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An Empirical study of Investors perception for Online Stock Trading

(A case premise to SMC Global Securities Ltd., Shimla (H.P.))

Submitted to Indira Gandhi National Open University In Partial Fulfilment of the Requirements For the Degree Of

Master of Business Administration (M.B.A.)



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. Online Trading is an easy way to buy and sell shares from the comfort of ones 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 savings 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, Kotak street and India Info lines 5paisa.com.


Mane & Hiremath (1995), states that the 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. Tay (2006 ), reveals the The financial market used to give financial services to the Industries ,The NSE provides exposure to investors into two types of financial Markets: 1. 2. Capital market. 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) 2) 3) 4) Gilt-edged Securities Market Industrial Securities Market Development Banks and Financial Services.

Dar & Sharma (2009), investigates that Industrial Securities Market has been further divided into two markets they are: A. B. Primary Market. Secondary Market.

Carlsson (1960), expresses that 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 conduitby facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions. Nishi (1955), reveals that the 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, cooperative 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. Fellner (1962), identifies that SMC Trade Online is one stop financial investment portal for all your financial needs. You can do online trading in Equities, Derivatives, Currency Futures & Commodities, apply online for IPOs, and invest online in Mutual Funds. At SMC, client services always come first & thus, we always endeavor to offer you latest online products, with state-of-the art technology, to serve you better. Rest assured, we, at

SMC, will help you realize your dream of financial freedom backed by sound in-house research & excellent advisory capabilities. Moya (1983), illustrates that in order to provide our investors hassle free and easy to use online trading tool we have designed online trading portal in such a way that it helps our customer to reap the benefits of online trading. Online trading allows you to make transaction on respective exchanges through internet. It is a very powerful medium to place your orders without any manual intervention and trades are executed in a matter of a few seconds. You can trade while working in the office or at home and if you do not have computer/internet at home, you can go to Cyber caf. Now, investors can also use their mobile for track and invest in the online trading market. Thus, it is truly a powerful medium to have full control on your investments and you can make right trade at the right time. Instant order/trade confirmation Convenient & Hassle free No Geographical & time limitations Greater Transparency Safe & Secure Secured Payment Gateways for Instant Fund Transfer Informed Decision Making & access to Advance Trading Tools Online access of back-office reports Control in the hands of customer


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..


To identify the elements that affects the investors perception in reference to online stock trading. To investigate the sources of information of investors for the stock transactions in online trading process. To study the factors that influences the investors for using online trading and their Benefits. To review the changing trend that Online trading brought over the last few years.

The purpose of this chapter is not only to describe the research procedure and the methods adopted by me for the achievement of the research objectives, explained in the previous chapter but also the logic behind the use of these methods, so that the result of this study can be evaluated and reviewed by other researchers. The chapter includes the research design, methods of data collection and the details of tools used.

Research Area: SMC SECURITIES,SHIMLA will be selected purposively for conducting the proposed research study specifying the data collection from Shimla district of H.P. Sampling Technique: Simple random sampling technique will be used for the selection of investors who deal in online trading. Sample units: Retail investors associated with the SMC SECURITIES,SHIMLA Sample size: A sample of 100 Retail investors will be selected who deal in online trading. Data Collection Techniques a) Primary data will be collected from Retail investors who deal in online trading through structured schedule. b) Secondary data will be collected from corporate reports and academic sources through books, journals, websites and industrial reports. Analytical Framework The collected data will be compiled and analyzed by the suitable statistical and mathematical tools in order to accomplish the desired objectives of the research study.


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 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.

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.

Mane , L. and Hiremath, A. (1995). A trial of online stock trading in India. Stock.traders. Pages;24: 113-17 Fellner, M. (1962). Effect and studies of stock trading in Asia., Data Quest, Pages 19-28. Dar, G. and Sharma, N. (2009). Some views on the development of online stock trading. (Suppl. I): 230.35 Moya, L. (1983), An empirical study of on-line stock trading and transactions. Indian Journal of Business Management, Vol. 4(5), pp. 108-112.


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.

(a) (b) (c) (d) 2 (a) (b) (c) (d) 3. (a) (b) (c) (d) 4. (a) (b) (c) (d) 5. (a) (b) (c) 6. (a) (b) 1. For how long you have been trading with on line-trading? 1 year 2 year 3 year 4 year .How will you describe your experience with on-line trading till date? very easy to operate very difficult to operate not secure Any other What amount of money you are invested normally ? 50000 100000 to 150000 150000 to 2000000 Any other amount How often do you trade? Daily Weekly Monthly More than one month In which trading you will prefer? Online trading offline trading Both According to you online trading settled in Indian investor psyche Yes No 10

7. (a) (b) (c) (d) 8. (a) (b) (c) (d)

What shortcomings do you feel in Indian On-line Trading ? Lack of awareness the investors about on-line trading Shortage of domestic technical expertise Shortage Of Infra structure If any other Which media would you prefer the most for investor? T.V Newspaper Magazines Journals