INTRODUCTION

Industry overview

Technology has changed the way you do trading. The entire process is speedy

with limited to zero paper work. NSE launched internet trading in early February

2000. It is the first stock exchange in the country to provide a web-based access to

investors to trade directly on the exchange.

PROCESS: Log on to the brokers’ site of your choice where you get real time

quotes, place a buy or sell order on the spot, and direct the site to debit the requisite

amount and depository account will reflect the changes which you can view

anywhere, anytime. All that you need is a PC, a modem, subscription to an

Internet Service Provider (ISP), a saving and a depository account with any bank

providing online trading facility.

NSE introduced for the first time in India a fully automated screen based

trading. It uses a modern fully computerized trading system designed to offer

investor across the length and breadth of country a safe and easy way to invest. The

NSE trading system called “National Exchange for Automated Trading”

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(NEAT) is a fully automated screen-based trading system which adopts the

principle of an order driven market.

What Is The Stock Market?

When investors think of the stock market, they may imagine a specific place - such

as a stock exchange. In fact, the stock market is the abstract idea of stock trading

and stock exchange. All selling of stocks - at stock exchanges and in other ways -

affects the market overall.

When investors think of the stock market, they may imagine a specific place - such

as a stock exchange. In fact, the stock market is the abstract idea of stock trading

and stock exchange. All selling of stocks - at stock exchanges and in other ways -

affects the market overall. Following stock market information in the news can help

you make the right decisions about stock market investing. Luckily, today you can

get stock market data from a wide variety of sources. Knowing the stock market

price of your investments, being able to answer the question what is the stock

market and watching the market's ups and downs can help you become a stronger

investor.

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Why Stock Market Is Needed?

The stock market is simply a term for the overall market or industry that is

concerned with buying and selling company stock, both private and publicly traded

securities. The stock market does many things. It helps to set prices of stocks. The

more a stock is traded on the market and the more in demand the stock, the higher

is its value. Having a stock market that is interconnected with stock markets around

the world helps traders and investors to see how specific stocks are doing.

Of course, the stock market is mainly present to create money. Through the market,

investors - both companies and individuals - can buy stocks, which effectively

make them own a small part of a company. If the company prospers, investors are

rewarded with dividends and profits. Companies, by becoming public and offering

stocks to the public, can raise money and improve their profile through business

expansions which can help them make great profit.

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Who Can Invest In the Market?

Stockbrokers and individuals can invest in the market. Individual investors invest a

lot although many businesses - such as financial institutions - invest more in the

stock market each day than individuals.

How to Invest In Stock Market?

Most financial experts recommend that investors must consult a full-service

financial advisor initially. This type of advisor can provide advice and can help

ensure that an investor's money gets a good return. More experienced investors may

be interested in one of the online investing options. These allow almost anyone

with a fast internet connection and a subscription to an investment site to buy and

sell stocks when they wish.

Learn About Stock Market

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Before you begin to invest, you will want to learn about the stock market and get

the latest stock market information. This will ensure that you understand how this

type of investment works. Next, you will want to decide what your long-term goals

are. How much money do you want to make and by when? Having goals will make

it easier for you to make investment decisions. Finally, you will want to put aside

money for investing and get this money to a broker or advisor regularly so that it

can be invested for you. With these simple steps, you can start investing and seeing

profits quite quickly.

How Are Stock Prices Determined?

When a company first offers stock, the way it determines price is quite complex.

Basically, a financial expert prices the stock by expected demand, expected

profitability of the stock, overall market conditions, and other market factors.

However once the stock is being traded, it is investors themselves who determine

price of stock. If a stock starts to sell a lot, its price starts to climb because there is a

greater demand (and usually fewer investors willing to sell). When everyone starts

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selling a specific stock -its price drops due to panic or some other reason. Since

more people are selling the stock than buying.

What Is A Stock Market Index?

Companies such as the S&P, Euronext, and the FTSE are called stock market

indices and they capture the movement of stock prices. Usually, these indices are

weighted by the total value of a company's floating capital. Obviously, experts at

the indices must constantly be including stock market changes as well as

considering external market factors to determine how a company is doing in

business.

Getting the latest stock market information is a key priority for almost all investors.

If you wish to try stock market investing, it is important to understand and study the

market in order to make the right investment decisions. This can help you work

with an advisor - or even alone, if you wish - to make the most profits possible.

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 OBJECTIVE OF STUDY

The growth of the share markets in India has opened more avenues for

investment to average Indian investor. Indian income levels are raising at a much

faster rate, as a result the demand for investment options is also on the rise.

However, the investors need to have a thorough knowledge of the different

markets and their changing trends.

Our objective is to find how Religare identifies, maintains & build up a

network with individual customers & employees & continuously strengthen the

network for the mutual benefits for both sides, through Interactive, Individualized

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& Value Added Contacts continuously & over a long period of time. And what are

the challenges in front of Religare.

METHODOLOGY

Research Design

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Research design is the conceptual structure within which the research would take

place. The presentation of such a design facilitates research to be as efficient as

possible yielding maximum information.

Types of Research

I used a descriptive type of research. It is one which includes surveys and fact –

finding, Enquiries of different kinds. The major purpose of such research is

description of the state of affairs, as it exists at present.

Data Sources

There are 2 types of data. They are:

a) Primary data

b) Secondary data

Primary Data are those, which are collected afresh and for the first time and thus

happen to be original in character. Primary data will not only be relevant for

research project but it is also reliable, accurate and dependable.

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Secondary Data are those which have already been collected by someone else and

which have already been passed through the statistical process.

For my research data has been procured from both primary and secondary sources.

Dealers, customers and organization constituted the primary source.

Newspapers, magazines and websites constituted the Secondary data.

Research Approach:

There are 2 basic types of approaches to research. They are,

a) Quantitative Approach

b) Qualitative Approach

Quantitative Approach involves the generation of data, which can be subjected to

rigorous quantitative analysis in a formal and rigid fashion. This approach can be

further sub classified into inferential, experimental and simulation approaches to

research. The purpose of inferential approach to research is to form a database to

infer characteristics or relationships of population.

Qualitative Approach to research is concerned with subjective assessment of

attitudes, opinions and behavior; research in such a situation is a function of

researcher’s insight and impressions.

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In this research a quantitative as well as Qualitative approach was used.

Research Instruments:

The various research instruments at the hands of the researcher are as follows: -

a) Observations: Under this the information is sought by way of

investigators, own direct observation without asking the respondents.

b) Interview: It involves presentation, oral-verbal, stimuli and reply in

terms of oral-verbal responses. This method can be used through personal

interviews and if possible, through telephone interviews.

c) Questionnaires: It consists of number of questions printed or typed

in a definite order on a form or a set of forms; the respondents have to

answer the questions themselves.

Sample Size

This refers to the number of items to be selected from the universe to constitute a

sample.

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For my research the sample size 50 customers surveyed.

LITERATURE REVIEW

World stock markets are booming, and emerging stock markets account for a

disproportionate share of this growth. Yet economists lack a common concept or

measure of stock market development. This article collects and compares a broad

array of indicators of stock market and financial intermediary development, using

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data from forty-four developing and industrial countries during the period from

1986 to 1993. The empirical results exhibit wide cross-country differences for each

indicator as well as intuitively appealing correlations between various indicators.

The article constructs aggregate indexes and analyzes them to document the

relationship between the emergence of stock markets and the growth of financial

intermediaries. It produces a set of stylized facts that facilitates and stimulates

research into the links among stock markets, economic development, and corporate

financing decisions.

Stock market liberalization is a decision by a country's government to allow

foreigners to purchase shares in that country's stock market. On average, a country's

aggregate equity price index experiences abnormal returns of 3.3 percent per month

in real dollar terms during an eight-month window leading up to the

implementation of its initial stock market liberalization. This result is consistent

with the prediction of standard international asset pricing models that stock market

liberalization may reduce the liberalizing country's cost of equity capital by

allowing for risk sharing between domestic and foreign agents.

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Stock Market Development and Long-Run Growth Is the financial system

important for economic growth? One line of research argues that it is not; another

line stresses the importance of the financial system in mobilizing savings,

allocating capital, exerting corporate control, and easing risk management.

Moreover, some theories provide a conceptual basis for the belief that larger, more

efficient stock markets boost economic growth. This article examines whether there

is a strong empirical association between stock market development and long-run

economic growth. Cross-country growth regressions suggest that the predetermined

component of stock market development is positively and robustly associated with

long-run economic growth

Stock Market Development and Financing Choices of Firms

In many developing countries with emerging stock markets, banks are fearful of

stock market development because they think that stock markets will reduce the

volume of their business. This article empirically analyzes the effects of stock

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market development on firms' financing choices using data from thirty developing

and industrial countries from 1980 to 1991. The results imply that initial

improvements in the functioning of a developing stock market produce a higher

debt-equity ratio for firms and thus more business for banks. In stock markets that

are already developed, further development leads to a substitution of equity for debt

financing. By contrast, in developing stock markets, large firms become more

levered as the stock market develops, whereas small firms do not appear to be

significantly affected by stock market development.

International Stock Market Efficiency and Integration: A Study of

Eighteen Nations

This study examines the relationships among stock prices in eighteen national stock

markets by using unit root and cointegration tests for the period 1961--92. All the

markets were analyzed individually and collectively in regions to test for market

efficiency. The results from unit root tests suggest that the world equity markets are

weak-form efficient. The cointegration test results show that there are only a small

number of significant cointegrating vectors over the last three decades. However,

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the number of significant cointegrating vectors increases after the October 1987

stock market crash, a result that is consistent with the contagion effect.

A wide array of official capital controls across countries makes it difficult to

perform cross-sectional analysis of the effects of market segmentation. This article

constructs a measure of deviations from capital market integration that can be

consistently applied across countries. It measures the deviations of asset returns

from an equilibrium model of returns constructed assuming market integration.

Applying the measure to stock returns from twenty-four national markets indicates

that market segmentation tends to be much larger for emerging markets than for

developed markets, and that the measure tends to decrease over time. Along several

dimensions, the proposed measure yields results that are consistent with reasonable

priors about the relations between effective integration and explicit capital controls,

capital market development, and economic growth.

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 Exchange rate and stock price interactions in emerging financial

markets: evidence on India, Korea, Pakistan and the Philippines

Interactions are investigated between exchange rates and stock prices in the

emerging financial markets of India, Korea, Pakistan and the Philippines. The

motivation is to establish the causal linkages between leading prices in the foreign

exchange market and the stock market; the linkages have implications for the

ongoing attempts to develop stock markets in emerging economies simultaneously

with a policy shift towards independently floating exchange rates. Some recent

econometric techniques are applied to a bivariate vector autoregressive model using

monthly observations on the IFC stock price index and the real effective exchange

rate over 1985:01 - 1994:07. The results show unidirectional causality from

exchange rates to stock prices in all the sample countries, except the Philippines.

This finding has policy implications; it suggests that respective governments should

be cautious in their implementation of exchange rate policies, given that such

policies have ramifications on their stock markets.

The stock market as a source of finance: a comparison of U.S. and Indian firms in

seeking funding, a firm's main choice is between external and internal financing.

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And, says the author, the evidence suggests that the stock market plays only a

limited role providing finance for both U.S. and Indian firms. The author finds that

internal finance plays less of a role for Indian firms than for U.S. firms - and

external debt a bigger role. This is consistent with theoretical predictions, given

that information and agency problems are less severe for Indian firms than for U.S.

firms. (India's financial system is predominantly bank-oriented, more like German

and Japanese financial systems than American and British systems.) The author's

estimate of the role of the stock market as a source of finance is lower than other

estimates, partly because of methodological approach: he studied sources and uses

of funds, rather than the financing of net asset growth and capital expenditures. To

the extent that these findings for India are generalizable to the other developing

countries - analysis was restricted to the stock market's role in providing finance -

the author concludes that the development of stock markets is unlikely to spur

corporate growth in developing countries. And there is a caveat: foreign investors

have played only a limited role in the slow-paced privatization of India's

state-owned enterprises - although in recent years, despite delayed reform of the

securities market, foreign institutional investors have begun to invest more. In

emerging markets in Eastern Europe and Latin America, foreign investors have

played a much more active role in privatization, chiefly by investing in those stock

markets.

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 Working of a stock market

Working of a stock market to learn more about how you can earn on the stock

market, one has to understand how it works. A person desirous of buying/selling

shares in the market has to first place his order with a broker. When the buy order

of the shares is communicated to the broker he routes the order through his system

to the exchange. The order stays in the queue exchange's systems and gets executed

when the order logs on to the system within buy limit that has been specified. The

shares purchased will be sent to the purchaser by the broker either in physical or

demat format

Indian Stock Market Overview. The Bombay Stock Exchange (BSE) and the

National Stock Exchange of India Ltd (NSE) are the two primary exchanges in

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India. In addition, there are 22 Regional Stock Exchanges. However, the BSE and

NSE have established themselves as the two leading exchanges and account for

about 80 per cent of the equity volume traded in India. The NSE and BSE are equal

in size in terms of daily traded volume. The average daily turnover at the exchanges

has increased from Rs 851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and

further to Rs 2,273 crore in 1999-2000 (April - August 1999). NSE has around

1500 shares listed with a total market capitalization of around Rs 9, 21,500 crore

(Rs 9215-bln). The BSE has over 6000 stocks listed and has a market capitalization

of around Rs 9, 68,000 crore (Rs 9680-bln). Most key stocks are traded on both the

exchanges and hence the investor could buy them on either exchange. Both

exchanges have a different settlement cycle, which allows investors to shift their

positions on the bourses. The primary index of BSE is BSE Sensex comprising 30

stocks. NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks. The

BSE Sensex is the older and more widely followed index. Both these indices are

calculated on the basis of market capitalization and contain the heavily traded

shares from key sectors. The markets are closed on Saturdays and Sundays. Both

the exchanges have switched over from the open outcry trading system to a fully

automated computerized mode of trading known as BOLT (BSE On Line Trading)

and NEAT (National Exchange Automated Trading) System. It facilitates more

efficient processing, automatic order matching, faster execution of trades and

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transparency. The scrips traded on the BSE have been classified into 'A', 'B1', 'B2',

'C', 'F' and 'Z' groups. The 'A' group shares represent those, which are in the carry

forward system (Badla). The 'F' group represents the debt market (fixed income

securities) segment. The 'Z' group scrips are the blacklisted companies. The 'C'

group covers the odd lot securities in 'A', 'B1' & 'B2' groups and Rights

renunciations. The key regulator governing Stock Exchanges, Brokers,

Depositories, Depository participants, Mutual Funds, FIIs and other participants in

Indian secondary and primary market is the Securities and Exchange Board of India

(SEBI) Ltd.

Top Rolling Settlement Cycle: In a rolling settlement, each trading day is

considered as a trading period and trades executed during the day are settled based

on the net obligations for the day. At NSE and BSE, trades in rolling settlement are

settled on a T+2 basis i.e. on the 2nd working day. For arriving at the settlement

day all intervening holidays, which include bank holidays, NSE/BSE holidays,

Saturdays and Sundays are excluded. Typically trades taking place on Monday are

settled on Wednesday, Tuesday's trades settled on Thursday and so on.

Concept Of Buying Limit Suppose you have sold some shares on NSE and are

trying to figure out that if you can use the money to buy shares on NSE in a

different settlement cycle or say on BSE. To simplify things for ICICI Direct

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customers, we have introduced the concept of Buying Limit (BL). Buying Limit

simply tells the customer what is his limit for a given settlement for the

desired exchange. Assume that you have enrolled for a ICICI Direct account, which

requires 100% of the money required to fund the purchase, be available. Suppose

you have Rs 1,00,000 in your Bank A/C and you set aside Rs 50,000 for which you

would like to make some purchase. Your Buying Limit is Rs 50,000. Assume that

you sell shares worth Rs 1,00,000 on the NSE on Monday. The BL therefore for the

NSE at that point of time goes upto Rs 1,50,000. This means you can buy shares

upto Rs 1,50,000 on NSE or BSE. If you buy shares worth Rs 75,000 on Tuesday

on NSE your BL will naturally reduce to Rs 75,000. Hence your BL is simply the

amount set aside by you from your bank account and the amount realized from the

sale of any shares you have made less any purchases you have made. Your BL of

Rs 50,000, which is the amount set aside by you from your Bank account for

purchase is available for BSE and NSE. As you have made the sale of shares on

NSE for Rs.100000, the BL for NSE & BSE rises to 1,50,000. The amount from

sale of shares in NSE will also be available for purchase on BSE. ICICI Direct

makes it very easy for its customers to know their BL on the click of a mouse. You

just have to specify the Exchange and settlement cycle and on a click of your

mouse, the BL will be known to you

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.

What Is Dematerialization? Dematerialization in short called as 'demat is the

process by which an investor can get physical certificates converted into electronic

form maintained in an account with the Depository Participant. The investors can

dematerialize only those share certificates that are already registered in their name

and belong to the list of securities admitted for dematerialization at the

depositories. Depository : The organization responsible to maintain investor's

securities in the electronic form is called the depository. In other words, a

depository can therefore be conceived of as a "Bank" for securities. In India there

are two such organizations viz. NSDL and CDSL. The depository concept is similar

to the Banking system with the exception that banks handle funds whereas a

depository handles securities of the investors. An investor wishing to utilize the

services offered by a depository has to open an account with the depository through

a Depository Participant. Depository Participant : The market intermediary through

whom the depository services can be availed by the investors is called a Depository

Participant (DP). As per SEBI regulations, DP could be organizations involved in

the business of providing financial services like banks, brokers, custodians and

financial institutions. This system of using the existing distribution channel (mainly

constituting DPs) helps the depository to reach a wide cross section of investors

spread across a large geographical area at a minimum cost. The admission of the

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DPs involves a detailed evaluation by the depository of their capability to meet with

the strict service standards and a further evaluation and approval from SEBI.

Realizing the potential, all the custodians in India and a number of banks, financial

institutions and major brokers have already joined as DPs to provide services in a

number of cities. Advantages of a depository services: Trading in demat segment

completely eliminates the risk of bad deliveries. In case of transfer of electronic

shares, you save 0.5% in stamp duty. Avoids the cost of courier/ notarization/ the

need for further follow-up with your broker for shares returned for company

objection No loss of certificates in transit and saves substantial expenses involved

in obtaining duplicate certificates, when the original share certificates become

mutilated or misplaced. Increasing liquidity of securities due to immediate transfer

& registration Reduction in brokerage for trading in dematerialized shares Receive

bonuses and rights into the depository account as a direct credit, thus eliminating

risk of loss in transit. Lower interest charges for loans taken against demat shares as

compared to the interest for loan against physical shares. RBI has increased the

limit of loans availed against dematerialized securities as collateral to Rs 20 lakh

per borrower as against Rs 10 lakh per borrower in case of loans against physical

securities. RBI has also reduced the minimum margin to 25% for loans against

dematerialized securities, as against 50% for loans against physical securities. Fill

up the account opening form, which is available with the DP. Sign the DP-client

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agreement, which defines the rights and duties of the DP and the person wishing to

open the account. Receive your client account number (client ID). This client id

along with your DP id gives you a unique identification in the depository system.

Fill up a dematerialization request form, which is available with your DP. Submit

your share certificates along with the form; (write "surrendered for demat" on the

face of the certificate before submitting it for demat) Receive credit for the

dematerialized shares into your account within 15 days. Procedure of opening a

demat account: Opening a depository account is as simple as opening a bank

account. You can open a depository account with any DP convenient to you by

following these steps: Fill up the account opening form, which is available with the

DP. Sign the DP-client agreement, which defines the rights and duties of the DP

and the person wishing to open the account. Receive your client account number

(client ID). This client id along with your DP id gives you a unique identification in

the depository system. There is no restriction on the number of depository accounts

you can open. However, if your existing physical shares are in joint names, be sure

to open the account in the same order of names before you submit your share

certificates for demat Procedure to dematerialize your share certificates: Fill up a

dematerialization request form, which is available with your DP. Submit your share

certificates along with the form; (write "surrendered for demat" on the face of the

certificate before submitting it for demat) Receive credit for the dematerialized

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shares into your account within 15 days. In case of directly purchasing

dematerialized shares from the broker, instruct your broker to purchase the

dematerialized shares from the stock exchanges linked to the depositories. Once the

order is executed, you have to instruct your DP to receive securities from your

broker's clearing account. You have to ensure that your broker also gives a

matching instruction to his DP to transfer the shares purchased on your behalf into

your depository account. You should also ensure that your broker transfers the

shares purchased from his clearing account to your depository account, before the

book closure/record date to avail the benefits of corporate action. Stocks traded

under demat: Securities and Exchange Board of India (SEBI) has already specified

for settlement only in the dematerialized form in for 761 particular scripts.

Investors interested in these stocks receive shares only in demat form without any

instruction to your broker. While SEBI has instructed the institutional investors to

sell 421 scripts only in the demat form. The shares by non institutional investors

can be sold in both physical and demat form. As there is a mix of both form of

stocks, it is possible if you have purchased a stock in this category, you may get

delivery of both physical and demat shares. Opening of a demat account through

ICICI Direct : Opening an e-Invest account with ICICI Direct, will enable you to

automatically open a demat account with ICICI, one of the largest DP in India,

thereby avoiding the hassles of finding an efficient DP. Since the shares to be

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bought or sold through ICICI Direct will be only in the demat form, it will avoid

the hassles of instructing the broker to buy shares only in demat form. Adding to

this, you will not face problems like checking whether your broker has transferred

the shares from his clearing account to your demat account.

Going Short: If you do not have shares and you sell them it is known as going short

on a stock. Generally a trader will go short if he expects the price to decline. In a

rolling settlement cycle you will have to cover by end of the day on which you had

g o n e s h o r t .

Concept Of Margin Trading: Normally to buy and sell shares, you need to have the

money to pay for your purchase and shares in your demat account to deliver for

your sale. However as you do not have the full amount to make good for your

purchases or shares to deliver for your sale you have to cover (square) your

purchase/sale transaction by a sale/purchase transaction before the close of the

settlement cycle. In case the price during the course of the settlement cycle moves

in your favor (risen in case of purchase done earlier and fallen in case of a sale done

earlier) you will make a profit and you receive the payment from the exchange. In

case the price movement is adverse, you will make a loss and you will have to

make the payment to the exchange. Margins are thus collected to safeguard against

any adverse price movement. Margins are quoted as a percentage of the value of the

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transaction. Important facts for NRI customers: Buying and selling on margin in

India is quite different than what is referred to in US markets. There is no

borrowing of money or shares by your broker to make sure that the settlement takes

place as per SE schedule. In Indian context, buying/selling on margin refers to

building a leveraged position at the beginning of the settlement cycle and squaring

off the trade before the settlement comes to end. As the trade is squared off before

the settlement cycle is over, there is no need to borrow money or shares. Buying On

Margin : Suppose you have Rs 1,00,000 with you in your Bank account. You can

use this amount to buy 10 shares of Infosys Ltd. at Rs 10,000. In the normal course,

you will pay for the shares on the settlement day to the exchange and receive 10

shares from the exchange which will get credited to your demat account.

Alternatively you could use this money as margin and suppose the applicable

margin rate is 25%. You can now buy upto 40 shares of Infosys Ltd. at Rs 10,000

value Rs 4,00,000, the margin for which at 25% i.e. Rs 1,00,000. Now as you do

not have the money to take delivery of 40 shares of Infosys Ltd. you have to cover

(square) your purchase transaction by placing a sell order by end of the settlement

cycle. Now suppose the price of Infosys Ltd rises to Rs. 11000 before end of the

settlement cycle. In this case your profit is Rs 40,000 which is much higher than on

the 10 shares if you had bought with the intent to take delivery. The risk is that if

the price falls during the settlement cycle, you will still be forced to cover (square)

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the transaction and the loss would be adjusted against your margin amount. Selling

On Margin : You do not have shares in your demat account and you want to sell as

you expect the prices of share to go down. You can sell the shares and give the

margin to your broker at the applicable rate. As you do not have the shares to

deliver you will have to cover (square) your sell transaction by placing a buy order

before the end of the settlement cycle. Just like buying on margin, in case the price

moves in your favor (falls) you will make profit. In case price goes up, you will

make loss and it will be adjusted against the margin amount.

Types Of Orders: There are various types of orders, which can be placed on the

exchanges: Limit Order : The order refers to a buy or sell order with a limit price.

Suppose, you check the quote of Reliance Industries Ltd.(RIL) as Rs. 251 (Ask).

You place a buy order for RIL with a limit price of Rs 250. This puts a cap on your

purchase price. In this case as the current price is greater than your limit price,

order will remain pending and will be executed as soon as the price falls to Rs. 250

or below. In case the actual price of RIL on the exchange was Rs 248, your order

will be executed at the best price offered on the exchange, say Rs 249. Thus you

may get an execution below your limit price but in no case will exceed the limit

buy price. Similarly for a limit sell order in no case the execution price will be

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below the limit sell price. Market Order : Generally a market order is used by

investors, who expect the price of share to move sharply and are yet keen on buying

and selling the share regardless of price. Suppose, the last quote of RIL is Rs 251

and you place a market buy order. The execution will be at the best offer price on

the exchange, which could be above Rs 251 or below Rs 251. The risk is that the

execution price could be substantially different from the last quote you saw. Please

refer to Important Fact for Online Investors. Stop Loss Order : A stop loss order

allows the trading member to place an order which gets activated only when the last

traded price (LTP) of the Share is reached or crosses a threshold price called as the

trigger price. The trigger price will be as on the price mark that you want it to be.

For example, you have a sold position in Reliance Ltd booked at Rs. 345. Later in

case the market goes against you i.e. go up, you would not like to buy the scrip for

more than Rs.353. Then you would put a SL Buy order with a Limit Price of

Rs.353. You may choose to give a trigger price of Rs.351.50 in which case the

order will get triggered into the market when the last traded price hits Rs.351.50 or

above. The execution will then be immediate and will be at the best price between

351.50 and 353. However stock movements can be so violent at times. The prices

can fluctuate from the current level to over and above the SL limit price, you had

quoted, at one shot i.e. the LTP can move from 350…351…and directly to 353.50.

At this moment your order will immediately be routed to the Exchange because the

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LTP has crossed the trigger price specified by you. However, the trade will not be

executed because of the LTP being over and above the SL limit price that you had

specified. In such a case you will not be able to square your position. Again as the

market falls, say if the script falls to 353 or below, your order will be booked on the

SL limit price that you have specified i.e. Rs. 353. Even if the script falls from

353.50 to 352 your buy order will be booked at Rs. 353 only. Some seller,

somewhere will book a profit in this case form your buy order execution. Hence, an

investor will have to understand that one of the foremost parameters in specifying

on a stop loss and a trigger price will have to be its chances of executionability as

and when the situation arises. A two rupee band width between the trigger and stop

loss might be sufficient for execution for say a script like Reliance, however the

same band hold near to impossible chances for a script like Infosys or Wipro. This

vital parameter of volatility bands of scrips will always have to be kept in mind

while using the Stop loss concept.

Circuit Filters And Trading Bands: In order to check the volatility of shares, SEBI

has come with a set of rules to determine the fixed price bands for different

securities within which they can move in a day. As per Sebi directive, all securities

traded at or above Rs.10/- and below Rs.20/- have a daily price band of ±25%. All

securities traded below Rs. 10/- have a daily price band of ± 50%. Price band for all

securities traded at or above Rs. 20/- has a daily price band of ± 8%. However, the

31
now the price bands have been relaxed to ± 8% ± 8% for select 100 scrips after a

cooling period of half an hour. The previous day's closing price is taken as the base

price for calculating the price. As the closing price on BSE and NSE can be

significantly different, this means that the circuit limit for a share on BSE and NSE

can be different.

Badla financing In common parlance the carry-forward system is known as 'Badla',

which means something in return. Badla is the charge, which the investor pays for

carrying forward his position. It is a hedge tool where an investor can take a

position in a scrip without actually taking delivery of the stock. He can

carry-forward his position on the payment of small margin. In the case of

short-selling the charge is termed as 'undha badla'. The CF system serves three

needs of the stock market : Quasi-hedging: If an investor feels that the price of a

particular share is expected to go up/down, without giving/taking delivery of the

stock he can participate in the volatility of the share. ? Stock lending: If he wishes

to short sell without owning the underlying security, the stock lender steps into the

CF system and lends his stock for a charge. ? Financing mechanism: If he wishes to

buy the share without paying the full consideration, the financier steps into the CF

system and provides the finance to fund the purchase The scheme is known as

32
"Vyaj Badla" or "Badla" financing. For example, X has bought a stock and does not

have the funds to take delivery, he can arrange a financier through the stock

exchange 'badla' mechanism. The financier would make the payment at the

prevailing market rate and would take delivery

of the shares on X's behalf. You will only have to pay interest on the funds you

have borrowed. Vis-à-vis, if you have a sale position and do not have the shares to

deliver you can still arrange through the stock exchange for a lender of securities.

An investor can either take the services of a badla financier or can assume the role

of a badla financier and lend either his money or securities. On every Saturday a CF

system session is held at the BSE. The scrips in which there are outstanding

positions are listed along with the quantities outstanding. Depending on the demand

and supply of money the CF rates are determined. If the market is over bought,

there is more demand for funds and the CF rates tend to be high. However, when

the market is oversold the CF rates are low or even reverse i.e. there is a demand

for stocks and the person who is ready to lend stocks gets a return for the same. The

scrips that have been put in the Carry Forward list are all 'A' group scrips, which

have a good dividend paying record, high liquidity, and are actively traded. The

scrips are not specified in advance because it is then difficult to get maximum

return. All transactions are guaranteed by the Trade Guarantee Fund of BSE, hence,

there is virtually no risk to the badla financier except for broker defaults. Even in

33
the worst scenario, where the broker through whom you have invested money in

badla financing defaults, the title of the shares would remain with you and the

shares would be lying with the "Clearing house". However, the risk of volatility of

the scrip will have to be borne by the investor.

Securities lending Securities lending program is from the NSE. It is similar to the

Badla from the BSE, only difference being the carry forward system not being

allowed by the NSE. Meaning this is a where in a holder of securities or their agent

lends eligible securities to borrowers in return for a fee to cover short positions.

Insider trading: Insider trading is illegal in India. When information, which is

sensitive in the form of influencing the price of a scrip, is procured or/and used

from sources other than the normal course of information output for unscrupulous

inducement of volatility or personal profits, it is called as Insider trading. Insider

trading refers to transactions in securities of some company executed by a company

insider. Although an insider might theoretically be anyone who knows material

financial information about the company before it becomes public, in practice, the

list of company insiders (on whom newspapers print information) is normally

restricted to a moderate-sized list of company officers and other senior executives.

Most companies warn employees about insider trading. SEBI has strict rules in

34
place that dictates when company insiders may execute transactions in their

company's securities. All transactions that do not conform to these rules are, in

general, prosecutable offenses under the relevant law

Navigating The Stock Exchange

Nothing can seem quite so intimidating as the stock exchange; a hotbed of wealth

and commerce all converging in one place; fortunes won and lost; businesses built;

and the economic viability of a nation awaiting the results.

The stock exchange can mean a variety of things for a variety of people. To

understand the stock exchange you must understand its role in today’s economy.

To begin with, the stock exchange offers corporations the opportunity to fund their

operations and grow their business. The money made from investors who believe in

the products and services offered by the business is used to finance growth; profits

are passed onto the stock holders in the form of increased stock prices which they

can use to realize a profit upon the sale of the stock. This opportunity – to be traded

on the public stock market - is only offered to businesses of a certain size. It can

mean the difference between viability and failure for a business.

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Of course, the bigger picture of all this buying, selling, and growth of corporations

is the impact it has on the greater economy. A strong economy is dependent upon a

viable and thriving stock exchange and the same can be said for the other way

around. It can be enormously exciting to be involved in a process of this

magnitude; to witness first-hand a nation’s financial axis. The stock exchange does

not have to be a place of intimidation; rather it should be what it was intended to be

– a place of opportunity.

To learn all you need to know about the stock exchange, go online. You’ll find

tremendous resources at your disposal that will explain the complexities of the

stock exchange while laying the groundwork for your possible participation.

If you decide to become a part of trading on the stock exchange you can either

begin with online trading – a safe and minimally risky venture for novices – or see

a professional stock broker who can guide you through the stock exchange with

e a s e .

Either way, the stock exchange offers a bevy of opportunities for those looking to

36
do something else with their money than having it sit in a bank account. Explore all

your options and you’re sure to find that you’ll be comfortable in no time.

VARIOUS ACHIEVEMENTS OF THE STOCK MARKET

Sensex journey to 17,000 points

Indian markets achieved yet another milestone on Wednesday; it opened positive

and within seconds, hit a new high. The 30-share index took 5 days to reach 17,000

from 16,000.

The Sensex opened with a positive gap of 70 points at 16,969. The index is now up

114 points at 17,013

Following is the timeline on the rise and rise of the Sensex through Indian stock

market history.

1 0 0 0 , J u l y 2 5 , 1 9 9 0

On July 25, 1990, the Sensex touched the magical four-digit figure for the first time

and closed at 1,001 in the wake of a good monsoon and excellent corporate results

37
2 0 0 0 , J a n u a r y 1 5 , 1 9 9 2

On January 15, 1992, the Sensex crossed the 2,000-mark and closed at 2,020

followed by the liberal economic policy initiatives undertaken by the then finance

minister and current Prime Minister Dr Manmohan Singh.

3 0 0 0 , F e b r u a r y 2 9 , 1 9 9 2

On February 29, 1992, the Sensex surged past the 3000 mark in the wake of the

market-friendly Budget announced by the then Finance Minister, Dr Manmohan

S i n g h .

4000,March30,1992

On March 30, 1992, the Sensex crossed the 4,000-mark and closed at 4,091 on the

expectations of a liberal export-import policy. It was then that the Harshad Mehta

scam hit the markets and Sensex witnessed unabated selling.

5000, October 8, 1999

On October 8, 1999, the Sensex crossed the 5,000-mark as the BJP-led coalition

Won the majority in the 13th Lok Sabha election.

38
6000,February 11 , 2000

On February 11, 2000, the InfoTech boom helped the Sensex to cross the

6,000-mark and hit and all time high of 6006.

7000, June 20, 2005

On June 20, 2005, the news of the settlement between the Ambani brothers boosted

investor sentiments and the scrips of RIL, Reliance Energy, Reliance Capital and

IPCL made huge gains. This helped the Sensex crossed 7,000 points for the first

t i m e .

8000, September 8 , 2005

On September 8, 2005, the Bombay Stock Exchange's benchmark 30-share index --

the Sensex -- crossed the 8000 level following brisk buying by foreign and

domestic funds in early trading.

9000,November 28, 2005

The Sensex on November 28, 2005 crossed the magical figure of 9000 to touch

9000.32 points during mid-session at the Bombay Stock Exchange on the back of

frantic buying spree by foreign institutional investors and well supported by local

39
operators as well as retail investors.10,000 February 6, 2006

The Sensex on February 6, 2006 touched 10,003 points during mid-session. The

Sensex finally closed above the 10K-mark on February 7, 2006.

11,000, March 21, 2006

The Sensex on March 21, 2006 crossed the magical figure of 11,000 and touched a

life-time peak of 11,001 points during mid-session at the Bombay Stock Exchange

for the first time. However, it was on March 27, 2006 that the Sensex first closed at

over 11,000 points.

12,000, April 20, 2006

The Sensex on April 20, 2006 crossed the 12,000-mark and closed at a peak of

12,040 points for the first time.

13,000, October 30, 2006

The Sensex on October 30, 2006 crossed the magical figure of 13,000 and closed at

13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the Sensex to

move from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000.

40
14,000 December 5, 2006

The Sensex on December 5, 2006 crossed the 14,000-mark to touch 14,028 points.

It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.

15,000 July 6, 2007

The Sensex on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005

points in afternoon trade. It took seven months for the Sensex to move from 14,000

to 15,000 points.

16,000, September 19, 2007

The Sensex scaled yet another milestone during early morning trade on September

19, 2007. Within minutes after trading began, the Sensex crossed 16,000, rising by

450 points from the previous close. The 30-share Bombay Stock Exchange's

sensitive index took 53 days to reach 16,000 from 15,000. Nifty also touched a new

high at 4659, up 113 points.

41
The Sensex finally ended with its biggest-ever single day gain of 654 points at

16,323. The NSE Nifty gained 186 points to close at 4,732.

17,000, September 26, 2007

The Sensex scaled yet another height during early morning trade on September 26,

2007. Within minutes after trading began, the Sensex crossed 17,000.

42
 OVERVIEW OF INDUSTRY AS A WHOLE

Capital Market

The capital market is a system or framework, which facilitates savings and

investment. The securities markets provide channels for the allocation of savings to

investments. Through the capital market:

1. Companies can raise resources from the people (investors); and

2. Households can invest their savings in industrial or commercial

activities to earn a return

Hence, the capital market is a mechanism by which capital (funds) moves

from those with surplus funds (investors) to those in need of funds (companies)

43
Savings are linked to investments through a range of financial products called

securities.

Main participants in the capital market

The capital market framework consists of the following participants:

1. Stock Exchanges

2. Market intermediaries, such as stock-brokers and Mutual Funds

3. Investors

4. Regulatory institutions (e.g. SEBI)

Primary Market and Secondary Market:

The securities market consists of two inseparable and interdependent

segments, namely the primary market and the secondary market.

44
 The primary market in the channel for the sale of new securities, while the

secondary market deals in securities previously issued. So, the secondary market

actually ensures the liquidity of the securities.

45
STOCK EXCHANGE

The market or place where securities, viz. shares are exchange traded or

simply where buying and selling talks place, is called stock exchange or stock

market. Presently, the stock market in India consists of twenty-three regional stock

exchanges and two national exchanges, namely, the National Stock Exchange

(NSE) and over the Counter Exchange of India (OTCEI)

The Bombay Stock Exchange (BSE) is the largest Stock Exchange, in the

country, where maximum transactions, in terms of money and shares take place.

The other major stock exchanges are Calcutta, Madras and Delhi Stock Exchanges.

Other one at Ahmedabad, Jaipur, Bangalore, Kanpur, Rajkot, Hyderabad, Cochin,

Pune, Bhubaneshwar, Guwahti, Indore, Mangalore, Ludhiana, Patna, Saurashtra,

Vadodara, Coimbatore, Meerut, and Surat.

BOMBAY STOCK EXCHANGE

46
 Background: The BSE Sensitive Index (1978-79) has, to a considerable

extent, been serving the purpose of quantifying the price movements as also

reflecting the sensitivity of the market in an effective manner.

The number of companies listed on the Bombay Stock Exchange has registered a

phenomenal increase from 992 in the year 1980 to about 4800 companies by the

end of July 2005 and their combined market capitalization rose from Rs. 5,421

crores to around Rs. 18, 00,000crores at end of July 2005.

These factors necessitated compilation of a new broad-based index series reflecting

the present market trends in a more effective manner and providing a better

representation of the increased equity stocks, market capitalization as also the

newly emerged industry groups. Towards this end, the Exchange constructed and

launched on 27th May 1994, two index series viz. the BSE-200 and the DOLLEX.

Coverage: The equity shares of 200 selected companies from the specified

and non-specified lists of this Exchange have been considered for inclusion in the

sample for `BSE-200'. The selection of companies has primarily been done on the

basis of current market capitalization of the listed scrips on the exchange. Besides

market capitalization, the market activity of the companies as reflected by the

47
volumes of turnover and certain fundamental factors were considered for the final

selection of the 200 companies.

Choice of Base Year: The financial year 1989-90 has been chosen as the base year

for the price stability exhibited during that year and due to its proximity to the

current period.

The National Stock Exchange

LOGO OF NSE

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1. The National Stock Exchange of India Limited has genesis in the report of

the High Powered Study Group on Establishment of New Stock Exchanges.

2. NSE was promoted by leading Financial Institutions at the behest of the

Government of India and was incorporated in November 1992.

3. It is a tax-paying company unlike other stock exchanges in the country.

4. 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.

5. The Capital Market (Equities) segment commenced operations in

November 1994 and operations in Derivatives segment commenced in June

2000.

49
NSE Group

1. NSCCL, the Organization

2. NSE.IT Ltd.

3. India Index Services & Products Ltd. (IISL)

4. Dot Ex International Limited

5. National Securities Depository Ltd. (NSDL)

1. NSCCL, the Organization

The National Securities Clearing Corporation Ltd. (NSCCL), a wholly

owned subsidiary of NSE, was incorporated in August 1995. It was set up

with the following objectives:

1. To bring and sustain confidence in clearing and settlement of

securities;

2. To promote and maintain, short and consistent settlement cycles;

3. To provide counter-party risk guarantee, and

50
 4. To operate a tight risk containment system.

2. NSE.IT Ltd

NSE.IT a 100% subsidiary of National Stock Exchange of India Limited

(NSE) is the information technology arm of the largest stock exchange of

the country.

NSE.IT possesses the wealth of expertise acquired in the last six years by

running the trading and clearing infrastructure of largest stock exchange of

the country.

NSE.IT is an Export Oriented Unit with STP and plans to go global for

various IT services in due course. In the near future the company plans to

release new products for Broker Back-office Operations and enhance

NeatXS / Neat iXS to support Straight through Processing on the net.

51
3. India Index Services & Products Ltd. (IISL)

1. India Index Services and Products Limited (IISL), a joint venture

between NSE and CRISIL Ltd. (formerly the Credit Rating

Information Services of India Limited).

2. Was set up in May 1998 to provide a variety of indices and index

related services and products for the Indian capital markets.

3. It has a consulting and licensing agreement with Standard and Poor's

(S&P), the world's leading provider of investible equity indices, for

co-branding equity indices.

4. It maintains over 80 equity indices comprising broad-based

benchmark indices, sect oral indices and customized indices.

5. Many investment and risk management products based on IISL

indices have been developed in the recent past, within India and

abroad. These include index based derivatives traded on NSE and

Singapore Exchange (SIMEX) and a number of index funds.

4. DotEx International Limited

52
a. DotEx was a joint venture between I-flex Solutions Ltd. and

NSE.IT Ltd. Recently NSE has taken over the shareholding

and management of DotEx.

b. DotEx was formed to provide world-class internet trading

platforms which allow members of NSE to offer online

trading facilities to their customers.

c. Members of NSE can service a larger clientele by using the

automated risk management features and thus increase

volumes.

d. Investors get comprehensive and updated information

necessary to trade, along with a single-click convenience to

fulfill their obligations.

i. The initial offering of DotEx is DotEx Plaza where

multiple market participants such as members of

53
 NSE, depository participants and banks can offer

web-based services to their customers.

ii. As a neutral aggregator and infrastructure

provider, DotEx offers choice and convenience to

i n v e s t o r s .

DotEx products may be classified under the

following broad categories:

iii. Equity Trading Module

iv. F&O Trading Module

5. National Securities Depository Ltd. (NSDL):

1. In order to solve the myriad problems associated with trading in physical

securities, NSE joined hands with the Industrial Development Bank of India

54
 (IDBI) and the Unit Trust of India (UTI) to promote dematerialization of

securities.

2. Together they set up National Securities Depository Limited (NSDL), the

first depository in India.

3. NSDL commenced operations in November 1996 and has since established

a national infrastructure of international standard to handle trading and

settlement in dematerialized form and thus completely eliminated the risks

to investors associated with fake/bad/stolen paper.

FUNCTIONING OF STOCK EXCHANGE

· LISTING

Listing of shares, on a stock exchange, means, such shares can be bought

and sold, in stock exchange.

A Company, which intends to issue shares, through prospectus, shall have

to apply to one or more stock exchanges, for getting its shares listed.

The detailed and elaborate procedure of getting the shares listed on a stock

exchange is monitored by SEBI. The SEBI, issues guidelines and

notifications, from time to time, with regard to listing of securities.

55
Once the shares are listed, they are divided into two categories:

1. GROUP“A”SHARES

2. GROUP "B" SHARES

GROUP "A" SHARES: are referred to as “Cleaned Securities” or

“specified shares". Group "A" shares represent companies, with huge

amount of capital, and equally a large scope for investment. These shares

are frequently traded and command higher price earning multiples.

GROUP "B" SHARES: are referred to as, Non-cleaned securities or

non-specified shares.

56
VARIOUS ORDERS AND TRANSACTIONS

SETTLEMENT CYCLES

There are various types of orders, which can be placed by the buyer or

seller. They are:

1. Market Order

A market order is to be executed as soon as possible at the best

prevailing price in the market.

2. Limit order

A limit order is constrained by the price limits specified by the investor.

The seller specifies the minimum price that the security must fetch, and

the buyer specifies the maximum price that he is willing to pay.

3. A Day order

57
 A day order remains valid only for the day when it is placed. If the order

is not executed on that day, it automatically lapses.

4. A Week order

A week order is one, which is active for a week

5. A Month order

A month order is an order, which is valid for one month.

6. An open order

An open order is an order, which is valid for one month. An open order

remains in effect until it is executed or cancelled.

Similarly there are certain types of transactions, which are allowed on the

stock exchanges. They are:

1. Transactions for Spot delivery

The delivery and payment is effected within the time or on the date

stipulated when entering into the transaction or within fourteen days,

whichever is shorter.

2. Transaction for Hand delivery

58
 These transactions also referred to as the transaction for "the account", are

cleared and settled through the clearinghouse.

3. Transactions for special delivery

The delivery and payment is affected within any time exceeding fourteen

days following the date of the contact as may be stipulated when entering

into the transaction provided the governing board or the president of the

exchange permits the same.

59
CAPITAL MARKET PROCESSES

Initial Public Offering (IPO)

An Initial Public Offering occurs when a company first approaches the

capital market for funds, by issuing shares for the first time. There are

guidelines issued by SEBI as well as by the Companies Act, 1956 regarding

various procedures involved in a public issue. Any company going in for an

IPO has to issue a Prospectus, which should disclose:

All facts and information relevant to prospective investors for deciding

whether or not to invest in the issue Risk factors and management

perception of those risks.

Private Placement

Private placement refers to the raising of funds directly from certain

investors without issuing a prospectus to the public. It involves issue of

securities to a limited number of subscribers, such as banks, Financial

Institutions, Mutual Funds and high net-worth individuals.

60
Private placements are arranged through a merchant banker / investment

banker, who acts as an agent for the issuer and brings together the issuer and

the investors. Since the publics at large are not involved in a private

placement, and since allotments are mainly made to a few sophisticated and

experienced investors, private placements are exempt from much of the

rigorous disclosure and regulatory requirements that apply to public issues.

According to the Companies Act, an issue becomes public if it results in

Book Building Issue

Book building is basically a process used during an IPO for efficient price

discovery, i.e., for fixing an appropriate price for the issue that reflects

market and investor perceptions. During the period for which the market is

kept open, bids are collected from investors at various prices, which have to

be equal to or above a certain fixed “floor price” (minimum price). After the

bid closing date, the final offer price is fixed after taking into account the

various bids received

61
SEBI

Security and Exchange Board of India was established on 12th of April

1988 and was given legal status in 1992 to promote and regulate the stock

markets in India.

Role of the Securities and Exchange Board of India (SEBI)

The SEBI is the main regulatory body in the Indian capital market scenario.

SEBI is responsible for:

1. Providing fair dealing in the issue of securities and ensuring a

market place where funds can be raised at a relatively low cost.

2. Providing a degree of protection to the investors

Regulating and developing a code of conduct by intermediaries

62
Market Intermediaries and their role

The stock market is the meeting place for suppliers of funds and users of

fund. It is difficult for suppliers and users of funds to directly meet each

other and exchange funds for securities, due to several reasons:

1. The amount of funds supplied by the supplier might not match the

amount required by the user

2. The risk, maturity and liquidity characteristics of the securities

issued by the user may not match the preference of the supplier

3. Substantial search costs and time will have to be spent for one party

to find another party whose needs perfectly match his order.

4. The presence of market intermediaries minimizes all these problems.

Intermediaries act as agents to match and bring users and suppliers

of funds together, for a commission.

5. The main market intermediaries consist of stockbrokers and their

sub-brokers.

63
Rolling Settlement

Earlier, the Indian stock exchanges were following the Account Period

Settlement. Under this settlement cycle, trades accumulate over a trading

period of 5 working days. At the end of the period, they are clubbed

together, positions are netted off and the balance is settled about a week

after the trading period. The members realize the sales proceeds and

securities in accordance with the pay-in and payout schedules notified by

the exchange.

However, now the Indian capital markets have moved over to the

Rolling Settlement System on a T+2 basis. Under the T + 2 rolling

settlement system, all trades executed on a day are netted off on that day

itself, and the settlement takes place 2 trading days later.

64
 INVESTOR PROTECTION IN THE INDIAN CAPITAL
MARKETS

Disclosure and Investor Protection (DIP) Guidelines

In order to protect the interests of the investors, SEBI has issued the DIP

guidelines. The guidelines contain a substantial body of requirements that

issuers of securities and market intermediaries are supposed to comply with.

The salient points in the DIP guidelines are:

1. They aim to secure full disclosure relevant information about the issuer and

the nature of the securities so that investors can make fully informed

decisions

2. Issuers are required to disclose any material “risk factors” involved in the

issue in the prospectus

65
D E P O S I T O R Y

Dematerialization (Demit) of Securities:

Dematerialization of securities occurs when securities issued in physical

form is destroyed, and an equivalent number of securities are credited into

the owner’s account. It is effectively, a process by which shares are

converted from physical form (share certificates) into electronic form (credit

in the owner’s account). A depository is very much parallel to a bank in its

nature and operations:

1. A bank holds funds in its accounts; a depository holds securities in its

accounts

2. A bank transfers funds between accounts; a depository transfers securities

between accounts

3. A bank transfers funds from one account to another without actually

handling cash; a depository transfers securities without actually handling the

physical +shares

66
 The bank is responsible for safekeeping money; a depository is

responsible for safekeeping securities

Principal function of a depository: -

a. Dematerialization: The principal function of a depository is to eliminate or

minimize the movement of physical securities in the market by

dematerializing the securities

b. Transfer and Registration: A transfer means a legal change in ownership

of a security in the records of the issuer. For transfer of physical shares,

several legal steps have to be taken, such as endorsement, execution of a

transfer document, and payment of stamp duty. Under the depository

system, the process of transfer is made much easier and faster, by merely

passing book entries in the depository records, upon the instructions of the

buyers and sellers

c. Pledge and Hypothecation: Depositories allow the securities placed with

them to be used as collateral to secure loans and other credit.

67
 d. Corporate Action: A depository handles corporate actions in 2 ways: By

providing information to the issuer about the persons entitled to receive

corporate benefits. By itself taking the responsibility of distributing the

corporate benefit

Advantages of holding shares in dematerialized form:

a. Lower risk of theft, forgery, mutilation of certificates

b. Lower risk of bad deliveries

c. Lower transfer costs

d. Faster transfer process

It has been made mandatory for all new IPOs to be traded in dematerialized

form. It has also been made compulsory for public listed companies making

68
 IPOs worth more than Rs 10 crore to do the same only in dematerialized

form.

Depository Participant (DP): -

A Depository Participant (DP) can be described as an agent of the

depository; i.e., an intermediary between the depository and the investors. A

DP has to enter into an agreement with a depository to this effect. Any

person who would like to avail the services of a depository has to enter into

an agreement with a DP of his choice.

STOCK BASICS

THE BULLS

A bull market is when everything in the economy is great, people are

finding jobs, GDP is growing and stock is rising. Picking stocks during a

bull market is easier because everything is going up. Bull markets cannot

69
last forever though, and sometimes they can lead to dangerous situation if

stocks become overvalued. A bull is a person who expects the share prices

in general to move up and he is likely to take a long position in the stock

market. A long position is where the investors purchase the shares.

THE BEARS

When the economy is bad, recession is looming and stock prices are falling

it leads to bear market. Bear markets make it tough for investors to pick

profitable stocks. One solution to this is to make money when stocks are

falling using a technique called short selling. Another strategy is to wait on

the sidelines until you feel that the bear market is nearing its end, only

starting to buy in anticipation of a bull market. A bear is a person who

expects the share prices in general to decline and he is likely to indulge in

short sales. A short sale is a position where the investor sells the shares

without holding those in anticipation that the prices will come down and he

will create a long position in the same shares to cancel the short position

created earlier to earn the difference.

70
CATEGORIES OF SHARES

i. Evergreen
These stocks are steady compounders, churning out steady

growth rates year on year. They are typically significant players in

their markets, with sound strategies that will help them achieve and

sustain market dominance in the long run. They have strong brands,

management credentials and a consistent track record of achieving

super normal shareholder returns. We expect stocks in this category

to compound at between 18-20% per annum for the next five to ten

years.

a. Apple Green: These are stocks that have the potential to be steady

compounders and are attempting to move upwards, to turn

Evergreen. They rank a shade below the Evergreen companies, only

71
 because their potential in the five to ten years' time is still not very

clear, although they might grow at rates faster than that of the

Evergreen stocks in the next year or two. They could grow at

25-30% per annum over the next two to three years.

b. Emerging Star: These are typically young companies, often in

niche businesses, that have the potential to grow and dominate their

niches. Even better, they might turn out to be real giants, if their

niches explode into full-blown markets in their own rights. These

stocks are potential ten-baggers but you need to be patient.

c. Ugly Duckling : These are companies that are trading below their

fair value or at values which are at a significant discount to that of

their peer group, due to a combination of circumstances. But things

are now starting to happen in these companies or in their markets

that are likely to cause a re-evaluation of their prospects. These

stocks could double in two to three years' time.

d. Vulture's Pick: These are companies with valuable assets or brands

that have been trashed to ridiculously low prices. Buy a Vulture's

Pick and wait for a predator who finds its assets undervalued to

come along. This could be a long wait but the returns could be

startlingly high.

72
e. Cannonball: These are companies with valuable assets or brands

that have been trashed to ridiculously low prices. Buy a Vulture's

Pick and wait for a predator who finds its assets undervalued to

come along. This could be a long wait but the returns could be

startlingly high.

COMPANY PROFILE

73
Religare, a Ranbaxy promoter group company, is one of the leading integrated

financial services institution of India. The company offers a large and diverse

bouquet of services ranging from equities, commodities, insurance broking, to

wealth advisory, portfolio management services, personal finance services,

Investment banking and institutional broking services. The services are broadly

clubbed across three key business verticals- Retail, Wealth management and the

Institutional spectrum. Religare Enterprises Limited is the holding company for

all its businesses, structured and being operated through various subsidiaries.

Religare’s retail network spreads across the length and breadth of the country with

its presence through more than 900 locations across more than 300 cities and

towns. Having spread itself fairly well across the country and with the promise of

not resting on its laurels, it has also aggressively started eyeing global geographies

74
Vision - To build Religare as a globally trusted brand in the financial services

domain and present it as the ‘Investment Gateway of India’

75
Mission - Providing financial care driven by the core values of diligence and

transparency.

Brand Essence -Religare is driven by ethical and dynamic processes for wealth

creation

Brand Identity

Name Religare is a Latin word that translates as 'to bind together'. This name has

been chosen to reflect the integrated nature of the financial services the company

offers. The name is intended to unite and bring together the phenomenon of money

and wealth to co-exist and serve the interest of individuals and institutions, alike.

Symbol

The Religare name is paired with the symbol of a four-leaf clover. The four-leaf

clover is used to define the rare quality of good fortune that is the aim of every

financial plan. It has traditionally been considered good fortune to find a single four

leaf clover considering that statistically one may need to search through over

10,000 three-leaf clovers to even find one four leaf clover.

76
Each leaf of the four-leaf clover has a special meaning in the sphere of Religare.

The first leaf of the clover represents Hope. The aspirations to succeed. The dream

of becoming. Of new possibilities. It is the beginning of every step and the

foundations on which a person reaches for the stars.

The second leaf of the clover represents Trust. The ability to place ones own faith

in another. To have a relationship as partners in a team. To accomplish a given

goal with the balance that brings satisfaction to all not in the binding but in the

bond that is built.

The third leaf of the clover represents Care. The secret ingredient that is the

cement in every relationship. The truth of feeling that underlines sincerity and the

triumph of diligence in every aspect. From it springs true warmth of service and

the ability to adapt to evolving environments with consideration to all.

The fourth and final leaf of the clover represents Good Fortune. Signifying that

rare ability to meld opportunity and planning with circumstance to generate those

often looked for remunerative moments of success.

77
 Hope. Trust. Care. Good fortune. All elements perfectly combine in the

emblematic and rare, four-leaf clover to visually symbolize the values that bind

together and form the core of the Religare vision.

Accent usage

The diacritical tilde mark ( ˜ ) over the letter A in the Religare typeface indicates a

palatal emphasis sound of the letter A.

Pronunciation

rel•i•ga•re (rel'i-gâir)

78
Top Management Team

Mr. Sunil Godhwani –

CEO & Managing Director, Religare Enterprises Limited

Mr. Sunil Godhwani is the CEO and Managing Director of our Company. He is a

graduate in chemical engineering and has a master’s degree in industrial

engineering and finance from Polytechnic Institute, New York. He has more than

20 years experience in business.

Mr. Godhwani joined our Board on July 13, 2006. He was appointed as CEO and

Managing Director of our Company on April 9, 2007. Mr. Godhwani is also the

managing director of Fortis Financial Services Limited. Prior to becoming the

79
Managing Director of our Company, he was Managing Director of Religare

Securities Limited since April 15, 2002

Mr. Shachindra Nath –

Group Chief Operating Officer, Religare Enterprises Limited

Mr. Shachindra Nath (Group Chief Operating Officer) aged 36 years, carries the

overall responsibility for managing the key operations of our group. He joined RSL

on May 8, 2000. RSL, at that relevant point of time, was a subsidiary of Fortis

Financial Services Limited, our Promoter Group company. He received a

bachelor’s degree in law from the Banaras University, Varanasi, and a post

graduate diploma in intellectual property rights from the Amity Law College,

Delhi.

Prior to joining us, he was at Abhipra Capital Limited as a Senior Consultant and

Divisional Incharge and held several key positions there from 1998 until 2000. In

the past, he has also worked with Obeetee Textiles Limited, R. D & Company and

Garware Wall Ropes Limited. He has over 14 years of experience in the financial

services industry.

80
Mr. Anil Saxena- Group Chief Finance Officer, Religare Enterprises Limited

Mr. Anil Saxena (Group Chief Finance Officer), aged 38 years, carries the overall

responsibility for management and supervision of our group and has played a key

role in driving its growth. He joined RSL on August 1, 2001. RSL, at that relevant

point of time, was a subsidiary of Fortis Financial Services Limited, our Promoter

Group Company. He received a bachelor’s degree in commerce from the University

of Delhi.

He is a member of the Institute of Chartered Accountants of India as well as the

Institute of the Cost and Works Accountants of India. Prior to joining us, he was at

Kotak Securities Limited as

their Vice-President. In the past, he has also worked with Fortis Financial Services

Limited and R. Singhania & Co. He has over 15 years of experience in the financial

services industry.

81
Board of Directors - Religare Enterprises Limited

· Mr. Malvinder Mohan Singh - Chairman (Non Executive)

· Mr. Sunil Godhwani - CEO & Managing Director

· Mr. Shivinder Mohan Singh - Non Executive Director

· Mr. Harpal Singh - Non Executive Director

· Mr.Deepak Ramchand Sabnani - Independent Director

· Mr.Padam Bahl - Independent Director

· Mr.J.W. Balani - Independent Director

· Mr. Baldev Singh Johal - Independent Director

· Mr. R. K. Shetty - Alternate to Mr. J. W. Balani

· Capt.G.P.S.Bhalla - Alternate to Mr. Deepak Sabnani

82
PRODUCTS OFFERED

Retail Spectrum- To cater to a large number of retail clients by offering all

products under one roof through the Branch Network and Online mode

1. Equity and Commodity Trading

2. Personal Finance Services

83
 a. Mutual Funds

b. Insurance

c. Saving Products

3. Personal Credit

a. Personal Loans

b. Loans against Shares

4. Online Investment Portal

Institutional Spectrum- To Forge & build strong relationships with Corporate and

Institutions

84
1) Institutional Equity Broking

2) Investment Banking

(1) Merchant Banking

(2) Transaction Advisory

(3) Corporate Finance

Wealth Spectrum - To provide customized wealth advisory services to High Net

worth Individuals

Wealth Advisory Services

1) Portfolio Management Services

2) International Advisory Fund Management Services

3) Priority Equity Client Services

4) Arts Initiative

85
New Initiatives

a) Religare is on a fast and ambitious growth trajectory with some

interesting plans in the pipeline

b) AEGON Religare Life Insurance - Life Insurance Company, a Joint

Venture with Aegon

c) Religare AEGON AMC - Asset Management Company, a Joint Venture

with Aegon

d) Religare Finance - Personal Loans / Credit Cards / Loan against

Property / Mortgage & Reverse Mortgage

86
 DATA ANALYSIS

COMPARATIVE ANALYSIS OF THE DIFFERENT

PLAYERS

87
 The Various Players for Online Trading which are competing with each

other are:

a) Religare.com

b) Indiabulls .com

c) ICICIDirect.com

d) HDFCsec.com

e) 5paise.com

f) KotakStreet.com

g) Unicon Investment

RELIGARE

Company Background

• Religare, a Ranbaxy promoter group company, is one of the leading integrated

financial services institution of India

• Focused on providing equity solutions to every segment.

• Largest ground network of 900 shops in various locations in 300 Cities.

88
Online Account Types

• Normal Account: Investor in equities

• Speed-e A/c : Trader in equities & derivatives

Pricing for Retail Customers

Normal Account

· Account Opening: NIL

· Brokerage:

Trading on Intra Day 0.10%

Delivery 0.50%

· Account Maintenance Charges:

NIL for the first year and Rs.250 p.a from onwards.

89
 Speed-e A/c

• Account Opening: NIL

• Demat 1st Yr: Rs.2/- per certificate

• Rematerialization charges: Rs.20/- per request+ Courier Charges

• Min Margin Retainable: NIL

• Brokerage:

Trading 0.10% each side + All Taxes

Delivery 0.50% each side + All Taxes (Negotiable based on volume)

• Account Access Charges

Monthly Rs 350 p.a.

INDIABULLS

Company Background

90
IndiaBulls is a retail financial services company present in 70 locations covering 62

cities. It offers a full range of financial services and Products ranging from Equities

to Insurance. 450 + Relationship Managers who act as personal financial advisors.

Online Account Type

• Signature Account: Plain Vanilla Account with focus on Equity analysis.

The equity analysis is a paid service even for A/c holders.

• Power Indiabulls: Account with sophisticated trading tools, low

commissions and priority access to R.M

Pricing of IB Accounts

Signature Account

Account Opening: Rs

Demat: Rs 200, No AMC for this DP

Initial Margin: NIL

Brokerage: Negotiable

Power IndiaBulls

Account Opening: Rs 750

91
 Demat: Rs 200, No AMC for this DP

Initial Margin: NIL

Brokerage: Negotiable

ICICI Direct

Company Background

ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an affiliate

of ICICI Bank Limited and the Website is owned by ICICI Bank Limited.

Account Type

ICICI Direct e-invest Account

Plain Vanilla Account with focus on 3 in 1 advantage. Differentiated in

services within the account

1. Cash on spot

2. Margin Plus

Premium trading interface of ICICIDirect Link is given to DBC partners and HNI’s

Account Opening: Rs 750

Schemes: For short periods Rs 750 is refundable against brokerage generated in a

qtr. These schemes are introduced 3-4 times a year.

92
Demat: NIL, 1st year charges included in Account Opening Plus a facility to open

additional 4 DP’s without 1st yr AMC

Initial Margin: Nil

Brokerage: All brokerage is inclusive of stamp duty and exclusive of other taxes.

HDFC Securities

Company Background
The HDFC BANK, HDFC and Chase Capital promote HDFC SECURITIES LTD.

Capital Partners and their associates. Pioneers in setting up Dial-a-share services

with the largest team of Tele-brokers

Online Account Type

HDFC Online Trading A/c: Plain Vanilla Account with focus on 3 in 1 advantage

Pricing of HDFC Account

• Account Opening: Rs 750

93
• Demat: NIL, 1st year charges included in Account Opening

• Initial Margin: Rs 5000/- for non HDFC Bank customers (AQB)

Brokerage:

Trading 0.15%* each side + ST

Delivery 0.50%** each side + ST

* Rs 25 Min Brokerage per transaction

** Rs 8 Min Brokerage per transaction

5 paisa(India Infoline Securities Ltd.)

Company Background
Indiainfoline was founded in 1995 and was positioned as a research firm in 2000

e-broking was started under the brand name of 5paisa.com. Apart from offering

94
online trading in stock market the company offers Mutual funds online. It also acts

as a distributor of various financial services i.e. GOI securities, Company Fixed

Deposits, Insurance. Limited ground network, present in 20 Cities

Online Account Types

Investor Terminal: Investors / Students

Trader Terminal: Day Traders / HNI’s

PRICING FOR RETAIL CLIENTS

• Account Opening: Rs 500

• Demat 1st Yr: Rs 250

• Initial Margin: Rs 2500(Compulsory)

• Min Margin Retainable: Rs 1000

• Brokerage:

Trading 0.10% each side + ST

Delivery 0.50% each side + ST

95
Trader Terminal

a) Account Opening: Rs 500

a. Demat 1st Yr: Rs 250

b. Initial Margin: Rs 5000(Compulsory)

c. Min Margin Retainable: Rs 1000

d. Brokerage:

b) Trading 0.10% each side + ST

c) Delivery 0.50% each side + ST

d) (Negotiable to 0.05% each side & 0.25%)

Account Access Charges

Monthly Rs 800, adjustable against Brokerage.

Yearly Rs 8000, adjustable against brokerage

KOTAK STREET

Company Background

96
Kotak Street is the retail arm of Kotak securities. Kotak Securities limited is a joint

venture between Kotak Mahindra Bank and Goldman Sachs

Online Account Types

• Twin Advantage / Green Channel: 2 DP’s, Limit against shares

• Free Way: Flat Rs 999 Cover Charge p.m, 0.03% per transaction

• High Trader: 6 Times Exposure Cash & Derivatives, Auto sq off 2:55

• Cash Expressway: Spot payment, additional 0.5% charges For KotakFastLane /

Keat Lite / Keat Desktop are trading interfaces. Keat Desktop with advanced tools

comes at a charge of Rs 500 p.m, Non-refundable

PRICING OF KOTAK

a) Account Opening: Rs 500

b) Demat: Rs 22.5 p.m

c) Initial Margin: Rs 5000(Compulsory)

d) Min Margin Retainable: Rs 1000

97
 e) Brokerage Slab wise: Higher the volume, lower the brokerage.

Even older customers (on 0.25% & 0.40%) have been moved to

the slab wise structure wef 1/4/2004.

Unicon Investment

Company Background

Unicon is the retail broking arm of GLOBE Capital Securities Pvt. Ltd.

It has above 135 branches in more then 105 cities.

It provides 10 different types of services including online equity.

Online account Types

a) Unicon Plus

b) Unicon Swift

Pricing for Retail Customers

• Account Opening: Rs 1200 (1000+200), 1200 Rs. For trading account (500

min. balance). Rs. 200 Demat account.) (Rs.1000 Refundable against

brokerage in Month)

• Demat 1st Yr: Incl. in Account Opening

98
• Initial Margin: 10 times

• Min Margin Retainable: 3 times

• Brokerage:

Trading 0.10% each side + All Taxes

Delivery 0.50% each side + All Taxes

(Negotiable based on volume)

Comparison of Religare Ltd. with different Broking Houses

Religare v/s Indiabulls

· As compare to Religare Ltd. IndiaBulls interest on funding starts on

leveraged delivery trades from T+1 day @ 21% p.a, on a daily basis

whereas, Religare Ltd. Interest on funding starts on leveraged delivery

trades from T+2 day @ 16% p.a.

· In Indiabulls Rs.500 per month will be charged for access to a research even

if it is trading account holder.

Religare v/s ICICI direct

99
 · In ICICI direct, the trader have to sell his\her shares with the maximum time

of T+1 day where in Religare Ltd. it is T+2 day which is known as BTST.

· The choice of bank account is only limited to ICICI Bank where in Religare,

trader have the choice of ten different banks.

· The brokerage in ICICI direct is 0.75% on delivery as compare to 0.50% in

Religare Ltd.

· Also the website interface provided by the ICICI direct to its customers is

too slow which creates dissatisfaction among customers.

Religare v/s HDFC Securities

· Like ICICI direct, HDFC Securities is also having a slow website interface.

· Broking is the very small unit of HDFC Bank that’s why proper focus on

broking business is not there.

Religare v/s 5paisa.

· Minimum initial margin of Rs.2500/- is compulsory in investor terminal

and Rs.5000/- in trader terminal for all the traders where it is not the same

in Religare Ltd.

· Every trader in 5 paisa has to maintain a minimum margin of Rs.1000/- into

his/her account.

100
 · In 5 paisa, accounting system is manual and also online fund transfer

through bank is not credited instantly.

Religare v/s KotakStreet

· Rs.5000/- is compulsory as an initial margin.

· No flexibility in account opening charges. Rs.500/- is fixed for opening of

an account.

· Every trader has to maintain a minimum margin of Rs.1000/- into his/her

account to keep the account active.

· Rs.25/- is charged if the calls goes beyond 20 per month.

Religare v/s Unicon Investment.

· Rs.1200/- is charged from the customer as an account opening.

· Service provided by the Unicon Investment is not up to the mark which is

very important in trading.

RESULT AND INTERPRETATION

101
 PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be

expressed in terms of the following factors:

a) Political

b) Economic

c) Social

d) Technological

Political Factors

As we know that the investment options in India are increasing day by day and also

the foreign investors are coming to India for investing their money. So, the

government should focus on cutting off the various taxes which restrict foreign

investor to come to India for investing their money.

Different broking houses are also suffering from multiplicity of taxes. Every

broking house has to pay different taxes which automatically levied on the clients

of a broking house which is directly affecting their profits.

Moreover, different broking house is under a strict licensing regime. Every broking

house has to take the license to operate and have to follow the SEBI guidelines

102
governed by the government. No broking house can make their own rules rather

than follow the SEBI guidelines.

As we know that, according to SEBI guidelines PAN Card is must to have for every

person to open his/her account which is sometimes very dissatisfactory for a normal

person because it takes almost 15-20 days in the making of a PAN Card.

So, the government should focus on this issues as they can easily affect the whole

investment industry.

Economical Factors

The GDP, GNP, disposable income of our country is sharply increasing and the

expectation that the economy will remain strong in the medium term is a positive

factor for the investment industry.

Other macro economic factors like the reduction in different taxes will also

contribute to increasing investment in our country. The total percentage of

investment is increasing year after year which is of course a very good sign for the

whole Indian economy but to maintain this constant rate of increase in investment,

government have to take some remedial actions in order to maintain the good rate

of investment.

Social Factors

103
Social factors also act as a strong influencing force in the investment sector. Indians

attitude towards foreign companies is totally different from Indian companies.

Indians are the firm believer that the foreign companies are far better than Indian

companies so that’s why most of the Indians like to invest their money in foreign

companies which is a big disadvantage from the India’s point of view.

Indians are also the believer that Foreign companies pay more interest or dividend

as compare to Indian companies which induce them to invest their money in

Foreign companies.

So, the government should take necessary steps in creating awareness among the

people that the Indian firms are also doing very well and also going with shoulder

to shoulder with foreign companies.

Technological Factors

Technological factors also act as a strong influence in the investment sector.

Technological up gradation is also a necessity so as to have edge over the

competitors. As the technology is increasing very fast, broking houses also have to

adapt the technological changes in order to retain and increase the database for their

company.

104
SWOT ANALYSIS

105
 A SWOT analysis focuses on the internal and external environments,

examining strengths and weaknesses in the internal environment and

opportunities and threats in the external environment.

STRENGTHS

1 ASSUMPTION ACCURACY

Religare Ltd. is known for its high prediction accuracy. Religare Ltd. claims

that they are having an 90% prediction accuracy which is also a great

strength of Religare Ltd.

2 RESEARCH REPORTS

Religare Ltd. also sends daily reports to their customers on their e-mail for

various information. Various reports are send to the customers for various

106
 information such as how the market will behave in future or how was the

market on previous day. Various reports which are send to the customers

are:

· Pre Report.

· Post Report.

· Eagle eye research report.

· High noon research report.

· Investor Eye report.

3 ONLINE FUND TRANSFER

Online fund transfer facility from leading Banks. Tie up with ten banks.

HDFC

CITI Bank

IDBI

OBC

Union Bank of India

IndusInd Bank

ICICI

Yes Bank

107
 UTI Bank

Bank of India

4 EXPOSURE

4 TO 6.7 Times (on margin money)

5 RELATIONSHIP MANAGER

Last but not the least is Relationship Manager. Religare Ltd. provides the

facility of Relationship Managers through which customer can solve

out their queries and also they can have the information regarding the

investment option in which they can invest their money by taking minimum

risk and having maximum return.

WEAKNESS

1. BRANDING

Though the company has a efficient products but it still requires the

branding in the market. The most basic expectation for a trader or

investor when one begins trading is that one must get timely delivery

of shares and proceeds from sale of shares. Also ones cash balances

with the broker must be safe and secure. Though this confidence in the

108
 broker comes with time and experience, good and transparent

practices also play a major role in imbibing confidence in traders.

2. SERVICES

As far as the services are concerned, religare is lacking in providing

up to the time services to their customers. What customer need is

proper delivery of their shares and documents on time which also

increases the faith of a customer but this is the one thing on which

Religare Ltd. have to work on.

OPPORTUNITIES

a. Ever-increasing Mark

After the NSE brought the screen based trading system, stock

markets are now more secured which has attracted lot of retail

investors and the demand is increasing day by day. This has resulted

in heavy volumes on transactions. Now, the biggest opportunity

which the Religare Ltd. is having is to target this customers as soon

as possible and to increase their customer database.

109
b. LATEST TECHNOLOGIES.

Another Opportunity in front of Religare Ltd. is improving

technology. If Share Ltd. will also go shoulder by shoulder with the

improving technology and adapt the changes than they can have the

big advantage over their competitors because the small broking

houses will not be able to adapt the changes because of small

capital.

THREATS

· New Competitors

As we know that the investors in INDIA is growing day by day and

with that investment options are also increasing. Because of this new

110
 competitors are taking place in the market as a broking house. This

is creating a lot of competition for players like Religare Ltd. and it is

creating little confusion in the minds of the customers about the

services provided by the different brokers. Competitors like,

Indiabulls, ICICI, Kotak, Unicon, HDFC, 5-Paisa etc. are posing a

lot of threats to the company.

· BROKERAGE OF DIFFERENT HOUSES

Another biggest threat for Religare Ltd. is the brokerage charge from

the customers. Many small broking house charges less brokerage

from customers as compare to biggest broking house in order to

attract their attention towards them which is creating a huge problem

for Religare Ltd.

111
The sample size of 50 customers has been taken from whom the various

questions have been asked and data is analysed on the basis of the answers

given by them.

Are you aware of online Share trading?

V a l i d Cumulative
Particulars Frequency Percent Percent Percent
Valid yes 42 82.4 82.4 82.4
no 8 17.6 17.6 100.0
Total 50 100.0 100.0

112
By compare the above data I can say that 82.4% people are aware about the

online share trading. So we easily say that there is opportunity for all online

trading firms to generate customers.

IN which company you have a De-mat account?

V a l i d Cumulative
Particulars Frequency Percent Percent Percent
Valid Indiabulls 12 23.5 23.5 23.5
Religare 9 17.6 17.6 41.2
Unicon 7 13.7 13.7 54.9
5paisa 12 23.5 23.5 78.4
I C I C I 10 21.6 21.6 100.0
113
 direct
Total 51 100.0 100.0

Indiabulls

Religare

Unicon

5paisa

ICICI

direct
1

Frequen
cy

0
IndiaBull Religare Unico 5pais ICICI

114
By this survey we can easily conclude that 5 Paisa and India bulls are top into

the market in de-mat account with 23.5%. And then ICICI in next place with

21.6 percent and Religare are on fourth place with 17.6% and Unicon

investment with 13.6% market share is growing into the market.7

Have you heard about Religare?

V a l i d Cumulative
Particulars Frequency Percent Percent Percent
Valid yes 32 62.7 62.7 62.7
no 18 37.3 37.3 100.0
Total 50 100.0 100.0

115
 Ye

Have you heard about

B y
N

above

survey

we can

say that

62.7%

o f

people know about Religare investment. So it is good for Religare that in this

less time more people are aware about them.

Are you satisfied with your company services?

Frequenc V a l i d Cumulative
y Percent Percent Percent
Valid yes 24 49.0 49.0 49.0
no 26 51.0 51.0 100.0
Total 50 100.0 100.0

Yes

No

116
 Are you satisfied with your company
N

Ye

49% o f

people

says t h a t

they are satisfied by the services provide by their firm but it is breaking that

51% of people are not fully satisfied with their services.

117
What are your company’s brokerage charges? (Intraday/Delivery)(Charges in

paisa)

Frequen V a l i d Cumulative
cy Percent Percent Percent
Valid 0-5/10-25 11 21.6 21.6 21.6
5-10/25-50 29 56.9 56.9 78.4
25-50/more
10 21.6 21.6 100.0
then 1 rupee
Total 50 100.0 100.0
0-5/10-25

5-10/25-50

25-50/more then 1 rupee

118
What is your 0-5/10-2
company brokerage
(Charges in charge?

Frequen
cy

0
5-10/25-5 25-50/more then 1
What is your company brokerage charge?
B y t h i s

survey we can say that maximum firms taken brokerage between 5-10/25-50

paisa and it is 56.9% of total market. So it is a competitive charges into the

market. Other brokerage charges equally taken into the market.

How much exposure your company provides you?

V a l i d Cumulative
Particulars Frequency Percent Percent Percent
Valid 0-5 8 17.0 17.6 17.6
5-8 17 33.0 33.3 51.0
119
 8-10 25 50.0 49.0 100.0
Total 50 100.0 100.0

0-5

5-8

8-10

2
How much exposure your company provides

1
Frequen
cy

0
5- 8-1

0-

120
 By this we

can say maximum firms provide exposure between 8-10 times of total invested

money. It is 50% of total market.

In which of these Financial Instruments do you invest into?

Frequenc V a l i d Cumulative
y Percent Percent Percent
Valid shares 20 39.2 39.2 39.2
mutual
14 27.5 27.5 66.7
funds
bonds 7 13.7 13.7 80.4
derivatives 10 19.6 19.6 100.0
Total 51 100.0 100.0

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 2 which ofShare
In these Financial Instruments do you invest

Frequen
cy

By this survey I can s a y t h a t maximum people

0
Mutual Bond Derivative
In which of these Financial Instruments do you invest (39.2%) are

aware about

shares and some are aware about mutual funds and derivatives. And less

people aware about derivatives.

Which factor that you consider most attract you before investing in a

particular company?

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 Frequenc V a l i d Cumulative
y Percent Percent Percent
Valid f i n a n c i a l
11 21.6 21.6 21.6
position
current market
18 35.3 35.3 56.9
position
goodwill/ brand
9 17.6 17.6 74.5
name
future prospect 13 25.5 25.5 100.0
Total 51 100.0 100.0

Which factor
Investing
that you
in consider
a particular
most attract you
2

Frequen
cy

0
Current Goodwill of Future
Positio a

Financial

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 This is

very important things comes that maximum investors attracts towards current

market position of the company and it is35.6% of total people then 25.5% of

people attracts towards future prospects and left people are attracted through

brand name and financial position of the company.

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 SCOPE

There are various scopes for Religare Ltd. which I have found by this study such as:

· Many people are now eying towards investment and are ready to invest their

money which is a very good sign for Religare Ltd. to increase the database

of their company by winning the faith of different investors.

· Slowly and slowly, Religare is increasing their goodwill in the market.

· Religare is having skilled and experienced workforce as compare to their

competitors.

· Religare is having high percentage of accuracy as compare to their

competitors.

· Religare gives various facilities to its customers such as different kind of

reports, exposure, free online fund transfer etc.

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 LIMITATIONS

The following are the limitations with this report

1. Only secondary information was available.

2. I have used secondary data.

3. Lack of knowledge about the topic.

4. Lack of time availability.

5. Not technically attach with the project.

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 PROBLEMS FACED BY ONLINE TRADING

COMPANIES

1. FAITH ON EXISTING BROKER.

As some of the people are doing trading with their existing brokers so they

feel comfortable with them only and not want to switch on to another

broker.

2. LACK OF KNOWLEDGE.

Since the knowledge of stock market is very less, it took lot of time in

convincing people to invest their money in stock market.

3. BUSY SCHEDULE.

People were mostly unwilling to talk because of their heavy schedule or

they get annoyed with the phone calls.

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4. RISKY PROFILE.

Some people think that investing money in shares is having a lot of risk and

rather a waste of time so they don’t want to invest their money in shares.

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DIFFICULTIES IN ONLINE TRADING

· FRAUD

· Trading in stock market is gambling in legal terms and fraud always

takes place in gambling. The very common difficulty in online

trading is Fraud which can be faced by any trader. Fraud can take

place in many ways like stolen of Password, online fund transfer to

some other account, hacking etc. So some strict guidelines or actions

should be taken by SEBI in order to stop this kind of fraud which

prevails online.

· SLOW WEB INTERFACE

· Sometimes, traders have to face the problem of slow interface which

is not satisfactory from the trader’s point of view. As we know that

the prices of shares changes in a split of a second so quick interface

should be there for traders so that they can take their decisions

instantly.

· LACK OF KNOWLEDGE

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· Traders who do trading online face the problem of proper

knowledge regarding the shares or investment options. The

assumption of a trader is not that accurate as relationship managers

of a broking house, that’s why traders are not sure of investing their

money in which kind of investment. This is the main difficulty in

online trading because it directly relates to money.

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 RECOMMENDATIONS

I would like to suggest some measures to Religare Ltd. so that they can compete

themselves with some top broking house of INDIA.

· As Religare is not fully known in the market, they should promote

themselves in various places such as Delhi and NCR.

· Religare is having very few offices due to which it is very difficult for their

existing customers to reach to them. So, Religare must open some new

offices in order to retain their existing customers and to attract new

customers as well.

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 · Service is the first priority for any customer on which company should

focus themselves so that the service should be properly given to the

customers.

· Religare should try to reduce their cost such as account opening charges,

brokerage as compare to different brokers in order to fetch new customers.

· Religare should contact their customers on regular basis for the problems

which they are facing which make the customer happy and can give

reference numbers which can increase the database of the company.

CONCLUSION

Here, the numbers of banks with a strong online presence are very few again,

dominated by new private banks and foreign banks. Both have lesser reach owing

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to a smaller network in the country. The relative inability of large public-sector

banks to offer-facilities for Internet banking is a barrier in this regard. Besides,

Internet penetration in India is still very low and concerns about security also tend

to predominate. In markets like the US, online brokerages are advertised very

heavily. Online trading in India has so far not seen similar levels of aggressive

advertising, with the exception of ICICI Direct and India bulls. Besides, only scripts

that have been compulsorily dematerialized can be traded on the net here.

Brand building, assurances of security, developing multiple delivery channels with

anytime telephonic grievance redressed options is some directions, which may be of

use for the immediate future. Online trading firms can also market themselves

aggressively to students who are entering the professional arena, ensuring that their

entry into equity happens online. One of the major issues governing trading is the

prevailing uncertainty in the market.

Hence, not withstanding the current sentiment in the market, potential for online

trading is still immense in India. With a more transparent system, increased

awareness, and a sustained bullish market we would surely be heading to become

the largest online stock trading country by the turn of the next decade.

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 APPENDICES

BIBLIOGRAPHY

BOOKS AND NEWSPAPERS

· Business Standard

· Business Times

· Economic Times

· Investment Analysis and portfolio Management

URLs

· www.religare.in

· www.moneycontrol.com

· www.icicidirect.com

· www.nseindia.com

· www.bseindia.com

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 ANNEXURE

QUESTIONNAIRE

Dear Respondent,

I am student of Rukmini Devi Institute of Advanced Studies; I am doing this

research to compare different charges and services provided by trading firm to its

clients.

1. Are you aware of online trading?

(a) Yes

(b) No

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2. In which company you have a De-mat account?

(a) India Bulls

(b) Religare

(c) Unicon

(d) 5 Paisa

(e) ICICI Direct

3. Have you heard about Religare?

(a) Yes

(b) No

4. Are you satisfy with your company services?

(a) Yes

(b) No

5. What are your company’s brokerage charges? (Intraday/Delivery)(In paisa)

136
(a) 0-5/10-25

(b) 5-10/25-50

(c) 25-50/more than 1 rupee

6. How much Exposure your company provides you?

(a) 0-5 times

(b) 5-8 times

(c) 8-10 times

7. In which of these financial instruments would you like to invest into?

(a) Shares

(b) Mutual Funds

(c) Bonds

(d) Derivatives

8. Which factor you consider attractive to you before investing in a particular

company?

(a) Financial position

(b) Current market position

(c) Goodwill of a company

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(d) Future prospect

9. Do you prefer long term investment or short term investment and why? (Not

more than 50 words)

Personal Information

Name:

Age:

Sex: ( ) Male ( ) Female

Phone No:

Occupation:

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