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ON ONLINE TRADING ON NSE

(A study With reference to INDIA INFOLINE LTD.)

A project submitted to the Andhra University, Visakhapatnam in partial fulfillment of the


requirements for the Award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

Mr. G. MANIKANTA SARMA


(Regd. No. 2070600018019)

Under the guidance of

Ms. S. MADHAVI LATHA M.B.A, M. Phil, MHRM (PhD)


Asst. Professor

DEPARTMENT OF MANAGEMENT STUDIES


SAMATA COLLEGE
(Affiliated to Andhra University)
VISAKHAPATNAM
2007-2009
CERTIFICATE

This is to certify that Mr. G.MANIKANTA SARMA a student of M.B.A


in the department of of management studies of Samata Degree &
Post Graduate College during the academic year 2007-2009 has
undergone the project wok on “ON LINE TRADING ON CAPITAL
MARKET-NSE” (a study with reference to India Infoline
securities Ltd., visakhapatnam) and had fulfilled the requirements
concerning the project work.

Visakhapatnam Mr. G. SRINIVASARAO


Date: M.Sc M.BA, Mphil, .PGDCA
Asst professor
Head of the department
CERTIFICATE

This is to certify that Mr. G.MANIKANTA SARMA a student of M.B.A


in the department of management studies of Samata Degree & Post
Graduate College during the academic year 2007-2009 has
undergone the project wok on “ON LINE TRADING ON CAPITAL
MARKET-NSE” (a study with reference to India Infoline
securities Ltd., Visakhapatnam) and had fulfilled the requirements
concerning the project work.

Visakhapatnam Ms. S. MADHAVILATHA


Date: M.B.A, M. Phil, MHRM (P.hD)
Asst. professor
DECLARATION

I, Mr. G. MANIKANTA SARMA here by declare that the project


report entitled “A study on National Stock Exchange on Online
Trading on CAPITAL MARKET - NSE” (A study with reference to
India infoline securities ltd., Visakhapatnam) is a genuine
bonafied work done by me was not submitted to any other University
or Institution either in part or in full.

Visakhapatnam Mr.G.MANIKANTA SARMA

Date:
ACKNOWLEDGEMENT

I wish to express my gratitude to MR G. SRINIVASA RAO,


head of the dept (M.B.A) of SAMATA DEGREE & P.G.COLLEGE,
Visakhaptnam, for his encouragement in my project.

It’s a great pleasure for me to express my project guide


Ms.S.MADHAVILATHA M.B.A, M.PHIL, MHRM, (PhD), without
whose guidance and encouragement this could not have been
completed.

I wish to express my gratitude to Mr. B. MURALI KRISHNA


Director of SAMATA DEGREE & P.G. COLLEGE and Mrs.
S.VIJAYA RAVINDRA principal of SAMATA DEGREE & P.G.
COLLEGE, Visakhapatnam, for her encouragement in my project.

My heartful thanks to Sri P.Nagesh Kumar, Branch Manager


of India Infoline Securities Ltd., Visakhapatnam for their constant
faithful guidance, advice and support for the successful completion of
the project

I like to thank my friends who helped me to develop this project


and my deep gratitude to my family members for their constant
support and encouragement.

Date: G.MANIKANTA SARMA


Place:
CONTENTS

CHAPTER - I

 Introduction
 Need for the study
 Objectives
 Methodology
 Limitations

CHAPTER - II
 Industry Profile
 Company Profile

CHAPTER - III
 Theoretical frame work of the study.

CHAPTER - IV
 Tabulation and Analysis

CHAPTER - V
 Summary
 Findings
 Suggestions

BIBLOGRAPHY
ANNEXURES

CHAPTER – I
 INTRODUCTION
 NEED FOR THE STUDY
 OBJECTIVES
 METHODOLOGY
 LIMITATIONS
INTRODUCTION OF THE STUDY

The capital markets perform an important function in mobilization of


resources liquidity of the stock markets is an important factor effecting growth.
Many profitable projects require long term finance; however investors do not
relinquish their savings for a long time. capital market is a group of interrelated
markets in which capital is raised in financial form, is lent and borrowed (or)
raised in a varying time periods (such as short term and long term).in a
developing economy, the business of capital market is the movement of capital to
the point of highest yield, a liquid stock market ensures a quick exit without
incurring heavy losses (or) costs. Stock market is a vehicle through which long
term finance is characterized for the various needs of industry, commerce,
government and local authorities. Thus development of efficient financial markets
is necessary for creating conducive climate for investment and economic growth.

The term capital market refers to the arrangements for facilitating the
borrowing and lending of long term funds. In its widest sense, it consists of a
series of channels through which the savings of the community are made
available for industrial and commercial enterprises and public authorities. The
tone of the capital market largely depends on the economy of the country and
therefore, depends on the available savings and investments on one hand and
the performances of the industry on the other. Among other factors that would
influence the tone of the capital and stock market are the monsoon, the
agriculture, the Industrial growth and in particular the performance of the
corporate sector, as they too have a controlling effect on the economy of the
country. In particular the government policy, the psychological expectations and
host of other factors play a very prominent role in influencing the capital markets.
The capital market in India can be categorized into two types:
1. Organized 2. Unorganized
The funds for long term capital come from individual investors, corporate
savings, government savings, foreign investments, banks, financial institutions,
investment trusts, life insurance corporation and international financial agencies,
industry, government and semi government institutions are the potential users in
the organized sector it self. Since the supply of funds for unorganized sector falls
short of demand, the interest rates are kept high.

The economic progress of a country is largely influenced by the availability


of savings for investment and hence there is a need for the mobilization of
savings for investment and hence on a massive scale indigenous bankers in
town and money lenders in rural areas supply long term finance in the
unorganized sector. There is no link between the organized and unorganized
sector (or) with in the. Unorganized sector it self. There is a need for the
mobilization of savings on a massive scale.
NEED FOR THE STUDY

The India Info line group has a significant presence across the
country with over 500 branches in over 300 cities across India. All these Offices
are networked and are connected with the corporate office in Mumbai. The
Group has invested significantly in technology and research, the results of which
are there for everyone to see. The 5paisa trading is one of the most advanced
Platforms available to retail investor in India. The group has memberships on
BSE and NSE for equities trading, depository participant with NSDL and CDSL
and on MCX and NCDEX for commodities trading. It has a SEBI license for
portfolio Management under which, various schemes are offered.

India Infoline Limited is listed on both the leading stock


exchange. In India, viz. the Stock Exchange, Mumbai (BSE) and the National
Stock Exchange (NSE) and is also a member of both the exchanges. It is
engaged in the businesses of Equities broking, Wealth Advisory Services and
Portfolio Management Services. It offers broking services in the Cash and
Derivatives segments of the NSE as well as the Cash segment of the BSE. It is
registered with NSDL as well as CDSL as a depository participant, providing a
one-stop solution for clients trading in the equities market. It has recently
launched its Investment banking and Institutional Broking business.

The capital markets perform an important function in mobilization of


resources liquidity of the stock markets is an important factor effecting growth.
Many profitable projects require long term finance; however investors do not
relinquish their savings for a long time. capital market is a group of interrelated
markets in which capital is raised in financial form, is lent and borrowed (or)
raised in a varying time periods (such as short term and long term).in a
developing economy, the business of capital market is the movement of capital to
the point of highest yield, a liquid stock market ensures a quick exit without
incurring heavy losses (or) costs. Stock market is a vehicle through which long
term finance is characterized for the various needs of industry, commerce,
government and local authorities. Thus development of efficient financial markets
is necessary for creating conducive climate for investment and economic growth.

The company offers the products and financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Go bonds and other small savings instruments to loan
products and Investment banking.
OBJECTIVES OF THE STUDY

 To study the basic operations of the Capital Market.

 To understand the various indices of National Stock Exchange.

 To understand the trading procedure of National Stock Exchange

with reference to India Info line Security Limited.

 To know about different trading companies brokerage charges and

their funding.

 To know the account opening and maintenance charges.


METHODOLOGY OF THE STUDY

. The information regarding the online trading is collected from both


primary as well as secondary sources of data.

The primary data is collected by watching the operations of on


line trading live and by interacting with the operator, at the computer terminals
and the clients trading in IIL.The primary data constitutes the information
regarding the functioning of NSE through its various broker members. This helps
to gain in depth knowledge about the various training procedures of NSE.

Information for the study is also collected from secondary data


which include NSEs, notices, manuals, magazines and latest information through
website of IIL.
LIMITATIONS OF THE STUDY
.

1. The study was confined only to the online trading system because the subject
chosen is comparatively a new one and the scope of the study is very vast.

2. It is difficult to collect trading information.


CHAPTER – II

 INDUSTRY PROFILE
 COMPANY PROFILE
INDUSTRY PROFILE

Stock Exchanges in India


Stock profile represents the secondary market where existing securities
shares and debentures are traded. Stock exchange provides an organized
mechanism for purchase and sales of securities. By the end of 2005, there were
23 stock exchanges in our country. The investors want liquidity for their
investments. Stock exchange provides a place where securities of different
companies can be purchased and sold.

History of Stock Exchanges


Houses of exchanges arose in Europe during the 15th century. Trading
was carried on exchanges in terms of securities which represented goods.
Antwerp, Layton, Amsterdam and London become celebrated all over Europe for
their dealings in stock exchanges. Particularly the London stock exchange can
be considered as the modern type of stock market. It had more than 500
members in 1802. During, that time, the list of securities traded had considerably
expanded and a vast majority of them were international in contact with the home
issues. In 1987 the brokers organized themselves into the New York exchange
board with a definite constitution. There were many changes and reorganizations
and amalgamations till 1969, during the “The New York stock exchange was
formed with a maximum membership limited to 1100. The origin of stock
exchanges in India is traceable in the later half of the 19th century. At that time,
capital market dealings were limited to loan stock transactions of the East India
Company. By 1930, stock market took a turn with the emergency of sonic
corporate stock and development of textile mills that resulted due to the
American civil war which gave Indian businessmen a global chance of quick
profiteering by increasing exports of cotton to America and Europe at exorbitant
prices. The trade boom lead to the establishment if stock exchanges at Bombay,
Ahmedabad andCalcutta
Despite the fact that unorganized stock market existed in Calcutta since
1830, the first organized stock exchange was set up at Bombay in 1877 under
the name of “Native Stock and Share Brokers Associations”. The next stock
exchange which emerged in the country was Ahmedabad share and Stock
brokers Association which was founded in 1894. The thirds stock exchange was
set up at Calcutta in the year 1908. Though some stock exchanges were setup
before independence but there was no all India Legislation to regulate their
working. To rectify this situation and to regulate the working of stock exchanges
in the country, the securities contract (Regulation) Act was passed in 1956.

At present, there are 23 recognize stock exchanges in the country. Further


over the counter exchanges and National Stock Exchange have also started
functioning in our country.

CHARACTERSTICS OF STOCK EXCHANGES


It is a place where securities are purchased and sold. A stock exchange is
an association of persons whether incorporated or not. Trading in stock
exchanges are strictly regulated by the rules and regulations prescribed by Stock
Exchange Board of India (SEBI). Both genuine investors and speculators buy
and sell shares in a Stock Exchange Securities of Corporation, trusts,
Government, Municipal corporations etc., are trades at stock exchanges.

Functions of Stock Exchange


I. Ensures liquidity of capital
II. Continuous market for securities
III. Mobilizing surplus savings
IV. Helpful in raising new capital,
V. Platform for public debt
VI. Clearing house of business information.
VII. Safety in dealings.
PROCEDURE FOR DEALING AT STOCK EXCHANGES
The buying and selling at stock exchanges is not allowed to outsides.
They have to approach brokers who are members of the stock exchange.

Selection of a Broker
The first thing is to do is to select a broker through whom the purchase or
sales is to be made. Placing an order: after selecting the broker the client places
an order for purchase or sale of securities.

Making the contract


The authorized clerk of the broker goes to the concerned post and
expresses his intention to buy and sell securities. A deal is struck when other
party agrees.

Contract Note
The buying and selling brokers prepare notes after their mutual consent
next day.

Settlement
The spot dealing are settled there in full. The settlement for ready delivery
and forward contacts is one with a different procedure.

STOCK MARKET INTERMEDIATES


Client Brokers
They do simple brokering between buyers and sellers and earn only
brokerage for their services for their services from the clients.

Floor Brokers
They are authorized clerks and sub brokers who enter the trading floor
and execute orders for the clients or for members.
Jobbers and Market Makers
They are members who are ready to buy and sell simultaneously in
selected scrip’s, offering bid and offer rates for the brokers and sub brokers on
the trading floor and earning profit through the margin between buying and
selling rates. Markets makers undertake this work compulsorily for some
companies and bank finance is available to them.
Arbitrageurs
They are members who do inter market deals for a profit through
differences in prices as between markets.

Badla Financers
They are members who finance carry forward deals in specified group for
a return in the form of interest, called badla rate. They lend money or shares for
the brokers who overbuy or oversell respectively at the time of settlement. Badla
is a carry forward facility from one settlement to another without taking a delivery
up to a maximum period of 90 days at a time, now reduced to 7—15 days.

TYPES OF SPECULATORS
There are different types of speculators who are active on stock exchanges in
India. They are known as
• Bull
• Bear
• Stag
• Lame Duck

Bull
A bull of Tejiwala is an operator who expects prices to rise in future and
sells securities in the future. A bull tends to throw his victims up in the air
Bear
A bear of Mandiwala speculator expects prices to fall in future and sells
securities at present with a view to purchase them at lower prices in future. Just
as bear presses their victim down to the ground.

Stag
A Stag is a cautious speculator in the stock exchange. He applies for
shares in new companies and expects to sell them at premium if he gets an
allotment. He sells the shares before being called to pay the allotment money.

Lame Duck
When a bear finds it difficult to fulfill his commitment, he is called
struggling like a lame duck.

THE IMPORTANT STOCK EXCHANGES IN INDIA ARE


• Bombay Stock Exchange (BSE)
• National Stock Exchange (NSE)

BOMBAY STOCK EXCHANGE (BSE)


Bombay Stock Exchange (BSE) is the first organized stock exchange set
up at Bombay in 1857. In the premier of apex stock exchange in India as it is
distinguished not only by its size but also it has been recognized permanently
where recognition of other stock exchanges is renewed in every 5 years. It is the
oldest stock market.

Earlier BSE was organized as voluntarily non-profit making association of


brokers to regulate and protect their interest. After the Security Contracts
(Regulation) Act was passed in 1956, BSE was the first Recognized Stock
Exchange on a permanent basis in 1957. Its business is no longer confined to
Mumbai alone. At the end of 1995, there were 100 other cities in which it had set
up business.
The number of companies listed in the stock exchanges is more than
8,000 out of which those listed in BSE are 6851. The capital listed in Bombay
Stock Exchange accounts for about 40% of the overall capital listed in all the
stock exchanges whereas, its share of the market capitalization amounts to
around 9%. In BSE the total number of companies’ listed and total number of
stocks issued is higher than any other stock exchanges. BSE switched over to
electronic trading system in January 1995 called “Bombay Online Trading”
(BOLT) system and this become fully operational in May 1995.

The BSE has allowed the expansion of online trading system to its
members in other cities having terminals since August 1995. The daily turnover
in BSE varies from Rs.400-800 crores. Brokers trading in NSE follow BSE to
know the market.

SENSEX
The index in BSE is Sensex’. It stands for Sensitivity index. Senses
consist of 30 selected top companies of BSE based on the capitalization or on
the performance weight age of the scrip’s. SENSEX is not only scientifically
designed but also based on globally accepted construction and overview
methodology. First complied in 1986, SENSEX is a basket of 30 constituent
stocks responding a sample of large, liquid and representative companies. The
base year of SENSEX is 1978-79 and the base value is 100. The index is widely
reported in both domestic and international markets through print as well as
electronic media.

NATIONAL STOCK EXCHANGE (NSE)


IDBI and other National Level Financial Institutions in Mumbai were
responsible for setting the National Stock Exchange in November 1992, with a
paid up equity capital of Rs.25 crores. The Government in the same year
recognized it and the exchange started operations in wholesale debt market in
June 1994.

The volume of daily trade in NSE is around Rs. 1,500/- to Rs.2, 000/-
crores. The market capitalization of listed companies in NSE is Rs.2.52 lakh
crores. There are more than 1,000 permitted securities for trading in NSE.

ORGANIZATION OF STOCK EXCHANGES


Stock Exchanges in India are organized by any of the following forms:
Voluntary, non-profit making association, e.g., Mumbai, Ahmedabad and Indore.
Public Limited companies such as Calcutta, Delhi and Bangalore stock
exchanges and Company Limited by guarantee e.g., Hyderabad and Madras
Stock exchanges.

WEAKNESS OF STOCK EXCHANGES IN INDIA:


Lack of Professionalism
Majority of stock holders lack proper education, business skills, infra-
structural facilities

Domination of Financial Institutions


The U.T.I, LIC, GIC are the main players in India Stock markets, or
liquidity. A small number of scrip’s are regularly trades on stock exchanges.

Domination of big operators


Some big operators influence the sentiment of stock exchanges in India.
In Bombay Stock Exchange 3-4 operators used to call the shots

Less floating Stocks


There is a scarcity of floating stock in Indian Stock Exchanges. I he shares
and debentures offered for sale or a small portion of total stocks.
Speculative Trading
The trading in stock exchanges is mainly speculative in nature. The
operators try to derive benefit out of short-term price fluctuations.

SEBI’S ROLE IN A STOCK EXCHANGE


It was set up under the SEBI Act 1992 to protect the interests of investors
in securities and to promote the development of and regulate the securities
market.
SEBI’S Power in relation to stock exchange:
 It may call periodical return from stock exchange.
 It has the power to prescribe the maintenance of certain documents by the
stock exchange.
 It can compel a public company to list its shares.
 In certain areas it can license dealers in securities.
 It can amend bye-laws of stock exchange.
 It has a power to approve bye-laws of stock exchange.

STOCK EXCHANGES IN INDIA & DEVELOPMENTS


India can boast of being one of the oldest stock markets in Asia. Nearly
200 years ago, trading in securities used to take place. The first stock exchange,
however, came to be established in 1875 in Bombay when the stock brokers,
aghast at their plight following the severe depression in securities industry,
decided to form, “an association for protecting the character, status and interest
of native share and shock brokers and of providing a hall or building for the use
of members of such an association.

The process of established of stock exchanges gradually spread to other


cities of the country like Ahmedabad, Calcutta, Madras etc., As a result, in the
initial years of regulation of the securities Contracts (Regulation) Act, 1956 — the
first All-India legislation regulating, the sock exchanges in the country — there
were eight recognized stock exchanges in the country. In 1996, there were 23
stock exchanges in India. With the cult of equity spreading fast to the four
corners of the country, prospects 40 stock exchanges humming with activity all
over the country by the end of the century. The argument by a section that
establishment of more establishment or more stock exchanges is not conductive
for the development of efficient systems of functioning of the securities industry,
the fact that the communication facilities in the country are now satisfactory and
also that a direct and close regulating authority easily accessible to the investors
inspires confidence in the investment in stock market instruments

CAPITAL MARKET
An efficient capital market is a pre-requisite of economic development. An
ideal capital market is one where finance is used as handmaid to serve the
needs of industry. The capital market must facilitate the movement of capital to
the point of highest yield.
The main components apart from financial institutions of a capital market are:
 Primary market
 Secondary Market

• Primary Market
The new issues market where new securities, i.e., shares or bonds that have
never been previously issued are offered represents the primary market. Both the
new companies and the existing ones can raise capital in the primary market.
The primary market helps the corporate enterprises in securing their funds that
are generally used for setting up new corporate enterprises or going in for
expansion, diversification, growth or modernization.

Growth and development of Primary market in India


The primary market in India is not fully developed as compared to other
countries like USA, UK, and Germany. But there has been tremendous growth in
the sphere of new issue activity in India in l980s and 1990s. The total amount of
capital raised during 1961 was only Rs.74 crores which increased to 301.1 crores
during 1981. Subsequently the liberalization of industrial and new capital issue
policies in 1984-85 gave real shot in the arm to the securities market. Further the
relaxation of norms relating to foreign investments and incentives provided by the
government helped to sustain the impetus of growth in the market. The securities
scam during 1991 caused a tremendous setback to the growing new issue
market in India. But the new economic policy of the P.V. Narasimha Rao
government and the setting up of SEBI to promote orderly and healthy growth of
securities market providing investor protection has to be regarded as one of the
most important developments on the securities market of India in recent years.
During the year 1993, there has been a tremendous growth in the new issue
activity resulting into Rs.19825.6 crores of capital raised by non-government
public limited companies in India.

• SECONDARY MARKET/STOCK MARKET:


Stock market represents the secondary markets where existing securities
(shares and debentures) are traded. Stock exchange provides an organized
mechanism for purchase and sale of existing securities. By the end of 1993-94,
there were 23 stock exchanges in our country. The daily turnover at these stock
exchanges during 1993-94 was to the tune of Rs.3877.8 million. At present, there
are 21 stock exchanges in our country. Stock exchanges provide a place where
securities of different companies can be purchased and sold.

Stock Exchange is a body of persons, whether incorporated or not, formed


with a view to helping, regulating and controlling the business of buying and
selling of securities. Stock exchanges are organized and regulated markets for
various securities issued by corporate sector and other institutions. Stock
Exchange acts as an investment market for buyer and sellers of securities.
The number of official stock exchanges in India has increased from 9 in
1979-80 to 21 as on today. India has now the largest number them are regulated
by the SEBI. They are organized either as voluntary, nonprofit making
associations (viz., Mumbai, Ahmedabad, Indore), or public limited companies
(viz., Kolkata, Delhi, Bangalore), or company limited by guarantee (viz., Chennai,
Hyderabad).

All stock exchanges have two parts: The new issue market or primary
market or primary market and Secondary market. While the primary market
supplies fresh or additional capital to the companies, the securities already
issued or floated on the primary market are traded on the secondary market. The
secondary market doesn’t play any direct role in making funds available to the
corporate; its role in this respect is only indirect, i.e., it helps to encourage
investors to invest in industrial securities by making them liquid, i.e., by providing
facilities for continuous, regular, and buying and selling of those securities.
Primary market deals in new securities while secondary markets deals in already
existing or old securities, which have been listed on it. The investors acquire or
buy securities directly from the companies on the primary market, while the trade
securities so acquired among themselves on these stock market.

TRADING SYSTEM
NSE operates on the “National Exchange for Automated Trading” (NEAT)
system, a fully automated screen based trading system, which adopts the
principle of an order driven market. NSE consciously opted in favor of an order
driven system as opposed to a quote driven system. This has helped reduce
jobbing spreads not only on NSE but in other exchanges as well thus reducing
transactions costs.

Trading System — Market Types


The NEAT System has four types of Market. They are
Normal Market
All orders which are of regular lot size or multiples thereof are traded in
the Normal Market. For shares that are traded in the compulsory dematerialized
mode the market lot of these shares in one. Normal market consists of various
book types wherein orders are segregated as Regular lot orders, Special Term
Orders, Negotiated Trade Orders and shop Loss orders depending on their
orders attributes.

Odd Lot Market


All orders whose orders size is less than the regular lot size are traded in
the odd — lot market. An order is called an odd lot order. If the orders size is less
than regular lot size. These orders do not have any special terms attributes
attached to them. In an odd lot market, both the price and quality of both the
orders (buy and sell) should exactly for the trade to take place. Currently the odd
lot market is used for the Limited Physical Market as per the SEBI directives.

Action Market
In the Auction Market, the Exchange on behalf o trading members for
settlement related reasons initiates auctions. There are 3 participants in this
market.
• Initiator - The party who initiate the auction process is called an initiator.
• Competitor - The party who enters orders on the same side as of the
initiator.
• Solicitor - The party who enters orders on the opposite side of the initiator.

Spot Market
Settlement periods vis-à-vis normal market. These orders do not have any
special terms attributes attached to them. Currently the spot Market is not in use.
Terms System-Orders Books
The NSE trading systems provides complete flexibility to members in the
kinds of orders that can be placed by them. Orders are first numbered and time-
stamped on receipt and then immediately processed for potential match. Every
order has a distinctive orders number and a unique time stamp on it. if a match is
not found, then the orders are stored in different books’. Orders are stored in
price-time priority in various books in the following sequence. Best Price. Within
Price, by time Priority. Price priority means that if two orders are entered into the
system, the order having the best price gets the higher priority. Time priority
means if two orders having the same price are entered, the order that is entered
first gets the higher priority.

The Equities Segments has following types of books.

 Regular Lot Book


The Regular Lot book contains all regular lot orders that have none of the
following attributes attachment to them.
All or none (AON)
Minimum Fill (MF)
Stop Loss (SL)

 Special Terms book


The Special terms book contains 11 orders that hove either if the following
terms attached.
All or None (AON)
Minimum Fill (MF)
Note: Currently, special terms orders i.e. AON and MF are not available on the
system as per the SEBI directives.
 Negotiated Trade book
The Negotiated Trade book contains all negotiated order entries captured by
the system before they have been matched against their counterparty trade
entries. These entries are matched with identical counterparty entries only. It is to
be noted that these entries contain a counterparty code in addition to other order
details.

 Stop-Loss Book
Stop Loss orders are stored in this book till the trigger price specified in the
order is reached or surpassed. When the trigger price is reached or surpassed,
the order is released in the Regular lot book.
The stop loss condition is met under the following circumstances: Sell order A
sell order in the Stop Loss book gets triggered when the last traded price in the
normal market reaches or fails below the trigger price of the order.
Buy Order - A buy order in the Shop Loss book gets triggered when the last
traded price in the normal market reached or exceeds the trigger price of the
order.

 Odd Lot Book


The Odd lot books contain all odd lot orders (orders with quantity less than
marketable) in the system. The system attempts to match an active odd lot order
against passive orders in the book. Currently, pursuant to a SEBI directive, the
Odd Lot Market is being used for orders that have quantity less than or equal to
500 viz., the Limited Physical Market.
 Spot Book
The Spot Lot Book contains all spot orders (orders having only the settlement
period different) in the system. The system attempts to match an active spot lot
order against the passive orders in the book. Currently the Spot Market type is
not in use.

 Auction Book
This book contains orders that are entered for all auctions. The matching
process for auction orders in this book are initiated only at the end of the solicitor
period.

TRADING SYSTEM - ORDER MATCHING RULES


The best buy is matched with the best sell order. An order may match
partially with another resulting in multiple trades. For order matching, the best
buy order is the highest price and the best sell order is the one with the lowest
price. This is because the system views all buy orders available from the point of
view of the buyers in the market. So, of all buy orders available in the market at
any point of time, a seller would obviously like to sell at the highest possible buy
price that is offered. Hence the best buy order is the order with the highest price
and the best sell order is the order with the lowest price.

Members can proactively enter orders in the system, which will be


displayed in the system till the full quantity is matched by one or more of counter-
orders and result into trade(s) or is cancelled by the member, Alternatively,
members may be reactive and put in orders that match with existing orders in the
system. Orders lying unmatched in the system are passive orders and orders
that come in to match the existing orders are called “active” orders. Orders are
always matched at the passive order price. This ensures that the earlier orders
get priority over the orders that come in later.

Trading System — Order Conditions


A Trading Member can enter various types of orders depending upon his / her
requirements. These conditions are broadly classified into three categories: time
related conditions

1. Time Conditions
DAY - A Day order, as the name suggests, is an order which is valid for the day
on which it is entered. If the order is not matched during the day, the order gets
cancelled automatically at the end of the trading day.

GTC - A Good Till Cancelled (GTC) order is an order that remains in the system
until it is cancelled by the Trading Member. It will therefore be able to span
trading days if it does not get matched. The maximum number of days a GTC
order can remain in the system is notified by the Exchange from time to time.

GTD - A Good Till Days / Date (GTD) order allows the Trading Member to specify
the days / date up to which the order should stay in the system. At the end of this
period the order will get flushed from the system. Each day / date counted is a
calendar day and inclusive of holidays. The days / date counted are inclusive of
the day / date on which the order is placed. The maximum number of days a
GTD order can remain in the system is notified by the Exchange from time to
time.

IOC - An Immediate of Cancel (IOC) order allows a Trading Member to buy or


sell a security as soon as the order is released into the market, failing which the
order will be removed from the market. Partial match is possible for the order and
the unmatched portion of the order is cancelled immediately.

2. Price Conditions
Limit Price / Order - An order that allows the price to be specified while entering
the order into the system.
Market Price / Order - An order to buy or sell securities at the best price
obtainable at the time of entering the order.

Stop Loss (SL) Price / Order - The one that allows the Trading Member to place
an order which gets activated only when the market price of the relevant security
reached or crosses a threshold price. Until then the order does not enter the
market.
A sell order in the Stop Loss book gets triggered when the last traded
price in the normal market reaches or fails below the trigger price of the order. A
buy order in the Stop Loss book gets triggered when the last traded price in the
normal market reached or exceeds the trigger price of the order.

E.g. If the stop loss buy order, the trigger is Rs.93.00, the limit price is
Rs.95.00 and the market (last traded) price is 90.00, then this order is released
into the system once the market price reached or exceeds 93.00. This order is
added to the regular lot book with time of triggering as the time stamp, as a limit
order of 95.00.

3. Quantity Conditions
Disclosed Quantity (DQ) An order with a DQ condition allows the Trading
Member to disclose only a part of the order quantity to the market. For example,
an order of 1000 with a disclosed quantity of 200 will mean that 200 is displayed
to the market at a time after this is traded. Another 200 is automatically released
So on till the full order is executed. The Exchange may set a minimum disclosed
quantity criteria from time to time.

MF - Minimum fill (MF) orders allow the Trading Member to specify the minimum
quantity by which an order should be filled. For example, an order of 1000 units
with minimum fill 200 will require that each trade be for at least 200 units.
AON - All or None orders allow a Trading Member to impose the condition that
only the full order should be matched it will stay in the books till matched of
cancelled.

STEPS TO BE FOLLWOED BY AN INVESTOR TO TRADE ON NSE SCRIPS

The client should open a


DEMAT Account

Open a trading account

The client will be


provided with a Trading
ID

He becomes a client

Professional

Retail

Institutional

Then client can trade on


NSE scrip’s on automated
screen
Steps are:
1. He should open a de-mat account.
2. He has to open a trading account to trade in the particular brokerage
company.
3. Then he will be given a trading number to trade on NSE scripts in the
particular.
4. Brokerage Company.
5. Then he becomes a client to the particular brokerage company

Clients in the brokerage companies


Clients are of three types, those are
1. Professional Clients
2. Retail Clients
3. Institutional Clients

Professional Clients
The Client involves in the speculation activities. He buys and sells shares on
daily basis. His brokerage charges will be low.

Institutional Clients
Here the broker trades on NSE on behalf of the institution. Then the client can
trade on the NSE Scripts on “Automated Screen”.

How to Trade
He can buy and sells shares through “NEAT” National Exchange Automated
Trading)
It adopts the order driven market against the quote driven market.
NSE TRADING SYSTEM

Trading
NSE introduced for the first time in India, fully automated screen based
trading. It uses a modern, fully computerized trading system designed to offer
investors across the length and breadth of the country a safe and easy way to
invest.
The NSE trading system called “National Exchange for Automated Trading”
(NEAT) is a fully automated screen based trading system, which adopts the
principle of an order driven market.

Market Timings
Trading on the equities takes place on all days of the week (except
Saturdays and Sundays and holidays declared by the Exchange in advance).
The market timings of the equities segment are:
Normal Market Open : 09:55 hrs
Normal Market Close : 15:30 hrs
The closing session is held between l5:50 hours and 16:00 hours.
Limited Physical Market Open : 09:55 hrs
Limited Physical Market Close : 15:30 hrs
Market Segments

The Exchange operates the following sub segments in the equities


segment
1. Rolling Settlement.
2. Limited Physical Market.
3. Institutional Segment.
4. Trade for Trade Segment.

1. Rolling Settlement
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 fore the
day.
At NSE trades in rolling settlement are settled on a T+2 basis i.e., on the 2 nd
working day. For arriving at the settlement day all intervening holidays, which
include bank holidays, NSE 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.

2. Limited Physical Market


Pursuant to the directive of SEBI to provide an exit route for small investors
holding physical shares in securities mandated for compulsory dematerialized
settlement, the exchange has provided a facility for such trading in physical
shares not exceeding 500 shares. This market segment is referred to as “Limited
Physical Market” (small window). The limited Physical Market was introduced on
June 7, 1999.

3. Institutional Segment
The Reserve Bank of India had vide a press release on October 21, 1999,
clarified that Inter Foreign institutional Investor (Inter-FIT) transactions do not
require prior approval or post-facto confirmation of the Reserve Bank of India,
since such transactions do not effect the percentage of overall holding in Indian
Companies (Inter FIT transactions are how ever nor permitted in securities where
the FII holdings have already crossed the overall limit due to any reason).
To facilitate execution of such inter Institutional deals in companies where the
cut-off limit of FIT investment has been reached, the exchange introduced a
JICW market segment on December 27, 1999.

The Securities where FIT investors and FIT holdings has reached the cut off
limit as specified by RBI (2% lower than the ceiling specified by RBI) from time to
time would be available for trading in this market type for exclusive selling by FIT
clients. The cut off limits for companies with 24% ceiling is 22%, for companies
with 30% ceiling, is 28% and for companies with 40% ceiling is 38%. Similarly,
the cut off limit for public sector banks (including State Bank of India) is 18%
whose ceiling is 20%. The list of securities eligible / become ineligible for trading
in this market type would be notified to members from time to time.

4. Trade for Trade Segment


Trading in this segment is available only for the securities which have not
established connectivity with both the depositors as per SEBI directive. The list of
these securities is notified by SEBI from Lime to time.On account of surveillance
action.

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

Mission
 NSE's mission is setting the agenda for change in the securities markets
in India. The NSE was set-up with the main objectives of:
 Establishing a nation-wide trading facility for equities, debt instruments
and hybrids,
 Ensuring equal access to investors all over the country through an
appropriate communication network,
 Providing a fair, efficient and transparent securities market to investors
using electronic trading systems,
 Enabling shorter settlement cycles and book entry settlements systems,
and meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technologies


have become industry benchmarks and are being emulated by other market
participants. NSE is more than a mere market facilitator. It's that force which is
guiding the industry towards new horizons and greater opportunities.

Corporate Structure
NSE is one of the first de-mutualised stock exchanges in the country, where
the ownership and management of the Exchange is completely divorced from the
right to trade on it. Though the impetus for its establishment came from policy
makers in the country, it has been set up as a public limited company, owned by
the leading institutional investors in the country.

From day one, NSE has adopted the form of a demuattualised exchange -
the ownership, management and trading is in the hands of three different sets of
people. NSE is owned by a set of leading financial institutions, banks, insurance
companies and other financial intermediaries and is managed by professionals,
who do not directly or indirectly trade on the Exchange. This has completely
eliminated any conflict of interest and helped NSE in aggressively pursuing
policies and practices within a public interest framework.

The NSE model however, does not preclude, but in fact accommodates
involvement, support and contribution of trading members in a variety of ways. Its
Board comprises of senior executives from promoter institutions, eminent
professionals in the fields of law, economics, accountancy, finance, taxation, etc,
public representatives, nominees of SEBI and one full time executive of the
Exchange.

While the Board deals with broad policy issues, decisions relating to
market operations are delegated by the Board to various committees constituted
by it. Such committees include representatives from trading members,
professionals, the public and the management. The day-to-day management of
the Exchange is delegated to the Managing Director who is supported by a team
of professional staff.

Membership
There are 890 trading members on the capital market segment, of which
around 86 per cent are corporate entities, while the rest are individuals and firms.
Of these 890 trading members, 89 trading members are also members of
wholesale debt market segment, all of which are corporate. There are 7 trading
members exclusively on wholesale debt market segment.

Number of listed companies


On the capital market segment, equity shares of 685 companies are listed
and 572 companies are permitted to trade as of October 31, 1999. On the
wholesale debt market segment, 797 securities are listed and 517 securities are
permitted to trade as of October 31, 1999. Of the 797 securities listed, 369 are
Government Securities/T-Bills and the balance account for other securities.

NSE Indices
The indices used by NSE are known under the following names:

S. No. Old Name New Name

1. NIFTY S&P CNX NIFTY

2. DEFTY S&P CNX DEFTY

3. CRISIL 500 EQUITY INDEX S&P CNX 500 EQUITY


INDEX

4. NIFTY JUNIOR CNX NIFTY JUNIOR

5. CRISIL MIDCAP 200 CNX MIDCAP 200 INDEX

6. CRISIL PSE CNX PSE INDEX

7. CRISIL IBG CNX IBG INDEX

8. CRISIL MNC CNX MNC INDEX

Promoters
NSE has been promoted by leading financial institutions, banks, insurance
companies and other financial intermediaries:
 Industrial Development Bank of India Limited
 Industrial Finance Corporation of India Limited

 Life Insurance Corporation of India

 State Bank of India

 ICICI Bank Limited

 IL & FS Trust Company Limited

 Stock Holding Corporation of India Limited

 SBI Capital Markets Limited

 Bank of Baroda

 Canara Bank

 General Insurance Corporation of India

 National Insurance Company Limited

 The New India Assurance Company Limited

 The Oriental Insurance Company Limited

 United India Insurance Company Limited

 Punjab National Bank

 Oriental Bank of Commerce

 Indian Bank

 Union Bank of India

 Infrastructure Development Finance Company Ltd.

NSE Family
NSCCL
National Securities Clearing Corporation Ltd. (NSCCL), a wholly-owned
subsidiary of NSE, was set up in August 1995. It was the first clearing
corporation in the country to provide novation/settlement guarantee that
revolutionized the entire concept of settlement system in India. It commenced
clearing operations in April 1996. It has been set up to bring and sustain
confidence in clearing and settlement of securities; to promote and maintain short
and consistent settlement cycles.

NSDL
Prior to trading in a dematerialized environment, settlement of trades required
moving the securities physically from the seller to the ultimate buyer, through the
seller’s broker and buyer’s broker, which involved lot of time and the risk of delay
somewhere along the chain. To obviate these problems, NSE to promote
dematerialization of securities joined hands with LTI and IDBI to set up the first
depository in India called the “National Securities Depository Limited” (NSDL).
The depository system gained quick acceptance and in a very short span of time
it was able to achieve the objective of eradicating the paper from the trading and
settlement of securities.

NSE InfoTech Services Ltd


Information Technology has been the backbone of conceptualization, formation,
running and the success of National Stock Exchange of India Limited (NSE).
NSE has been at the forefront in spearheading technological changes in the
securities market. It was important to give a special thrust and focus on
Information Technology to retain the primacy in the market. Towards this a wholly
owned subsidiary NSE InfoTech Services Limited (NSETECH) was incorporated
to cater to the needs of NSE and all it’s group companies exclusively.

NSE.IT
NSE.IT Limited, a 100% technology subsidiary of NSE, was incorporated in
October 1999. It provides the securities industry with technology that ensures
transparency and efficiency in the trading, clearing and risk management
systems. Additionally, NSE.IT provides consultancy services in the areas of data
warehousing, internet and business continuity plans. Amongst various products
launched by NSE.IT are NEAT XS, a Computer-To-Computer Link (CTCL) order
routing system, NEAT XS, an internet trading system and Probes, professional
broker’s back office system.

IISL
India Index Services and Products Limited (IISL), a joint venture of CRISIL and
NSE, was set up in May 1998 to provide indices and index services. It has a
licensing and marketing agreement with Standard and Poor’s (S&P), the world’s
leading provider of investible equity indices, for co-branding equity indices. IISL is
India’s first specialized company focusing upon the index as a core product. It
provides a broad range of services, products and professional index services. It
maintains over 90 equity indices comprising broad—based benchmark indices,
sect oral indices and customized indices.

NCDEX
NSE joined hand with other financial institutions in India viz., ICICI Bank,
NABARD, LIC, PNB, CRISIL, Canara Bank and IIFCO to promote the National
Commodity & Derivatives Exchange (NCDEX which provides for a world class
commodity exchange platform for Market Participants to trade in wide spectrum
of commodity derivatives. Currently NCDEX facilitates trading of 41 agro based
commodities, 2 precious metals, 6 base metal, 2 energy products and 3
polymers.

Significance of Logo
The logo of the NSE symbolizes a single nationwide securities trading
facility ensuring equal and fair access to investors, trading members and issuers
all over the country. The initials of the Exchange viz., N, S and E have been
etched on the logo and are distinctly visible. The logo symbolizes use of
state of the art information technology and satellite connectivity to bring
about the change within the securities industry. The logo symbolizes
vibrancy and unleashing of creative energy to constantly bring about change
through innovation.
Milestones of NSE
 November 1992 Incorporation
 April 1993 Recognition as a stock exchange
 May 1993 Formulation of business plan
 June 1994 Wholesale Debt Market segment goes live
 November 1994 Capital Market (Equities) segment goes live
 March 1995 Establishment of Investor Grievance Cell
 April 1995 Establishment of NSCCL, the first Clearing Corporation
 June 1995 Introduction of centralized insurance cover for all trading
members
 July 1995 Establishment of Investor Protection Fund
 October 1995 Became largest stock exchange in the country
 April 1996 Commencement of clearing and settlement by NSCCL
 April 1996 Launch of S&P CNX Nifty
 June 1996 Establishment of Settlement Guarantee Fund
 November 1996 Best IT Usage award by Computer Society of India
 December 1996 Commencement of trading/settlement in dematerialized
securities
 December 1996 Dataquest award for Top IT User
 December 1996 Launch of CNX Nifty Junior
 February 1997 Regional clearing facility goes live
 November 1997 Best IT Usage award by Computer Society of India
 May 1998 Promotion of joint venture, India Index Services & Products
Limited (IISL)
 May 1998 Launch of NSE's Web-site: www.nse.co.in
 July 1998 Launch of NSE's Certification Programme in Financial Market
 August 1998 CYBER CORPORATE OF THE YEAR 1998 award
 February 1999 Launch of Automated Lending and Borrowing Mechanism
 April 1999 CHIP Web Award by CHIP magazine
 October 1999 Setting up of NSE.IT
 January 2000 Launch of NSE Research Initiative
 February 2000 Commencement of Internet Trading
 June 2000 Commencement of Derivatives Trading (Index Futures)
 September 2000 Launch of 'Zero Coupon Yield Curve'
 December 2000 Commencement of WAP trading
 June 2001 Commencement of trading in Index Options
 July 2001 Commencement of trading in Options on Individual Securities
 November 2001 Commencement of trading in Futures on Individual
Securities
 December 2001 Launch of NSE VaR for Government Securities
 January 2002 Launch of Exchange Traded Funds (ETFs)
 October 2002 Launch of NSE Government Securities Index
 January 2003 Commencement of trading in Retail Debt Market
 June 2003 Launch of Interest Rate Futures
 August 2003 Launch of Futures & options in CNXIT Index
 June 2004 Launch of STP Interoperability
 August 2004 Launch of NSE’s electronic interface for listed companies
 March 2005 ‘India Innovation Award’ by EMPI Business School, New
Delhi
 June 2005 Launch of Futures & options in BANK Nifty Index
 December 2006 'Derivative Exchange of the Year', by Asia Risk magazine
 January 2007 Launch of NSE – CNBC TV 18 media centre
 March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com
 June 2007 NSE launches derivatives on Nifty Junior & CNX 100
 October 2007 NSE launches derivatives on Nifty Midcap 50
 January 2008 Introduction of Mini Nifty derivative contracts on 1st January
2008
 March 2008 Introduction of long term option contracts on S&P CNX Nifty
Index

CAPITAL MARKET (EQUITIES) SEGMENT


Settlement Guarantee Fund Mar 31, 2006 Rs. 4,055.18 crores
Investor Protection Fund May 31, 2007 Rs. 196.74 crores
Number of securities available May 31, 2007 1,526
for trading
Record number of trades Feb 28, 2007 47,78,407
Record daily turnover (qt) Jan 05, 2005 6,765 lakhs
Record daily turnover (value) Mar 31, 2006 Rs.17,315.06 crores
Record market capitalization May 29, 2007 Rs.39,14,386 crores
Record value of S&P CNX Jun 04, 2007 4362.95
Nifty Index
Record value of CNX Nifty Jun 20, 2007 8397.05
Junior Index
Record Pay-in/Pay-out (Rolling Settlement):
Funds Pay-in/Pay-out May 02, 2006* Rs. 4,110.52 crores
(N2006077)
Securities Pay-in/Pay-out May 02, 2006* Rs. 7,293.25 crores
(Value)(N2006077)
Securities Pay-in/Pay-out May 15, 2006* 2,443.71 lakhs
(Quantity) (N2006086)
*Settlement Date
Settlement Guarantee Fund Mar 31, 2006 Rs. 13,032.36 crores
Investor Protection Fund May 31, 2007 Rs. 44.56 crores
Record daily turnover (value) Apr 27, 2006 Rs. 60,433.75 crores
Record number of trades May 31, 2007 916,645
WHOLESALE DEBT SEGMENT
Number of securities available May 31, 2007 3,277
for trading
Record daily turnover (value) Aug 25, 2003 Rs.13,911.57 crores

Technology
Across the globe, developments in information, communication and
network technologies have created paradigm shifts in the securities market
operations. Technology has enabled organizations to build new sources of
competitive advantage, bring about innovations in products and services, and to
provide for new business opportunities. Stock exchanges all over the world have
realized the potential of IT and have moved over to electronic trading systems,
which are cheaper, have wider reach and provide a better mechanism for trade
and post trade execution.
.
NSE believes that technology will continue to provide the necessary
impetus for the organization to retain its competitive edge and ensure timeliness
and satisfaction in customer service. In recognition of the fact that technology will
continue to redefine the shape of the securities industry, NSE stresses on
innovation and sustained investment in technology to remain ahead of
competition. NSE's IT set-up is the largest by any company in India. It uses
satellite communication technology to energize participation from around 320
cities spread all over the country. In the recent past, capacity enhancement
measures were taken up in regard to the trading systems so as to effectively
meet the requirements of increased users and associated trading loads. With up
gradation of trading hardware, NSE can handle up to 6 million trades per day in
Capital Market segment. In order to capitalize on in-house expertise in
technology, NSE set up a separate company, NSE.IT, in October 1999. This is
expected to provide a platform for taking up new IT assignments both within and
outside India and attaining global exposure.

NEAT is a state-of-the-art client server based application. At the server


end, all trading information is stored in an in-memory database to achieve
minimum response time and maximum system availability for users. The trading
server software runs on a fault tolerant STRATUS main frame computer while the
client software runs under Windows on PCs.

The telecommunications network uses X.25 protocol and is the backbone


of the automated trading system. Each trading member trades on the NSE with
other members through a PC located in the trading member's office, anywhere in
India. The trading members on the various market segments such as CM / F&O ,
WDM are linked to the central computer at the NSE through dedicated 64Kbps
leased lines and VSAT terminals. The Exchange uses powerful RISC -based
UNIX servers, procured from Digital and HP for the back office processing. The
latest software platforms like ORACLE 7 RDBMS, GUPTA - SQL/ORACLE
FORMS 4.5 Front - Ends, etc. have been used for the Exchange applications.
The Exchange currently manages its data centre operations, system and
database administration, design and development of in-house systems and
design and implementation of telecommunication solutions.

NSE is one of the largest interactive VSAT based stock exchanges in the world.
Today it supports more than 3000 VSATs. The NSE- network is the largest
private wide area network in the country and the first extended C- Band VSAT
network in the world. Currently more than 9000 users are trading on the real
time-online NSE application. There are over 15 large computer systems which
include non-stop fault-tolerant computers and high end UNIX servers, operational
under one roof to support the NSE applications. This coupled with the nation
wide VSAT network makes NSE the country's largest Information Technology
user.
In an ongoing effort to improve NSE's infrastructure, a corporate network
has been implemented, connecting all the offices at Mumbai, Delhi, Calcutta and
Chennai. This corporate network enables speedy inter-office communications
and data and voice connectivity between offices
.
In keeping with the current trend, NSE has gone online on the Internet.
Apart from having a 2mbps link to VSNL and our own domain for internal
browsing and e-mail purposes, we have also set up our own Web site. Currently,
NSE is displaying its live stock quotes on the web site (www.nseindia.com) which
are updated online.

Market Design- Primary and Secondary Markets


 Primary Market
Corporate Securities: The Disclosure and Investor protection (DIP)
guidelines prescribe a substantial body of requirements for
issuers/intermediaries, the broad intention being to ensure that all concerned
observe high standards of integrity and fair dealing, comply with all the
requirements with due skill, diligence and care, and disclose the truth, whole
truth and nothing but truth. The guidelines aim to secure fuller disclosure of
relevant information about the issuer and the nature of the securities to be
issued to that investors can take informed decisions. For example, issuers are
required to disclose any material ‘risk factors’ and give justification for pricing
in their prospectus. An unlisted company can access the market up to 5 times
its pre-issue net worth only if it has track record of distributable profits and net
worth of Rs. 1 crore in 3 out of last five years. A listed company can access
up to 5 times of its pre-issue net worth. In case a company does not have
track record or wishes to raise beyond 5 times of its pre-issue net worth, it
can access the market only through book building with minimum offer of 60%
to qualified institutional buyers. Infrastructure companies are exempt from the
requirement of eligibility norms if their project has been appraised by a public
financial institution and not less than 5% of the project cost is financed by any
of the institutions, jointly or severally, by way of loan and/or subscription to
equity. The debt instruments of maturities more than 18 months require credit
rating. If the issue size exceeds Rs. 100 crores, two ratings from different
agencies are required. Thus the quality of the issue is demonstrated by track
record/appraisal by approved financial institution/credit ratings/subscription by
QIBs. The lead merchant banker discharges most of the pre-issue and post-
issue obligations. He satisfies himself about all aspects of offering and
adequacy of disclosures in the offer document. He issues a due diligence
certificate stating that he has examined the prospectus, he finds it in order
and that brings out all the facts and does not contain anything wrong or
misleading. He also takes care of allotment refund and dispatch of
certificates. The admission to a depository for dematerialization of securities
is prerequisite for making a public or rights issue or an offer for sale. The
investors, however, have the option of subscribing to securities in either
physical form or dematerialized form. All new IPOs are compulsorily traded in
dematerialized from. Every public listed company making IPO of any security
for Rs. 10 crores or more is required to do so only in dematerialized form.
Government Securities: The government securities market has witnessed
significant transformation in the 1990s. With giving up of the responsibility of
allocating resources from securities market, government stopped expropriating
seignior age and started borrowing at near – market rates. Government
securities are now sold at market related coupon rates through a system of
auctions instead of earlier practice of issue of securities at very low rates just to
reduce the cost of borrowing of the government. Major reforms initiated in the
primary market for government securities include auctions system (uniform price
and multiple price method) for primary issuance of T-bills and central government
dated securities, a system of primary dealers and non-competitive bids to widen
investor base and promote retail participation, issuance of securities across
maturities to develop a yield curve from short to long end and provide
benchmarks for rest of the debt market, innovative instruments like, zero coupon
bonds, floating rate bonds, bonds with embedded derivatives, availability of full
range (91-day and 382 day) of T-bills, etc.

 Secondary Market
(1) Corporate Securities: The stock exchanges are the exclusive centre’s for
trading of securities. Though the area of its recognition, they have been allowed
recently to set up trading terminals anywhere in the country. The three newly set
up exchanges (OTCEI, NSE and ICSE) were permitted since their inception to
have nation wide trading. The trading platforms of a few exchanges are now
accessible from many locations. Further, with extensive use of information
technology, the trading platforms of a few exchanges are also accessible from
anywhere through the Internet and mobile devices. This made a huge difference
in a geographically vast country like India.

(2) Exchange Management: Most of the stock exchanges in the country are
organized as “mutual’s” which was considered beneficial in terms of tax benefits
and matters of compliance. The trading members, who provide brokering
services, also own, control and manage the exchanges. This is not an effective
model for self-regulatory organizations as the regulatory and public interest of the
exchange conflicts with private interest. Efforts are on to demutualise the
exchanges whereby ownership, management and trading membership would be
segregated from one another. Two exchanges viz. OTCEI and NSE are
demutualised from inception, where ownership, management and trading are in
the hands of three different sets of people. This model eliminates conflict of
interest and helps the exchange to pursue market efficiency and investor interest
aggressively.
(3) Membership: The trading platform of an exchange is accessible only to
brokers. The broker enters into trades in exchanges either on his own account or
on behalf of clients. No stock broker or sub-broker is allowed to buy, sell or deal
in securities, unless he or she holds a certificate of registration granted by SEBI.
Over time, a number of brokers – proprietor firms – have converted themselves
into corporate. The standards for admission of members stress on factors, such
as corporate structure, capital adequacy, track record, education, experience,
etc. and reflect a conscious endeavor to ensure quality broking services.

(4) Listing: A company seeking listing satisfies the exchange that at least 10%
of the securities, subject to a minimum of 20 lakh securities, were offered to
public for subscription, and the size of the net offer to the public (i.e. the offer
price multiplied by the number of securities offered to the public, excluding
reservations, firm allotment and promoters contribution) was not less than Rs.
100 crores, and the issue is made only through book building method with
allocation of 60% of the issue size to the qualified institutional buyers. In the
alternative, it is required top offer at least 25% of the securities to public. The
company also required to maintain the minimum lever of non-promoter holding
on a continuous basis.

The basic norms for listing of securities on the stock exchanges are
uniform for all the exchanges. These norms are specified in the listing agreement
entered into between the company and the concerned exchange. The listing
agreement prescribes a number of requirements to be continuously complied
with by the issuers for continued listing and such compliance is monitored by the
exchanges. It also stipulates the disclosures to be made by the companies and
the corporate governance practices to be followed by them. SEBI has been
issuing guidelines/circulars prescribing certain norms to be included in the listing
agreement and to be complied with by the companies.

A listed security is available for trading on the exchange. The stock


exchanges levy listing fees – initial fees and annual fees – from the listed
companies. It is a major source of income for many exchanges. A security listed
on other exchanges is also permitted for trading.

A listed company can voluntary delist its securities from non-regional stock
exchanges after providing an exit opportunity to holders of securities in the region
where the concerned exchange is located. An exchange can, however, delist the
securities compulsorily following a very stringent procedure.

(5) Trading Mechanism: The exchanges provide an on-line fully-automated


screen based trading system (SBTS) where a member can punch into the
computer quantities of securities and the prices at which he likes to transact and
the transaction is executed as soon as it finds a matching order from a counter
party. SBTS electronically matches orders on a strict price/time priority and
hence cuts down on time, cost and risk of error, as well as on fraud resulting in
improved operational efficiency. It allows faster incorporation of price sensitive
information into prevailing prices, thus increasing the informational efficiency of
markets. It enables Market participants to see the full market on real time,
making the market transparent. It allows a large number of participants,
irrespective of their geographical locations, to trade with one another
simultaneously, improving the depth and liquidity of the market. It provides full
anonymity by accepting orders, big or small, from members without revealing
their identity, thus providing equal access to everybody. It also provides a perfect
audit trail, which helps to resolve disputes by logging in the trade execution
process in entirety.

(6) Trading Rules: Regulations have been framed to prevent insider trading as
well as unfair trade practices. The acquisitions and takeovers are permitted in a
well defined and orderly manner. The companies are permitted to buy back their
securities to improve liquidity and enhance the shareholder’s wealth.

(7) Price Bands: Stock Market volatility is generally a cause of concern for both
policy makers as well as investors. To curb excessive volatility, SEBI has
prescribed a system of price bands. The price bands or circuit breakers bring
about a coordinated trading halt in all equity derivatives markets nation-wide. An
index-based market-wide circuit breaker system at three stages of the index
movement either way at 10%, 15% and 20% has been prescribed.

The movement of wither S&P CNX Nifty or Sensex, whichever is breached


earlier, triggers the breakers. As an additional measure of safety, individual scrip-
wise price bands of 20% either way have been imposed for all securities except
those available for stock options.

(8) Demate Trading: The Depositories Act, 1996 was passed to proved for the
establishment of depositories in securities with the objective of ensuring free
transferability of securities with speed, accuracy and security by (a) making
securities of public limited companies freely transferable subject to certain
exceptions: (b) dematerialized the securities in the depository mode: and
providing for maintenance of ownership records in a book entry form. In order to
streamline both the stages of settlement process, the Act envisages transfer of
ownership of securities electronically by book entry without making the securities
move from person to person. Two Depositories, viz. NSDL and CDSL, have
come up to provide instantaneous electronic transfer of securities. At the end of
March 2002, 4,172 and 4,284 companies were connected to NSDL and CDSL,
respectively. The number of dematerialized securities increased to 56.5 billion at
the end of March 2002. As on the same date, the value of dematerialized
securities was Rs. 4,669 billion and the number of investor accounts was 46,
05,588. All actively traded scrip’s are held, traded and settled in demate form.
Demate settlement accounts for over 99% of turnover settled by delivery.

(9) Charges: A stock broker is required to any a registration fee of Rs. 5,000
every financial year, if his annual turnover does not exceed Rs. 1 crore. If the
turnover exceeds Rs.1crore during any financial year, he has to pay Rs. 5,000
plus one-hundredth of 1% of the turnover in excess of Rs. 1 crore. After the
expiry of five years from the date of initial registration as a broker, he has to pay
Rs.5, 000 for a block of five financial years. Besides, the exchanges collect
transaction charges from its trading members. NSE levies Rs.4 per lakh of
turnover.

The maximum brokerage a trading member can levy in respect of


securities transactions is 2.5% of the contract price, exclusive of statutory levies
like SEBI turnover fee, service tax and stamp duty. However, brokerage charges
as low as 0.15 are also observed in the market.

(10) Trading Cycle: Rolling settlement on T+3 basis gave way to T+2 from April
2003. The market has moved close to spot/cash market.

(11) Risk Management: To pre-empt market failures and protect investors, the
regulator/exchanges have developed a comprehensive risk management system,
which is constantly monitored and upgraded. It encompasses capital adequacy
of members, adequate margin requirements, limits on exposure and turnover,
indemnity insurance, on-line position monitoring and automatic disablement etc.
They also administer an efficient market surveillance system to curb excessive
volatility, direct and prevent price manipulations.
COMPANY PROFILE

Historical view of the India Infoline


We are a one-stop financial services shop, most respected for quality of its
advice, personalized service and cutting-edge technology. The India Infoline
group has a significant presence across the country with over 500 branches in
over 300 cities across India. All these offices are networked and are connected
with the Corporate office in Mumbai. The group has invested significantly in
technology and research, the results of which are there for everyone to see. The
5paisa trading interface is one of the most advanced platform available to retail
investor in India. The group has memberships on BSE and NSE for equities
trading, depository participant with NSDL and CDSL and on MCX and NCDEX
for commodities trading. It has a SEBI license for portfolio Management under
which, various schemes are offered, which have been consistently beating the
benchmark indices inception.

Vision
Our vision is to be the most respected company in the financial services
space. Having an vision gives an organization a sense of direction. It helps all
employees of the organization to channelize their efforts in the same direction
towards a common organizational goal and acts as a cornerstone too resolve
conflicts.
.
At India Infoline, we are convinced that even as a number of our peer
companies are focused on emerging as the biggest and the best in the financial
services space in India. We need to be most respected by our stake holders, our
customers, our employees, and by society in general.
India Infoline limited
India Infoline Ltd is listed on both the leading stock exchanges in India,
viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange
(NSE). The India Infoline group, comprising the holding company, India Infoline
Ltd and its subsidiaries, straddles the entire financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Go bonds and other small savings instruments to loan
products and Investment banking. India Infoline also owns and manages the
websites,www.indiainfoline.com and www.5paisa.com

India Infoline Ltd, being a listed entity, is regulated by SEBI (Securities


and Exchange Board of India). It undertakes equities research which is
acknowledged by none other than Forbes as 'Best of the Web' and '…a must
read for investors in Asia'. India Infoline’s research is available not just over the
internet but also on international wire services like Bloomberg (Code: IILL),
Thomson First Call and Internet Securities where it is amongst the most read
Indian brokers.

INDIA INFOLINE STORY OF GLORY


Cira 1995. A group of professionals formed a company called Probity
Research & Services Private Limited. The name was latter changed to India
Infoline Limited. The objective was to provide unbiased and independent
information to market intermediaries and investors. The quality of research soon
caught the imagination all manager participants in the financial market. In a span
of 2 to 3 years the client list red like the who’s who of Indian financial market. The
list included consulting forms like Mckinsey, companies like Hindustan lever,
Banks like Citi Bank, Rating Agencies like CRISIL,D & B,FIs, FIIs, foreign brokers
as well as leading Indian brokers. The going was smooth but not exciting.

One finding morning in early 1999 a colleague had a crazy idea that if
the company made all the research available free on the web, the number of
users may well jumps from 250 to 2.5 million! To make it true the business
required a reincarnation. And the pre –requisite was a death. It meant that the
company put up all the information free on the website and let go of all the
revenues and profits. Worse, if the new avatar failed, there would be’ no
comebacks.

The idea was too compelling to worry about the consequences. Probity
took a whole-hearted plunge. The advertisement, alongside, said it all. The new
avatar business model took off. And it took off like a rocket! All employees, angel
investors and well-wishers were ecstatic little did they know that the rocket would
run out of fuel in mid-air. Venture capitalists and private equity investors lined up
to sign term sheets without even looking at the balance sheet. Indian Infoline
raised US$ 1 million in the first round and completed the second round at the
peak of dotcom euphoria around March 2000 and raised US$ 5million.

Circa 2001. The internet bubble started bursting faster than anybody
could have imagined. The dot com suffix, which was the sexiest tail to any
business name, suddenly became the worst stigma to have. Funding
disappeared completely, regardless of valuation, business model or management
depth. The company also had a crash landing and was forced to jettison a
number of plans including one to set up a TV channel. India Infoline decided
narrow its focus on business where it could leverage its core competencies to the
maximum. The key business lines that emerged were mutual funds, life
insurance and e-broking.
The company became heavily dependent on its e-broking business for
survival. The odds were against them. There was no money available from the
private equity investors at any valuation. All competitors were backed by
institutions or hand abundant capital. The core competitors of the company had
little experience of broking. There was a core group who never lost hope. They
cut all possible costs and worked on a bare bones structure. They survived
against all odds and started capturing market share. The company rose from
strength to strength to become the leading corporate agent in life insurance and
among the top retail players in mutual funds and broking space.

INDIA INFOLINE SHARE VALUE


India Infoline Limited has fixed its issue price at Rs 76 per Equity share.
The 100% book-built issue offering 1.19 crore shares in the price band of Rs 70-
80 closed on April 27, 2005 and was oversubscribed 7.22 times. While the QIB
portion was oversubscribed 10.49 times, the non-institutional investors segment
was oversubscribed 5.64 times.

In India, investment advisory is a sunrise industry, with tremendous long


term promise. The young ‘earning’ and ‘saving’ class of population is growing
very rapidly. Falling interest rates are compelling people to look around for
advised investment. The Industry is consolidating as smaller players find it
difficult to meet strict compliance standards and service customers with research
and technology. Understandably, competition is intense. The business is
susceptible to cyclical gyrations. The landscape is changing everyday and the
road ahead is less traveled by. India Infoline Limited.

Along with its subsidiaries is a unique one stop Investment shop which
offers everything from information and advice to execution and service to the
retail customers for the entire gamut of investment products from risk free RBI
Bonds to high risk, high reward equities and also mutual funds and life insurance.
Various Services of India Infoline Ltd
India Infoline Securities
India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd,
which is engaged in the businesses of Equities broking and Portfolio
Management Services. It holds memberships of both the leading stock
exchanges of India viz. the Stock Exchange, Mumbai (BSE) and the National
Stock Exchange (NSE). It offers broking services in the Cash and Derivatives
segments of the NSE as well as the Cash segment Of the BSE.

A SEBI authorized Portfolio Manager; it offers Portfolio Management


Services to clients. These services are offered to clients as different schemes,
which are based on differing investment strategies made to reflect the varied risk-
return Preferences of clients.

India Infoline commodities private limited


India Infoline Commodities Pvt Ltd is a 100% subsidiary of India Infoline
Ltd, which is engaged in the business of commodities broking. Our experience in
securities broking empowered us with the requisite skills and technologies to
allow us offer commodities broking as a contra-cyclical alternative to equities
broking. We enjoy memberships with the MCX and NCDEX, two leading Indian
commodities exchanges, and recently acquired membership of DGCX. We have
a multi-channel delivery model, making it among the select few to online as well
as offline trading facilities

India Infoline distribution limited


India Infoline.com Distribution Co Ltd is a 100% subsidiary. India Infoline
Ltd and is engaged in the business of distribution of Mutual Funds, IPO’s, Fixed
Deposits and other small savings products. It is one of the largest 'vendor-
independent' distribution houses and has a wide pan-India footprint of over 232
branches coupled with a huge number of 'feet-on-street', which help source and
service customers across the length and breadth of India. Its unique value
proposition of free doorstep expert advice coupled with free pick-up and delivery
of cheques has been met with an enthusiastic response from customers and fund
houses alike.

India Infoline Insurance Service limited


India Infoline Insurance Services Ltd is also a 100% subsidiary of India
Infoline Ltd and is a registered Corporate Agent with the Insurance Regulatory
and Development Authority (IRDA). It is the largest Corporate Agent for ICICI
Prudential Life Insurance Co Ltd, which is India's largest private Life Insurance
Company.

India Infoline Investment Services limited


India Infoline Investment Service Ltd is also a 100% subsidiary of India
Infoline Ltd. It has an NBFC license from the Reserve Bank of India (RBI) and
offers margin-funding facility to the broking customers.

India Infoline Insurance Brokers Limited


India Infoline Insurance Brokers Ltd is a 100% subsidiary of India Infoline
Ltd and is a newly formed subsidiary which will carry out the business of
Insurance broking. We have applied to IRDA for the insurance broking license
and the clearance for the same is awaited.

Mortgages & Loans


IILD has also entered the business to distribution of mortgages and loan
products during the year 2005-2006. The business is still in the investing phase
and We plan to roll the business out across its pan-Indian network to provide it
with a truly national scale in operations

Our key milestones


Incorporated on October 18,1995 as probity research & services
Launched internet portal www.indiainfoline.com in may 1999
• Commenced distribution of personal financial products like Mutual funds and
RBI Bonds in April 2000
• Launched online trading in shares and securities branded as
www.5paisa.com in July 2000
• Started life insurance agency business in December 2000 as a corporate
agent of ICICI prudential life insurance
• Became a depository participant of NSDL in September 2001
• Launched stock messaging service in May 2003
• Acquired commodities broking license in march 2004
• Launched portfolio management services in August 2004
• Listed on NSE and BSE on may 17,2005
• Acquired NBFC license in May 2005
• Acquired 75% stake holding in Money tree Consultancy services, which is a
distributor of Mortgages and other Loan products, in October 2005.
• Acquired 100% equity of March Mont Capital Advisors Private Limited in
December 3005 through which we have ventured into Merchant Banking.
• DSP Merrill Lynch Capital subscribed to convertible bonds aggregating Rs. 80
crores in December 2005. Their stake in India Infoline is a little over 14% as
on 31st March 2007.
• Ben net Coleman & Company Limited (BCCL) invested Rs. 20 crores in India
Infoline by way of preferential allotment in December 2005.
• Became a depository participant of CDSL in June 2006.
• Merger of India Infoline Securities Private Limited with India Infoline Limited in
January 2007
.

Various Functional Departments


i. Planning
It involves planning of human resources requirements, recruitment, selection,
training, etc. it also involves forecasting of personnel needs, changing values,
attitudes and behavior of employees. The directors of the company usually
undertake this activity.

ii. Directing
In this company the personnel manager coordinates various managers at
different levels as the personnel functions are concerned. The willing and
effective cooperation of employees for the attainment of organizational goals is
possible through proper directions.

iii. Controlling
In IISL, the controlling is done by the top management, in this aspect they do
auditing training programmes, directing morale surveys, conducting separate
interviews are some of the functions of the top management in controlling.

iv. Recruitment
It is the process of searching for prospective employees and stimulating them to
apply for jobs in the organization. In IISL, if they want any person, they will give
notification in newspaper in order to stimulate the eligible persons to apply for
that job.
v. Employee Relation
The company has recruited required personnel and trained them for
operations of the company at all braches and to maintain cordial relations
between the management and the employees.
vi. Employee Service
All the employees of the company from top to bottom dedicate their sincere
services with co-operation, co-ordination, hard work and team spirit which results
in successful performance of IISL which helped IISL to become of the best stock
broking firm in India.

vii. Selection
It is the process of ascertaining the qualifications, experience, skill, knowledge,
etc. of an applicant with a view to appraise his/her suitability to a job. The top
management in this organization shall do the selection. They send the letters of
appointment or rejection to the board of directors.

viii. Placement
It is the process of assigning the selected candidates with most suitable job. In
IISL, the directors do the selection of the candidates for placement. The
placement may be in the head office or in branches of IISL which are different
places.

ix. Training
The selected candidates will be shown placement in one of the branches of IISL
and are given proper training. The trainers are the most experienced persons.

x. Promotions and Transfers:


In IISL, the personnel management provides promotion to the skilled and eligible
persons. The transfers of persons are more in this company but they will be an
increase in the salary of the persons who are transferred to other branches.
xi. Activities of the organization:
India Infoline Securities Limited provides different services. These services are
provided through various departments.

xii. Trading Department:


This area mainly deals with online trading facility which is received through VSAT
into the server and finally into Hub going to the trading system. Interacting with
the clients, admitting the clients or investors or sub-brokers and helping out in
opening the accounts and facilitating them with the direct interaction with the
online trading facility, etc. are the other works done by the Trading Department.
The main aspect is concerned with the involvement of investors or clients or sub
brokers to participate in trading. A particular day’s trading on the different scripts
can be viewed online which is provided by the NEAT trading software by NSE
and the original positions are determined by the end of the trading day, i.e., at
3.30 p.m. where there itself a back up is saved and that particular day’s trading
position of each client is determined by the back office process made by the
depository participants. So trading department has a very important role in a
member of NSE like IISL to provide updated information of a day’s trading
activities.

D. TRADING AND SETTLEMENT:

One of the basic services provided by IISL as member of NSE and NSDL is to
facilitate transfer of securities from one demates account to the other on the
instruction of the account holder. In NSDL depository system both transfer and
the transferee have to give instructions to their DPs for delivering and receiving
of securities. However, the transferee can give ‘Standing Instructions (SI)’ to its
DP for receiving in securities. Transfer of securities from one demates account to
the other may be done for any of the following purposes: Transfer due to a
transaction done on a person to person basis i.e., an ‘off market’ trade Transfer
arising out of a transaction done on a stock Exchange. Transfer arising out of a
transmission and account closure.

STOCK MARKET TRADING

The trading on stock exchanges in India used to take place through open outcry
without use of information technology for immediate matching or recording of
trades. This was time consuming and inefficient. This imposed limits on trading
volumes and efficiency. In order to provide efficiency, liquidity and transparency,
NSE introduced a nation-wide on-line fully-automated screen based trading
system (SBTS) where a member can punch into the computer quantities of
securities and the prices at which he likes to transact and the transaction is
executed as soon as it finds a matching sale or buy order from a counter party.
SBTS electronically matches orders on a strict price/time priority and hence cuts
down on time, cost and risk of error, as well as on fraud resulting in improved
operational efficiency. It allows faster incorporation of price sensitive information
into prevailing prices, thus increasing the informational efficiency of markets. It
enables market participants, irrespective of their geographical locations, to trade
with one another simultaneously, improving the depth and liquidity of the market.
It provides full anonymity by accepting orders, big or small, from members
without revealing their identity, thus providing equal access to everybody. It also
provides a perfect audit trail, which helps to resolve disputes by logging in the
trade execution process in entirety. This sucked liquidity from other exchanges
and in the very first year of its operation, NSE became the leading stock
exchange in the country, impacting the fortunes of other exchanges and forcing
them to adopt SBTS also. Today India can boast that almost 100% trading take
place through electronic order matching.

Technology was used to carry the trading platform from the trading hall of
stock exchanges to the premises of brokers. NSE carried the trading platform
further to the PCs at the residence of investors through the Internet and to
handheld devices through WAP for convenience of mobile investors. This made
a huge difference in terms of equal access to investors in a geographically vast
country like India.

NSE has main computer which is connected through Very Small Aperture

Terminal (VSAT) installed at its office. The main computer runs on a fault tolerant

STRATUS mainframe computer at the Exchange. Brokers have terminals

installed at their premises which are connected through VSATs/leased

lines/modems. An investor informs a broker to place an order on his behalf. The

broker enters the order through his PC, which runs under Windows NT and

sends signal to the Satellite via VSAT/leased line/modem. The signal is directed

to mainframe.

I. NEAT System

The NEAT system supports an order driven market, wherein orders match

on the basis of time and price priority. All quantity fields are in units and prices

are quoted in Indian Rupees. The regular lot size and tick size for various

securities traded is notified by the Exchange from time to time

II. Market Types

The Capital Market system has four types of market.

a. Normal Market

Normal market consists of various book types wherein orders are

segregated as Regular Lot Orders, Special Term Orders, Negotiated

Trade Orders and Stop Loss Orders depending on their order attributes.

b. Odd Lot Market


The odd lot market facility is used for the Limited Physical Market.

c. RETDEBT Market

The RETDEBT market facility on the NEAT system of capital

market segment is used for transactions in Retail Debt Market session.

Trading in Retail Detail Market takes place in the same manner as in

equities (capital market) segment.

d. Auction Market

In the Auction market, auctions are initiated by the Exchange on

behalf of trading members for settlement related reasons.


E. ACCOUNTS DEPARTMENT
The function of accounts department is to maintain a record of all pay in, pay out;
cash received for demate account opening, account closing, and transaction
charges for operating the account. Records of expenses incurred and incomes
earned from business are also maintained basing on which every year an Annual
Report is prepared.

F. DELIVERIES DEPARTMENT
Deliveries department acts as an Intermediary between stock exchange
and clients and so proper knowledge is needed without which the results may be
hazardous.

Proper records of all inward and outward stocks should be maintained


failing which there may be improper deliveries leading to penalties and
disagreement with clients.

In the secondary market operations when shares and securities are


bought or sold, the change of hands of the possession of these shares or
securities from seller to the buyer will discharge the delivery obligation of the
seller. In case of BSE, the clearing house is BOISL and in case of NSE, NSCCL
is extended to the responsibility of settling the delivery obligations of sellers and
buyers dealt Ina given settlement period.

G. Rolling Settlement for Demate Securities for both BSE and NSE:-
i. Introduction to Dematerialized Rolling Segment

a. Trading of dematerialized securities is available both on NSE

and BSE.
b. At NSE, dematerialized securities are traded in two separate

segments called ‘AE Segment’ and ‘BE Segment’ which are in

addition to the segment for trading in securities in the Normal

Segment (account period settlement) where compulsory

dematerialized trading is only allowed. In case of AE segment,

dematerialized securities are traded only in market lots, whereas in

BE segment these can be traded in multiples of one share.

c. At BSE, dematerialized securities are traded in a separate

segment called Demate Rolling Segment and normal segment

(account period settlement) where compulsory dematerialized

trading is only allowed. In Demate Rolling Segment, the trades are

settled on T+5 bases.

ii. Rolling Settlement Cycle

Trading in rolling settlement is quite similar to trading in normal settlement

except that the normal segment follows weekly account period settlement and

rolling settlement follows T+5 Settlement. For example, all trades executed on a

particular day (T), netted intra day, will be settled on the following fifth (T+5)

working day. The trades done on a day cannot be netted off against those done

on the earlier day. Trades executed on Monday will normally be settled on next

Monday (T+5). Both Pay-in and pay-out will be on the same day. The difference

between a rolling settlement and weekly account period settlement can be

illustrated by the following figure:


T + 5 Rolling Settlement

Weekly Account Period


5 PAISA
5paisa trade name of India Infoline Securities Private Limited, Wholly owned
subsidiary of India Infoline Limited. 5paisa hold Membership of been the leading
stock exchanges of India viz. The Bombay stock Exchange (BSE) and National
stock Exchange (NSE) and is also a depository participant with NSDL and CDSL.
It has tied up with the leading banks for funds transfer facilities viz. Citibank,
Centurion Bank, HDFC Bank, ICICI Bank. The group has a membership of the
Multi-Commodities Exchange (MCX), National Commodities and Derivatives
Exchange of India (index) and the Dubai gold and Commodities Exchange
(DGCX).
India Infoline Ltd was founded in 1995 by a group of professionals with
impeccable educational qualifications and professional credentials. India Infoline
is listed on BSE and NSE with a market capitalization of over $ 150 million.
The India Infoline group offers the entire gamut of financial
Services from research and advisory to execution and services which include:
• Equities broking where it offers trading in both the Cash as well as the
Derivatives segments. It is one of the largest online players.

• Commodities broking on the MCX and the NCDEX exchanges

• Portfolio management services as a SEBI registered Portfolio Manager

• Investment banking and corporate advisory under the category – I merchant


banking license

• Home loans and other loan products

• Mutual funds, Fixed Deposits,IPOs,Bonds,Post Office Savings & several


other investments products
Insurance- India Infoline is the largest corporate agent for ICICI
prudential Life Insurance Company
STRUCTURE OF INDIA INFOLINE LTD

CHAIRMAN

EXECUTIVE DIRECTOR

BOARD OF DIRECTORS

Non- Independent Independent


Independent
Executive Director Director
Director
Director
THE MANAGEMENT TEAM

Mr. Nirmal jain

Is the founder and Chairman of India Infoline Ltd. He holds an MBA


degree from IIM Ahmedabad and Chartered Accountant (All India Rank2) and a
Cost Accountant.

Mr. R Venkataraman

Is the co-promoter and Executive Director of India Infoline Ltd. He holds a


B.Tech Electronics and Electrical Communications Engineer from IIT Kharagpur
and an MBA degree also.

THE BOARD OF DIRECTORS

Apart from Nirmal Jain and R Venkataraman, the Board of Directors of


India Infoline comprises a Non-Executive Director and three Independent
Directors. They are_

 Mr. Sat Pal Khattar

 Mr. Sanjiv Ahuja

 Mr. Nilesh Vikamse


 Mr. Kranti Singh
CHAPTER – III
 THEORETICAL FRAME WORK OF THE STUDY
THEORETICAL FRAME WORK

STOCK EXCHANGE
The term “STOCK EXCHANGE” implies is evident from the following feature of
an exchange.
S - Securities provider for investor
T - Tax benefits, planning and examples
0 - Optimum return of investments
C - Caution approach
K - Knowledge of Market
E - Eligibility for accruals
X - Exchange of securities transacted
C - Cyclopedia of listed companies
H - High yield
A - Authentic information
N - New entrepreneurs encouraged
G - Guidance to investors and companies
E - Equity cult

INDIAN STOCK BROKING HOUSES

The Indian capital market has undergone numerous changes in over the
years. Traditionally stock market booms and decline have laid numerous
Problems for lay investors. A close interaction of these problems revealed that
these were due to paper based trading and settlement. The short learning of the
markets become manifest in the bad deliveries, delays in transfers and irregular
settlement etc. the remedial measure was dematerialization under the depository
system. With the introduction of de-mat system in 1996 and in effect from
January 1998, investors in capital market need to have de-mat a\c. and trading
a\c. stock broking houses play a vital role in this field. These stock broking
houses become depository participant of NSDL&CDSL arid help lay investors to
trade in capital markets without any hassles.

FUNCTIONING OF THESE HOUSES


An investor can contact a broker (or) a sub-broker registered with SEBI
(Securities exchange board of India). For carrying out customer transactions
pertaining to the capital market. A broker is a member of a recognized Stock
Exchange, who is permitted to do trades on the floor of the exchange. He is
enrolled as a member with the concerned exchange and is registered with SEBI.
A sub-broker is a person who is registered with SEBI as such and is affiliated to a
member of a recognized stock exchange. The investors have to sign the
“member-client agreement”/sub-broker client agreement” for the purpose of
engaging a broker to execute trades on his/her behalf From time to time and
furnish details retailing to investors for enabling the member to maintain client
registration form

The brokers have to maintain a database of their clients, by which


customers have to fill client registration, broadly following information Should be
provided:
1. Clients name, Address, Educational qualifications, occupation, residential
status (resident Indian/NRl/others).

2. Particulars of bank a/c.

3. Income-tax no (Pan/GIR) which also serves as unique client code.

4. If registered with any other broker, then the name of broker and concerned
stock exchange and client code number.

5. Passport number /Driving license / Ration card/ voters card identity card.

6. Each client has to use one registration form. in case of joint names/family
members, a separate form has to be submitted from each person.

In case of corporate client, following information has to be provided:


• Name, address of the company/firm
• Date of incorporation and date of commencement of business.
• Copy memorandum and articles of association/partnership deed.
• Details of promoters/partners/key managerial personnel the firm in specified
format.
• Copies of annual report of last three years.
• Particulars of the bank account.
• Income tax number of the company.
• Annual income in last three years and market value of portfolio.

Brokerage:

The maximum brokerage that can be charged by a broker is decided by


the stock exchanges as per the Exchanges regulations. The SEBI (stock brokers
and sub brokers),1992 stipulates that sub broker cannot charge from his clients
commission which is more than 1.5% of the value mentioned in the respective
purchase (or)sale note.
The trading member can charge:
1. Brokerage charged by member broker.
2. Penalties arising on specific default on behalf of client. (Investor).
3. Service tax as stipulated.
In India, now many stock broking houses have come up. some of the
major players are India Infoline Ltd., ICICI, India bulls, Motilal Oswal, etc. some
companies provide on line services, some of them are provide only off line
services and some are provide both on Line & off-line. Ex India Infoline Ltd.

Over the years stock markets matured as the platforms for making
Investments. Here we can’t forget the role played by SEBI(Securities Exchange
Board Of India). The regulations passed by SEBI in monitoring and controlling
the trading practices made it comfortable for the investors. Over the last few
decades, the average person’s interest in the stock market has grown
exponentially. What was once a toy of the rich has now turned into the vehicle of
choice for growing wealth. This demand coupled with advances in trading
technology has opened up the markets so that now a day nearly anybody can
own stocks.

Despite their popularity, however, most people don’t fully understand


stocks. Much is learned from conversations around the water cooler with others
who also don’t know what they’re talking about. Chances are you’ve already
heard people say things Like, “Bob’s cousin made a killing in XYZ Company, and
now he’s got another hot tip...” or “Watch out with stocks--you can lose your shirt
in a matter of days!” So much of this misinformation is based on a get- rich-quick
mentality, which was especially prevalent during the amazing dotcom market in
the late 90s. People thought that stocks were the magic answer to instant wealth
with no risk. The ensuing dotcom crash proved that this is not the case. Stocks
can (and do) create massive amounts of wealth, but they aren’t without risks. The
only solution to this is education. The key to protecting yourself in the stock
market is to understand where you are putting your money.

Prior to SEBI there was not that awareness of the markets, investors used
to face so many problems with brokers. But after the concept of dematerialization
of Stocks it was made easy. As the next step exchanges like BSE (Bombay
Stock Exchange) and NSE (National Stock Exchange) allowed with some criteria
“Online Trading in Equity & Derivative Markets”.

Today there are so many Stock Broking Houses offering these online
trading services, among which India Infoline Ltd is one of the largest service
provider.

THE TRADING PROCESS


India Infoline provides stock trading services to its clients and members. It
enables the clients to trade in both NSE & BSE. Through the computer trading
terminals in India Infoline, the client places an order to buy or sell the shares.
After the trade is confirmed, the client receives the settlement net positions. India
Infoline collects the margin, brokerage, service tax & commission from the clients
for the trades taking place in India Infoline.

India Infoline converts the paper shares into the electronic shares through
D-MAT process. Clearing and settlement of trades, dematerialization of shares,
providing market information to the clients are daily chores in India Infoline, apart
form trading.

DOCUMENTATION
The trading member or stockbroker shall enter into an agreement in the
specified format provided by NSE with the client before accepting orders on
latter’s behalf. The said agreement shall be executed on non-judicial stamp
paper of adequate value, duly signed by both the parties on all the pages. This
agreement is known as ‘Member Constraint Agreement’. Copy of this agreement
is to be kept with the trading member permanently.

In addition to the agreement, the stock broker/trading member shall seek


information from the client in the ‘Client Registration Application Form’ obtaining
information like investor risk profile, financial profile, social profile, investor
identification details, family, income, PAN number, employment, age,
investments, other assets, financial liabilities etc. A stockbroker shall not deal
knowingly, directly or indirectly, with a client who defaults to another stockbroker.

Similarly, the sub-broker shall enter into an agreement with the client
before placing orders, with shall be executed on non-judicial stamp paper. The
client should provide information to the sub-brokers in the ‘client registration
application form’.
NEAT System
The NEAT system supports an order driven market, wherein orders match
on basis of time and price priority. All quantity fields are in units and prices are
quoted in Indian Rupees. The regular lot size and tick size for various securities
traded is notified by the exchange from time to time.

To bring in efficiency, transparency and depth in the market, NSE provides


a fully automated screen based trading system known as NEAT. Its trading
members use NEAT system for trading in the capital market segment in NSE.

Logging on to the BOLT system


 User ID
 Trading Member ID
 Password
 New Password

Market Phase
The system is normally made available for trading on all days except
Saturdays, Sunday & other holidays.

Pre-open phase:
The pre-open period is relevant only in the normal market. Order
matching takes place at the end of the session, based on which an opening price
is computed & assigned to all trades of pre-open.

Opening:
In this period, all orders that have been entered in the pre-open phase are
matched. During this phase, the trading member cannot login to the system. If
the member is already logged in the cannot perform trading activities till market is
opened.
Open Phase:
The open period indicates the commencement of trading activity. To
signify the start of a trading, a message is sent to all the trade workstation. Order
entry is allowed when all the securities have been opened. During this phase,
orders are matched on a continuous basis. Trading in all the instruments is
allowed unless they are specifically prohibited by the exchange. The activities
that are allowed at this stage are:
 Inquiry: Inquiry about the market status, the shares and their prices.
 Order entry: Placing an order to buy or sell the scrips by quoting the price
and the quantity of the share.
 Order modification: Modifying the order that has been already placed. The
modification may be with respect to price or quantity.
 Order cancellation: The order placed already can also be cancelled if the
price or the quantity of scrip is not satisfactory. Order cancellation also
includes quick order cancellation.
Market close:
Where the market closes, trading in all instruments for that market
comes to an end. No further orders are accepted, but the user is permitted to
perform activities like inquiries.
Surcon:
Surveillance and control (SURCON) is that period after market close
during which, the users have inquiry access only. After the end of SURCON
period, the system processes the data for making the system available for the
next trading day. When the system starts processing data, the interactive
connection with the BOLT system is lost and the message to that effect is
displayed at the trader workstation.

BOLT system enables members from across the country to trade


simultaneously with enormous ease and efficiency. A member punches into the
computer quantities of securities and the price at which he wants to transact and
the transaction is executed through the mainframe computer of the exchange as
soon as the order punched by him finds a matching sale or buy order from a
counter party.

The NSE opens at 9.55 a.m. and the trading starts at 10.00 a.m. 5
minutes is given for the stockbrokers to quote their price and to get a recap of the
yesterdays prices of different scrips. The trading ends at 3.30 P.m. The auction
market starts at 4.00 p.m. and continues till 4.30 after normal on-line trading. In
BSE, the trade starts at 9.55 a.m. and ends at 3.30 p.m. A grace time of 20
minutes from 3.40p.m. to 4.00 p.m. is given in BSE as ‘End of the Session’ for
trading.
Back Office
To calculate the net mark to market value, Bhav copy file is imported from
NSE/BSE. Net mark to market value is to be known to know the profit or loss
position of the client, basing on which the Trading Manager of India Infoline will
decide whether the client can trade or not for the next day on comparing it with
the margin paid by the client.

After importing the Bhav copy file, the trading module is opened. In
trading module, the sauda status is known from the Sauda Manager’. Sauda
manager is the number of trade confirmations recorded. Confirmation of trading
transaction with brokerage commission is known as ‘Sauda’.

After Sauda Manager, Net positions process is done. In the net positions
process, cumulative net positions reports, client-wise net position reports and
other reports are made and are sent to clients and to the accounts department.
The bills are prepared and are sent to the respective clients.

REPORTS
After selecting ‘REPORTS’ option from main menu, the member bas to
specify the criteria for which the report is needed. The types of reports that may
be generated are: deliveries reports; receipts reports; obligations reports;
custodial trades reports; bad deliveries reports; funds reports; auctions reports;
objections reports; margins reports; securities reports and miscellaneous reports.
The daily reports of various aspects relating to the trading activities are
maintained.

CLEARING
Settlement of trades transacted on an exchange requires smooth,
preferably instantaneous, movement of securities and funds in accordance with
the prescribed schedule of pay-in / pay-out. Movement of securities has been
almost instantaneous in the dematerialized environment. Two depositories are in
place to provide electronic transfer of securities. 10 major stock exchanges
accounting for about 99% of turnover have been connected to depositories. All
actively traded scrips are held, traded and settled in de-mat form. NSE follows a
different model where a clearing corporation guarantees settlement obligations
emanating from trades.

SETTLEMENT
The trades accumulated over a trading cycle are clubbed together at the
end of the trading cycle, positions (trades) are netted and the balance obligations
are settled.
There are two main types of settlements:
 Fixed or Account Period Settlement
 Rolling Settlement

Account Period Settlement (APS)


An APS is a settlement where the trades pertaining to a period stretching
over more than one day are settled together. The clearing member of NSE has 3
days market segment and 5 days market segment.
NSCCL offers an account period settlement, which starts on Wednesday
and ends on Tuesday of next week. Concluded or locked-in trades are received
from NSE by NSCCL. At the end of each trading day, NSCCL determines the
cumulative obligations of each member and electronically transfers the data to
clearing members. Settlement is deemed to be complete upon declaration and
release of pay-out of funds and securities. On pay-out day the securities are
delivered to the respective receiving members.

Rolling Settlement
In contrast to account period settlement, under rolling settlement all open
positions at the end of a date ‘T’ mandatory results in delivery and payment of ‘X’
working days later. In other words, all the net obligations at the end of day’s
trading are to be settled by exchange of funds and delivery on the fifth day from
the trading day. This method of trading and settlement process is called ‘Rolling
Settlement’.

In order to enhance liquidity, to shorten the settlement cycle and to


promote market for derivatives, SEBI permitted rolling settlement in respect of
selected shares and trades in this segment are settled by de-mat delivery only.
As on January 2001, rolling settlement was available in respect of 156 scrips.

In both the types of settlement, for confirmed trades, the settling bank will
arrange for payment and clearance and depository for effecting transfers by
electronic book entry system. Canara bank provides the clearinghouse facility.

COST OF TRADING
The various costs involved in the process of online trading are as follows:
 Margins,
 Brokerage,
 Service tax,
 Stamp duty.
Margins
The base capital to set up a trade centre is one crore rupees. Earlier, IIL
paid Rs. 75 lakhs as base capital when it was set-up. The trade corporation has
to maintain a reserve of some amount with NSE where 30% -50% will be in the
form of cash and the remaining in the form of bank guarantees (securities),
FDR’s etc. IIL has 7.5. crores as margin with NSE at present.

Gross intra-day turnover (buy and sell) of a member shall not exceed 33
1/3 time the base capital. Gross exposure of a member at any time shall not
exceed 8.5 times the free base capital of one crore rupees and not exceed 12
times over the free base capital of one crore rupees.

Minimum of Rs.20000 is collected as margin money from professional


clients in India Infoline. For delivery purpose no margin money is collected.
Client margin collection is calculated in 16 types known as ‘Span calculation’ and
the maximum margin is collected from the clients. India Infoline collects 25%
margin money in futures from clients. For trading in index 15% margin is
charged. For retail clients, thee full amount of the value of shares is calculated
and collected to allow them to purchase the shares.

Brokerage
Brokerage is of two types:

Speculation brokerage or square up commission


This brokerage is charged where buying and selling of shares is done in
one day only and at the end of the days trade, the position is zero. The
speculation brokerage is charged from 0.02% to 0.05%.

Delivery Brokerage
This brokerage is charged where there may be buying or selling lot
remaining at the end of the days trade. The delivery brokerage is charged from
0.3% to 0.5%.

As per SEBI, maximum brokerage shouldn’t exceed 2.5% both in BSE and
NSE. For retail clients, the brokerage charged is 0.7%. A sub-broker charge
2.5% from the clients to sell or buy the shares out of which, India Infoline charges
1% from the sub-broker.
Service tax
In India Infoline, 5% service tax on brokerage is collected from the clients.
Stamp duty
If the stamp duty of 0.006% on turnover is Rs30 or more, only Rs30 is
collected in NSE. In BSE, the minimum is 1Re and the maximum stamp duty is
unlimited.

ACCOUNTS
The Accounts/ Finance department maintains the accounts in India
Infoline. The accounts are prepared in three forms. They are:
 Client-wise net positions,
 Scrip-wise net positions,
 Pay-in and Pay-out settlement of funds.

DEMATERIALIZATION AND ELECTRONIC TRANSFER OF SECURITIES:


Though de-mat was introduced in 1994, it came into existence in 1996.
The depositories Act, 1996 was passed to provide for the establishment of
depositories in securities with the objective of ensuring free transferability of
securities with speed, accuracy and security by dematerializing the securities in
the depository model. A depository holds securities in dematerialized form. It
maintains ownership records of securities and effects transfer of ownership
through book entry.
The two depositories, National Securities Depository Limited (NSDL) and
Central Depository Services Limited (CDSL) provide services to investors and
clearing members through Depository Participants (DPs). They do not change
the investors and clearing members directly but charge their DPs, who are free to
have their own charge structure for their clients.

De-mat Process
When a client places his physical shares for de-mat, India Infoline after
inputting the information in depository participants sends the physical shares to
the company, which issued the shares. The client code number and the
information and the clients signature is sent to Share Holding Registrar.

There they verify whether the shares really belong to the client and
whether the signature is matching or not. Once they are satisfied that the
information sent through the DP’s are right, the shares are cleared and the
information is passed on to the client. The physical shares are then torn away as
they already exist in electronic form.

When a client enters into DP for de-mat purpose, he is given a unique


code member. He can know his share position easily. It is known as client ID
number.

Advantages of Dematerialization
The process of transfer of securities became faster. The fear of loosing the
share certificates is not there because of dematerialization. Theft, forgery,
mutilation of certificates is not found in dematerialization.

INTERMEDIARIES
There are no intermediaries in between India Infoline and NSE or BSE.
Similarly there are no intermediaries in between India Infoline and professional
clients. Since India Infoline is a share broker to NSE and BSE the clients
operating in India Infoline directly, on behalf of other clients are sub-brokers to
the ultimate clients who doesn’t operate the trade directly. So, there may be sub-
brokers as intermediaries in between India Infoline and clients who do not trade
directly in India Infoline.

As mentioned earlier, India Infoline is depository participant. So, India


Infoline acts as an intermediary between clients and NSDL &CDSL.

MARKET INFORMATION
In India Infoline, daily the research analyst collects the market information
and it is analyzed. The market information is used to forecast the index
movement, price movement of the shares and enables the clients to make use of
the information in trading to get better results.
The research analyst in forecasting the market movement follows the
technical analysis, fundamental analysis and efficient market hypothesis. The
research analyst collects the information about the company, the industry and the
economy through different media to know the company’s position.

The research analyst follows the market closely by watching the price
movement of the shares in the market. The technical analysis is very helpful in
making investment decisions. The research analyst follows different tools of
technical analysis like Japanese candlestick method; Elliot wave theory; Dow
theory; price trends and volume trends; volatility; floating stock and volume of
trade etc., to assess the market. Technical analysis reveals the movement of the
scrip. It explains when to buy a share and when to sell. So, the research analyst
gives much important to the technical analysis to forecast the price movement of
the scrip accurately.

Since, the NSE & BSE are markets with strong form efficiency, as the
market discounts the information itself very quickly and changes as per the
information, the research analyst has only fewer jobs to do here.
The research analyst not only analyses the marketing information but,
every day in India Infoline an edition of the research analyst’s, suggestions on
scrips that have to be bought and sold is also printed which helps the clients of
India Infoline to invest in shares that are profitable. Mostly, the predictions of the
research analyst about the market movement prove to be accurate. So market
information in India Infoline is trust worthy.

LEGAL FRAMEWORK
It deals with legislative and regulatory provisions relevant from the
viewpoint of a dealer. The legality of trading is through the various acts and
regulators of stock exchange. Before 1992, the three principal acts governing
the securities market were:

Acts related to stock trading are


 The Capital Issues (control) Act, 1947, which restricted the issuers’ access
to the securities market and controlled the pricing of issues.
 The Companies Act, 1956, which sets out the code of conduct for the
corporate, sector in relation to issue, allotment and transfer of securities,
and disclosures to be made in public issues.
 The Securities Contract (Regulation) Act, 1956 that provides for regulation
of transactions in securities through control over stock exchanges.
 SEBI Act, 1992: To ensure effective regulation of the market, SEBI Act,
1992 was enacted to empower SEBI with statutory powers for
 Protecting the interests of investors in securities.
 Protecting the development of the securities market and
 Regulating the securities market.

Regulators
The responsibility for regulating the securities market is shared by
Department of Economic Affairs (DEA), Department of Company Affairs (DCA),
RBI; Securities Exchange Board of India (SEBI) and Securities Appellate
Tribunal (SAT).

MOCK TRADING
BSE conducts mock trading for all its trading members. The mock trading
usually takes place once in a month or in two months.

Mock – trading is a process where the regular online trading is done at all
the trade workstations, which are registered with BSE. Though the on-line trading
is done, payment of funds or deliveries doesn’t take place. Though the trade
results in turnover in crores there is no transfer of funds or share certificates.
The mock-trading process is similar to the regular trading process. Mock trading
is generally done on Saturdays as it is not a working day for the stock exchange
and it doesn’t affect the daily trade in BSE.Mock- trading enables the operators to
operate efficiently and to adjust to the changes made if any in the trading system.

SMS Alerts

Customers can activate / de-activate / modify their mobile number for the
SMS Alerts facility by either of the means mentioned below:
Just login to indiainfoline.com - Click on My Account -Click on Get Your SMS
Alerts Now OR Just login to indiainfoline.com - Click on Customer Service - Click
on Get Your SMS Alerts Now OR Just login to indiainfoline.com - Click on
Trading Tools -- Click on Get Your SMS Alerts Now
The charges applicable for availing the said facility are as follows:
Rs. 100/- pm (For Gateway, Freeway and High Trader Accounts) Rs. 75/- pm
(For Value Account). Please note that the above-mentioned charges shall be
debited to the ledger as soon as the said service is activated.
CHAPTER – IV
 TABULATION AND ANALYSIS
TABLE – 1 TABLE SHOWING NIFTY MOVEMENT
DURING 02.05.2008 TO 09.05.2008

DATE OPENING CLOSING


2-May 5265.29 5228.2
5-May 5227.25 5192.25
6-May 5192.35 5144.64
7-May 5156.7 5135.5
8-May 5135.79 5081.7
9-May 5070.85 4982.6

5300
5265.29
5250
5228.2 5227.25
5200 5192.25 5192.35
5150 5156.7
5144.64 5135.5 5135.79
5100
5081.7
5070.85
5050

5000
4982.6
4950
2-May 5-May 6-May 7-May 8-May 9-May

OPENING CLOSING
TABLE ANALYSIS:-

On the 02-05-2008 the Nifty open at 5265.29 and closed at 5228.20 with a
decrease of 37.09 points.
On the 05-05-2008 the Nifty open at 5227.25 and closed at 5192.25 with a
decrease of 32 points.
On the 06-05-2008 the Nifty open at 5192.35 and closed at 5144.64 with a
decrease of 47.71 points.
On the 07-05-2008 the Nifty open at 5156.70 and closed at 5135.50 with a
decrease of 21.2 points.
On the 08-05-2008 the Nifty open at 5135.79 and closed at 5081.70 with a
decrease of points.
On the 09-05-2008 the Nifty open at 5070.85 and closed at 4982.60 with a
decrease of 54.09 points.

GRAPH ANALYSIS:-

In the first week of May the NSE nifty there was a positive opening with
5265.29 points and on 9th may it closed with 4982.60. In this week there is an
increase in fuel prices. This hike in fuel prices had fall great impact on the rest of
the sectors. IT, consumer goods &realty pharmacy and retail sectors. Due to
these investors does not pay any interest in buying the shares at the end of the
week and at the middle of the week. In this week the nifty down with 282.69
TABLE-2 TABLE SHOWING NIFTY MOVEMENT
DURING 12.05.2008 TO 20.05.2008.

DATE OPENING CLOSING


12-May 4981.00 5012.64
13-May 5008.60 4953.79
14-May 4958.45 5011.75
15-May 5010.89 5115.25
16-May 5115.64 5157.70
20-May 5157.00 5104.95

5200.00

5150.00 5157.70 5157.00


5115.25 5115.64 5104.95
5100.00

5050.00
5012.64 5008.60 5011.75 5010.89
5000.00
4981.00
4950.00 4953.79 4958.45

4900.00
12-May 13-May 14-May 15-May 16-May 20-May

OPENING CLOSING
TABLE ANALYSIS:-

On the 12-05-2008 the Nifty open at 4981.00 and closed at 5012.64 with an
increase of 31.64 points.
On the 13-05-2008 the Nifty open at 5008.60 and closed at 4953.79 with a
decrease of 54.85points.
On the14-05-2008 the Nifty open at 4958.45 and closed at 5011.75 with a
increase of 53.3 points.
On the 15-05-2008 the Nifty open at 5010.89 and closed at 5115.25 with an
increase of 104.36 points.
On the 16-05-2008 the Nifty open at 5115.64 and closed at 5157.70 with an
increase of 42.06 points.
On the 20-05-2008 the Nifty open at 5157.00 and closed at 5104.95 with a
decrease of 142.35 points.

GRAPH ANALYSIS:-
In this week the NSE opened with 4981.00 points which is less than the
previous week opening. Because of previous week fluctuations the investor did
not invest their shares in IT and pharmacy sectors .but the quarterly results of IT
companies Satyam, Infosis and Tcs has shown major profits .due to this the
realty &banking shares value increased. Finally the nifty had closed by 5104.95
points with an increase of 123.95
TABLE – 3 TABLES SHOWING NIFTY MOVEMENT
DURING 21.05.2008 TO 28.05.2008.

DATE OPENING CLOSING


21-May 5105.70 5117.64
22-May 5117.00 5025.45
23-May 5026.54 4946.54
26-May 4953.60 4875.04
27-May 4877.14 4859.79
28-May 4862.70 4918.35

5150.00
5117.64
5105.70 5117.00
5100.00

5050.00
5025.45 5026.54
5000.00

4950.00 4946.54 4953.60


4918.35
4900.00
4875.04 4877.14
4859.79 4862.70
4850.00

4800.00
21-May 22-May 23-May 26-May 27-May 28-May

OPENING CLOSING
TABLE ANALYSIS:-

On the 21-05-2008 the Nifty open at 5105.70 and closed at 5117.64 with a
increase of 11.94 points.
On the 22-05-2008 the Nifty open at 5117.00 and closed at 5025.45 with a
decrease of 91.55 points.
On the 23-05-2008 the Nifty open at 5026.54 and closed at 4946.54 with a
decrease of 80 points.
On the 26-05-2008 the Nifty open at 4953.60 and closed at 4875.04 with a
decrease of 78.56 points.
On the 27-05-2008 the Nifty open at 4877.14 and closed at 4859.79 with a
decrease of 17.35 points.
On the 28-05-2008 the Nifty open at 4862.70 and closed at 4918.35 with
increase of 55.65 points.

GRAPH ANALYSIS:-

In this week there observes a good opening value of NSE with 5105.70
point compared to previous week the nifty value increased. In this week the RBI
has increased the interest rates over the banks and FII’S. Due to this investors
did not go forward to invest in the realty and IT sectors. As the result the Nifty
ended with 4918.35 points with a loss of 187.35 points
TABLE – 4 TABLE SHOWING NIFTY MOVEMENT
DURING 29.05.2008 TO 05.06.2008.

DATE OPENING CLOSING


29-May 4926.29 4835.29
30-May 4844.00 4870.10
2-Jun 4869.25 4739.60
3-Jun 4739.30 4715.90
4-Jun 4718.70 4585.60
5-Jun 4586.95 4676.85

4950.00
4926.29
4900.00
4870.10 4869.25
4850.00 4835.29 4844.00
4800.00
4750.00 4739.60 4739.30
4715.90 4718.70
4700.00
4676.85
4650.00
4600.00 4585.60 4586.95
4550.00
4500.00
29-May 30-May 2-Jun 3-Jun 4-Jun 5-Jun
OPENING CLOSING
TABLE ANALYSIS:-

On the 29-05-2008 the Nifty open at 4926.29 and closed at 4835.29 with a
decrease of 91 points.
On the 30-05-2008 the Nifty open at 4844.00 and closed at 4870.10 with a
increase of 21.10 points.
On the 02-06-2008 the Nifty open at 4869.25 and closed at 4739.60 with a
decrease of 129.65 points.
On the 03-06-2008 the Nifty open at 4739.30 and closed at 4715.90 with a
decrease of 23.4 points.
On the 04-06-2008 the Nifty open at 4718.70 and closed at 4585.60 with a
increase of 133.1 points.
On the 05-06-2008 the Nifty open at 4586.95 and closed at 4676.85 with a
increase of 89.9 points.

GRAPH ANALYSIS:-

In this week the NSE open with 4926.29 points .the downtrend of market
had continued in this also. As the result of this all the top sectoral shares has fell
down i.e. CG, power, IT metal and oil. These shares are traded in downfall stage
during this week also. As the investors had done heavy sell off in realty and
metals. As the result the market had ended by 4676.85 points with a max
decrease of 249.44 points
TABLE – 5 TABLE SHOWING NIFTY MOVEMENT
DURING 06.06.2008 TO 16.06.2008

DATE OPENING CLOSING


6-Jun 4680.55 4627.80
9-Jun 4626.45 4500.95
10-Jun 4522.00 4449.80
11-Jun 4469.65 4523.60
13-Jun 4539.50 4517.10
16-Jun 4536.30 4572.50

4700.00
4680.55
4650.00
4627.80 4626.45
4600.00
4572.50
4550.00 4539.50 4536.30
4522.00 4523.60 4517.10
4500.00 4500.95
4469.65
4450.00 4449.80

4400.00
6-Jun 9-Jun 10-Jun 11-Jun 13-Jun 16-Jun

OPENING CLOSING
TABLE ANALYSIS:-

On the 06-06-2008 the Nifty open at 4680.55 and closed at 4627.80 with a
decrease of 52.75 points.
On the 09-06-2008 the Nifty open at 4626.45 and closed at 4500.95 with a
decrease of 125.5 points.
On the 10-06-2008 the Nifty open at 4522.00 and closed at 4449.80 with a
decrease of 72.2 points.
On the 11-06-2008 the Nifty open at 4469.65 and closed at 4523.60 with a
increase of 62.95 points.
On the 13-06-2008 the Nifty open at 4539.50 and closed at 4517.10 with a
decrease of 22.4 points.
On the 16-06-2008 the Nifty open at 4536.30 and closed at 4572.50 with a
increase of 36.2 points.

GRAPH ANALYSIS:-

During this week the NSE opened with 4680.5 points. In his week the NSE
indices were down trend due to drop in Chinese stock and losses in outsourcing
firms on concerns about the strength of the rupee value. As the result power, oil,
FMCG, shares fell down and the realty, banking shares follow the same path.
And at the end of week the C.G. had gain in the market .due to this the market
slightly increases. As the result the NSE ended with 4572.50 with a decrease of
108.05 points.
TABLE – 6 TABLES SHOWING NIFTY MOVEMENT
DURING 17.06.2008 TO 24.06.2008.

DATE OPENING CLOSING


17-Jun 4572.50 4653.00
18-Jun 4652.80 4582.40
19-Jun 4582.55 4504.25
20-Jun 4504.20 4347.55
23-Jun 4351.15 4266.40
24-Jun 4271.05 4919.10

5000.00
4900.00 4919.10

4800.00
4700.00
4653.00 4652.80
4600.00 4572.50 4582.40 4582.55
4500.00 4504.25 4504.20
4400.00
4347.55 4351.15
4300.00 4271.05
4266.40
4200.00
17-Jun 18-Jun 19-Jun 20-Jun 23-Jun 24-Jun

OPENING CLOSING

TABLE ANALYSIS:-
On the 17-06-2008 the Nifty open at 4572.50 and closed at 4653.00 with an
increase of 80.5 points.
On the 18-06-2008 the Nifty open at 4652.80 and closed at 4582.40 with a
decrease of 70.4 points.
On the 19-06-2008 the Nifty open at 4582.55 and closed at 4504.25 with a
decrease of 78.3 points.
On the 20-06-2008 the Nifty open at 4504.20 and closed at 4347.55 with a
decrease of 156.65 points.
On the 23-06-2008 the Nifty open at 4351.15 and closed at 4266.40 with a
decrease of 84.75 points.
On the 24-06-2008 the Nifty open at 4271.05 and closed at 4919.10 with a
increase of 648.05 points.

GRAPH ANALYSIS:-

In this week the NSE opened with 4572.50 points and ended by 4919.10
points with an increase of 346.60 points. In this week the NIFTY ended flat.
IT shares were offset by losses in auto and cement counters where as on
Tuesday. The Nifty had traded normally during this week .But at the end of
week it has increased to a peak value which made all investors a great
recovery from their losses. Overall the market had traded in good time
during this week.
TABLE - 7 TABLE SHOWING NIFTY MOVEMENT
DURING 25.06.2008 TO 30.06.2008.

DATE OPENING CLOSING

25-Jun 4189.60 4252.65

26-Jun 4252.60 4315.85


27-Jun 4315.30 4136.65
30-Jun 4136.25 4040.55

4350.00
4300.00 4315.85 4315.30
4250.00 4252.65 4252.60
4200.00 4189.60
4150.00 4136.65 4136.25
4100.00
4050.00 4040.55
4000.00
3950.00
3900.00
25-Jun 26-Jun 27-Jun 30-Jun

OPENING CLOSING

TABLE ANALYSIS:-
On the 25-06-2008 the Nifty open at 4189.60 and closed at 4252.65 with an
increase of 63.05 points.
On the 26-06-2008 the Nifty open at 4252.60 and closed at 4315.85 with an
increase of 63.25 points.
On the 27-06-2008 the Nifty open at 4315.30 and closed at 4136.65 with a
decrease of 178.65points.
On the 30-06-2008 the Nifty open at 4136.25 and closed at 4040.55 with a
decrease of 45.7 points.

GRAPH ANALYSIS:-

In this week the NSE opened with 4189.60 points and ended by 4040.55
points with a decrease of 149.05 points. This week the market is likely to
follow the continuing downward trend. Institutional investors are unlikely to
buy into a market that has caught onto a downward momentum.
Institutional investors were to face redemption pressure going ahead as
corporate results fail to satisfy market expectations.
CHAPTER – V

 SUMMARY
 FINDINGS
 SUGGESTIONS
SUMMARY

The capital markets perform an important function in mobilization of


resources liquidity of the stock markets is an important factor effecting growth.
Many profitable projects require long term finance; however investors do not
relinquish their savings for a long time. capital market is a group of interrelated
markets in which capital is raised in financial form, is lent and borrowed (or)
raised in a varying time periods (such as short term and long term).in a
developing economy, the business of capital market is the movement of capital to
the point of highest yield, a liquid stock market ensures a quick exit without
incurring heavy losses (or) costs. Stock market is a vehicle through which long
term finance is characterized for the various needs of industry, commerce,
government and local authorities. Thus development of efficient financial markets
is necessary for creating conducive climate for investment and economic growth

The India Info line group has a significant presence across the country
with over 500 branches in over 300 cities across India. All these Offices are
networked and are connected with the corporate office in Mumbai. The Group
has invested significantly in technology and research, the results of which are
there for everyone to see. The 5paisa trading is one of the most advanced
Platforms available to retail investor in India. The group has memberships on
BSE and NSE for equities trading, depository participant with NSDL and CDSL
and on MCX and NCDEX for commodities trading. It has a SEBI license for
portfolio Management under which, various schemes are offered.

India Infoline Limited is listed on both the leading stock exchange. In


India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange
(NSE) and is also a member of both the exchanges. It is engaged in the
businesses of Equities broking, Wealth Advisory Services and Portfolio
Management Services. It offers broking services in the Cash and Derivatives
segments of the NSE as well as the Cash segment of the BSE. It is registered
with NSDL as well as CDSL as a depository participant, providing a one-stop
solution for clients trading in the equities market. It has recently launched its
Investment banking and Institutional Broking business.

The capital markets perform an important function in mobilization of


resources liquidity of the stock markets is an important factor effecting growth.
Many profitable projects require long term finance; however investors do not
relinquish their savings for a long time. capital market is a group of interrelated
markets in which capital is raised in financial form, is lent and borrowed (or)
raised in a varying time periods (such as short term and long term).in a
developing economy, the business of capital market is the movement of capital to
the point of highest yield, a liquid stock market ensures a quick exit without
incurring heavy losses (or) costs. Stock market is a vehicle through which long
term finance is characterized for the various needs of industry, commerce,
government and local authorities. Thus development of efficient financial markets
is necessary for creating conducive climate for investment and economic growth.

The company offers the products and financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Go bonds and other small savings instruments to loan
products and Investment banking.

To study the basic operations of the Capital Market. To understand the


various indices of National Stock Exchange. To understand the trading procedure
of National Stock Exchange with reference to India Info line Security Limited. To
know about different trading companies brokerage charges and their funding. To
know the account opening and maintenance charges.
The information regarding the online trading is collected from both primary
as well as secondary sources of data. The primary data is collected by watching
the operation of on line trading live and by interacting with the operator, at the
computer terminals and the clients trading in IIL.The primary data constitutes the
information regarding the functioning of NSE through its various broker members.
This helps to gain in depth knowledge about the various training procedures of
NSE.

On the capital market segment, equity shares of 685 companies are


listed and 572 companies are permitted to trade as of October 31, 1999. On
the wholesale debt market segment, 797 securities are listed and 517
securities are permitted to trade as of October 31, 1999. Of the 797
securities listed, 369 are Government Securities/T-Bills and the balance
account for other securities.
.
We are a one-stop financial services shop, most respected for quality of its
advice, personalized service and cutting-edge technology. The India Infoline
group has a significant presence across the country with over 500 branches in
over 300 cities across India. All these offices are networked and are connected
with the corporate office in Mumbai. The group has invested significantly in
technology and research, the results of which are there for everyone to see. The
5paisa trading interface is one of the most advanced platforms available to retail
investor in India. The group has memberships on BSE and NSE for equities
trading, depository participant with NSDL and CDSL and on MCX and NCDEX
for commodities trading. It has a SEBI license for portfolio Management under
which, various schemes are offered, which have been consistently beating the
benchmark indices inception.

Our vision is to be the most respected company in the financial


services space. Having an vision gives an organization a sense of direction. It
helps all employees of the organization to channelize their efforts in the same
direction towards a common organizational goal and acts as a cornerstone too
resolve conflicts.

At India Infoline, we are convinced that even as a number of our peer


companies are focused on emerging as the biggest and the best in the financial
services space in India. We need to be most respected by our stake holders, our
customers, our employees, and by society in general.

India Infoline Ltd is listed on both the leading stock exchanges in India,
viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange
(NSE). The India Infoline group, comprising the holding company, India Infoline
Ltd and its subsidiaries, straddles the entire financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Go bonds and other small savings instruments to loan
products and Investment banking. India Infoline also owns and manages the
websites,www.indiainfoline.com and www.5paisa.com

All competitors were backed by institutions or hand abundant capital.


The core competitors of the company had little experience of broking. There was
a core group who never lost hope. They cut all possible costs and worked on a
bare bones structure. They survived against all odds and started capturing
market share. The company rose from strength to strength to became the leading
corporate agent in life insurance and among the top retail players in mutual funds
and broking space.

India Infoline Limited has fixed its issue price at Rs 76 per Equity share.
The 100% book-built issue offering 1.19 crore shares in the price band of Rs 70-
80 closed on April 27, 2005 and were oversubscribed 7.22 times. While the QIB
portion was oversubscribed 10.49 times, the non-institutional investors segment
was oversubscribed 5.64 times.
India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd,
which is engaged in the businesses of Equities broking and Portfolio
Management Services. It holds memberships of both the leading stock
exchanges of India viz. the Stock Exchange, Mumbai (BSE) and the National
Stock Exchange (NSE). It offers broking services in the Cash and Derivatives
segments of the NSE as well as the Cash segment Of the BSE.

India Infoline Commodities Pvt Ltd is a 100% subsidiary of India Infoline


Ltd, which is engaged in the business of commodities broking. Our experience in
securities broking empowered us with the requisite skills and technologies to
allow us offer commodities broking as a contra-cyclical alternative to equities
broking. We enjoy memberships with the MCX and NCDEX, two leading Indian
commodities exchanges, and recently acquired membership of DGCX. We have
a multi-channel delivery model, making it among the select few to online as well
as offline trading facilities

India Infoline Insurance Services Ltd is also a 100% subsidiary of India


Infoline Ltd and is a registered Corporate Agent with the Insurance Regulatory
and Development Authority (IRDA). It is the largest Corporate Agent for ICICI
Prudential Life Insurance Co Ltd, which is India's largest private Life Insurance
Company.

India Infoline Investment Service Ltd is also a 100% subsidiary of India


Infoline Ltd. It has an NBFC license from the Reserve Bank of India (RBI) and
offers margin-funding facility to the broking customers. India Infoline Insurance
Brokers Ltd is a 100% subsidiary of India Infoline Ltd and is a newly formed
subsidiary which will carry out the business of Insurance broking. We have
applied to IRDA for the insurance broking license and the clearance for the same
is awaited.
IIL has also entered the business to distribution of mortgages and loan
products during the year 2005-2006. The business is still in the investing phase
and we plan to roll the business out across its pan-Indian network to provide it
with a truly national scale in operations

Incorporated on October 18 1995 as probity research & services


• Launched internet portal www.indiainfoline.com in may 1999
• Commenced distribution of personal financial products like Mutual funds
and RBI Bonds in April 2000
• Launched online trading in shares and securities branded as
www.5paisa.com in July 2000
• Started life insurance agency business in December 2000 as a corporate
agent of ICICI prudential life insurance
• Became a depository participant of NSDL in September 2001
• Launched stock messaging service in May 2003
• Acquired NBFC license in May 2005
• Acquired 75% stake holding in Money tree Consultancy services, which is
a distributor of Mortgages and other Loan products, in October 2005.
• Acquired 100% equity of March Mont Capital Advisors Private Limited in
December 3005 through which we have ventured into Merchant Banking.
• DSP Merrill Lynch Capital subscribed to convertible bonds aggregating
Rs. 80 crores in December 2005. Their stake in India Infoline is a little
over 14% as on 31st March 2007.
• Became a depository participant of CDSL in June 2006.
• Merger of India Infoline Securities Private Limited with India Infoline
Limited in January 2007

The Indian capital market has undergone numerous changes in over the
years. Traditionally stock market booms and decline have laid numerous
Problems for lay investors. A close interaction of these problems revealed that
these were due to paper based trading and settlement. The short learning of the
markets become manifest in the bad deliveries, delays in transfers and irregular
settlement etc. the remedial measure was dematerialization under the depository
system. With the introduction of de-mat system in 1996 and in effect from
January 1998, investors in capital market need to have de-mat a\c. and trading
a\c. stock broking houses play a vital role in this field. These stock broking
houses become depository participant of NSDL&CDSL arid help lay investors to
trade in capital markets without any hassles.

The maximum brokerage that can be charged by a broker is decided by


the stock exchanges as per the Exchanges regulations. The SEBI (stock brokers
and sub brokers),1992 stipulates that sub broker cannot charge from his clients
commission which is more than 1.5% of the value mentioned in the respective
purchase (or)sale note.
The trading member can charge:
1. Brokerage charged by member broker.
2. Penalties arising on specific default on behalf of client. (Investor).
3. Service tax as stipulated.

In India Infoline all the shares, scrips, stocks, bonds, debentures,


derivatives, government securities, debt instruments etc. can be traded. But
generally, trading is mostly done in scrips listed in BSE & NSE.

The government securities and the corporate securities can be traded


through NEAT system in NSE. Only trading mechanism available in the debt
market was the telephone market before June 1994 when NSE launched
wholesale debt market (WDM) segment. This provides the only formal platform
for trading of a wide range of debt securities. Though many trades in the gilts
takes place through telephone, a longer chunk of trades get rented through NSE
brokers.
India Infoline provides stock trading services to its clients and members. It
enables the clients to trade in both NSE & BSE. Through the computer trading
terminals in India Infoline, the client places an order to buy or sell the shares.
After the trade is confirmed, the client receives the settlement net positions. India
Infoline collects the margin, brokerage, service tax & commission from the clients
for the trades taking place in India Infoline
.
The NEAT system supports an order driven market, wherein orders match
on basis of time and price priority. All quantity fields are in units and prices are
quoted in Indian Rupees. The regular lot size and tick size for various securities
traded is notified by the exchange from time to time.

To bring in efficiency, transparency and depth in the market, NSE provides


a fully automated screen based trading system known as NEAT. Its trading
members use NEAT system for trading in the capital market segment in NSE.
The open period indicates the commencement of trading activity. To signify the
start of a trading, a message is sent to all the trade workstation. Order entry is
allowed when all the securities have been opened. During this phase, orders are
matched on a continuous basis. Trading in all the instruments is allowed unless
they are specifically prohibited by the exchange. The activities that are allowed
at this stage are:

The NSE opens at 9.55 a.m. and the trading starts at 10.00 a.m. 5
minutes is given for the stockbrokers to quote their price and to get a recap of the
yesterdays prices of different scrips. The trading ends at 3.30 P.m. The auction
market starts at 4.00 p.m. and continues till 4.30 after normal on-line trading. In
BSE, the trade starts at 9.55 a.m. and ends at 3.30 p.m. A grace time of 20
minutes from 3.40p.m. to 4.00 p.m. is given in BSE as ‘End of the Session’ for
trading.
To know the trade position, back-office is done in India Infoline everyday
immediately after the trade ends. ‘INFOLINE PACK’ is the package used in back
office system.
The main modules of back office system are:
• Trading
• Finance
• Clearing
• Business & Administration
• Import Export
• Housekeeping
• Margins

In the back office, first the Import Export module is opened where the
trade file of the days trade is collected and the text file if imported to the system.
There, the old closing prices are inserted by new prices from the Bhav copy file.
Bhav copy is the average of last half-an-hour prices of the scrip’s

custodial trades reports; bad deliveries reports; funds reports; auctions


reports; objections reports; margins reports; securities reports and miscellaneous
reports. The daily reports of various aspects relating to the trading activities are
maintained.

Settlement of trades transacted on an exchange requires smooth,


preferably instantaneous, movement of securities and funds in accordance with
the prescribed schedule of pay-in / pay-out. Movement of securities has been
almost instantaneous in the dematerialized environment. Two depositories are in
place to provide electronic transfer of securities. 10 major stock exchanges
accounting for about 99% of turnover have been connected to depositories. All
actively traded scrips are held, traded and settled in de-mat form. NSE follows a
different model where a clearing corporation guarantees settlement obligations
emanating from trades.
The trades accumulated over a trading cycle are clubbed together at the
end of the trading cycle, positions (trades) are netted and the balance obligations
are settled.

The base capital to set up a trade centre is one crore rupees. Earlier, IIL
paid Rs. 75 lakhs as base capital when it was set-up. The trade corporation has
to maintain a reserve of some amount with NSE where 30% -50% will be in the
form of cash and the remaining in the form of bank guarantees (securities),
FDR’s etc. IIL has 7.5. Crores as margin with NSE at present.

Gross intra-day turnover (buy and sell) of a member shall not exceed 33
1/3 time the base capital. Gross exposure of a member at any time shall not
exceed 8.5 times the free base capital of one crore rupees and not exceed 12
times over the free base capital of one crore rupees.

This brokerage is charged where buying and selling of shares is done in


one day only and at the end of the days trade, the position is zero. The
speculation brokerage is charged from 0.02% to 0.05%.This brokerage is
charged where there may be buying or selling lot remaining at the end of the
days trade. The delivery brokerage is charged from 0.3% to 0.5%.

As per SEBI, maximum brokerage shouldn’t exceed 2.5% both in BSE and
NSE. For retail clients, the brokerage charged is 0.7%. A sub-broker charge
2.5% from the clients to sell or buy the shares out of which, India Infoline charges
1% from the sub-broker.

In India Infoline, 5% service tax on brokerage is collected from the clients.


If the stamp duty of 0.006% on turnover is Rs30 or more, only Rs30 is collected
in NSE. In BSE, the minimum is 1Re and the maximum stamp duty is unlimited.
The Accounts/ Finance department maintains the accounts in India
Infoline. The accounts are prepared in three forms. They are:
• Client-wise net positions,
• Scrip-wise net positions,
• Pay-in and Pay-out settlement of funds.

The net positions of each client at the end of the day are prepared and a copy is
sent to the client. This is the settlement wise pay-in/pay-out funds statement. It is
similar to trial balance. Delivery out is termed as pay-in and receipt in is termed
as pay-out. The pay-out for India Infoline are debited and the pay-in for India
Infoline is credited. This statement includes other expenses in trading like
brokerage, delivery commission, stamp duty etc

Though de-mat was introduced in 1994, it came into existence in 1996.


The depositories Act, 1996 was passed to provide for the establishment of
depositories in securities with the objective of ensuring free transferability of
securities with speed, accuracy and security by dematerializing the securities in
the depository model. A depository holds securities in dematerialized form. It
maintains ownership records of securities and effects transfer of ownership
through book entry.

The two depositories, National Securities Depository Limited (NSDL) and


Central Depository Services Limited (CDSL) provide services to investors and
clearing members through Depository Participants (DPs). They do not change
the investors and clearing members directly but charge their DPs, who are free to
have their own charge structure for their clients.

When a client places his physical shares for de-mat, India Infoline after
inputting the information in depository participants sends the physical shares to
the company, which issued the shares. The client code number and the
information and the clients signature is sent to Share Holding Registrar
In India Infoline, daily the research analyst collects the market information
and it is analyzed. The market information is used to forecast the index
movement, price movement of the shares and enables the clients to make use of
the information in trading to get better results.

The research analyst in forecasting the market movement follows the


technical analysis, fundamental analysis and efficient market hypothesis. The
research analyst collects the information about the company, the industry and the
economy through different media to know the company’s position.

BSE conducts mock trading for all its trading members. The mock trading
usually takes place once in a month or in two months.

Mock – trading is a process where the regular online trading is done at all
the trade workstations, which are registered with BSE. Though the on-line trading
is done, payment of funds or deliveries doesn’t take place. Though the trade
results in turnover in crores there is no transfer of funds or share certificates.
The mock-trading process is similar to the regular trading process.

Mock trading is generally done on Saturdays as it is not a working day for


the stock exchange and it doesn’t affect the daily trade in BSE..Mock- trading
enables the operators to operate efficiently and to adjust to the changes made if
any in the trading system. Customers can activate / de-activate / modify their
mobile number for the SMS Alerts facility by either of the means mentioned
below

FINDINGS
 It is observed that market fluctuations day by day as there is a raise or fall
in the market Nifty points and specific reasons for such the during the
project period raise or fall are also analyzed.

 During the month of May, where Inflation spiked to 3 1/2 year high. From
there on, The Government intensified its fight against inflation.

 Indian economy received another jolt with the industrial output falling to a
six-year low for the month of March.

 High interest rates, coupled with spiraling costs and a US-led global
slowdown hit industrial activity during the last month of FY08. Industrial
production grew by just 3% in March as against 8.6% in February.

 In the month of June, Government finally bit the bullet on the fuel price
hike issue and announced a package, comprising a mix of price increases
and duty changes to enable the public sector oil marketing companies to
combat high crude oil prices.

 Crude oil prices further accelerated, touching a new all-time high of nearly
US$142 per barrel in electronic trading.

 During my project work I had observed that all IT companies had


announced their quarterly results which brought them a good profit over
the period.

SUGGESTIONS
 They can increase the total number of customers trading per day there is still
lot of potential is there with existing client base. This can be achieved by
increasing activation staff.

 Since the internet trading is newly introduced in India the customer support
should guide the customers while trading.

 The company has to conduct awareness campaigns to attract more


customers.

 It may be suggested that the company has to take necessary initiation


towards more advertisements.
BIBLIOGRAPHY

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT


- FISCHER JORDAN
INVESTMENT MANAGEMENT - V.K.BHALLA

FINANCIAL MANAGEMENT - R.K.SHARMA &SHASHI.K.GUPTA

FINANCIAL INSTITUTIONS AND MARKETS


- L.M.BHOLE
JOURNALS:

FINANCIAL ANALYST
BUSINESS INDIA
BUSINESS WORLD

WEBSITES:
www.nseindia.com
www.bseindia.com
www.googlesearch.com
www.vantagetrade.com
www.indiainfoline