CHAPTER-I

INTRODUCTION

INTRODUCTION TO STUDY:
Change is the law of nature. There were times when man was a wanderer or a normal. He
himself had to go place to place in search of food, water and now everything is available at
your doorstep just at the click of the mouse. The growth of information technology has
affected almost all sectors of life. Internet has enabled us to get every information at our
doorstep. When Internet has affected all sectors he could stock markets the most important
player of the economy, has remained far behind? Like all other sectors Internet has set its feet
in the stock markets also.
Online trading definition is a basic understanding of online trading processes. Since the
invention of Internet people have beena able to do practically everything virtually. Due to the
Internet online trading has become one of the most popular ways to trade as far as stock
trading turned out to be as available to independent investors as possible. Online trading gives
both beginners who've just had a single day trading course and advanced traders an
opportunity to trade stocks, options, forex and futures all over the world without physical
presence of a broker and with much lower commissions, because everything is done online
Internet trading commissions are clearly posted on the websites of the various
services, and are typically a fixed rate charge, depending upon the type of security being
traded and the size of trade. In theory, therefore, an Interest investor always knows what
commission he is being charged on each trade. Internet investors can take as much time as
they would like to take prior to placing a trade order. Similarly the online investor likely does
not have to worry that his broker is making unauthorized trades. Since there is no individual
broker making a commission, the only person who is authorized to trace in the account is the
actual investor. Furthermore, the internet investor can never become a victim of excessive
trading (where for the broker) since the investor maintains total control over the number of
transactions which take place in the account.
All of these positive features of internet trading may lead the unwary investor to
believe that Internet trading is a way to take control of their finances and save more money in
the process. Unfortunately, this is not always the case. The advantages of Internet stock
trading have also its weaknesses and these weaknesses present significant drawbacks for the
average investor.

First and foremost, the average investor is not an expert in the financial markets. There
is a danger for allowing the autonomy of online trading to hull you into the belief that you are
an expert investor. An online investor sitting at home at a personal computer also foregoes
proper investment advice and financial planning, perhaps among the most valuable services
provided by traditional brokers.
There are, of course, additional risks relative to performing transactions over the
Internet especially on a shared computer. Those people whom investors have provided their
account number and password can freely trade that account while the investor will have little,
if any, resource against the brokerage firm for the breach of security.

NEED FOR THE STUDY:

The present study to review the online trading procedure a case study of ONLINE
TRADING at Karvy Stock Broking Limited., as the exchange has changed its trading from
it and there is need to assess the performance of the capital market.
Maintaining good records requires discipline, just like good trading. Unfortunately, many
commodity traders dont take the time to track their trading history, which can offer a wealth
of information to improve their odds of successMost professional traders, and those who
consistently make money from trading commodities, keep diligent records of their trading
activity. The same cannot be said for the masses that consistently lose at trading comm.

OBJECTIVES OF THE STUDY:

It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system

To known the on line screen based trading system adopted by indianfonl;ine and about
its communication facilities for the appropriate configuration to set network.

To known about the settlement procedure involved in indianfonline and als NSDL
operations.

Clearing defining each every term of the stock exchange trading procedures

SCOPE OF THE STUDY

Investor can assess the company financial strength and factors that effect the company.
Scope of the study is limited. We can say that 70% of the analysis is proved good for the
investor, but the 30% depends upon market sentiment.

The topic is selected to analyses the factors that affect the future EPS of a company based
on fundamentals of the company.
The market standing of the company studied in the order to give a better scope to the
Analysis is helpful to the investors, share holders, creditors for the rating of the company.

.
5

METHODOLOGY OF THE STUDY:

The data collection methods include both primary and secondary Collection methods.
Primary method: No orimary data avalible in this project.
Secondary method: The secondary data collection method includes:
The brochures and material provided by Karvy Stock Broking Limited.
The data collected from the magazines of the NSE, economic times, etc.
Various books relating to the investments, capital market and other related topics.

LIMITATIONS OF THE STUDY:

The study confines to the past and present system of the trading procedure in theand the
Indiainfoline study is confined to the coverage of all the related issues in brief. The data is collected
from the primary and secondary sources and thus is subject to slight variation than what the study
includes in reality.
The study is confined to online trading procedure only. Problems of listing are not
covered due to limited time and to keep the study in manageable limits.
-

Time constraint was a major limiting factor. Forty five days were insufficient to even
grasp the theoretical concepts.

Several other strategies that could have been studied were not done.

Lack of knowledge with the brokers.

Difference of theory from practice.

Absence of required knowledge and technology

CHAPTER-II
INDUSTRY PROFILE

PROFILE OF INDUSTRY STOCK EXCHANGE IN ONLINE:

Stocks that respond to interest rate moves, coupled with select debt schemes, are likely to be
the winners in 2015, with the Reserve Bank of India expected to start easing its monetary
policy.
Fund managers said economic prospects have improved, but the New Year may be tougher for
equity investors to make money as valuations of many stocks are rich after the broad-based
rally in 2014. Concern over interest rate hike in the US and weak global crude oil prices may
also keep investors on.
India is among the top-performing emerging markets in 2014. So far in 2014, the Sensex has
gained 34%. Smaller companies have fared even better, with the BSE Mid Cap index surging
56% and the BSE Small Cap Index jumping 75%.
Though the falling crude prices have improved the prospects of the Indian economy, India
may not be spared if there is an emerging market sell-off. "On the global front, oil exporting
nations could face problems, and there could be a global risk aversion.
Market participants consider probable interest rate cuts by the Reserve Bank of India (RBI) as
the biggest trigger for the economy and the markets. The extent of monetary policy easing
would determine the strength of rally in shares of the so-called interest rate-sensitive sectors
such as banks, auto, real estate and bonds.
Fund managers said debt funds could offer good returns in the coming year as a fall in interest
rates could lead to an appreciation in bond prices. With wholesale price inflation coming at nil
for November, expectations of interest rate cuts as early as in the March quarter are high.
"Shortterm rates can fall more than long-term rates. We expect consumer inflation to be in the
range of 5-5.5%, and expect RBI to cut interest rates by 50 basis points in 2015," said Dhawal
Dalal, executive V-P and head (fixed income), DSP BlackRock Mutual Fund. If interest rates
fall by 50 basis points, investors could see a 5% capital appreciation on their long-term gilt
fund portfolio.

Measured by BSE Sensex, stock market has generated a positive return of about 9 per cent for
investors in 2013, while gold prices fell by about three per cent and its poorer cousin silver
plummeted close to 24 per cent.
After outperforming stock market for more than a decade, gold has been on back foot for two
consecutive years now vis-a-vis equities, shows an analysis of their price movements.
"Gold's under-performance was mainly due to prices falling in dollar terms amid anticipated
tapering over last several months combined with FII investment in Indian stocks.
"This movement has been equally true for global markets as 2013 saw gold losing its shine
and markets coming back with a bang," said Jayant Manglik, President Retail Distribution,
Religare Securities.
"As always, gold and stock prices follow opposite trends and this year was no different except
that both changed direction," he said.
Improvement in the world economy has brought the risk appetite back amongst retail
investors and this has drenched the liquidity from safe havens such as gold leading to its
under-performance, an expert said.
In 2012, the Sensex had gained over 25 per cent, which was nearly double the gain of about
12.95 per cent in gold. The appreciation in silver was at about 12.84 per last year.
According to Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio, "Markets have
particularly shown great strength post July-August 2013 when RBI took some strong
measures to control the steeply depreciating rupee."
"When the US Fed gave indications that it might taper its stimulus programme given the
economy shows improvement, a knee-jerk correction was seen in most risky assets, including
stocks in Indian markets. However, assurance by the Fed about planned and staggered
tapering in stimulus once again proved to be a catalyst for the markets."
"External factors affecting Indian stocks seem to be negative for the first half of 2014 due to
continued strength of the US dollar and benign in the second half. By that time, elections too
would have taken place. A combination of domestic and international factors point to a
bumper closing of Indian markets in 2014 with double-digit percentage growth," he said.
Stock market segment mid-cap and small-cap indices have fallen by about 10 per cent and 16
per cent, respectively, in 2013.
10

Foreign Institutional Investors have bought shares worth over Rs 1.1 lakh crore (nearly USD
20 billion) till December 19. In 2012, they had pumped in Rs 1.28 lakh crore (USD 24.37
billion).
Evolution
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years
ago. The earliest records of security dealings in India are meager and obscure. The East India
Company was the dominant institution in those days and business in its loan securities used to
be transacted towards the close of the eighteenth century.
By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in
Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers
recognized by banks and merchants during 1840 and 1850.
The 1850's witnessed a rapid development of commercial enterprise and brokerage business
attracted many men into the field and by 1860 the number of brokers increased into 60.
In 1860-61 the American Civil War broke out and cotton supply from United States of Europe
was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about
200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began
(for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs.
87).
At the end of the American Civil War, the brokers who thrived out of Civil War in 1874,
found a place in a street (now appropriately called as Dalal Street) where they would
conveniently assemble and transact business. In 1887, they formally established in Bombay,
the "Native Share and Stock Brokers' Association" (which is alternatively known as " The
Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it
was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.
Other leading cities in stock market operations

11

Ahmadabad gained importance next to Bombay with respect to cotton textile industry. After
1880, many mills originated from Ahmadabad and rapidly forged ahead. As new mills were
floated, the need for a Stock Exchange at Ahmadabad was realized and in 1894 the brokers
formed "The Ahmadabad Share and Stock Brokers' Association".
What the cotton textile industry was to Bombay and Ahmadabad, the jute industry was to
Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta. After
the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares, which was
followed by a boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and
1908. On June 1908, some leading brokers formed "The Calcutta Stock Exchange
Association".
In the beginning of the twentieth century, the industrial revolution was on the way in India
with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company
Limited in 1907, an important stage in industrial advancement under Indian enterprise was
reached.
Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies generally
enjoyed phenomenal prosperity, due to the First World War.
In 1920, the then demure city of Madras had the maiden thrill of a stock exchange functioning
in its midst, under the name and style of "The Madras Stock Exchange" with 100 members.
However, when boom faded, the number of members stood reduced from 100 to 3, by 1923,
and so it went out of existence.
In 1935, the stock market activity improved, especially in South India where there was a rapid
increase in the number of textile mills and many plantation companies were floated. In 1937,
a stock exchange was once again organized in Madras - Madras Stock Exchange Association
(Pvt) Limited. (In 1957 the name was changed to Madras Stock Exchange Limited).
Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with the
Punjab Stock Exchange Limited, which was incorporated in 1936.

12

Indian Stock Exchanges - An Umbrella Growth

The Second World War broke out in 1939. It gave a sharp boom which was followed by a
slump. But, in 1943, the situation changed radically, when India was fully mobilized as a
supply base.
On account of the restrictive controls on cotton, bullion, seeds and other commodities, those
dealing in them found in the stock market as the only outlet for their activities. They were
anxious to join the trade and their number was swelled by numerous others. Many new
associations were constituted for the purpose and Stock Exchanges in all parts of the country
were floated.
The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited (1940)
and Hyderabad Stock Exchange Limited (1944) were incorporated.
In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and the
Delhi Stocks and Shares Exchange Limited - were floated and later in June 1947,
amalgamated into the Delhi Stock Exchnage Association Limited.
Post-independence Scenario
Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange
was closed during partition of the country and later migrated to Delhi and merged with Delhi
Stock Exchange.
Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963.
Most of the other exchanges languished till 1957 when they applied to the Central
Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only
Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and Indore, the well established
exchanges, were recognized under the Act. Some of the members of the other Associations
were required to be admitted by the recognized stock exchanges on a concessional basis, but
acting on the principle of unitary control, all these pseudo stock exchanges were refused
recognition by the Government of India and they thereupon ceased to function.
13

Thus, during early sixties there were eight recognized stock exchanges in India (mentioned
above). The number virtually remained unchanged, for nearly two decades. During eighties,
however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar
Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange
Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock
Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh
Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989),
Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange
Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently
established exchanges - Coimbatore and Meerut. Thus, at present, there are totally twenty one
recognized stock exchanges in India excluding the Over The Counter Exchange of India
Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
The Table given below portrays the overall growth pattern of Indian stock markets since
independence. It is quite evident from the Table that Indian stock markets have not only
grown just in number of exchanges, but also in number of listed companies and in capital of
listed companies. The remarkable growth after 1985 can be clearly seen from the Table, and
this was due to the favouring government policies towards security market industry.
Trading Pattern of the Indian Stock Market
Trading in Indian stock exchanges are limited to listed securities of public limited companies.
They are broadly divided into two categories, namely, specified securities (forward list) and
non-specified securities (cash list). Equity shares of dividend paying, growth-oriented
companies with a paid-up capital of atleast Rs.50 million and a market capitalization of atleast
Rs.100 million and having more than 20,000 shareholders are, normally, put in the specified
group and the balance in non-specified group.
Two types of transactions can be carried out on the Indian stock exchanges: (a) spot delivery
transactions "for delivery and payment within the time or on the date stipulated when entering
into the contract which shall not be more than 14 days following the date of the contract" :
and (b) forward transactions "delivery and payment can be extended by further period of 14
14

days each so that the overall period does not exceed 90 days from the date of the contract".
The latter is permitted only in the case of specified shares. The brokers who carry over the
outstandings pay carry over charges (cantango or backwardation) which are usually
determined by the rates of interest prevailing.
A member broker in an Indian stock exchange can act as an agent, buy and sell securities for
his clients on a commission basis and also can act as a trader or dealer as a principal, buy and
sell securities on his own account and risk, in contrast with the practice prevailing on New
York and London Stock Exchanges, where a member can act as a jobber or a broker only.
The nature of trading on Indian Stock Exchanges are that of age old conventional style of
face-to-face trading with bids and offers being made by open outcry. However, there is a great
amount of effort to modernize the Indian stock exchanges in the very recent times.
Over The Counter Exchange of India (OTCEI)
The traditional trading mechanism prevailed in the Indian stock markets gave way to many
functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long
settlement periods and benami transactions, which affected the small investors to a great
extent. To provide improved services to investors, the country's first ringless, scripless,
electronic stock exchange - OTCEI - was created in 1992 by country's premier financial
institutions - Unit Trust of India, Industrial Credit and Investment Corporation of India,
Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation
of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.
Trading at OTCEI is done over the centres spread across the country. Securities traded on the
OTCEI are classified into:

Listed Securities - The shares and debentures of the companies listed on the OTC can
be bought or sold at any OTC counter all over the country and they should not be
listed anywhere else

15

Permitted Securities - Certain shares and debentures listed on other exchanges and
units of mutual funds are allowed to be traded

Initiated debentures - Any equity holding atleast one lakh debentures of a particular
scrip can offer them for trading on the OTC.

OTC has a unique feature of trading compared to other traditional exchanges. That is,
certificates of listed securities and initiated debentures are not traded at OTC. The original
certificate will be safely with the custodian. But, a counter receipt is generated out at the
counter which substitutes the share certificate and is used for all transactions.
In the case of permitted securities, the system is similar to a traditional stock exchange. The
difference is that the delivery and payment procedure will be completed within 14 days.
Compared to the traditional Exchanges, OTC Exchange network has the following
advantages:

OTCEI has widely dispersed trading mechanism across the country which provides
greater liquidity and lesser risk of intermediary charges.

Greater transparency and accuracy of prices is obtained due to the screen-based

scripless trading.

Since the exact price of the transaction is shown on the computer screen, the investor
gets to know the exact price at which s/he is trading.

Faster settlement and transfer process compared to other exchanges.

In the case of an OTC issue (new issue), the allotment procedure is completed in a
month and trading commences after a month of the issue closure, whereas it takes a
longer period for the same with respect to other exchanges.

Thus, with the superior trading mechanism coupled with information transparency investors
are gradually becoming aware of the manifold advantages of the OTCEI.
16

National Stock Exchange (NSE)

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock
market trading system on par with the international standards. On the basis of the
recommendations of high powered Pherwani Committee, the National Stock Exchange was
incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and
Investment Corporation of India, Industrial Finance Corporation of India, all Insurance
Corporations, selected commercial banks and others.
Trading at NSE can be classified under two broad categories:
(a) Wholesale debt market and
(b) Capital market.
Wholesale debt market operations are similar to money market operations - institutions and
corporate bodies enter into high value transactions in financial instruments such as
government securities, treasury bills, public sector unit bonds, commercial paper, certificate
of deposit, etc.
There are two kinds of players in NSE:
(a) trading members and
(b) participants.
Recognized members of NSE are called trading members who trade on behalf of themselves
and their clients. Participants include trading members and large players like banks who take
direct settlement responsibility.
Trading at NSE takes place through a fully automated screen-based trading mechanism which
adopts the principle of an order-driven market. Trading members can stay at their offices and
execute the trading, since they are linked through a communication network. The prices at
which the buyer and seller are willing to transact will appear on the screen. When the prices
17

match the transaction will be completed and a confirmation slip will be printed at the office of
the trading member.
NSE has several advantages over the traditional trading exchanges. They are as follows:

NSE brings an integrated stock market trading network across the nation.

Investors can trade at the same price from anywhere in the country since inter-market
operations are streamlined coupled with the countrywide access to the securities.

Delays in communication, late payments and the malpractices prevailing in the

traditional trading mechanism can be done away with greater operational efficiency
and informational transparency in the stock market operations, with the support of
total computerized network.

Unless stock markets provide professionalized service, small investors and foreign investors
will not be interested in capital market operations. And capital market being one of the major
source of long-term finance for industrial projects, India cannot afford to damage the capital
market path. In this regard NSE gains vital importance in the Indian capital market system.
Preamble
Often, in the economic literature we find the terms development and growth are used
interchangeably. However, there is a difference. Economic growth refers to the sustained
increase in per capita or total income, while the term economic development implies sustained
structural change, including all the complex effects of economic growth. In other words,
growth is associated with free enterprise, where as development requires some sort of control
and regulation of the forces affecting development. Thus, economic development is a process
and growth is a phenomenon.
Economic planning is very critical for a nation, especially a developing country like India to
take the country in the path of economic development to attain economic growth.
Why Economic Planning for India?
18

One of the major objective of planning in India is to increase the rate of economic
development, implying that increasing the rate of capital formation by raising the levels of
income, saving and investment. However, increasing the rate of capital formation in India is
beset with a number of difficulties. People are poverty ridden. Their capacity to save is
extremely low due to low levels of income and high propensity to consume. Therefor, the rate
of investment is low which leads to capital deficiency and low productivity. Low productivity
means low income and the vicious circle continues. Thus, to break this vicious economic
circle, planning is inevitable for India.
The market mechanism works imperfectly in developing nations due to the ignorance and
unfamiliarity with it. Therefore, to improve and strengthen market mechanism planning is
very vital. In India, a large portion of the economy is non-monitised; the product, factors of
production, money and capital markets is not organized properly. Thus the prevailing price
mechanism fails to bring about adjustments between aggregate demand and supply of goods
and services. Thus, to improve the economy, market imperfections has to be removed;
available resources has to be mobilized and utilized efficiently; and structural rigidities has to
be overcome. These can be attained only through planning.
In India, capital is scarce; and unemployment and disguised unemployment is prevalent. Thus,
where capital was being scarce and labour being abundant, providing useful employment
opportunities to an increasing labour force is a difficult exercise. Only a centralized planning
model can solve this macro problem of India.
Further, in a country like India where agricultural dependence is very high, one cannot ignore
this segment in the process of economic development. Therefore, an economic development
model has to consider a balanced approach to link both agriculture and industry and lead for a
paralleled growth. Not to mention, both agriculture and industry cannot develop without
adequate infrastructural facilities which only the state can provide and this is possible only
through a well carved out planning strategy. The governments role in providing infrastructure
is unavoidable due to the fact that the role of private sector in infrastructural development of
India is very minimal since these infrastructure projects are considered as unprofitable by the
private sector.
19

Further, India is a clear case of income disparity. Thus, it is the duty of the state to reduce the
prevailing income inequalities. This is possible only through planning.

Planning History of India

The development of planning in India began prior to the first Five Year Plan of independent
India, long before independence even. The idea of central directions of resources to overcome
persistent poverty gradually, because one of the main policies advocated by nationalists early
in the century. The Congress Party worked out a program for economic advancement during
the 1920s, and 1930s and by the 1938 they formed a National Planning Committee under the
chairmanship of future Prime Minister Nehru. The Committee had little time to do anything
but prepare programs and reports before the Second World War which put an end to it. But it
was already more than an academic exercise remote from administration. Provisional
government had been elected in 1938, and the Congress Party leaders held positions of
responsibility. After the war, the Interim government of the pre-independence years appointed
an Advisory Planning Board. The Board produced a number of somewhat disconnected Plans
itself. But, more important in the long run, it recommended the appointment of a Planning
Commission.
The Planning Commission did not start work properly until 1950. During the first three years
of independent India, the state and economy scarcely had a stable structure at all, while
millions of refugees crossed the newly established borders of India and Pakistan, and while
ex-princely states (over 500 of them) were being merged into India or Pakistan. The Planning
Commission as it now exists, was not set up until the new India had adopted its Constitution
in January 1950.
Objectives of Indian Planning
The Planning Commission was set up the following Directive principles :

20

To make an assessment of the material, capital and human resources of the country,
including technical personnel, and investigate the possibilities of augmenting such of
these resources as are found to be deficient in relation to the nations requirement.

To formulate a plan for the most effective and balanced use of the countrys resources.

Having determined the priorities, to define the stages in which the plan should be
carried out, and propose the allocation of resources for the completion of each stage.

To indicate the factors which are tending to retard economic development, and
determine the conditions which, in view of the current social and political situation,
should be established for the successful execution of the Plan.

To determine the nature of the machinery this will be necessary for securing the
successful implementation of each stage of Plan in all its aspects.

To appraise from time to time the progress achieved in the execution of each stage of
the Plan and recommend the adjustments of policy and measures that such appraisals
may show to be necessary.

To make such interim or auxiliary recommendations as appear to it to be appropriate

either for facilitating the discharge of the duties assigned to it or on a consideration of
the prevailing economic conditions, current policies, measures and development
programs; or on an examination of such specific problems as may be referred to it for
advice by Central or State Governments.

The long-term general objectives of Indian Planning are as follows:

Increasing National Income

Reducing inequalities in the distribution of income and wealth

Elimination of poverty

Providing additional employment; and

21

Alleviating bottlenecks in the areas of : agricultural production, manufacturing

capacity for producers goods and balance of payments.

Economic growth, as the primary objective has remained in focus in all Five Year Plans.
Approximately, economic growth has been targeted at a rate of five per cent per annum. High
priority to economic growth in Indian Plans looks very much justified in view of long period
of stagnation during the British rule

CHAPTER-III
COMPANY PROFILE

22

KARVY STOCKBROKING LIMITED:

COMPANY PROFILEOVERVIEW OF THE KARVY:
HISTORY:
Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely
towards attaining diverse goals of the customer through varied services. Creating a plethora of
opportunities for the customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes no boundaries.
Helping the customer create waves in his portfolio and empowering the investor completely is
the ultimate goal.
Stock Broking Services
It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success
rate as a wealth management and wealth accumulation option. The difference between
unpredictability and a safety anchor in the market is provided by in-depth knowledge of
market functioning and changing trends, planning with foresight and choosing one's options
with care. This is what we provide in our Stock Broking services.
We offer services that are beyond just a medium for buying and selling stocks and shares.
Instead we provide services which are multi dimensional and multi-focused in their scope.
There are several advantages in utilizing our Stock Broking services, which are the reasons
why it is one of the best in the country.
23

We offer trading on a vast platform National Stock Exchange and Bombay Stock Exchange.
More importantly, we make trading safe to the maximum possible extent, by accounting for
several risk factors and planning accordingly. We are assisted in this task by our in-depth
research, constant feedback and sound advisory facilities. Our highly skilled research team,
comprising of technical analysts as well as fundamental specialists, secure result-oriented
information on market trends, market analysis and market predictions. This crucial
information is given as a constant feedback to our customers, through daily reports delivered
thrice daily ; The Pre-session Report, where market scenario for the day is predicted, The
Mid-session Report, timed to arrive during lunch break , where the market forecast for the rest
of the day is given and The Post-session Report, the final report for the day, where the market
and the report itself is reviewed. To add to this repository of information, we publish a
monthly magazine "Karvy The Finapolis", which analyzes the latest stock market trends and
takes a close look at the various investment options, and products available in the market,
while a weekly report, called "Karvy Bazaar Baatein", keeps you more informed on the
immediate trends in the stock market. In addition, our specific industry reports give
comprehensive information on various industries. Besides this, we also offer special portfolio
analysis packages that provide daily technical advice on scrips for successful portfolio
management and provide customized advisory services to help you make the right financial
moves that are specifically suited to your portfolio.
Our Stock Broking services are widely networked across India, with the number of our
trading terminals providing retail stock broking facilities. Our services have increasingly
offered customer oriented convenience, which we provide to a spectrum of investors, highnetworth or otherwise, with equal dedication and competence.
But true to our spirit, this success is not our final destination, but just a platform to launch
further enhanced quality services to provide you the latest in convenient, customer-friendly
stock management.
Over the years we have ensured that the trust of our customers is our biggest returns. Factors
such as our success in the Electronic custody business has helped build on our tradition of
trust even more. Consequentially our retail client base expanded very fast.
24

To empower the investor further we have made serious efforts to ensure that our research calls
are disseminated systematically to all our stock broking clients through various delivery
channels like email, chat, SMS, phone calls etc.
Our foray into commodities broking has been path breaking and we are in the process of
converting existing traders in commodities into the more organized mainstream of trading in
commodity

futures,

both

as

trading

and

risk

hedging

mechanism.

In the future, our focus will be on the emerging businesses and to meet this objective, we have
enhanced our manpower and revitalized our knowledge base with enhances focus on Futures
and Options as well as the commodities business.
Depository Participants
The onset of the technology revolution in financial services Industry saw the emergence of
Karvy as an electronic custodian registered with National Securities Depository Ltd
(NSDL) and Central Securities Depository Ltd (CSDL) in 1998. Karvy set standards
enabling further comfort to the investor by promoting paperless trading across the country and
emerged as the top 3 Depository Participants in the country in terms of customer serviced.
Offering a wide trading platform with a dual membership at both NSDL and CDSL, we are a
powerful medium for trading and settlement of dematerialized shares. We have established
live DPMs, Internet access to accounts and an easier transaction process in order to offer more
convenience to individual and corporate investors. A team of professional and the latest
technological expertise allocated exclusively to our demat division including technological
enhancements like SPEED-e, make our response time quick and our delivery impeccable. A
wide national network makes our efficiencies accessible to all.
Karvy Consultants Limited was started in the year 1981, with the vision and enterprise of a
small group of practicing Chartered Accountants. Initially it was started with consulting and
financial accounting automation, and carved inroads into the field of registry and share
accounting by 1985. Since then, it has utilized its experience and superlative expertise to go
from strength to strengthto better its services, to provide new ones, to innovate, diversify
25

and in the process, evolved as one of Indias premier integrated financial service enterprise.
Today, Karvy has access to millions of Indian shareholders, besides companies, banks,
financial institutions and regulatory agencies. Over the past one and half decades, Karvy has
evolved as a veritable link between industry, finance and people. In January 1998, Karvy
became the first Depository Participant in Andhra Pradesh. An ISO 9002 company, Karvy's
commitment to quality and retail reach has made it an integrated financial services company.
An Overview:
KARVY, is a premier integrated financial services provider, and ranked among the top five in
the country in all its business segments, services over 16 million individual investors in
various capacities, and provides investor services to over 300 corporates, comprising the who
is who of Corporate India. KARVY covers the entire spectrum of financial services such as
Stock broking, Depository Participants, Distribution of financial products - mutual funds,
bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance
Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs,
among others. Karvy has a professional management team and ranks among the best in
technology, operations and research of various industrial segments.
Today, Karvy service over 6.5 lakhs customer accounts spread across over 250 cities/towns in
India and serves more than 85 million shareholders across 7500 corporate clients and makes
its presence felt in over 15 countries across 5 continents. All of Karvy services are also backed
by strong quality aspects, which have helped Karvy to be certified as an ISO 9002 company
by DNV.
ACHIEVEMENTS:
Among the top 5 stock brokers in India (4% of NSE volumes)
India's No. 1 Registrar & Securities Transfer Agents
Among the top 3 Depository Participants
Largest Network of Branches & Business Associates
ISO 9001:2000 certified operations by DNV
Among top 10 Investment bankers
Largest Distributor of Financial Products
26

 Adjudged as one of the top 50 IT uses in India by MIS Asia

Full Fledged IT driven operations
First ISO-9002 Certified Registrars in India
Ranked as The Most Admired Registrar by MARG
Largest mobilize of funds as per PRIME DATABASE
First depository participant from Andhra Pradesh.
Handled over 500 public issues as Registrars.
Handling the Reliance account, which accounts for nearly 10 million account holders?
Range of services:

Stock broking services

Distribution of Financial Products (investments & loan products)

Depository Participant services

IT enabled services

Personal finance Advisory Services

Private Client Group

Debt market services

Insurance & merchant banking

Mutual Fund Services

Corporate Shareholder Services

Other global services

Besides these, they also offer special portfolio analysis packages that provide daily technical
advice on scrips for successful portfolio management and provide customized advisory
services to help customers make the right financial moves that are specifically suited to their
portfolio. They are continually engaged in designing the right investment portfolio for each
customer according to individual needs and budget considerations.

27

Karvy Consultants limited deals in Registrar and Investment Services. Karvy is one of the
early entrants registered as Depository Participant with NSDL (National Securities Depository
Limited), the first Depository in the country and then with CDSL (Central Depository
Services Limited).

Karvy stock broking is a member of National Stock Exchange (NSE), The Bombay Stock
Exchange (BSE), and The Hyderabad Stock Exchange (HSE). The services provided are multi
dimensional and multi-focused in their scope: to analyze the latest stock market trends and to
take a close looks at the various investment options and products available in the market.
Besides this, they also offer special portfolio analysis packages.

The paradigm shift from pure selling to knowledge based selling drives the business
today. The monthly magazine, Finapolis, provides up-dated market information on market
trends, investment options, opinions etc. Thus empowering the investor to base every
financial move on rational thought and prudent analysis and embark on the path to wealth
creation.

Karvy is recognized as a leading merchant banker in the country, Karvy is registered with
SEBI as a Category I merchant banker. This reputation was built by capitalizing on
opportunities in corporate consolidations, mergers and acquisitions and corporate
restructuring.

28

Karvy has a tie up with the worlds largest transfer agent, the leading Australian company,
Computer share Limited. It has attained a position of immense strength as a provider of
across-the-board transfer agency services to AMCs, Distributors and Investors. Besides
providing the entire back office processing, it also provides the link between various Mutual
Funds and the investor.

Karvy global services limited covers Banking, Financial and Insurance Services (BFIS),
Retail and Merchandising, Leisure and Entertainment, Energy and Utility and Healthcare
sectors.

Karvy comtrade limited trades in all goods and products of agricultural and mineral origin
that include lucrative commodities like gold and silver and popular items like oil, pulses and
cotton through a well-systematized trading platform.

Karvy Insurance Broking Pvt. Ltd. provides both life and non-life insurance products to
retail individuals, high net-worth clients and corporates. With Indian markets seeing a sea
change, both in terms of investment pattern and attitude of investors, insurance is no more
seen as only a tax saving product but also as an investment product.

Karvy Inc. is located in New York to provide various financial products and information
29

on Indian equities to potential foreign institutional investors (FIIs) in the region. This entity
would extensively facilitate various businesses of Karvy viz., stock broking (Indian equities),
research and investment by QIBs in Indian markets for both secondary and primary offerings.
.Quality Policy:
To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, by
combining its human and technological resources, to provide superior quality financial
services. In the process, Karvy will strive to exceed Customer's expectations.

Quality Objectives
As per the Quality Policy, Karvy will:
Build in-house processes that will ensure transparent and harmonious relationships
with its clients and investors to provide high quality of services.
Establish a partner relationship with its investor service agents and vendors that will
help in keeping up its commitments to the customers.
Provide high quality of work life for all its employees and equip them with adequate
knowledge & skills so as to respond to customer's needs.
Continue to uphold the values of honesty & integrity and strive to establish
unparalleled standards in business ethics.
Use state-of-the art information technology in developing new and innovative financial
products and services to meet the changing needs of investors and clients.
Strive to be a reliable source of value-added financial products and services and
constantly guide the individuals and institutions in making a judicious choice of same.
Strive to keep all stake-holders (shareholders, clients, investors, employees, suppliers and
regulatory authorities) proud and satisfied

30

CHAPTER-IV
REVIEW OF LITERATURE

31

ONLINE TRADING
Before getting in to the online trading we should know some things about the internet, ecommerce and etc.
1.

Internet

Internet is a worldwide, self-governed network connecting several other smaller networks

and millions of computers and persons, to mega sources of information. This technology
shrinks vast distances, accelerating the pace of business reforms and revolutionizing the
way companies are managed. It allows direct, ubiquitous links to anyone anywhere and
anytime to build up interactive relationships.
A combination of time and space, called the Internet promises to bring unprecedented
changes in our lives and business. Internet or net is an inter-connection of computer
communication networks spanning the entire globe, crossing all geographical boundaries.
It has re-defined the methods of communication, work study, education, business, leisure,
health, trade, banking, commerce and what not it is virtually changing every thing and we
are living in dot.com age. Net being an interactive two way medium, through various
websites, enables participation by individuals in business to business and business to
consumer commerce, visit to shopping arcades, games, etc. in cyber space even the
information can be copied, downloaded and retransmitted.

32

The use of Internet has grown 2000 percent in last decade and is currently growing at
10 percent per month. In India, growth of Internet is of recent times. It is expected to bring
changes in every functional area of business activity including management and financial
services. It offers stock trading at a lower cost. Internet can change the nature and capacity
of stock broking business in India.
2. E-commerce
Electronic commerce is associated with buying and selling over computer
communication networks. It helps conduct traditional commerce through new way of
transferring and processing of information. Information is electronically transferred from
computer to computer in an automated way. E-commerce refers to the paperless exchange
of business information using electronic data inter change, electronic technologies. It not
only reduces manual processes and paper transactions but also helps organization move to
a fully electronic environment and change the way they operated.
PCs and networking attempts to introduce banks of the tools and technologies
required for electronic commerce. The computers are either workstations of individual
office works or serves where large databases and information reside. Network connects
both categories of computers; the various operating systems are the most basis program
within a computer. It manages the resources of the computer system in a fair and efficient
manner.
Now we can enter in to the concept known as online trading.
In the past, investors had no option but to contact their broker to get real time access to
market data. The net brings data to the investor on-line and net broking enables him to
trade on a click of mouse. Now information has become easily accessible to both retail as
well as big investor.
EVOLUTION OF BROKING IN INDIA:
The evolution of a broking in India can be categorized in three phases

Stockbrokers will offer on their sites features such as live portfolio manager, live
quotes, market research and news, etc. to attract more investors.

33

Brokers will offer online broking and relationship management by providing and
offering analysis and information to investors during broking and non-broking
hours based on their profile and needs, i.e. customized services.

Brokers (now e-brokers) will offer value management or services like initial public
offering online, on-line asset allocation, portfolio management, financial planning,
tax planning, insurance services, etc. and enables the investors to take better and
well considered decisions.

The actual definition of Online Trading is as explained below:

Online trading is a service offered on the internet for purchase and sale of shares. In the
real world you place orders on your stockbroker either verbally (personally or telephonically)
or in a written form (fax). In online trading, you will access a stockbrokers website through
your internet enabled PC and place orders through the brokers internet based trading engine.
These orders are routed to the stock exchange without manual intervention and executed
thereon in a matter of a few seconds.The net is used as a mode of trading in internet trading.
Orders are communicated to the stock exchange through website.
In India:
Internet trading started in India on 1st April 2000 with 79 members seeking permission
for online trading. The SEBI committees on internet based securities trading services has
allowed the net to be used as an Order Routing System (ORS) through registered stock
brokers on behalf of their clients for execution of transaction. Under the ORS the client enters
his requirements (security, quantity, price buy/sell) on brokers site.
Objectives:
Internet trading is expected to

Increase transparency in the markets,

Enhance market quality through improved liquidity, by increasing quote continuity

and market depth,

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

Provide management information system,

Introduce flexibility in system, so as to handle growing volumes easily and to

support nationwide expansion of market activity.
34

Besides, through internet trading three fundamental objectives of securities

regulation

can be easily achieved, these are:

Investor protection

Creation of a fair and efficient market, and

Reduction of the systematic risks.

Some of the brokers offering net trading include ICICI direct, kotakstreet, etc.
Requirements for net trading:
For investors:
1. Installation of a computer with required specification
2. Installation of a modem
3. Telephone connection
4. Registration for on-line trading with broker
5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading
The following should be produced to get a demat account and online trading account:
As identity proof & address proof any one of the following:

Voter ID card

Driving license

PAN card( in case of to trade more than 50000)

Ration card

Bank pass book

Telephone bill

Other requirements, which are necessary

First page of the bank pass book and last 6 months statement.

Bank managers signature along with banks seal, manager registration code on
photograph.

For stock brokers:

1. Permission from stock exchange for net trading
35

2. Net worth of Rs. 50 lac

3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
9. Setting up a website.
The net is used as a medium of trading in internet trading. Orders are communicated to
the stock exchange through website. Internet trading started in India on 1st April 2000
with 79 members seeking permission for online trading. The SEBI committees on internet
based securities trading services has allowed the net to be used as an Order Routing
System (ORS) through registered stock brokers on behalf of their clients for execution of
transaction.
Under the Order Routing System the client enters his requirements (security, quantity,
price, and buy/sell) in broker's site. They are checked electronically against the clients
account and routed electronically to the appropriate exchange for execution by the broker.
The client receives a confirmation on execution of the order. The customer's portfolio and
ledger accounts get updated to reflect the transaction. The user should have the user id and
password to enter into the electronic ring. He should also have demat account and bank
account. The system permits only a registered client to log in using user id and password.
Order can be placed using place order window of the website.
Procedure for net trading
Step 1: Those investors, who are interested in doing the trading over internet system i.e.
NEAT-IXS, should approach the brokers and get them self registered with the Stock
Broker.
Step 2: After registration, the broker will provide to them a Login name, Password and
personal identification number (PIN).
Step 3: Actual placement of an order. An order can then be placed by using the place
36

order window as under:

(a) First by entering the symbol and series of stock and other parameters like 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 10 seconds is there in executing the trade.
Step 8: It is regarding charging payment, for which there are different mode. Some
brokers will take some advance payment from the investor and will fix their trading limits.
When the trade is executed, the broker will ask the investor for transfer of funds to his
account.
Internet trading provides total transparency between a broker and an investor in the
secondary market. In the open outcry system, only the broker knew the actually transacted
price. Screen based trading provides more transparency. With online trading investors can
see themselves the price at which the deal takes place.
The time gap has narrowed in every stage of operation. Confirmation and execution of
trade reaches the investor within the least possible time, mostly within 30 seconds. Instant
feedback is available about the execution. Some of the websites also offer;

News and research report

BSE and NSE movements

Stock analysis

IPO and mutual fund centers

Step by step procedure in online trading:

37

Following steps explain the step by step approach to on-line trading:

Log on to the stock broker's website

Register as client/investor

Fill the application form and client broker agreement form on the requisite

value

stamp paper

Obtain user ID and pass word

Log on to the broker's site using secure user ID and password

Market watch page will show real time on-line market data

Trade shares directly by entering the symbol or number of the security

Brokers server will check your limit in the on-line account and demat account for the
number of shares and execute the trade

Order is executed instantly (10-30 seconds) and confirmation can be obtained.

Confirmation is e-mailed to investor by broker

Contract note is printed and mailed in 24 hours

Settlement will take place automatically on the settlement day

Demat account and the bank account will get debited and credited by electronic
means.

ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS:

Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this
leeway facility since one need to hold a price.

Market orders: orders can be filled at unexpected prices, but this type is much more
risky, since you have to buy stock at the given price.

Cash account: where funds have to be available prior to placing the order.

Margin account: where orders can be placed against stocks, to increase Purchasing
power.

ADVANTAGES OF ONLINE TRADING:

Online trading has made it possible for anyone to have easy and efficient access to
more reports and charts than it was previously possible if one went to any brokers'
office. Thus we have access to a lot more information online.

38

Online trading has let room for smaller organizations to compete with multinational
organizations since it is no longer a leg it issue. Being online does not identify the size
of any particular organization, therefore, this additional power to the underdogs.

Online trading has allowed companies to locate themselves where they want as
physical location is not an issue anymore. Companies can establish themselves
according to their gains and losses, for instance where tax (sales and value added
taxes) is best suited to them.

Online trading gives control to individuals and they can exercise it over accounts thus
comprehend what is going on when they trade. It is like going back to school and reeducating oneself on how to trade online.

Individuals benefit by saving comparatively a lot more when trading online as the
cost per trade is less.

Individuals can invest in a variety of products, unlike earlier when people bought
bonds, mutual funds, and stock for long-term basis and sat on them. Now they can
invest in stocks, stock and index options mutual funds, government, and even
insurance.

INVESTORS REASONS TO TRADE ONLINE:

They have control over their accounts, can make their own decisions and dont have to
give reasons for their actions. They are independent.

They have a reason to participate in the market and learn about it.

It is interesting, cheap, easy, fast, and convenient.

A lot of information is online so they can keep up-to-date with what is happening in
the trading world.

It will give investors a greater choice and better realization.

The immediate impact will be competition and benefits will accrue to the investors.

It will lead to brokerage commissions going down and brokers striving to increase
business afloat.

Investors will now go to place, which have better trading conditions and also members
to offer them better facilities.

They have access to numerous tools to invest, and can create their own portfolio.

HERE ARE THE POSSIBLE DISADVANTAGES:

39

When network crashes, there will be problems and delays due to a large influx of rapid
online trading criteria.

Individuals are restricted to first-hand financial guidance. This simply means that the
individual is himself / herself alone to.

A tax (sales tax and value added tax) evaluation becomes an issue, especially when
you are trading internationally.

One has no idea with whom he is dealing with on the other end.

According to a study conducted by Mary Rowland, careful investor: is online trading

bad for your portfolio, the more one trades the less returns one gets, meaning that an
addicted trader gets, carried away online and begins to trade for too much which
causes losses for him / her.

Individuals think that they are trading with the market directly and know what they are
doing, but the truth is that even though technology has taken over, the basic rules of
trading are the same. It seems that the middleman has been removed, but that is not so.
When the individuals click on the mouse, his trade goes through a broker. The
commissions online pertain to the intermediary.

There is a need for more effective communication links over the Internet and the
ability of the server to deal with a large volume of visitors.

STOCK EXCHANGES IN INDIA

Stock exchanges are the perfect type of market for securities whether of government and
semi-govt bodies or other public bodies as also for shares and debentures issued by the jointstock companies. In the stock market, purchases and sales of shares are affected in conditions
of free competition. Government securities are traded outside the trading ring in the form of
over the counter sales or purchase. The bargains that are struck in the trading ring by the
members of the stock exchanges are at the fairest prices determined by the basic laws of
supply and demand.
Definition of a stock exchange:
Stock exchange means any body or individuals whether incorporated or not, constituted
for the purpose of assisting, regulating or controlling the business of buying, selling or dealing
in securities. The securities include:
40

 Shares of public company.

Government securities.
Bonds
History of Stock Exchanges:
The only stock exchanges operating in the 19th century were those of Mumbai setup in
1875 and Ahmedabad set up in 1894. These were organized as voluntary non-profit-marking
associations of brokers to regulate and protect their interests. Before the control on securities
under the constitution in 1950, it was a state subject and the Bombay securities contracts
(control) act of 1925 used to regulate trading in securities. Under this act, the Mumbai stock
exchange was recognized in 1927 and Ahmedabad in 1937. During the war boom, a number
of stock exchanges were organized. Soon after it became a central subject, central legislation
was proposed and a committee headed by A.D.Gorwala went into the bill for securities
regulation. On the basis of the committees recommendations and public discussion, the
securities contract (regulation) act became law in 1956.

Functions of Stock Exchanges:

Stock exchanges provide liquidity to the listed companies. By giving quotations to the
listed companies, they help trading and raise funds from the market. Over the hundred and
twenty years during which the stock exchanges have existed in this country and through their
medium, the central and state government have raised crores of rupees by floating public
loans. Municipal corporations, trust and local bodies have obtained from the public their
financial requirements, and industry, trade and commerce- the backbone of the countrys
economy-have secured capital of crores or rupees through the issue of stocks, shares and
debentures for financing their day-to-day activities, organizing new ventures and completing
projects of expansion, diversification and modernization. By obtaining the listing and trading
facilities, public investment is increased and companies were able to raise more funds. The
quoted companies with wide public interest have enjoyed some benefits and assets valuation
has become easier for tax and other purposes.
Various Stock Exchanges in India:

41

At present there are 23 stock exchanges recognized under the securities contracts
(regulation), Act, 1956. Those are:
1. Ahmedabad Stock Exchange Association Ltd.
2. Bangalore Stock Exchange
3. Bhubaneshwar Stock Exchange Association
4. Calcutta Stock Exchange
5. Cochin Stock Exchange Ltd.
6. Coimbatore Stock Exchange
7. Delhi Stock Exchange Association
8. Guwahati Stock Exchange Ltd
9. Hyderabad Stock Exchange Ltd.(Presently not working)
10. Jaipur Stock Exchange Ltd
11. Kanara Stock Exchange Ltd
12. Ludhiana Stock Exchange Association Ltd
13. Madras Stock Exchange
14. Madhya Pradesh Stock Exchange Ltd.
15. Magadh Stock Exchange Limited
16. Meerut Stock Exchange Ltd.
17. Mumbai Stock Exchange
18. National Stock Exchange of India
19. OTC Exchange of India
20. Pune Stock Exchange Ltd.
21. Saurashtra Kutch Stock Exchange Ltd.
22. Uttar Pradesh Stock Exchange Association
23. Vadodara Stock Exchange Ltd.
Out of these major stock exchanges were:
NSE

42

The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations,
NSE was promoted by leading Financial Institutions at the behest of the Government of India
and was incorporated in November 1992 as a tax-paying company unlike other stock
exchanges in the country. On its recognition as a stock exchange under the Securities
Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale
Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment
commenced operations in November 1994 and operations in Derivatives segment commenced
in June 2000
NSE's mission is setting the agenda for change in the securities markets in India. The NSE
was set-up with the main objectives of:

Establishing a nation-wide trading facility for equities and debt instruments.

Ensuring equal access to investors all over the country through an appropriate
communication network.

Providing a fair, efficient and transparent securities market to investors using

electronic trading systems.

Enabling shorter settlement cycles and book entry settlements systems, and

The standards set by NSE in terms of market practices and technology, have become
industry benchmarks and are being emulated by other market participants. NSE is more
than a mere market facilitator. It's that force which is guiding the industry towards new
horizons and greater opportunities.
BSE
The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The
Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the
Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making
Association of Persons (AOP) and is currently engaged in the process of converting itself into
43

demutualised and corporate entity. It has evolved over the years into its present status as the
premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have
obtained permanent recognition in 1956 from the Govt. of India under the Securities
Contracts (Regulation) Act 1956.The Exchange, while providing an efficient and transparent
market for trading in securities, debt and derivatives upholds the interests of the investors and
ensures redresses of their grievances whether against the companies or its own memberbrokers. It also strives to educate and enlighten the investors by conducting investor education
programmers and making available to them necessary informative inputs.
A Governing Board having 20 directors is the apex body, which decides the policies and
regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors,
who are from the broking community (one third of them retire ever year by rotation), three
SEBI nominees, six public representatives and an Executive Director & Chief Executive
Officer and a Chief Operating Officer.
The Executive Director as the Chief Executive Officer is responsible for the day-to-day
administration of the Exchange and the Chief Operating Officer and other Heads of
Department assist him.
The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to
constitution of the Executive Committee of the Exchange. Accordingly, an Executive
Committee, consisting of three elected directors, three SEBI nominees or public
representatives, Executive Director & CEO and Chief Operating Officer has been constituted.
The Committee considers judicial & quasi matters in which the Governing Board has powers
as an Appellate Authority, matters regarding annulment of transactions, admission,
continuance and suspension of member-brokers, declaration of a member-broker as defaulter,
norms, procedures and other matters relating to arbitration, fees, deposits, margins and other
monies payable by the member-brokers to the Exchange, etc.

44

REGULATORY FRAME WORK OF STOCK EXCHANGE

A comprehensive legal framework was provided by the Securities Contract Regulation
Act, 1956 and Securities Exchange Board of India 1952. Three tier regulatory structure
comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
Members of the stock exchange:
The securities contract regulation act 1956 has provided uniform regulation for the
admission of members in the stock exchanges. The qualifications for becoming a member of a
recognized stock exchange are given below:

The minimum age prescribed for the members is 21 years.

He should be an Indian citizen.

He should be neither a bankrupt nor compound with the creditors.

He should not be convicted for fraud or dishonesty.

He should not be engaged in any other business connected with a company.

He should not be a defaulter of any other stock exchange.

The minimum required education is a pass in 12th standard examination.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

The securities and exchange board of India was constituted in 1988 under a resolution of
government of India. It was later made statutory body by the SEBI act 1992.according to
this act, the SEBI shall constitute of a chairman and four other members appointed by the
central government.
With the coming into effect of the securities and exchange board of India act, 1992 some
of the powers and functions exercised by the central government, in respect of the
regulation of stock exchange were transferred to the SEBI.
45

OBJECTIVES AND FUNCTIONS OF SEBI

To protect the interest of investors in securities.

Regulating the business in stock exchanges and any other securities market.

Registering and regulating the working of intermediaries associated with securities

market as well as working of mutual funds.

Promoting and regulating self-regulatory organizations.

Prohibiting insider trading in securities.

Regulating substantial acquisition of shares and take over of companies.

Performing such functions and exercising such powers under the provisions of
capital issues (control) act, 1947and the securities to it by the central government.

SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES):

Board of Directors of Stock Exchange has to be reconstituted so as to include nonmembers, public representatives and government representatives to the extent of 50%
of total number of members.

Capital adequacy norms have been laid down for the members of various stock
exchanges depending upon their turnover of trade and other factors.

All recognized stock exchanges will have to inform about transactions within 24 hrs.

TYPES OF ORDERS:
Buy and sell orders placed with members of the stock exchange by the investors. The
orders are of different types.
Limit orders: Orders are limited by a fixed price. E.g. buy Reliance Petroleum at
Rs.50.Here, the order has clearly indicated the price at which it has to be bought and the
investor is not willing to give more than Rs.50.

46

Best rate order: Here, the buyer or seller gives the freedom to the broker to execute the
order at the best possible rate quoted on the particular date for buying. It may be lowest
rate for buying and highest rate for selling.
Discretionary order: The investor gives the range of price for purchase and sale. The
broker can use his discretion to buy within the specified limit. Generally the
approximation price is fixed. The order stands as this buy BRC 100 shares around
Rs.40.
Stop loss order: The orders are given to limit the loss due to unfavorable price movement
in the market. A particular limit is given for waiting. If the price falls below the limit, the
broker is authorized to sell the shares to prevent further loss. E.g. Sell BRC limited at
Rs.24, stop loss at Rs.22.
Buying and selling shares: To buy and sell the shares the investor has to locate register
broker or sub broker who render prompt and efficient service to him. The order to buy or
sell specifying the number of shares of the company of investors choice is placed with the
broker. The order may be of any type. After receiving the order the broker tries to execute
the order in his computer terminal. Once matching order is found, the order is executed.
The broker then delivers the contract note to the investor. It gives the details regarding the
name of the company, number of shares bought, price, brokerage, and the date of delivery
of share. In this physical trading form, once the broker gets the share certificate through
the clearing houses he delivers the share certificate along with transfer deed to the
investor. The investor has to fill the transfer deed and stamp it. The stamp duty is one of
the percentage considerations, the investor should lodge the share certificate and transfer
deed to the register or transfer agent of the company. If it is bought in the DEMAT form,
the broker has to give a matching instruction to his depository participant to transfer
shares bought to the investors account. The investor should be account holder in any of
the depository participant. In the case of sale of shares on receiving payment from the
purchasing broker, the broker effects the payment to the investor.
Share groups: The

scrips

traded on the

BSE have

been classified

into

A,B1,B2,C,F and Z groups. The A group represents those, which are in the
carry forward system. The F group represents the debt market segment (fixed income

47

securities). The Z group scrips are of the blacklisted companies. The C group covers the
odd lot securities in A, B1&B2 groups.
ROLLING SETTLEMENT SYSTEM:
Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or
5days) after the trading day. The shares bought and sold are paid in for n days after the
trading day of the particular transaction. Share settlement is likely to be completed much
sooner after the transaction than under the fixed settlement system.
The rolling settlement system is noted by T+N i.e. the settlement period is n days after the
trading day. A rolling period which offers a large number of days negates the advantages
of the system. Generally longer settlement periods are shortened gradually.
SEBI made RS compulsory for trading in 10 securities selected on the basis of the criteria
that they were in compulsory demat list and had daily turnover of about Rs.1 crore or
more. Then it was extended to A stocks in Modified Carry Forward Scheme, Automated
Lending and Borrowing Mechanism (ALBM) and Borrowing and lending Securities
Scheme (BELSS) with effect from Dec 31, 2001.
SEBI has introduced T+5 rolling settlement in equity market from July 2001 and
subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement
experience it was further reduced to T+2 to reduce the risk in the market and to protect the
interest of the investors from 1st April 2003.
Activities on T+1: conformation of the institutional trades by the custodian is sent to the
stock exchange by 11.00 am. A provision of an exception window would be available for
late confirmation. The time limit and the additional changes for the exception window are
dedicated by the exchange.
The exchanges/clearing house/ clearing corporation would process and download the
obligation files to the brokers terminals late by 1.30 p.m on T+1. Depository participants
accept the instructions for pay in securities by investors in physical form upto 4 p.m and in
electronic form upto 6 p.m. the depositories accept from other DPs till 8p.m for same day
processing.
Activities on T+2: The depository permits the download of the paying in files of
securities and funds till 10.30 a.m on T+2 from the brokers pool accounts. The depository
processes the pay in requests and transfers the consolidated pay in files to clearing
48

House/clearing Corporation by 11.00am/on T+2. The exchange/clearing house/clearing

corporation executes the pay-out of securities and funds latest by 1.30 p.m on T+2 to the
depositories and clearing banks. In the demat mode net basis settlement is allowed. The
buy and sale positions in the same scrip can be settled and net quantity has to be settled.

49

CHAPTER-V
DATA ANALYSES AND INTERPRETATION

DATA ANALYSIS&INTERPRETATION
OUTCRY SYSTEM
50

The broker has to buy or sell securities for which he has received the orders. For this, the
broker or his authorized representatives goes to the stock exchange. This method is called
the open outcry system. Basically the brokers shout while buying or selling the securities.
The floor of the stock exchange is divided into a number of markets also known as post
pit or wing based on particular securities dealt there.
In the post pit or wing, the broker using open outcry method makes an offer or bid
price. For making the necessary bargain, he quotes his purchase or sale price, also known
as offer or bid price. The dealer, to whom the price is quoted, quotes his own price when
the quotation of the dealer suits the broker, he may loose the bargain. If he is not satisfied
with the quote price, he may turn to some other dealer. On the close of the bargain, the
dealer as well as the broker makes a brief note of the particulars of the deal. Such notes
are made on some pad and on it the number of shares, the price agreed upon, the name of
the party, what membership number etc., are noted.
DISADVANTAGES OF OUTCRY SYSTEM:

It lacks transparency.

The scope of manipulation, speculation and mal practice is more.

Signal were more important in the outcry system any member who could not interpret
the buy/sell signal correctly often landed himself in disaster situation.

In audibility was another disadvantage of the outcry system.

Due to the above disadvantages of the outcry system the Networth Stock Broking
Ltd has shifted from outcry system to online trading from February 29th 1997.

MANUAL TRADING
Trading procedure before introduction of online trading
Trading on stock exchanges is officially done in the trading ring. In the trading ring
the space is provided for specified and non-specified sections, the members and their
authorized assistants have to wear a badge or carry with them an identity card given by the
exchange to enter the trading ring. They carry a sauda book or confirmation memos, duly
authorized by the exchange and carry a pen with them. The stock exchanges operations
are floor level are technical in nature .Non-members are not permitted to enter in to stock

51

market. Hence various stages have to be completed in executing a transaction at a stock

exchange .The steps involved in this method of trading have given below:
Choice of broker:
The prospective investor who wants to buy shares or the investors, who wants to sell
shares and transact business, have to act through member brokers only. They can also appoint
their bankers for this purpose as per the present regulations.
Placement of order:
The next step is the placing order for the purchase or sale of securities with a broker. The
order is usually placed 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
Orders, Limit Order, Immediate or Cancel Order, Limited Discretionary Order, and Open
Order, Stop Loss Order.
Execution of order or contract:
Orders are executed in the trading ring of the BSE. This works from 11:30 to 2.30 P.M on
all working days Monday to Friday, and a special one-hour session on Saturday. The members
or the authorized assistants have to wear a badge given by the exchange to enter into the
trading ring. They carry a sauda Block Book or conformation memos, which are duly
authorized by the exchange when the deal is struck; both broker and jobber make a note in
their sauda block books. From the sauda book, the contract notes are drawn up and posted to
the client. A contract note is written agreement between the broker and his clients for the
transaction executed.
Drawing Up and Bills:
Both sale and purchase bills are prepared along with the contract note and it is posted
on the same day or the next day. This in a purchase transaction, once the shares are delivered
to the client effects payment for the purchases and pays the stamp fees for transfer, a bill is
made out giving the total cost of purchase, including other expenses incurred by the broker in
the price itself. With this, the process ends.

DEMATERLIZATION:

52

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

converted to an equipment number of securities in electronic from and credited in the investor
account with his DP. In order to dematerialize the certificates, an investor has to first open an
account with a DP and then request for the Dematerialization Request Form, which is DP and
submit the same along with the share certificates. The investor has to ensure that he marks
Submitted for Dematerialization on the certificates before the shares are handed over to the
DP for demat. Dematerialization can only be done to those certificates, which are already
registered in your name and belong to the list of securities admitted for Dematerialization at
NSDL.
Most of the active scrips in the market including all the scrips of S&P CNX NIFTY and
BSE SENSEX have already joined NSDL. This list is steadily increasing.
Briefly, the process is as follows: after completion of transfer, the investor gets the option
to dematerialize such shares. Investors willing to exercise this option sends a Demat
request along with the option letter sent by the company to his DP. The company or its
R&T agent would confirm the Demat request on its receipt from the DP to reduce risk of
loss in transit.
Dematerialized shares do not have any distinctive or certificate numbers. These shares are
fungible-which means that 100 shares of a security are the same as any other 100 shares of
the security. Odd lot shares certificates can also be dematerialized.
Dematerialization normally takes about fifteen to thirty days. To get back dematerialized
securities in the physical form, request DP for Rematerialization of the same is made.
Rematerialization is the process of converting electronic shares in to physical shares.
Benefits of Demat:

It reduces the risk of bad deliveries, in turn saving the cost and wastage of time
associated with follow up for rectification. This has lead to reduction in brokerage
to the extent of 0.5% by quite a few brokerage firms.

In case of transfer of electronic shares, you save 0.5% in stamp duty. You avoid the
cost of courier / notarization.

You can receive your bonuses and rights issues into your DA as a direct credit, this
eliminating risk of loss in transit.
53

You can also expect a lower interest charge for loans taken against Demat shares
as compared to loans against physical shares.

There is no lost in transit, thus the overheads of getting a duplicate copy in such
circumstances is reduced.

RBI has also reduced the minimum margin to 25% for loans against
dematerialized securities as against 50% for loans against physical securities.

TRADING AND SETTLEMENT AT SHARE KHAN

The NSE first introduced online trading in India. The Online trading system imparted a
greater level of transparency and investors preferred exchanges that offered Online trading
because of the following factors:

The ease of operation from the view of the both members and the investors.

Increase in the confidence of the investors because of higher level of transparency.

Facilities better monitoring of the market by the exchange.

The best price achieved in buying and selling.

All these resulted in ever-increasing volumes on the exchanges offering the online trading.
TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING
Share Khan deals in buying and selling equity shares and debentures on the National
Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The-Counter
Exchange of India (OTCEI).
Share Khan is provided with a computer and required software from their registered
stock exchanges. These centers are called Broker Work Stations. These computers are
connected to the server at the stock exchanges through cable.
The member or broker sitting in his office can send the quotations, orders, negotiations,
deals, in-house deals, auction orders etc., through the computer. The Central trading
system (CTS) will accept these orders and send it for match. If there is any mistake in the
order, CTS will reject the orders and send respective error message to the member
concern. All these operations are in built. The main objective of CTS is to monitor the
Stock Exchanges operations.
Order placed by the broker will be sent for a match and if the match is found suitable, the
transaction will be executed. Otherwise, the order will be deleted automatically after
54

completion of trading time. The carry forward transactions (Good Till cancellation) are
forwarded to the next day. Even if the match is not found with in the prescribed period, the
order will not cancel.
TRADING SESSION
Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period.
Monday to Friday is the trading period in all the stock exchanges. SEBI has stipulated that all
the stock exchanges in India must have same trading period.
BROKER WORK STATION:
At the broker workstation the BBOs, the last traded price, the days opening price,
previous days closing price, highest and lowest prices, the weighted average price and
total trade value will be available continuously, as the BBO for each scrip.
Other information will be available on query from the BWS. These include top gainers
/losers of the day. Trader-wise, scrip wise net position, client wise net position, top scrip
by the volume/value, market summary etc.
Brokers are also provided with information relating to the companies in the matter of
Book closure, Dividend declarations, resolutions in board meeting, information about
liquidated companies, company report etc.
ORDERS:
Orders can be done one at a time or in a batch mode.
The submitted order will be accepted at the CTS, after validation if it finds any invalid
reason the order is return back to the BWS, with the appropriate error message.
If Accepted at the CTS it will be added to the local pending order book.
The order will then be taken up for matching, if it is a buy order the system tries to
find a sell order, which fits the requirement of the buy order, when such match is found
a trade gets executed. Each trade involves two brokers and
respective traders who sent the order. Both these traders are informed of the trade
being executed at their respective BWS.
At the BWS the trade is added to the local trade book.
Orders sent by the brokers are two types:

Good for the day (GFD)

55

Good till cancellation(GTC)

Good for the day:

This is also called as market order. For an order if the member selects the deal as
good for the day, the order is treated as market order. If a best bid founds match with
best order then the transaction gets executed. If the match is not found then after trade
time the order gets cancelled that day. Next day he has to place a new order.
For example if a member wants to purchase 1000 shares of Wipro info @ 400 each
through Good for Day order. If the correct match is not found, order gets cancelled
automatically and new quotation has to be placed the next day.
Good till cancellation:
This order is forwarded to the last trading day of that settlement period. This is also called
as carry forward order like GFD; broker has to select the option of GTC for the order. If the
order finds match with in the trading settlement period, the order is executed. If no match is
found, the order is cancelled on the last day of settlement period. This order is not carried
forward to the next settlement period.
For example, if a member a place purchase order of 500 shares of SBI @ 690 per share
and selects the order as GTC and place an order. If the match is not found on that day it
will be forwarded to the next day until trading settlement period day.
SETTLEMENT OF TRANSACTIONS:
Clearing of transaction in the form of shares and cash is called settlement. Buyers will
take the delivery of shares through the depository participants like Networth Stock
Broking Ltd and others.
Finally, the settlement is made by means of delivering the share certificates along with the
transfer deeds. The transferor (or the seller) duly signed transfer deed. It bears a stamp of
the selling broker. The buyer then fills up the certificates fills up the particulars in the
transfer deed. Settlement can be done in the following way.
Spot settlement: under this method, the delivery of securities and payment for them are
affected on the day of the contract itself.
56

Rolling settlement: Under this rolling settlement the trading is on T+2,basis i.e. if
Monday is trading day then Wednesday is the paying day . In case on non-delivery, the
securities will go for auction.
DETAILS OF PROCEDURES:
Delivery in : The members who are in pay-out position delivers share certificates in to
clearing house within the settlement period along with the delivery Chelan filled in with the
details of share certificates which has folio numbers or distinctive numbers etc.
Delivery out: The buyer of shares who made pay in position will take delivery of shares
from the clearing house.
Pay-in: The member who is in paying position shall pay for value of shares with in the
trading settlement period (T+2).
Payout: The cheques paid in the clearinghouse will be paid to members who are in paying
position.
All disputes arising between members regarding non-deliveries, non-payments, good and
bad deliveries pertaining to the settlement will be settled by the settlement committee of the
exchange.

The given flow chart clearly explains the process of online trading:

57

L o g in

S e ll t r a n s c a t io n

B u y t r a n s c a t io n

T h e s y s te m w ill c h e c k y o u r
d p ac c o u n t q u an tity

T h e s y s te m w ill c h e c k b u y in g
lim its

O rd e rs ac c e p te d

R e je c t e d o r d e r s w o u ld b e
c o m m u n ic a t e d a lo n g w it h r e a s o n s

o rd e rs ac c e p te d

y o u r o r d e r is t r a n s m it t e d t o e x c h a n g e f o r e x e c u t io n

p e n d in g b u y o r d e r s
w o u ld b e d is p la y e d
o n y o u r s c re e n

y o u m a y e d it y o u r
p e n d in g o r d e r

o n e x e c u t io n
o f y o u r o rd e rs

y o u m a y e d it y o u r
p e n d in g o r d e r

y o u m a y d e le t e
y o u r p e n d in g o r d e r

f la s h e d o n y o u r
s c r e e n im m e d ia t e ly
o n e x e c u t io n

c o n f o r m a t io n c o u l
d b e s e n d to y o u r
e - m a il a n d m o b ile

58

p e n d in g s e ll o r d e r s
w o u ld b e d is p la y e d
o n y o u r s c re e n

y o u m a y d e le t e y o u r
p e n d in g o r d e r

c o n t r a c t n o t e w o u ld
b e s e n t t o b y m a il
o r h a n d d e liv e r y

STOCK TRADES
The stock order entry screen, located at the top of the platform, allows you to buy, sell, and
sell short. The Save to Basket button can save any order that you may want to place later.
To Place An Order
1. Click the Equities tab at the top of the page. The screen will show
"EQUITIES" at the top right-hand corner to let you know that you are in
stock-trading mode.
2. Select Buy, Sell, or Short from the drop-down menu below SIDE.
3. Enter the number of shares in Qty box. Enter the
symbol m Symbol box.
4. For a market order, click Market. For a limit order, enter the limit price
and click the Limit button. For a Good Till Canceled order, click GTC.
5. Click Submit to send the order,
6. If it is a GTC order, select 15 Days or 30 Days for the GTC order. Click
OK to send the order. If you do not want to send the order or if you want
to make changes, click Cancel.

8. A window will appear (as the picture) asking you to confirm the order. If all details are
correct, click OK to send the order. If you do not want to send the order, or if you want
to make changes, click Cancel.

59

To Save an Order into the Basket

You can enter an order and click the shopping cart icon to save it. Click Basket tab to see
the trades you have saved. Orders saved to the Basket are not sent to the market until you
decide to do so. This is not the same as placing Good Till Canceled or other open orders.
To Place an Order from the Watch List
You can also place an order from your Watch List

OPTION QUOTES AND OPTION TRADES

To Get Option Quotes
1. Click the Option Chain tab to open the option quote screen.
2. Enter the stock symbol in the Equity Symbol field.
3. Select the strike price from By Strike.
4. Select the expired month from the By Exp. Month.
60

5. Select the range of option quotes you would like to view from
Calls, Puts, or All
6. Click Go. The screen will list all the option symbols and current Market prices
associated with your criteria.
7. To Place an Option Trade
1. Click the Option button at the top left hand corner to open the option

order entry

screen. OPTION will appear at the upper right-hand corner to let you know that you
are in Option mode.
1. Follow the above steps to open the option quote screen and get the option symbol.
2. In the Option Chain quote screen, double click the symbol, which you would like to
place an order.
3. The option order entry screen at the top will show the real-time quote of the option.
4. Select: Buy to Open, Sell to Open, Buy to Close, or Sell to Close from the drop-down
menu below SIDE.
5. Enter the number of contracts in the # of Contracts field.
6. Click Market, or enter a limit price and click Lim (Limit). For a Good Till Canceled
order, click GTC.
7. Click Submit
8. If it is a GTC order, select 15 Days or 30 Days for the GTC order. Click OK to send
the order. If you do not want to send the order or if you want to make changes, click
Cancel.

61

9. A window will appear (as the picture) asking you to confirm your order. If the information
is correct, click OK to send the order. If you click Cancel, the order will not be sent to
market.
LEVEL I QUOTE
The Level I real-time streaming quote updates automatically every five seconds and
continually throughout market hours.
To Get Quotes
1. Enter a symbol in the field located on the left-hand side. You can also click the small
arrow at the right to select a symbol you previously entered in the same day.
2. Press the Enter key on your keyboard or select Get Quotes (under the Select
Action drop-down menu) to display real-time streaming quotes.
a) Detailed Quotes:
Detailed quote, intra-day charts, and the latest news.
b)News:
Recent News.
c) Charts:
Six different chart types - intra-day, one month, three months, six months, one year and
Interactive.
d) SEC Filings:
The company's reports to the SEC.
e) Profile
A description of the company and fundamental information about its stock.
f) Historical:
The open, high, low and closing prices, change and volume of any given stock in the past six
years.
Bid:
Highest price at which someone currently offers to buy the stock.
Bid Size:
Number of shares, in hundreds, of the offer at the current Bid.
Change:
The difference between the price of the Last trade and the stock's previous Close price.
62

% Change:
The percent difference between the price of the Last trade and the stock's previous Close
price.
Close:
The last trade price on the previous trading day.
High:
Highest trade price of the stock during the current trade date.
Last:
Most recent trade price of the stock during the current trade day.
Low:
Lowest trade price of the stock during the current trade day.
Open:
The opening price for the stock on the current trade date.
Tick:
Located to the right of the symbol. Indicates whether the current Bid is higher or lower than
the previous Bid.
Current Bid is higher:
Tick will show an arrow pointing up.
Current Bid is lower:
Tick will show an arrow pointing down.
Current Bid is same:
Tick will show "UC" (unchanged).
Volume:
Total number of shares of the stock traded during the current trade date
Close:
The last trade price on the previous trading day.
High:
Highest trade price of the stock during the current trade date.
Last:
Most recent trade price of the stock during the current trade day.
63

Low:
Lowest trade price of the stock during the current trade day.
Open:
The opening price for the stock on the current trade date.
Tick:
Located to the right of the symbol. Indicates whether the current Bid is higher or lower than
the previous Bid.
Current Bid is higher:
Tick will show an arrow pointing up.
Current Bid is lower:
Tick will show an arrow pointing down.
Current Bid is same:
Tick will show "UC" (unchanged).
Volume:
Total

number

of

shares

of

the

stock

64

traded

during

the

current

trade

date

ACCOUNT SCREEN
To View Account Information
1. Click the Accounts tab to see your account information.
To Switch to another Account
2. Click the Accounts tab to open the Account screen.
3. Click Change Account button.
4. Select the new account number.

ORDER SCREEN
To View an Order You Placed
1. Click the Orders tab. The system will show all intra-day (same day)
1. Trades

and

their

current

status,

which

including

filled.
To View Detailed Log for a Specific Order
1. Open the Order screen by following the above steps.
2. Click order sequence number in the UOI field.
3. Click TRANSACTIONS button.

1. A detailed order log will be displayed in a pop-out window.

65

pending,

canceled,

2. Click OK to close the window.

To Cancel an Open Order

1.Open the Order screen by following the above steps.
2.To cancel one open order, select it and click Cancel.

3.To cancel all open orders, click Cancel All.

To Export Order Records to an Excel File
1. In the Order screen, click Import to Excel at the bottom.
2. Choose the location on your computer where you want to save the file and click Save.
BASKET TRADING
You can fill your basket with orders in advance, and place them later with just one click.
To Set Up Your Basket
1. Click the Basket tab to open the Basket window.
2. Select a basket from the drop-down menu at left.

66

3. To re-name the basket, click Rename Cart, type a new name into the pop-up
window, and click OK.

To Enter Orders Directly into the Basket

1. Click the Basket tab to open the Basket window.
2. Select a basket from the drop-down menu at left.
3. Click New Row at left to add stocks to the basket. OK.
4. Double click the empty field under Action and select your action:
Buy, Sell or Short
5. Double click on the empty field below Qty until it changes to written mode. Enter
the number of shares you would like to trade.
6. Double click on the empty field under Symbol until it changes to written mode.
Enter the stock symbol.
7. Double click on the empty field under Price. Enter a price for a limit order, or
select Mkt for a market order.
8. Double click on the empty field under Account. Choose the account number
from the drop-down menu.

67

To Save an Order to a Basket from the Order Entry Screen

You can save an order to a basket from the order entry screen and send the order to market
later.
1. In the Order screen, enter all the required information about the order.
2. Click the shopping cart icon.
3. From the drop-down menu, select the basket in which you want to save the
order. Click OK to save, or Cancel to not save the order into the basket.

Remove an Order from the Basket

1. Click the Basket tab to see the Basket screen, and select one of
the baskets from the drop-down menu.
2. Select the order you want to remove.
3. Click Remove at right.
To Get Quotes for Stocks in the Basket
1. Click the Basket tab to see the Basket screen, and select one of
the baskets from the drop-down menu.
2. Select the order for which you would like to see a quote.
To Execute an Order in the Basket
1. Click

the

Basket

tab

to

see

the

Basket

screen,

the baskets from the drop-down menu.

2. To execute all orders listed in the basket, click Execute AH.
68

and

select

one

of

3. To execute only one order, select the order and then click Execute.
When you Execute trade(s) in the Basket, the Basket Order(s) will still display in the basket
until you remove the order(s).

KEYS USED FOR TRADING

Fl

- BUY

F2

- SELL

F3

- PENDING ORDERS (BUYING & SELLING)

F6

- MARKET DEBTS (COMPANY ENQUIRY)

F7

- ARBITRAGE ORDERS

F8

- HOW MANY TRADING HAS BEEN DONE

SHIFT+F8 - NET POSITION OF THE COMPANY'S SHARES

CTRL+F8 - SETTLEMENT OF NET POSITION FOR EXPOSURE
SHIFT+F9 - NEWS
69

 F ll
F12

- ADDING A NEW COMPANY IN TO THE N/W

- TEMPORARY LOCKING OF WINDOWS

TECHNICAL ANALYSIS
Company :SYNDICATE BANK 532276
Period: 02-Dec-2014 to 23-Jan-2015

70

Date
22-Jan-15
21-Jan-15

Open

High

129.9 130.45

Low

Close

WAP

No. of

No. of

Total

Shares

Trades

Turnover

126.8

127.25

127.8857

191670

2161

24511845

130

132

128.3

129.25

130.031

247676

3691

32205565

20-Jan-15 128.75

131.5

128.5

129.2

129.6991

148037

2360

19200259

19-Jan-15 129.65 130.25

127.65

128.15

128.8639

192814

2801

24846766

16-Jan-15

131.5

132

128

128.35

129.782

277430

3707

36005413

15-Jan-15

132

132.9

129.85

131.15

131.5046

327733

5460

43098395

14-Jan-15 128.65

129.9

125.5

126.5

127.1132

196171

4205

24935915

13-Jan-15

132

132.3

127.55

128.65

129.3174

259987

3045

33620852

12-Jan-15 127.85

132

126.15

131.1

130.2234

261177

4093

34011363

129 129.45

125.05

127.4

127.0529

199232

3423

25313011

9-Jan-15

8-Jan-15 126.05

128.3

125.55

127.9

126.9213

143955

2374

18270949

7-Jan-15

125.1

126.8

121.7

124.05

124.1948

275528

4948

34219142

6-Jan-15

129

130

124.25

125.2

127.2976

289084

4106

36799689

5-Jan-15 134.15

134.7

131.3

132.25

132.8504

189341

3431

25154027

2-Jan-15 133.75

136.4

133

133.45

134.5909

229670

4303

30911481

1-Jan-15

131.7

135.6

131

133.6

134.0957

286104

4957

38365310

31-Dec-14

132.5

132.9

130.75

131.6

131.9357

180371

2843

23797367

30-Dec-14

127.8

132.3

125.65

131.6

130.0089

316081

5012

41093356

130 130.45

126

127.3

128.879

222830

3837

28718114

26-Dec-14 122.15 128.95

122.15

128.45

126.1559

350981

4585

44278315

121

122.7

122.6527

174618

2668

21417367

29-Dec-14

24-Dec-14

121 123.75

23-Dec-14

124.5

125.3

121.2

122.2

123.3339

223571

3515

27573889

22-Dec-14

122.1

124.2

121

123.8

122.7141

156365

2970

19188186

19-Dec-14

123.3

125

121.7

121.9

122.8081

341712

5781

41964990

18-Dec-14

120.1

124

120.1

122.55

122.3572

373768

7927

45733224

17-Dec-14

116.3 121.15

111.55

119.15

116.9748

497660

10627

58213670

116.35

117.2
71

120.1912

424319

7076

50999399

16-Dec-14

125

126.7

INTERPRETATION:

On open value risen from 129.90 to 127.25 than compare to higher value of EPS
90128.25. Then coming to lower price from 136.00 to 138.45. Wholly the conclusion is
129.55 raised.
The comings to the volume on the same dates or days volumes are increased.
Because on this session SYNDICATE BANK value is raised i.e. percentage of 10.05%.

72

Company :TATA COMMUNICATIONS LTD. 500483

Period: 02-Dec-2014 to 22-Jan-2015
All Prices in

73

Date

Open

High

Low

Close

WAP

No. of

No. of

Total

Shares

Trades

Turnover

22-Jan-15

424

427

414.3

418.05

421.0761

13820

1237

5819272

21-Jan-15

425.1

429

421.2

423.85

425.2002

15108

819

6423925

20-Jan-15

427.9

429.8

423.1

423.85

426.6652

23516

1219

10033458

19-Jan-15

428

438.65

423.6

425.05

430.7814

53628

2575

23101947

16-Jan-15 433.35

436.2

424.8

426.85

428.8303

41509

1872

17800315

15-Jan-15

435

436.95

422

432.25

431.2961

110909

2541

47834617

14-Jan-15

423.5

434.95

418.5

423.4

427.6632

37710

2741

16127178

13-Jan-15

420

428.35

420

425.6

425.5786

26526

1023

11288897

12-Jan-15

425

428

419.15

420.6

424.0744

17440

1140

7395857

9-Jan-15

420

430.95

420

424.75

424.699

17556

974

7456015

8-Jan-15 428.55

429.45

421

424.2

425.0951

17093

1117

7266151

7-Jan-15

417

426.2

413

423.55

421.5754

32272

1660

13605082

6-Jan-15

433

433.9

414.5

416.8

421.2322

39299

2352

16554003

5-Jan-15 438.25

444.85

435.65

438.15

440.4209

18853

1273

8303255

2-Jan-15

443.6

445.1

433.6

435.3

440.7269

121075

1597

53361011

1-Jan-15

441.7

444.95

439.5

441.65

441.7799

25029

1537

11057309

31-Dec-14

432

441.9

430.2

439.4

437.1528

24373

1104

10654725

30-Dec-14

430

434.4

428

430.4

430.6442

21689

1371

9340243

29-Dec-14 433.85

438.4

428.6

430.1

432.9419

24648

1218

10671153

26-Dec-14

436.9

441.05

430.5

431.6

434.0689

27928

1127

12122676

24-Dec-14

446.6

448.6

436.05

439.2

442.9896

52456

1998

23237465

23-Dec-14

442.9

445.6

435.8

442

440.9493

35432

2634

15623714

22-Dec-14

424.3

443.45

424.3

439.95

438.4251

44228

2417

19390666

19-Dec-14

438

439.7

423.2

425.05

430.3039

28311

1304

12182333

18-Dec-14

414

435.5

414

432.8

428.0855

38203

2187

16354152

17-Dec-14

416

422.25

394

413.5

410.5915

41430

3524

17010807

16-Dec-14 432.55

444

412.8

416.75
74

426.7279

27569

2411

11764461

INTERPRETATION:
On open value has increased from 424.00 to 418.05. Then compare to higher
value of EPS 428.51. Then coming to lower price from 469.05 to 455.60. Wholly the
conclusion is 431.12 increased.
Then coming to the volume on the same dates or days volumes are increased.
Because totally this session TATA COMMUNICATIONS LTD. EPS value is increased i.e.
percentage of 3.54%.

75

Company :ITC LTD. 500875

Period: 02-Dec-2014 to 23-Jan-2015

76

Date

Open

High

Low

Close

WAP

No. of

No. of

Total

Shares

Trades

Turnover

22-Jan-15

353

359.6

348.9

350.35

356.8064

2440877

17006 870920536

21-Jan-15

372.7

373.6

349.2

352.6

357.97

1781770

37883 637820149

20-Jan-15

358.4

372

358.4

371.2

366.9447

553506

11126 203106085

19-Jan-15

360.5

361.8

356.05

358.4

359.0509

220147

5480

79043987

16-Jan-15

358.15

360.15

354.75

359.3

358.0374

205070

4860

73422731

15-Jan-15

354

359.9

350.95

358

355.8332

390820

8653 139066718

14-Jan-15

359

359

346.1

348.4

349.533

745803

17160 260682742

13-Jan-15

358

361.4

357

360.25

359.9008

210490

5335

75755509

12-Jan-15

358.45

361.5

356.25

357.95

358.2032

244177

8511

87464985

9-Jan-15

363.85

365.8

353.15

356.7

357.2258

424725

10050 151722728

8-Jan-15

356

363.3

355.25

362.45

359.0688

287774

8645 103330656

7-Jan-15

360.6

364

352.95

353.55

356.0336

416574

9035 148314333

6-Jan-15

369.75

370

359.15

360.6

363.914

708040

9536 257665680

5-Jan-15

369

372

368

369.8

369.801

292017

7042 107988179

2-Jan-15

368

370.2

367.5

368.25

368.5461

188501

4376

69471301

1-Jan-15

368

369

366.1

367.05

367.1251

127759

2702

46903531

31-Dec-14

369

370.4

367.75

368.4

368.6447

149613

3549

55154037

30-Dec-14

372.4

372.4

367.5

368.7

369.6077

96597

2959

35702995

29-Dec-14

367.8

371.4

367.5

369.9

369.7146

160505

4292

59341037

26-Dec-14

370

372.35

366.3

367.7

368.0993

161941

4183

59610365

24-Dec-14

376.85

378.4

368.85

371.95

375.1559

406323

10463 152434477

23-Dec-14

375

377.3

372.9

374.85

374.2399

733080

4697 274347806

22-Dec-14

370

378.35

369

374.5

374.022

370127

7058 138435640

77

INTERPRETATION:
On open value has risen from 353.00 to 350.35 than compare to higher value of
EPS 367.51. Then coming to lower price from 373.00 to382.75. Wholly the conclusion is
371.24 rise.
The comings to the volume on the same dates or days volumes are increased.
Because on this session ITC LTD value is raised i.e. percentage of 4.15%.

78

Company :Heritage Foods Limited 519552

Period: 02-Dec-2014 to 23-Jan-2015

79

Date

Open

High

Low

22-Jan-15

398.1

407.6

394.95

21-Jan-15

398.7

402.65

20-Jan-15

403.2

19-Jan-15

Close
396.4

WAP

No. of

No. of

Total

Shares

Trades

Turnover

399.658

7866

882

3143710

390

394.85 394.9988

9898

1113

3909698

405.7

396.55

400.75 400.7749

4567

433

1830339

399

410.75

390

401.7 405.3161

8324

1033

3373851

16-Jan-15

395

402

390.15

398.65 396.7984

4693

444

1862175

15-Jan-15

399.9

403

391.2

394.05 396.3239

9620

772

3812636

14-Jan-15

393

396.85

386.1

390.95 391.9377

4286

384

1679845

13-Jan-15

398

401

390.5

391.15

396.559

7742

666

3070160

12-Jan-15

389

399.4

389

394.8 396.1577

14590

1145

5779941

9-Jan-15 389.65

391

380.25

385.65 385.4796

6928

574

2670603

8-Jan-15 388.75

394.2

383.7

388.5 388.0841

16494

1148

6401059

7-Jan-15

377.3

389.95

369.3

382.45 378.9626

13516

1213

5122058

6-Jan-15

389

389

375.05

376.85 380.7945

14504

1427

5523043

5-Jan-15 386.15

401.25

380.95

392.4 393.9385

26258

2361

10344036

2-Jan-15

380

389.7

380

382.5 385.7167

10833

1017

4178469

1-Jan-15

376

380

376

377.65 378.2054

3973

359

1502610

31-Dec-14 374.35

379.75

370

375.6 375.1631

9402

753

3527283

30-Dec-14

374.6

380.3

370

372.35 374.4985

6594

623

2469443

29-Dec-14

381.7

383.8

373.5

374.8 378.0257

6310

750

2385342

26-Dec-14

380

389.1

375.35

377.95 381.9854

8861

937

3384773

24-Dec-14 391.85

392.8

377

382.3 386.2734

5845

537

2257768

23-Dec-14

394.6

398

380.6

385.95 390.8327

10813

679

4226074

22-Dec-14

389.6

394

389.6

390.65 391.5617

5441

358

2130487

19-Dec-14

390.2

401.75

384

387.25 394.6524

16087

1454

6348773

18-Dec-14

375

395

375

384.5 387.2399

28282

2404

10951919

17-Dec-14 373.55

382.95

358.1

371.3 370.5324

19091

1278

7073835

384

367.85

373 373.2572
80

10605

1278

3958393

16-Dec-14

384

INTERPRETATION:
On open value has risen from 389.92 to 393.45. Then compare to higher value of
EPS 390.84. Then coming to lower price from 398.12 to396.47. Wholly the conclusion is
391.55 raised.
Then coming to the volume on the same dates or days volumes are increased.
Because totally this session Heritage Foods Limited. EPS value is increased i.e.
percentage of 11.54%.

81

CHAPTER-VI
FINDINGS
SUGGESSIONS
CONCLUSSIONS
82

 BIBLIOGRAPHY

Findings

The volume on the same dates or days volumes are increased. Because totally this
session Heritage Foods Limited. EPS value is increased i.e. percentage of 11.54%.

The volume on the same dates or days volumes are increased. Because on this session
SYNDICATE BANK value is raised i.e. percentage of 10.05%.

The volume on the same dates or days volumes are increased. Because totally this
session TATA COMMUNICATIONS LTD. EPS value is increased i.e. percentage of
3.54%.

The volume on the same dates or days volumes are increased. Because on this session
ITC LTD value is raised i.e. percentage of 4.15%.

83

Suggestions
There must be prohibition on disposal of promoters share holding, and also restrictions
and the expansion without prior approval of the financial institutions for declaration of
higher amount/ rate.
The availability of derivative products in eluding index futures, index options,
individual stock futures and individual stock options re-enforces the overall
attractiveness of this market to foreign and domestic investors.
Volume of paper work is small but it is very complicated to maintain data in system so
tries to reduce that by regular audit and updating data.
Most of the DPs do not have the necessary infrastructure to handle the high work load
of

transactions leading to may error by DPs, so by

information to every DO can avoid this problem.

84

giving full infrastructure

 The pool account doesnt know the true owner of the share and hence dividends are
paid to the broker instead of owners by this the broker can do any manipulation or any
fraud with the owner, for this the owner can loose his dividend.
Hence for this try to pay the dividend directly to the owner.
If the shares are fake/forged which delivery by the broker the share holder can loose
that shares an have to receive another lot of issued shares from the broker in 21 days,
this system stands abused.
So minimize that waiting days are deliver the issued shares to the share holder as soon as
Possible

CONCLUSION:
The comprehensive study of capital market instrument at Inter Connected stock
exchange has been an enlightening experience stressing on the positive aspects on
Dematerialization.
And settlement of shares, derivative market and capital instrumentshas done in whole
lot of good to the issuer, investor companies and country.
The depository systems has reduced the lag in delivery and settlement of securities but
also supported the cause of providing more liquidity to the security holder, the need for
setting up of a depository paper less trading.

85

 Through online trading system and settlement became inevitable and unavoidable for
the smooth and the efficient functioning of the capital market.
This system has proved its worthiness by increasing in the speed of transactions within
T+3 days which are earlier T+5 days.
Now there is a proposal that the settlement will be done within T+1days in near future
which is in it an indication of a boon in the system of demat and capital market
instruments.
It has been fairly long since derivative trading started off on the Indian Indexes.
Actively has failed to really take off with low figures being transacted in terms of value
and volumes.
The introduction of derivative trading was hailed by the punters in the capital markets
but has not really brought about a wave so as to speak.
There are several factors, which impede the growth of the derivative markets in India.
Of these factors the absence of clear guidelines on tax-related issues and the high cost
of transactions are the most prominent.

BIBLIOGRAPHY
BOOKS:

Investment management
-V.K.Bhalla

Investment management
-Preethi Singh

86

Security Analysis And Portfolio Management

-V.A.Avadhani

Marketing of Financial Services

-V.A.Avadhani

Indian Financial System

-M.Y.Khan
WEBSITES:

www.karvy.com

www.bseindia.com

www.sebi.com

www.moneycontrol.com

www.economictimes.com

www.nseindia.com

MARKET WATCH WINDOWS:

BLUE COLOUR INDICATE SHARE VALUE INCREASE
RED COLOUR INDICATE SHARE VALUE DECREASE
NSE Scrips

87

NSE & BSE Scrips

(BUY Order Form)

88

(Sell Order Form)

(Market Depth)
89

(Order Book)

Client Margin
90

Trade Book

Client Activity Report

91

Exercise Report

92