes.

3. Enter online trades at anytime You can enter online trades at anytime and
from anywhere. This is very convenient if you live in a different time zone
than the country you are trading in. Not to mention, it is especially fit for
investors with busy schedules.

4. With online trading you are in charge You are in control of your
investments. No sales pitches and no hassle. You decide where to invest
your money.

BIBLIOGRAPHY

BOOKS
• C. R. Kothri, Research Methodology, Vishwa
Prakshan

MAGAZINES
• Business World
• LSE’s Magazine

INTERNET SITES
• www.nseindia.com
• www.bseindia.com
• www.on-linetrading.com
• www.sebi.gov.in
• www.lse.co.in

Questionnaire

Dear respondent,

I am student of MBA. I am working on the

project of “On-Line trading”. You are requested
to fill the questionnaire to enable, to undertake
the study on the said Project.
Name……………………….
Occupation………………
Address ……………………
Phone no………………….

1. For how long you have been trading with on line-trading?

(a)1 year (b) 2 year

(c) 3 year (d) 4 year

2 .How will you describe your experience with on-line trading till
date?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

(d) Any other

3. what amount of money you are invested normally ?

(a) 50000 (b) 100000 to 150000

(c) 150000 to 2000000 (d) Any other amount

4. How often do you trade?

(a)Daily (b) Weekly

(c) Monthly (d) More than one month

5. In which trading you will prefer?

(a) Online trading (b) offline trading

(c) Both

6. According to you online trading setteled in Indian investor psyche

(a) Yes (b) No

7. What shortcomings do you feel in Indian On-line Trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

 (d) If any other

8. Which media would you prefer the most for investor?

(a) T.V (b) Newspaper

(c) Magazines (d) Journals