EXECUTIVE SUMMARY

New ideas and innovations have always been the hallmark of progress made by mankind.
At every stage of development, there have been two core factors that drive man to ideas
and innovation. These are increasing returns and reducing risk, in all facets of life.

The financial markets are no different. The endeavor has always been to maximize
returns and minimize risk. A lot of innovation goes into developing financial products
centered on these two factors. It has spawned a whole new area called financial
engineering.

Equities are among the forefront of the innovations in the financial market sand aim to
increase returns and reduce risk. They provide an outlet for investors to protect
themselves from the vagaries of the financial markets. These instruments have been very
popular with investors all over the world.

Indian financial markets have been on the ascension and catching up with global
standards in financial markets. The advent of screen based trading, dematerialization,
rolling settlement has put our markets on par with international markets.

This market presents a tremendous opportunity for individual investors. The Markets
have performed smoothly over the last four years and have stabilized. The time is ripe for
investors to make full use of the advantage offered by this market. We have tried to
present in a lucid and simple manner, online trading, so that the individual investor is
educated and equipped to become a dominant player in the market.
BASICS OF INDUSTRY
WHY INVEST?
If you were to open a book on economics and look up the word “investing”, chances are
that you would find the following definition: “Investing is building up to meet future
consumption demands with the intention of making surpluses or profits, as they are
popularly known.”

And after reading it, the last trace of your eagerness to invest is likely to evaporate.
But investing is essential. Here is why…

While the life expectancy of the average human being has increased, we are productive
only between the ages of 30 and 60 years. Hence the short time span that we are able to
earn money needs to provide for our future when we may not be capable of earning.

Everything being the same, we could keep away a part of our earnings every year (save)
that will come in handy when we will not be able to earn. However inflation destroys the
value of what we save. A sum of Rs10,000 saved this year will not have the same
purchasing power ten years down the line. Hence we need to preserve the purchasing
power of what we save.

The only way to hedge inflation is to invest in shares, debentures, bonds, gold or real
estate, to earn returns from these assets that compensate for the decline in our purchasing
power.

WHAT IS A SHARE ?
“Share” or “Equity” represents part of an ownership of a business. So as a shareholder
you own a piece of the action that happens in that business. Why would you want a piece
of the action? For the rewards of course. As a shareholder you have a right over the
profits generated by your business. Your company might pay out the profits generated
every year as dividends or it may retain the profits to further grow them.

There’s another way you as a shareholder can make money. If your company does well,
then its shares listed on the stock market become more valuable and the stock price
appreciates. On the other hand, the company might perform badly. Then not only do you
not get dividends but the stock price also declines. Hence investing in shares is a risky
proposition.

When you invest in shares, you can expect certain returns based on the fundamentals of a
business. However you have no control over it. What you have control over is managing
risks associated with it.
 INTRODUCTION
Stock exchanges to some extent play an important role as indicators, reflecting the
performance of the country’s economic state of health. Stock market is a place where
securities are bought and sold. It is exposed to a high degree of volatility, prices fluctuate
within minutes and are determined by the demand and supply of stocks at a given time.
Stock brokers are the ones who buys and sells securities on behalf of individuals and
institutions for some commission.

The Securities and Exchange Board of India (SEBI) is the authorized body, which
regulates the operations of stock exchanges, banks and other financial institutions. The
past performances in the capital markets especially the securities scam by Hasrshad
Mehta has led to tightening of the operations by SEBI. In addition the international
trading and investment exposure has made it imperative to better operational efficiency.
With the view to improve, discipline and bring greater transparency in this sector,
constant efforts are being made and to a certain extent improvements have been made.
 HISTORY OF THE STOCK BROKING INDUSTRY

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200
years ago. The earliest records of security dealings in India are meager and obscure.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place
in Bombay. Though the trading list was broader in 1839, there were only half a dozen
brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed
a rapid development of commercial enterprise and brokerage business attracted many
men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of
Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers
increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a
disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850
could only be sold at Rs. 87). At the end of the American Civil War, the brokers who
thrived out of Civil War in 1874, found a place in a street (now appropriately called as
Dalal Street) where they would conveniently assemble and transact business.

In 1887, they formally established in Bombay, the "Native Share and Stock Brokers'
Association" (which is alternatively known as "The Stock Exchange"). In 1895, the Stock
Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the
Stock Exchange at Bombay was consolidated.

Thus in the same way, gradually with the passage of time number of exchanges were
increased and at currently it reached to the figure of 24 stock exchanges.
 DEVELOPMENT OF INDIAN STOCK MARKET
An important early event in the development of the stock market in India was the
formation of the Native Share and Stock Brokers’ Association at Bombay in 1875, the
precursor of the present-day Bombay Stock Exchange. This was followed by the
formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras
(1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant
periods to recede into oblivion during depressing times subsequently.

In order to check such aberrations and promote a more orderly development of the stock
market, the central government introduced a legislation called the Securities Contracts
(Regulation) Act, 1956. Under this legislation, it is mandatory on the part of a stock
exchanges to seek government recognition. As of January 2002 there were 23 stock
exchanges recognized by the central Government. They are located at Ahemdabad,
Bangalore, Baroda, Bhubaneshwar, Calcutta, Chenni,(the Madras stock Exchanges ),
Cochin, Coimbatore, Delhi, Guwahati, Hyderbad, Indore, Jaipur, Kanpur, Ludhiana,
Mangalore, Mumbai(the National Stock Exchange or NSE), Mumbai (The Stock
Exchange), papularly called the Bombay Stock Exchange, Mumbai (OTC Exchange of
India), Mumbai (The Inter-connected Stock Exchange of India), Patna, Pune, and Rajkot.
Of course, the principle bourses are the National Stock Exchange and The Bombay Stock
Exchange, accounting for the bulk of the business done on the Indian stock market.

While the recognized stock exchanges have been accorded a privileged position, they are
subject to governmental supervision and control. The rules of a recognized stock
exchanges relating to the managerial powers of the governing body, admission,
suspension, expulsion, and re-admission of its members, appointment of authorized
representatives and clerks, so on and so forth have to be approved by the government.
These rules can be amended, varied or rescinded only with the prior approval of the
government. The Securities Contracts (Regulation) Act vests the government with the
power to make enquiries into the affairs of a recognized stock exchange and its business,
withdraw the recognition the task of regulating the stock exchange to the Securities
Exchanges Board of India.
 BSE (THE STOCK EXCHANGE OF MUMBAI)
The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as
"The Native Share and Stock Brokers Association". It is the oldest one in Asia, even
older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary
non-profit making Association of Persons (AOP) and is currently engaged in the process
of converting itself into demutualised and corporate entity. It has evolved over the years
into its present status as the premier Stock Exchange in the country. It is the first Stock
Exchange in the Country to have obtained permanent recognition in 1956 from the Govt.
of India under the Securities Contracts (Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for trading in
securities, debt and derivatives upholds the interests of the investors and ensures redressal
of their grievances whether against the companies or its own member-brokers. It also
strives to educate and enlighten the investors by conducting investor education program
and making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies and
regulates the affairs of the Exchange. The Governing Board consists of 9 elected
directors, who are from the broking community (one third of them retire ever year by
rotation), three SEBI nominees, six public representatives and an Executive Director &
Chief Executive Officer and a Chief Operating Officer.
 NSE (NATIONAL STOCK EXCHANGE)

NSE was incorporated in 1992 and was given recognition as a stock exchange in April
1993. It started operations in June 1994, with trading on the Wholesale Debt Market
Segment. Subsequently it launched the Capital Market Segment in November 1994 as a
trading platform for equities and the Futures and Options Segment in June 2000 for
various derivative instruments.

NSE has been able to take the stock market to the doorsteps of the investors. The
technology has been harnessed to deliver the services to the investors across the country
at the cheapest possible cost. It provides a nation-wide, screen-based, automated trading
system, with a high degree of transparency and equal access to investors irrespective of
geographical location. The high level of information dissemination through on-line
system has helped in integrating retail investors on a nation-wide basis. The standards set
by the exchange in terms of market practices, Products , technology and service standards
have become industry benchmarks and are being replicated by other market participants.
Within a very short span of time, NSE has been able to achieve all the objectives for
which it was set up. It has been playing a leading role as a change agent in transforming
the Indian Capital Markets to its present form. The Indian Capital Markets are a far cry
from what they used to be a decade ago in terms of market practices, infrastructure,
technology, risk management, clearing and settlement and investor service.
 NCDEX
(NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE)

NCDEX started working on 15th December, 2003. This exchange provides facilities to
their trading and clearing member at different 130 centers for contract.

In commodity market the main participants are speculators, hedgers and arbitrageurs.
Promoters of NCDEX are
 National Stock Exchange(NSE)
 ICICI bank
 Life Insurance Corporation(LIC)
 National Bank for Agricultural and Rural Development (NABARD)
 IFFICO
 Punjab National Bank (PNB)
 CRISIL

WHY NCDEX?

 NCDEX is nationalized screen based system which is providing transparent,

private and easy services.
 NCDEX is one of the traditional media which gives online information
 NCDEX is one of the Indian commodity exchange, constructed on the basis of the
current national institutes the exchange has been established with the coloration of
leading institutes like NABARD, LIC, NSI etc….
 In India NCDEX has maximum settlement guarantee fund.
 NCDEX has appointed two exports for checking quality at the time of delivery

FACILITIES PROVIDED BY NCDEX

 NCDEX has developed facility for checking of commodity and also provides a
wear house facility
 By collaborating with industrial partners, industrial companies, news agencies,
banks and developers of kiosk network NCDEX is able to provide current rates
and contracts rate.
 To prepare guidelines related to special products of securitization NCDEX works
with bank.
 To avail farmers from risk of fluctuation in prices NCDEX provides special
services for agricultural.
 NCDEX is working with tax officer to make clear different types of sales and
service taxes.
 NCDEX is providing attractive products like “weather derivatives”
 MCX
(MULTI COMMODITY EXCHANGE)
MULTI COMMODITY EXCHANGE of India limited is a new order exchange with a
mandate for setting up a nationwide, online multi-commodity marketplace, offering
unlimited growth opportunities to commodities market participants. As a true neutral
market, MCX has taken several initiatives for users

In a new generation commodities futures market in the process, become the country’s
premier exchange.

MCX, an independent and a de-mutualized exchange since inception, is all set up to

introduce a state of the art, online digital exchange for commodities futures trading in the
country and has accordingly initiated several steps to translate this vision into reality.

TRANSACTION CYCLE

Decision to
Decision to Placing
Placing
trade
trade Order
Order

Funds or
Funds or
Securitie
Securitie Trade
ss
Transaction Trade
Execution
Execution
Cycle

Settlement
Settlement
of trades
of trades Clearing
Clearing
of Trades
of Trades
A person holding assets (Securities/Funds), either to meet his liquidity needs or to
reshuffle his holdings in response to changes in his perception about risk and return of the
assets, decides to buy or sell the securities. He selects a broker and instructs him to place
buy/sell order on an exchange. The order is converted to a trade as soon as it finds a
matching sell/buy order. At the end of the trade cycle, the trades are netted to determine
the obligations of the trading member’s securities/funds as per settlement cycle.
Buyer/seller delivers funds/ securities and receives securities/funds and acquires
ownership of the securities.

A securities transaction cycle is presented above. Just because of this Transaction cycle,
the whole business of Securities and Stock Broking has emerged. And as an extension of
stock broking, the business of Online Stock broking/ Online Trading/ E-Broking has
emerged.
 MAJOR PLAYERS
1. S S KANTILAL ISHWARLAL SECURITIES PVT LTD. (www.sharekhan.com)
2. ICICI WEB TRADE LTD. (www.icicidirect.com)
3. 5 PAISA.COM (www.5paisa.com)
4. KOTAK SECURITIES LTD. (www.kotakstreet.com)
5. INDIABULLS (www.indiabulls.com)
6. MOTILAL OSWAL SECURITIES LTD.
7. HDFC SECURITIES LTD. (www.hdfcsec.com)
8. UTI SECURITIES LTD.
9. IDBI CAPITAL MARKET SERIVICES LTD.
10. REFCO SIFY SECURITIES PVT LTD.

A/c Opening Fee Brokerage Interface

Parameters
Trading Square Banks Associated
Demat Delivery
A/c Off with
HDFC, UTI, OBC,
Sharekhan 750 NIL 0.50 0.10
IDBI & Citibank
ICICI Direct 750 NIL 0.75 0.18 ICICI Bank

Indiabulls 750 250 0.40 0.10 N.A.

Citibank, HDFC,
5 paisa 800 NIL 0.20 0.05 OBC, UTI & ICICI
Bank
Kotak Bank &
Kotak Street 500 N.A. 0.59 0.06
Citibank
HDFC & Other 4
HDFC Securities 700 NIL 0.50 0.15
Banks
S. S. KANTILAL ISHWARLAL SECURITIES PVT. LTD. (SHAREKHAN.COM):

Sharekhan, India’s leading stock broker is the retail arm of SSKI, and offers you
depository services and trade execution facilities for equities, derivatives and
commodities backed with investment advice tempered by decades of broking experience.
A research and analysis team is constantly working to track performance and trends.
That’s why Sharekhan has the trading products, which are having one of the highest
success rates in the industry. Sharekhan is having 240 share shops in 110 cities; the
largest chain of retail share shops in India is of Sharekhan.

In future, Sharekhan is planning to enter in Mutual funds, Insurance sector and banking
sector to expand beyond the market currently covered by it. And it has started MF
(Mutual Funds) on priority basis but wants to grow in it.

ICICI WEB TRADE LTD. (ICICIdirect.com):

ICICIdirect.com was the first entrant into e-broking. ICICdirect.com provides the 3-
in-1 to the users which ties in their saving bank account and their Demat account to their
brokerage account electronically. This integration ensures that money is transferred
to/from their bank account and the shares are transferred from/to their Demat account
automatically without writing any cheques or transfer instructions while carrying out
their trades in shares.

ICICIdirect.com has the option of trading in shares in cash, margin or spot segments. An
investor can also invest in 14 Mutual Funds (Prudential ICICI MF, Franklin Templeton
India MF, Alliance Capital MF, JM MF, Birla Sun Life MF, Sundaram MF, IL&FS MF,
Principal MF, HDFC MF, Standard Chartered MF, Reliance Capital MF, Kotak
Mahindra MF, TATA MF and DSP MERRILL LYNCH MF) through their trading
account.
ICICIdirect.com doesn’t provide the facility of trading in a traditional way.

5Paisa.com:
5paisa is the trade name of India Infoline Securities Private Limited (5paisa), member of
National Stock Exchange and The Stock Exchange, Mumbai. 5paisa is a wholly owned
subsidiary of India Infoline Ltd, India’s leading and most popular finance and investment
portal. 5paisa has emerged as one of leading players in e-broking space in India.

The company’s brokerage is one of the lowest in the industry. It also provides the
research on commodities. Investors can benefit from its analysis and advice available at
the click of the mouse. For those who prefer to trade the traditional way, India Infoline
investor points are available across the country.

India Infoline was founded by a group of professionals in 1995. Its institutional investors
include Intel Capital, one of the leading technology companies in the world promoted by
the UK government, ICICI, TDA and Reeshanar. The company offers a slew of products
such as stock and derivatives broking, commodities broking and mutual funds.
KOTAK SECURITIES LIMITED (kotakstreet.com):
Kotak Securities Ltd., a strategic joint venture between Kotak Mahindra Bank and
Goldman Sachs (holding 25% - one of the world’s leading investment banks and
brokerage firms) is India’s leading stock broking house with a market share of 5 - 6 %.
Kotak Securities Ltd. has been the largest in IPO distribution - It was ranked number One
in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME
Database. It has also won the Best Equity House Award from Finance Asia - April 2004.

Kotak Securities Ltd is also a depository participant with National Securities Depository
Limited (NSDL) and Central Depository Services Limited (CDSL) providing dual benefit
services wherein the investors can use the brokerage services of the company for
executing the transactions and the depository services for settling them. The company has
42 branches servicing around 1, 00,000 customers. Kotakstreet.com the online division of
Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual
Fund Investments.

Kotak Securities Limited manages assets over 1700 crores under Portfolio Management
Services (PMS) which is mainly to the high end of the market. Kotak Securities Limited
has newly launched “Kotak Infinity” as a distinct discretionary Portfolio Management
Service which looks into the middle end of the market.

India Bulls:
Indiabulls is India's leading retail financial services company with 77 locations spread
across 64 cities. Its size and strong balance sheet allows providing varied products and
services at very attractive prices, our over 750 Client Relationship Managers are
dedicated to serving your unique needs.

Indiabulls is lead by a highly regarded management team that has invested crores of
rupees into a world class Infrastructure that provides real-time service & 24/7 access to
all information and products. The Indiabulls Professional Network offers real-time
prices, detailed data and news, intelligent analytics, and electronic trading capabilities,
right at your finger-tips. This powerful technology is complemented by our
knowledgeable and customer focused Relationship Managers.

Indiabulls offers a full range of financial services and products ranging from Equities,
Derivatives, Demat services and Insurance to enhance wealth and to achieve the financial
goals.
MOTILAL OSWAL SECURITIES LTD. (MOSt):
One of the top-3 stock-broking houses in India, with a dominant position in both
institutional and retail broking, MOSt is amongst the best-capitalized firms in the broking
industry in terms of net worth. MOSt was founded in 1987 as a small sub-broking unit,
with just two people running the show. Focus on customer-first-attitude, ethical and
transparent business practices, respect for professionalism, research-based value investing
and implementation of cutting-edge technology have enabled it to blossom into a
thousand-member team.

The institutional business unit has relationships with several leading foreign institutional
investors (FIIs) in the US, UK, Hong Kong and Singapore. In a recent media report
MOSt was rated as one of the top-10 brokers in terms of business transacted for
FIIs.

The retail business unit provides equity investment solutions to more than 50,000
investors through 270 outlets spanning 150 cities and 22 states. MOSt provides Advice-
Based Broking, Portfolio Management Services (PMS), E-Broking Services,
Depository Services, Commodities Trading, and IPO and Mutual Fund Investment
Advisory Services. Its Value PMS Scheme gave a 160% post-tax return for the year
ended March 2004.

In AsiaMoney Brokers Poll 2003 MOSt has been rated as the Best Domestic Research
House- Mega Funds ,while in 2000 and 2002 it has been rated as the Best Domestic
Equity Research House and Second best amongst Indian Brokerage firms
respectively.

HDFC SECURITIES LTD (HDFCsec):

HDFCsec is a brand brought to you by HDFC Securities Ltd, which has been promoted
by the HDFC Bank & HDFC with the objective of providing the diverse customer base of
the HDFC Group and other investors a capability to transact in the Stock Exchanges &
other financial market transactions. The services comprise online buying and selling of
equity shares on the National Stock Exchange (NSE). Buying and selling of select
corporate debt and government securities on the NSE would be introduced in a
subsequent phase. In a few months, they will also start offering the following online
trading services on the BSE and NSE:
1. Buying and selling of shares on the BSE
2. Arbitrage between NSE & BSE
3. Trading in Derivatives on the NSE
4. Margin trading products.
They are also planning to include buying and selling of Mutual Funds, IPO subscriptions,
Right issues, purchase of Insurance policies and asset financing.
UTI SECURITIES LTD.: (UTISEL)

UTI Securities Ltd was incorporated on June 24, 1994 by Unit Trust of India as a 100%
subsidiary and on the repealing of the UTI Act, the capital is now held by the
Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI). UTI
Securities has been working as an independent professional entity for providing financial
intermediary and advisory services to its corporate and retail clientele.

The Company has presence in major cities with 20 branches and 50 franchisees to service
a wide range of clients. The company has also invested in the joint-venture company with
Standard Chartered Bank viz. Standard Chartered UTI Securities (P) Ltd. that is
engaged in primary dealership and Government securities. The company is very soon
going to start Commodity Trading through its subsidiary, USEc Commodities Ltd, which
provides facility of commodity trading on NCDEX and MCX.

IDBI Capital Market Services Ltd.

IDBI Capital is a leading Indian securities firm offering a complete suite of products and
services to individual, institutional and corporate clients.

IDBI Capital Market Services Ltd. (IDBI Capital), a wholly owned subsidiary of
Industrial Development Bank of India (IDBI), is a leading Indian securities firm, offering
a complete suite of products and services to individual, institutional and corporate clients.
The services include fixed income trading, equities brokerage, debt and equity
derivatives, research, private placements, depository services, portfolio management and
distribution of financial products. Over the last five years, we have emerged as a leading
player in each of these businesses.

 March 1995 - Commenced Equity Broking on NSE CM segment

 July 1995 - Built agent Distribution Network across the country
 October 1996 - Commenced Debt Broking on NSE WDM segment
 December 1996 - Started operations as a Depository Participant
 1996 - Started to act as Arranger to Privately Placed Bond issues
 April 1998 - Commenced operations as a Portfolio Manager
 February 1999 - Acquired membership of BSE, Mumbai
 November 1999 - Started operations as a Primary Dealer
 June 2000 - Acquired Derivatives memberships of BSE and NSE
 March 2002 - Achieved an outright secondary market turnover exceeding
Rs100,000 cr in G-Secs
 October 2002- Commenced trading in Interest Rate Swaps
Refco - Sify Securities India Pvt. Ltd

Refco-Sify Securities India Pvt. Ltd., headquartered in Mumbai, is a joint venture

between the Refco Group Holding Ltd., USA; and Satyam Infoway Limited (NASDAQ:
SIFY) to offer online and offline equity and derivatives trading for retail customers as
well as execution and clearing services for financial institutions.

Refco also provides clients with prime brokerage services, fixed income, equities, foreign
exchange, OTC derivatives and asset management.

Refco is a leader in providing clients with the latest technological advances in products
and services. Its proprietary systems and global infrastructure provide the flexibility to
meet all client requirements.
 INDUSTRY ANALYSIS USING PORTER’S 5 FORCES MODEL

POTENTIAL
POTENTIAL ENTERANT
ENTERANT

Investmart
Investmart
Various
Various Banks
Banks
Geojit
Geojit
Cipher
Cipher
UTI
UTI Securities Ltd.
Securities Ltd.
Refco
Refco Group
Group Ltd.
Ltd.
IDBI
IDBI Capital
Capital Mkt.
Mkt. Services
Services
Ltd.
Ltd.
BUYERS
BUYERS
SUPPLIERS
SUPPLIERS
Small
Small Investors
Investors
Web
Web maintainers
maintainers COMPETITORS
COMPETITORS Franchise/Business
Franchise/Business
NSCL
NSCL Partners
Partners
CSDL
CSDL ICICI
ICICI Web
Web Trade
Trade Ltd
Ltd HNI’s
HNI’s
NSE
NSE 5paisa.com
5paisa.com MF Companies
MF Companies
BSE
BSE Kotak
Kotak Securities
Securities Ltd
Ltd HUF
HUF
MCX
MCX India
India Bulls
Bulls Institutional
Institutional
NCDEX
NCDEX Motilal
Motilal Oswal
Oswal Securities
Securities Ltd
Ltd Investors
Investors
HDFC
HDFC Securities
Securities Ltd
Ltd
Marwadi
Marwadi Finance
Finance Ltd
Ltd

SUBSTITUTES
SUBSTITUTES
Mutual
Mutual Funds
Funds
Insurance
Insurance
Bank
Bank FD
FD
1. SUPPLIERS

 NSDL & CSDL are the regulatory bodies for Depository Participants like SSKI,
SHCIL, ICICIdirect.com, etc. Also these regulatory bodies have got an upper
hand as the bargaining power stock broking houses like SSKI, etc. would be less.

 NSE & BSE are playgrounds where common an investor trade through stock
broking houses, for which they have to take permission from NSE/BSE.

 NSE & BSE are under the purview of SEBI, that’s why stock broking houses like
SSKI, have low bargaining power. But here there is one advantage that NSE/BSE
have i.e. they cannot go for forward integration.

 MCX & NCDEX are stock exchanges which trade in commodities and
derivatives. Here again stock broking houses have to follow rules and regulation
of the same.

 Web maintainers are companies which maintain web sites & technical aspects of
the same. Here stock broking houses like SSKI can have more bargaining power
due to stiff competition among web maintaining companies.

 Web maintainers are companies who make and maintain software’s for stock
broking houses. If say for example stock broking houses switches over to other
web maintainers then that company cannot understand the mechanisms of
software’s. So it is quite high switching cost.

2. BUYERS

 There are various types of investors who trade through stock broking houses like
SSKI, which includes investors like small investors, medium net worth investors,
business partners, institutional investors and mutual fund companies.

 Here the bargaining power of stock broking houses depends on how big the
investor is.
 So here we can say that bargaining power of stock broking houses is high in case
of small investors & HUF.

 While the bargaining power is moderate in case of HNI (High New Worth
Investors)/ MNI’s (Medium Net Worth Investors) and business partners.

 But the in case of mutual fund companies and institutional investors bargaining
power is less.
 There is competitive buzz in stock broking industry; competitors are offering low
brokerage and best services with added feature. So switching cost is pretty much
less. So the buyer can easily switch over to competitors product.

3. ENTRY BARRIERS
 Huge capital: - Capital is necessary not only for fixed facilities but also for
customer’s credit and absorbing start up losses. To start a stock broking house,
one needs huge capital for technology up gradation and skilled manpower.

 Technology: - Technology for stock broking houses is life saving device.

Stock broking requires huge capital to make their products user friendly,
which in turn requires capital to employ skilled manpower. Thus, technology
could be one of the entry barriers.

 Regulatory Constraints: - Obtaining a license is a tedious job for a stock

broking house. It should comply with the regulation of the governing bodies
like SEBI, NSDL, etc. For a stock broking houses to plunge into the stock
broking industry, it needs to have some kind of financial background and
expertise. Thus, regulators constraints could be an entry barrier.

 Experience curve: - The core competency in this industry is the services which
are provided to the end-users and the research based activities which includes
“TIPS”, fundamental as well as technical script analysis. Also the most
important thing which helps already established firms is-“TRUST” which
people would be having on firms like SSKI , Motilal Oswal, etc. this is very
difficult for new companies to imitate.

 Network: - The “Reach” to the customer is the key factor in the industry. The
network of the companies like Motilal Oswal, Sharekhan, and ICICI is very
efficient and spreaded all over India. It will take time for a new entrant to
establish such a huge network (e.g. Marwadi), which say that,”Network can
come up as most difficult entry barrier to overcome.”

 Expected Retaliation: - Whenever a new player comes in the industry, the old
companies have an option to reduce the prices of their product. This kind of
practice is called expected Retaliation which is also possible in this industry in
terms of less brokerage rates and reduced account opening charges. E.g.
before the entry of so many mew companies, Sharekhan was having two types
of accounts viz. speed trade speed trade plus, which were costing 1000 &
1500 account opening charges respectively. But due to competition, they have
come up with only one account i.e. speed trade plus with the account charges
of Rs.1000.
4. COMPETITORS
 The company is facing the competition from local as well as national level
players. The local players provide facility for off-line trading while the
national players like ICICIdirect.com and Kotakstreet.com, HDFC Security
provide online trading services.

 There are also other big names like Indiabulls, Motilal Oswal, 5paisa and
Marwadi encircles the company form both the sides by providing online and
off-line trading with competitive services.

5. POTENTIAL ENTRANTS
 The potential entrants in like Investmart, Jeojit and Cipher which are coming
in near future to Baroda City.

 Nationalized banks are also thinking to enter in this field by tying up with
broking houses. E.g. Bank Of Baroda.

6. SUBSTITUTES
 Here substitutes are such instruments which can be used instead of
investing in shares.

 The instruments like Bank FD, insurance, mutual funds are the substitutes.

 If the use of this instruments increase this may be disadvantage for the
stock broking houses.

 The companies and banks which are having these instruments can plunge
into this industry.
ALL ABOUT SHAREKHAN
ALL ABOUT SHAREKHAN
 ABOUT THE SHAREKHAN COMPANY
Sharekhan, the retail arm of the SSKI (Shrepal Sewaklal Kantilal Ishwarlal) Group offers
world-class facilities for buying and selling shares on BSE and NSE, demat services,
derivatives (F&O) and most importantly investment advice tempered by 85 years of
research and broking experience. A research and analysis team is constantly working to
track performance and trends. That’s why Sharekhan has the trading products, which are
having one of the highest success rates in the industry. You can avail of all its services at
any of their 240 outlets in 110 cities, or through internet using their real time online
trading terminals.

A part from Sharekhan, the SSKI Group also comprises of Institutional Broking and
Corporate Finance. The Institutional Broking division caters to domestic and foreign
institutional investors, while the Corporate Finance Division focuses on niche areas such
as infrastructure, telecom and media. SSKI has been voted as the Top Domestic
Brokerage House in the research category, twice by Euromoney survey and four times by
Asiamoney survey. SSKI has been voted the best domestic brokerage in India by
Asiamoney Polls’ 2004.

Also SSKI is being rated as No. 1 Financial Researcher by Business Today, in the Survey
conducted on Lead Managers of all the Mutual Funds.

Basically, the company is a market leader in providing brokering services and has a high
turnover in it which makes it No.1 in the market. The main difference is the services that
they provide to the investors. The customer is managed with a friendly corporate culture
to give him a more benefited investment idea and motivate him whenever he needs. The
company is providing as many tips to the clients (pre-market, online and post-market) for
more and more trading ideas and the manager helps each client to concentrate on a few
scripts so that he can manage the profit/loss.

In future, Sharekhan is planning to enter in Mutual funds, Insurance sector and banking
sector to expand beyond the market currently covered by it. And it has started MF
(Mutual Funds) on priority basis but wants to grow in it.

To sum up, Sharekhan brings a user- friendly trading facility, coupled with a wealth of
content that will help customers stalk the right shares.
 CURRENT POSITION
VISION

To empowr the investor with quality advice and superior serivce to help him take
better investment decisions. We believe that our growth depends on client
satisfaction.
 MISSION STATEMENT

o To provide the best customer service and product innovation tuned to diverse
needs of clientele
o Continuous up-gradation with changing technology, while maintaining human
values
o Respond to progressive globalization and achieving international standard.
o Efficiency and effectiveness built on ethical practices.

CORE VALUE

 Customer satisfaction through

 Providing quality service effectively and efficiently
 “Smile, it enhances your face value ” is a service quality stressed on
 Periodic customer service Audits

 Maximization of stakeholder value

 Success through Teamwork ,integrity and People

 COMPANY AT A GLANCE

NAME : S. S. KANTILAL ISHWARLAL

SECURITEIS PVT. LTD.

HEAD OFFICE : SHAREKHAN LTD.

A – 206, PHOENIH HOUSE,
PHOENIH MILL COPUND,
SENAPATI, BAPTA MARG,
LOWER PAREL,
MUMBAI - 400013
PH NO : 1800 - 22 7500 , 3970 75 00
E-MAIL : shrinivasb@branch.sharekhan.com
WEB SITE : www.sharekhan.com
CHIEF EXECUTIVE OFFICER: TARUN SHAH
BRANCH OFFICES : 100 BRANCHES
 CHANGING TREND

Remember the time when you left orders with your broker in the morning and received a
confirmation fax late in the evening?
You wondered whether you had acquired the shares at the best possible price for the day.
Today, the picture is different. Imagine a scenario where you log on to your account, get the
live quotes of scripts you are interested in, get advise from experts and research reports
on your investment choice and then just click the mouse to place your order, pay the
amount due (which automatically gets debited into your account with the on line
brokerage firm), get your account statement, and the delivery of your shares into your
Demat account. All this through just one click of a mouse. Seems like a dream? But with
online trading this has become a reality. A few seconds later, you get the confirmation on
your screen. And after the trade settlement, your bank and DP accounts will reflect the
changes accordingly.

The speed of transaction, confidentiality about the prices and ease of settlement in the
paperless mode should be good reasons for retail investors to jump on to the Net. All they
need is a PC, a modem, a subscription to an ISP, an account with a bank (which has a web
presence) and a depository account. And they can choose from a plethora of e-trading web
sites.

So, finally the changing trend is known as E-trading which really means Buying and selling
securities via the Internet or other electronic means such as wireless access, touch-tone
telephones, and other new technologies with online trading. In most cases customers access a
brokerage firm's Web Site through their regular Internet Service Provider. Once there,
customers may consult information provided on the Web Site and log into their accounts to
place orders and monitor account activity"
 7 P’s OF SHAREKHAN
1. PRODUCT

• Product Variety
Share khan offers 3 types of online trading accounts for its customers
specially designed according to their volume in share trading. Those 3
varieties are:
 Classic- for retail investors
 Speed Trade: for high net worth investors with large and active
equity portfolio who need to monitor and action swiftly
 Speed trade Plus- for high net worth investors dealing in derivative
market.

• Quality
User Friendly, attractive & colorful Website.
.
• Design
The website of Share khan namely www.sharekhan.com has been specially
designed to facilitate its users to buy and sell shares in an instant at anytime
and from anywhere they like. The site is user friendly allowing even a
layman to easily operate without any hassles.

• Features:
Share khan’s product comes with the following features:

• Trade execution in a fraction of a second!

• Single Screen Trading Terminal
• Real time streaming quotes. Price watch on any number of scripts.
• Hot keys similar to Brokers Terminal.
• Customized Alerts based on Multiple Parameters.
• Back up Facility to place trades on Direct Phone Lines.
• Intra day charts, updated live, tick-by-tick.
• Instant Order\ Trade Confirmation in the same window
• Live margin, position, marked to market profit & loss report.
• Competitive Brokerage.
• Flexibility to customize screen layout and setting.
• Facility to customize any number of portfolios & watch lists.
• Facility to cancel all pending orders at one click.
• Facility to square off all transactions at one click.
• Top Gainers, Top Losers, and Most Active, updated live.
• Index information; index chart, index stock information live.
• Market depth, i.e. Best 5 bids and offers, updated live for all scripts
• Online access to both accounts and DP.
• Live updated Order and Trade Book.
 •Details of pending, executed and rejected orders.
•Online access to Customer Service.
•128 - bit super safe encryption.
•Facility to place after market orders
•Online fund transfer facility from leading Banks
•Online intra-day technical calls.
•Exhaustive database of over 2000 companies
•Historical charts and technical analysis tools.
•Last but not the least, ideas that help you to make money!!!
• Brand Name

 The company as a whole in its offline business has named itself as

SSKI Securities Pvt. Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal
Securities Pvt. Ltd. The company has preferred to name themselves
under a Blanket Family Name.

 But in its online division started since 1997, the company preferred
to name itself as “SHARE KHAN”. The Brand Name “SHARE
KHAN” itself suggests the business in which the company is dealing so
that the consumer could easily identify the product or service category.

• Services

 Share khan offers its customers, depository services and trade

execution facilities for equities, derivatives and commodities backed
with investment advice tempered by decades of broking experience.
The teams of its dedicated analysts are constantly at work to track
performance and trends.

 Dial-n-trade is also an exclusive service available to all Sharekhan

customers for trading in shares via the telephone. On dialing the toll
free number 1600-22-7050 and on entering the customers TPIN
number, the customer will be directed to a telebroker who will buy or
sell shares for him

2. PRICE
• List Price
CLASSIC SPEED TRADE SPEED TRADE
PLUS
One time 750 1000 1500
registration fee
Minimum brokerage Nil 1000 1500
Charges –Quarterly
• Brokerage
Share khan in its online business charges brokerage as follows:
 - In equity Market:
On Trading: 0.1% On Delivery: 0.5%
- In Derivative Market
On Trading: 0.12% (Total brokerage) On Delivery: 0.2%
• Service Tax
-8% on Brokerage.
• Turnover tax + Stamp duty
-0.015% (Rs. 15 on every turnover of Rs. 100000)
• Custody Charge
Re. 1 per script held per month.
• Discounts
For investors with High Net worth, there are slabs in brokerage rates.
• Payment Period
The transaction settlement date in the securities market is T+ 2 days i.e.
the payment of the transaction taken place has to be made within two
days of its occurrence.
• Credit terms
Share khan allows its customers to trade up to 4 times i.e. by keeping
1/4th margin with them.
• Dematerialization charges
Re. 3 per certificate or Rs.15 per requests whichever is higher.

3. PROMOTION

Online share trading is totally a new concept in Indian Market. Generally

investor doesn’t like to come out from conventional way of share trading. Share
khan has introduced this product in. The concept and Product are still new in the
market. Therefore the company has undertaken extensive promotion campaign
to create awareness about the product. Share khan adopts the following tools for
promoting the product

o Advertising
Company advertises its product through TV media on channels like
CNBC, Print Media-in leading dailies and outdoors media. It advertises
itself as an innovative Brand with a cartoon of tiger-called SHERU.
Besides attractive and colorful brochures as well as posters are used giving
full details about the product.
Mails are sent to people logging on to sites like moneycontrol.com and
rediff.com.
Also, stalls are opened up now and then at places where prospective
customers can be approached.

o Sales Promotion
The Company offers Rs.500 instead of Rs.750 for corporate accounts
(more than 20 accounts).
 Also, it provides online trading accounts for just Rs.300 for IIM students.

o Sales Force
The Company has an aggressive sales force, which is given incentives,
based on their sales. The sales force is given intensive training
continuously.

o Seminar
The Company also arranges seminar in corporate world for creating
awareness about the product. Recently, it had organized for a seminar in
ONGC, IIM.

o Direct Marketing
Company emphasizes more on direct marketing, as many people are still
not aware of this new way of smart trading. For this, the company recruits
and trains sales representatives so as to explain the product and solve
customer queries related to the product. This is the most effective way to
communicate the three-in-one concept which company offers.

o Telemarketing
This is another promotional tool company is using to boost up its sales.
For this, the company collects the database of the people belonging to
different professional segments.

4. PLACE

• Channels
Share khan uses various channel alternatives to reach to its customers
through

 Internet
 Tele Marketing
 Retail Share Shops
 Franchisee Owners
 Power Brokers
 Sales Force

• Coverage
Access to the website from any part of the globe.

• Locations
Share khan has the largest chain of retail share shops in India. It has 180
share shops located in 90 cities all over India like Pune, Thane, Chennai,
Kolkata, Banglore, Luckhnow, Darjleeng, Kanpur, Baroda, Midnapore,
Surat, Delhi, Gaziabad, Hydrabad, Allahbad, etc.
5. PEOPLE

• Employees

⇒ Selection: Employees are selected on the basis of their experience

and qualification as applicable to the job.
⇒ Training: Intensive training is provided to the employees till a week
once they join and even at times required after that.
⇒ Motivation: The employees are motivated through incentives they
are provided.

• Research Team

Share khan has a team of dedicated analysts who have years of working
experience in the industries that they track, and a proven track record in
using their knowledge of the investment science to deliver results.

• Customers, the heart of sharekhan are really treated loyally like the kings.
The customer care, which comprises of highly trained executives operating
from 9:30 to 8:00 p.m.

6. PHYSICAL EVIDENCE

• Locality of the office: In Vadovara, two franchise outlets are located in

posh areas like Old padra Road and Makarpura. A new franchise is going to
open up in Fatehganj.

• Office Environment: The ambience within the office is what can make the
customer feel comfortable in trading. The cordial and friendly atmosphere at
office is like a full time motivation for the employees.

• Interiors and Infrastructure: The office is well furnished and has 24

computer terminals on which tick-by-tick price movements of the securities
are displayed.

7. PROCESS

• In this service organization, the ways in which the customers receive

delivery of the service constitutes the process. Here, the process involves
adding ‘value’ or ‘utility’ so that the customers get full satisfaction for the
money spent by them.
 • Here the process begins from the step when customer wants to open e-invest
account and ends when his account is actually activated.

• All Indian residents and NRI are eligible to avail this service.

• Customers can open a sharekhan e-invest account by filling a single

application form.

This form includes 12 agreements like

1. Main form with customer details

2. Agreement between sharekhan and client in respect of the ONLINE-
INVESTMENT SUPPORT service offered.
3. Agreement between the Depository Participant and the client for
providing the transaction statement through Internet.
4. Irrevocable power of attorney
5. Agreement between the DP and the person seeking to open an
account with the DP.
6. Maintenance of client’s account on a running account bases by
SSKI.
7. Agreement giving the right of lien on the credit balance of client in
NSE trading.
8. Agreement giving the right of lien on the credit balance of client in
BSE trading.
9. Risk disclosure document (cash segment)
10. Power of attorney
11. Member and client agreement.
12. Web-online agreement between member-broker and client.
 SEVEN (7) - S MODEL

Structu
re
Syste
Strate
gy ms
Super-
ordina
te

Goals
goals Styl
Skill
e
s

Staf
f

STRUCTURE:

Share khan is flexible in terms of making temporary structural changes to cope up with
specific strategic tasks without any hassles. If need arises, the top management can assign
the role to any of its employees which it considers capable and skillful.

STRATEGY:

Share khan believes not only in developing the strategies but also in its successful
execution.

SYSTEMS:

This constitutes of all the training and development systems, estimating budgets and the
accounting system of Share khan.

STYLE:

Style refers to all the symbolic actions undertaken by top managers of Share khan and its
influence on the subordinates.
STAFF:

Share khan values its employees as its assets and therefore carefully trains and motivates
them by giving them incentives at regular intervals. Talented employees are assigned as
mentors and given real responsibility and moved into higher positions.

SKILLS:

The term skills refer to those activities organizations do best and for which they are
known. Share khan is known for its timely advice (suggestions/tips), which it caters to its
customers and it boasts of 70-90% strike rates in booking recommendations.

SUPERORDINATE GOALS:

This refers to guiding concepts, values and aspirations that unite an organization in some
common purpose. It provides the customers the best service as it believes in customer
satisfaction and retention.
 CORPORATE STRUCTURE
SSKI Group - Corporate Structure

Owns 56%
of Owns 50.5% of
SSKI Securities Pvt. Ltd.
Morakhia Family & Associates

SSKI Investor Services Pvt. Ltd.

SSKI Corporate Finance Pvt. Ltd.

Retail broking arm of the group
Shareholding pattern
Investment Banking arm of the group
56% Morakhia family (promoters)
Shareholding pattern
18.5% HSBC Private Equity
50.5% SSKI Securities Pvt. Ltd.
Management, Mauritius
49.5 % Morakhia family
18.5% First Carlyle Ventures, Mauritius
7% Intel Pacific Inc.

Integrated Equity Solutions Provider

• Among the top 3 branded retail service providers

(Rs. 200+crs average daily Vol- FY 03-04)

• Multi-channel access to clients

• Tailor made research and products

• Depository Services

• Derivatives

• Innovative products for enhanced performance

 PRODUCTS OF THE SHAREKHAN COMPANY

ShareKhan’s
product

offline online Other Services

Speed Trade
Classic A/C
A/C

OFFLINE
The Off-Line account is trading account through which one can buy and sell through
his/her telephone or by personal visit at sharekhan shop. This a/c is for those who are not
comfortable with computer and want to trade.

o Offline A/c is the A/c for the investors who are not familiar with the use of
computer.

o The A/C opening charges Rs.500(One time)

o For 1st Year Demat A/C is Free, on 2nd Year AMC charge is applicable.

ONLINE

 A/C Opening Charges Rs.750(onetime Charge).

 For 1st Year Demat A/C is Free,On 2nd Year AMC charge is applicable.
 Type with 7 banks through which one can transfer or withdraw his fund
online.Which are as follows
1. HDFC Bank
2. IDBI Bank
 3. UTI Bank
4. OBC Bank
5. CITY Bank
6. Indusind Bank
7. Union Bank of India
Any one who have A/C either of above banks they can use this
facility.Otherwise one has to make fund transfer or withdraw by cheque.

This account enables you to buy and sell shares through our website. You get features
like

a) Streaming quotes (using the applet based system)

b) Mutltiple watchlists
c) Integrated Banking, demat and digital contracts
d) Instant credit and transfer
e) Real-time portfolio tracking with price alert and, of course, the
assurance of secure transactions.

HOW TO USE:
By entering the Login ID and Browsing Password you can login into your
CLASSIC A/C.
FEATURES OF CLASSIC ACCOUNT / FAST TRADE ACCOUNT
that enables you to invest effortlessly

Online trading account for investing in Equities and Derivatives via

sharekhan.com

Integration of: Online trading + Bank + Demat account

Instant cash transfer facility against purchase & sale of shares

Make IPO booking

You get Instant order and trade confirmations by e-mail

Streaming Quotes

Personalised Market Scan with your own customized stock ticker!

Single screen interface for cash and derivatives

Your very own Portfolio Tracker!

FAST TRADE TERMINAL

SYSTEM REQUIREMENTS
you’ll need access to a computer which has at least the following configuration:

Pentium 3 PC, Minimum 128 MB RAM

Windows 2000/XP

Internet Connection

Internet Explorer 6.0

Java enabled in IE
SPEEDTRADE PLUS

 A/C Opening Charges Rs.1000/-(onetime Charge).

 Monthly charges Rs.500/-(But if Client give Brokerage of Rs.1500/-in a Quarter,
then Rs.1500/-that was charged of a Quarter will be Reimbursed).
 For 1st Year Demat A/C is Free, On 2nd Year AMC charge is applicable.
 Type with 7 banks through which one can transfer or withdraw his fund online.
which are as follows
1. HDFC Bank
2. IDBI Bank
3. UTI Bank
4. OBC Bank
5. CITY Bank
6. Indusind Bank
7. Union Bank of India

Any one who have A/C either of above banks they can use this facility.
Otherwise one has to make fund transfer or withdraw by cheque.

FEATURES OF SPEEDTRADE PLUS ACCOUNT

that enable you to trade effortlessly

 Instant order Execution & Confirmation

 Single screen trading terminal
 Real-time streaming quotes, tic-by-tic charts
 Market summary (most traded scrip, highest value and lots of
 other relevant statistics)
 Hot keys similar to a brokers terminal
 Alerts and reminders
 Back-up facility to place trades on Direct Phone lines
 Single screen interface for cash and derivatives
SPEEDTRADE PLUS TERMINAL

⇒ SYSTEM REQUIREMENTS
You'll need access to a computer which has at least the following configuration:

 Pentium 3 PC
 Minimum 128 MB RAM
 Windows 2000/XP
 Dial-up Modem / Cable modem
 Internet Connection Account
 Internet Explorer 6.0
 Java enabled in IE
GRAPHICAL INFORMATION OF SCRIPTS ON SHAREKHAN TERMINAL
 SERVICES
STOCK IDEAS
Stock Ideas is aimed at Sharekhan's trading clients. It presents our best stock picks in
today's market. We categorize these companies into six clusters to help you identify the
stocks that fit your time horizons and return objectives the best. Each cluster represents a
certain profile in terms of business fundamentals as well as the kind of returns you can
expect of it over a certain time horizon.

STOCK CLUSTER

We categorize all the scrips that are under coverage into six clusters. Each cluster
represents a certain profile in terms of business fundamentals as well as the kind of
returns you can expect over a certain time horizons and return objectives best.

⇒ EVERGREEN
Dominant players with strong brands, robust management
credentials, supernormal shareholder returns. Will steadily compound 18-
20% per year for next five to ten years.

⇒ APPLEEGREN
Potentially steady compounders, but five to ten years graph bit unclear.
Could gallop at 25-30 per year over the next two to three years.

⇒ EMERGING STAR
Young companies likely to rule chosen niches. Even better, the niches
could balloon into full-blow markets. Potentially ten-baggers if you’re
patient.
⇒ UGLY DUCKLING
Trading below fair value or at huge discount to peer group. But
somtehing’s cooking. Could double in two to three years time.

⇒ VULTURE’S PICK
Companies with valueable assets at throwaway prices.Buy & await
predators. Stratlingly high returns possible.

⇒ CANNONBALL
Season’s favourites. Typically fast gainers in rising markets,could return
30-50% within six months. Get in, cash in, get out.
 DIAL AND TRADE

⇒ Trade in Equity by using your phone!

Free with your Sharekhan Classic Account, the Dial-n-Trade service enables you
to place orders for buying and selling shares through your telephone.

All you have to do is dial any one of our two dedicated numbers (1-800-22-
7050 or 30307600), enter your TPIN number (which is provided at the time
of opening your account) and on authentication you'll be directed to a
telebroker who will buy and sell shares for you.

⇒ Features of Dial-n-Trade

that enable you to trade effortlessly

 TWO dedicated numbers for placing your orders with your cellphone or
landline. Toll free number: 1-800-22-7050. For people with difficulty in accessing the
toll-free number, we also have a Reliance number 30307600 which is charged at Rs.
1.50 per minute for STD calls.

 Automtic funds tranfer with phone banking (for Citibank and HDFC bank
customers)

 Simple and Secure Interactive Voice Response based system for authentication

 No waiting time. Enter your TPIN to be transferred to our telebrokers

 You also get the trusted, professional advice of our telebrokers

 After hours order placement facility between 8.00 am and 9.30 am (timings to be
extended soon)

 Reliable service, wherever you are

⇒ Requirements
All you need is access to a phone - either a landline or a cellphone: (the type of
phone doesn't matter)
  If calling from a cellphone, please dial 022-1-800-22-7050
 Currently for Citibank and HDFC customers. More banks to be order.

PMS (PORTFOLIO MANAGEMENT SERVICE)

I. Better Performance & Linear Returns with Hedging

Better performance

Superior performance is possible from superior market timing; our

critical edge
Superior performance is possible from picking stocks before inflection points in their
trading cycles

Linear Returns with moderated & hedged risks

Linear returns are possible from having hedged/sell market positions in

downtrends

Linear returns are possible by using options market to change the

portfolio beta

II. Convergence of time frames

 The best of both worlds can be achieved by having positions in cash and options
 The best of both worlds are achieved by using swing/momentum based index
trading systems with stop and reverse trend following.
 Delivery positions enable profit maximisation while options positions offer high
beta short term profile in the same portfolio

III. Two Product offering

Trading on Nifty: Nifty futures will be bought and sold on the basis of an
automated trading system generated calls to go long/short. The exposure will
never exceed the value of the portfolio i.e. no leveraging; but will allow us to be
short/hedged in Nifty in falling markets therefore allowing the client to earn
irrespective of the market direction.
Trading Portfolio:
Stocks in long term technical up trends will be identified to trade in at various
inflection points in their trading cycles. 80% of the portfolio will trade in delivery
of such stocks. 20% will be used in creating an options book i.e. buying calls/puts
of the index/stocks to increase the beta of the portfolio and to hedge against
pitfalls. The use of timing for delivery and options for a higher beta will attempt
to offer a superior rate of return by taking a risk with only 20% of the capital.
Here too money management rules will be in place to see that the capital is not
 eroded. Portfolio rebalancing may be conducted between the Cash and options
segments based on the profitability of each segment.

IV. How to Invest?

 Minimum investment Rs.5 Lakh
 Lock in for 3 months
 Fortnightly reporting of Portfolio Net Worth
 Monthly reporting of Portfolio Holdings/Transactions
 20% profit sharing fees on booked profits quarterly basis.
 5% discount on profit sharing fees [to 15%] for investment of 1 crore OR lock in
of 1 year.
 0% AMC fees
 Brokerage 0.05% for derivatives and 0.30% for delivery
ONLINE IPO

Online IPO (Initial Public Offering) is a new service started by Sharekhan for providing
the application form of any company’s issues of shares just like the TCS issue can be
subscribed by filling an online form to reduce the paper work and the fund transfer
facility is also provided to the clients for transferring the funds online. It is given on its
web-site for helping the clients who are not able to collect the forms manually and the
speed of filling and reducing the risk of misplacing of forms, not reaching in time, etc.
Sharekhan gives you the facility to fill up the IPO without giving any physical
documents and signatory.
RESEARCH BASED SERVICES

Every investor’s needs and goals are different. To meet these needs, Sharekhan provides
a comprehensive set of research reports, so that one can take the right
investment decisions regardless of their investing preferences! The Research and
Development at Sharekhan is done at its Head office Mumbai.
The R&D department Head Mr. Hemang Jani forwards all the details regarding all stocks
and scripts to all the branches through Internet. At the end of each trading day there is a
Teleconference, through which the R&D department Head MR. Hemang Jani talks with
each Branch heads and discusses about each day’s closing position and shows their
predictions about next day’s opening position. The quarries regarding stock positions and
other relevant matter of the branch heads of each branch is being solved through
teleconference.

Institutional Research - Each individual company is analyzed and its results are placed
on our site. Here Rating is given on relative basis, in the form of underperformer, neutral
and outperformer.

Outperformer: This stock will outperform the market by giving a relatively

higher return than a market-based index.

Neutral: This stock is expected to more or less give you the index rate of return
or a return not significantly higher or lower than the market index.

Underperformer: This stock is expected to lose value on a relative basis when

compared to a market-based index.

Sector Watch – Here each sector is analyzed thoroughly. For eg. Pharma sector,
Automotive sector, and various other sectors.
An example of Sharekhan’s Research Based Service :
SHAREKHAN DEPOSITORY SERVICES

Dematerialization and trading in the demat mode is the safer and faster alternative to the
physical existence of securities. Demat as a parallel solution offers freedom from delays,
thefts, forgeries, settlement risks and paper work. This system works through depository
participants (DPs) who offer demat services and the securities are held in the electronic
form for the investor directly by the Depository.

Sharekhan Depository Services offers dematerialization services to individual and

corporate investors. Sharekhan is a registered Depository Participant (DP) with National
Securities Depository Ltd. (NSDL). It has a team of professionals and the latest
technological expertise dedicated exclusively to our demat department, apart from a
national network of franchisee, making our services quick, convenient and efficient. At
Sharekhan, the commitment is to provide a complete demat solution which is simple,
safe and secure.
BENEFITS OF TRADING WITH SHAREKHAN

• Only Sharekhan offers the facility to trade at two major commodity exchanges of
the country:

1. Multi Commodity Exchange of India Ltd, Mumbai (MCX) and

2. National Commodity and Derivative Exchange, Mumbai (NCDEX).

• Sharekhan also equips you with world-class research, based on technical and
fundamental study of all major commodities.

• What’s more Sharekhan is in the process of launching several trading products

and strategies to help you trade in the commodity futures segment.

Sharekhan is a registered Stock Broker with the Bombay Stock Exchange and
National Stock Exchange to trade on behalf of clients. The screen-based trading is
done on BOLT- BSE Online Trading and NEAT- National Exchange Automated
Trading, terminals. There are two types of transactions executed on these terminals
viz. intra-day and delivery based transactions. Intraday transactions are those, in
which the squaring up of deal is done on the same day, while in delivery based
transaction the squaring up is not done on the same day, but the stock is to be traded
on the basis of rolling settlement i.e. T+2. The Brokerage of Intraday transaction is
0.10% single side, while brokerage on delivery based transactions is 0.50% on both
side, i.e. while purchasing as well as selling.
SMS SERVICES

Our SMS service comes at a nominal fee of Rs100, which The Sharekhan SMS
shall be charged on a monthly basis. * Alert service can be
accessed from:
In order to avail of this facility all you need to do is to fill in  Hutch
the form below and submit the details  BSNL
 TouchTel
 Customer ID  Reliance
 Airtel
 First Name
 Spice Mobile
 Last Name  and several others!
 Mobile
number
Submit
 City

Your Classic account now comes with the exclusive Sharekhan SMS Alert service. Get
quality trading calls and profitable investment ideas on your mobile phones.

In our continuous efforts to make investing easier, we have launched the Sharekhan
SMS Alert service. As part of this service our Chart Buster Calls and Stock Ideas shall
be disseminated to our on-line trading customers via mobile phones in the form of short
messages.
 MARKET COVERAGE : GROUND NETWORK LARGEST IN INDIA

122 Franchisees and 28 branches

Covers 82 cities in 17 states across
India
Trade execution facility on BSE and
NSE for Cash as well as
Derivatives
Depository/Demat account services
Personalized Sharekhan research
advice
Uniform service standards

Sharekhan is having the 478 BRANCHES in 178 Cities all over India.
 SWOT ANALYSIS

During this training at Sharekhan, we had come to know the Strengths – Weaknesses –
Opportunities – Threats for the company and it is very useful for a company to analyze
them. Therefore, the SWOT analysis is presented here and the suggestions for
maintaining strengths and removing weaknesses are explained.

STRENGTHS:

 Well-maintained infrastructure.
 Dedicated, Intelligent and Loyal staff.
 On-line Trading products.
 Lowest brokerage and other charges w.r.t. Competitors.
 The best investment advice correct up to 70-90 % through dedicated
 research and reports.
 Wide product range to enable the clients to choose the best alternative.
 One of the best DPs in India.
 A positive image in the existing clients.

WEAKNESSES:

 Less awareness in the market.

 Time consuming process for account opening, resolving the problems of the
customers, etc.
 Service quality is not maintained accordingly how they are promoted.
OPPORTUNITIES:

 Slope of stock market towards delivery based transaction.

 Large potential market for delivery and intra-day transactions.
 Open interest of the people to enter in stock market for investing.
 Attract the customers who are dissatisfied with other broker & DPs.
 An indirect opportunity generated by the market from its bullishness.
 Large untapped market in the saurashtra region of Gujrat.

THREATS:

 Decreasing rates of brokerage in the market.

 Increasing competition against other brokers & DPs
 Poor marketing activities for making the company known among the
customers.
 A threat of loosing clients for any kind of weakness of the company.
 Loosing the untapped market with the entry of the competitors.
 INVESTMENT AVENUES

NON-MARKETABLE FINANCIAL ASSETS

A good portion of financial assets is represented by non-marketable financial assets.
These can be classified into the following broad.

• Bank deposits
• Post office deposits
• Company deposits
• Provident fund deposits

EQUITY SHARES
Equity shares represent ownership capital. As an equity shareholder, you have an
ownership stake in the company. This essentially means that you have a residual interest
in income and wealth. Perhaps, the most romantic among various investment avenues,
equity shares are classified into the following broad categories by stock market analysts:

• Blue chip shares

• Growth shares
• Income shares
• Cyclical shares
• Speculative shares

BONDS
Bonds or debentures represent long-term debt instruments. The issuer of a bond promises
to pay a stipulated stream of cash flows. Bonds may be classified into the following
categories:

• Government securities
• Government of India relief bonds
• Government agency securities
• PSU bonds
• Debentures of private sector companies
• Preference shares

MONEY MARKET INSTRUMENTS

Debt instruments which have a maturity of less than one year at the time of issue are
called money market instruments. The important money market instruments are;

• Treasury bills
 • Commercial paper
• Certificates of deposit

MUTUAL FUNDS
Instead of directly buying equity shares and/or fixed income instruments, you can
participate in various schemes floated by mutual funds which, in turn invest in equity
shares and fixed income securities. There are three broad types of mutual fund schemes:

• Equity schemes
• Debt schemes
• Balanced schemes

LIFE INSURANCE
In a broad sense, life insurance may be viewed as an investment. Insurance premiums
represent the sacrifice and the assured sum the benefit. The important types of insurance
policies in India are:

• Endowment assurance policy

• Money back policy
• Whole life policy
• Term assurance policy

REAL ESTATE
For the bulk of the investors the most important asset in their portfolio is a residential
house. In addition to a residential house, the more affluent investors are likely to be
interested in the following types of real estate:

• Agricultural land
• Semi-urban land
• Timeshare in a holiday resort

PRECIOUS OBJECTS
Precious objects are items that are generally small in size but highly valuable in monetary
terms. Some important precious objects are:

• Gold and Silver

• Precious stones
• Art objects

FINANCIAL DERIVATIVES
A financial derivative is an instrument whose value is derived from the value of an
underlying asset. It may be viewed as a side bet on the asset. The most important
financial derivatives from the point of view of investors are;

• Options
• Futures
 SUMMARY EVALUATION OF VARIOUS INVESTMENT
AVENUES

RETURN
MARKETA CON
Capital
Current RISK BILITY/LIQ TAX SHELTER VENI
appreci
yield UIDITY ENCE
ation
Equity Section 80L
Low High High Fairly high High
shares benefit
Non-
converti
Negligib
ble High Low Average Nil High
le
Debentu
res
Equity Section 80L Very
Low High High High
Schemes benefit High
Debt No tax on Very
High Low Low High
Schemes dividends high
Bank Neglig Section 80L Very
Moderate Nil High
Schemes ible benefit high
Public
Very
Provide Nil High Nil Average Section 88 benefit
high
nt Fund
Life
Insuran Moderat Very
Nil Nil Average Section 88 benefit
ce e high
Policies
Resident
Moderat Neglig
ial Moderate Low High Fair
e ible
House
Gold
Moderat Avera Avera
and Nil Average Nil
e ge ge
Silver
 MARKET SEGMENTS
PRIMARY EQUITY MARKET
There are four ways in which a company may raise equity capital in the primary market.

o PUBLIC ISSUE
o RIGHTS ISSUE
o PRIVATE PLACEMENT
o PREFERENTIAL ALLOTMENT

A long period of lacklustre activity and waning investor interest was dispelled in
2003-04 by signs of revival in the public issues segment. The bulk of resource
mobilisation (71.4 per cent) from the public issues market in 2003-04 was by banks and
financial institutions. Four public sector banks floated equity issues aggregating Rs.950
crore during 2003-04. In addition, there were six bond issues aggregating Rs.4,181 crore
by the IDBI (Rs.2,930 crore from three issues) and the ICICI Bank (Rs.1,251 crore from
three issues). The share of equity issues in total resource mobilisation increased sharply
in 2003-04 in comparison with the previous year. Resource mobilisation from the private
placement market declined during 2003-04. This decline needs to be placed in the context
of stringent disclosure norms prescribed by the SEBI on September 30, 2003 for this
segment, which had remained almost unregulated until then. Public sector entities
(mainly financial intermediaries) continued to dominate the private placement market in
2003-04, accounting for 75.0 per cent of the total resource mobilisation. Resource
mobilisation by financial intermediaries (both public and private sector) increased by
17.4 per cent to Rs.35,057 crore, while that by non-financial companies declined sharply
by 34.9 per cent to Rs.24,158 crore. Resources raised by Indian corporates from the
international capital market by way of Foreign Currency Convertible Bonds (FCCBs),
Global Depository Receipts (GDRs) and American Depository Receipts (ADRs) declined
marginally during 2003-04. With a view to integrating the Indian capital market with the
international capital markets and to enable Indian investors to diversify risk, foreign
companies were allowed to access the Indian capital market by way of Indian Depository
Receipts (IDR).
 SECONDARY MARKET
There are five ways in secondary equity market.

• TRADING
• OPEN OUTCRY SYSTEM
• SCREEN-BASED SYSTEM
• SETTLEMENT
• SHIFT TO ROLLING SETTLEMENT

The stock market turned buoyant in 2003-04, ending a long subdued spell of over
three years which began shortly after the BSE Sensex crossed the historical 6000-mark in
intra-day trading in February 2000. The rally in equity prices, which began from end-
May 2003, continued almost uninterrupted till January 2004. It was sustained by large
investments by FIIs against the background of improving fundamentals, strong corporate
results and initiatives on the disinvestment front. The BSE Sensex crossed the 6000-mark
again in January 2004. The uptrend was interspersed by several corrections from
February 2004 in an environment of high uncertainty. Despite some downtrend in
February 2004 and March 2004 due to political uncertainty, the BSE Sensex ended the
year with net significant gains of over 83 per cent over the previous year. The stock
market remained somewhat volatile during April-June 2004. The downtrend witnessed in
February 2004 continued during March and April 2004. On May 17, 2004 the stock
market in India witnessed turbulent conditions. The market opened the day on an
extremely weak note and plunged by 16.6 per cent during intra-day trading before
recovering partly. The market ended the day with a net loss of 11.1 per cent as compared
with the previous day’s close. The trading was halted twice during the day due to the
application of the index-based circuit filters.

One of the outstanding features of the Indian Capital Market in recent years is the
growth of the equity derivative market. This is Indias first effort at building a modern,
transparent, well regulated derivative market. Going by the turn over in 2003-04, the
biggest five underlying on the NSE equity derivatives markets were (1) Nifty, Rs 6.01
trillion, (2) TELCO, Rs 1.89 trillion,(3) TISCO, Rs.1.68 trillion, (4) Satyam Computers
Rs. 1.24 trillion (5) State Bank of India, Rs. 1.22 trillion. The experience with rapid
growth of index derivatives and the domination of Nifty, is consistent with economic
logic, which predicts that the biggest role in the derivative market is for macro economic
underlyings - such as the equity index, interest rates and currencies - which are the most
important sources of risk for households and firms, when compared with the fluctuations
of shares or bonds issued by individual firms or fluctuations of individual commodities.

While this growth of the index derivatives is impressive, India still considerably
lags the relationships found internationally. In calender 2003, index derivatives at NSE
were merely 40 per cent of the equity spot at NSE. This estimate overstates the size of the
Indian index derivatives market since it does not account for the BSE spot market.
 This ratio greatly lags behind that found in numerous markets, where the index
derivatives market ranges from 1.3 to 40.6 times larger than the equity spot market.

Options trading is another sophisticated aspect of the derivatives market where

there are considerable hurdles faced in terms of knowledge and awareness amongst the
largely retail trading community. However, unlike the index derivatives, options trading
has not yet grown in prominence in India . As of March 2004, options accounted for only
11 per cent of equity derivatives turnover; the reminder was taken up by futures. Options
turn over growth, at only 147 per cent substantially lagged the growth of equity
derivatives turn over, so options actually lost ground in 2003-04.

In 2008, certain weaknesses were observed in the process engineering of the primary
market, particularly in the context of the sale of ONGC shares by the government. These
were partly caused by the unusual loads faced in the system. The secondary market for
equity now offers the capacity of seamless end-to-end electronic operation. In particular
customers of an electronic bank and an internet broking facility who use the internet
broking facility offered by NSDL, all elements of trading on the secondary market can be
done electronically, without any human intervention

ONLINE BSE AND NSE TRADING WITH SHAREKHAN

Sharekhan is a registered Stock Broker with the Bombay Stock Exchange and National
Stock Exchange to trade on behalf of clients. The screen-based trading is done on BOLT-
BSE Online Trading and NEAT- National Exchange Automated Trading, terminals.
There are two types of transactions executed on these terminals viz. intra-day and
delivery based transactions. Intraday transactions are those, in which the squaring up of
deal is done on the same day, while in delivery based transaction the squaring up is not
done on the same day, but the stock is to be traded on the basis of rolling settlement i.e.
T+2. The Brokerage of Intraday transaction is 0.10% single side, while brokerage on
delivery based transactions is 0.50% on both side, i.e. while purchasing as well as selling.
 INTRODUCTION TO DERIVATIVES

What is Derivatives

Derivatives are financial contracts, which derive their value from an underlying
asset. The underlying asset can be equity, commodity, foreign exchange, interest rates,
real estate or any other asset. Broadly four types of derivatives are traded, namely
forwards, futures, options and swaps.

DERIVATIVES
DERIVATIVES

Options
Options Futures
Futures Swaps
Swaps Forwards
Forwards

Put
Put Call
Call Interest
Interest Currency
Currency
Rate
Rate
MEANING OF Commod
Commod FORWARD, FUTURES,
Security
Security
OPTIONS AND ity
ity SWAPS

A Forward contract is an agreement between two parties to buy or sell an asset

at a future date for price agreed upon while signing the agreement. Forward contract is
not traded on an exchange. The terms and conditions of forward contracts are customized
based on negotiations between the counter parties. It is the oldest form of derivative
contract.

A futures contract is an agreement between two parties to buy or sell a specified

and standardized quantity of an asset at a certain time future at a price agreed upon at the
time of entering into the contract on the futures exchange.

An Option gives the right but not obligation to the option owner, to buy or sell an
underlying asset at a specific price at a specific time period in the future.

There are two types of Options:

 A call option is an option contract that gives the owner of the option ,the right,
but not the obligation to buy the underlying assets on or before a specific date and at a
specific price.

A put option is an option contract that gives the option owner the right, but not
the obligation to sell the underlying asset on or before a specific date and at a specific
price.

As in any other financial transaction, there are two sides to every contract. For
instance, where as the buyer of a call option has the right to buy an asset, the seller of the
same option has obligation to the sell the same asset if the option is exercised. The option
seller is virtually selling “ price protection” to the buyer who pays a certain amount of
money called the premium to the options seller.

A swap is an agreement between two parties to exchange different streams of

cash flows in the future according to predetermined terms. It is a recent innovation. The
basic idea is that the counter-parties agree to swap two different types of payments. A
payment is either fixed or is designed to float according to an underlying interest rate,
exchange rate, index or the price a security or commodity. When the payments are to be
executed in the same currency, then only the net amount of payments are made. The
world Bank and IBM entered into the first ever swap contract in August 1981.

A “Swap Rate” and associated cash flows are formulated so that one series of
payment is based on a fixed interest rate and the other series is based on a floating
interest rate like LIBOR or a U.S. Treasury bill yield. A foreign exchange swap consists
of two transactions; the first involves buying a foreign currency at a specific exchange
rate and the second involves selling back that currency at another specific exchange rate.
A foreign currency swap is structured so that one party makes a series of payments based
on an interest rate in one currency and then receives a series of payments in another
currency based on that currency’s interest rate.
 ABOUT THE COMMODITY
COMMODITIES MARKET IN INDIA

Organized futures market evolved in India by the setting up of "Bombay Cotton Trade
Association Ltd." in 1875. In 1893, following widespread discontent amongst leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade
Association, a separate association by the name "Bombay Cotton Exchange Ltd." was
constituted. Futures trading in oilseeds was organized in India for the first time with the
setting up of Gujarati Vyapari Mandali in 1900, which carried on futures trading in
groundnut , castor seed and cotton. Before the Second World War broke out in 1939
several futures markets in oilseeds were functioning in Gujarat and Punjab.

There were booming activities in this market and at one time as many as 110 exchanges
were conducting forward trade in various commodities in the country. The securities
market was a poor cousin of this market as there were not many papers to be traded at
that time.

The era of widespread shortages in many essential commodities resulting in inflationary

pressures and the tilt towards socialist policy, in which the role of market forces for
resource allocation got diminished, saw the decline of this market since the mid-1960s.
This coupled with the regulatory constraints in 1960s, resulted in virtual dismantling of
the commodities future markets. It is only in the last decade that commodity future
exchanges have been actively encouraged. However, the markets have been thin with
poor liquidity and have not grown to any significant level.

A three-pronged approach has been adopted to revive and revitalize the market. Firstly,
on policy front many legal and administrative hurdles in the functioning of the market
have been removed. Forward trading was permitted in cotton and jute goods in 1998,
followed by some oilseeds and their derivatives, such as groundnut, mustard seed,
sesame, cottonseed etc. in 1999. A statement in the first ever National Agriculture Policy,
issued in July, 2000 by the government that futures trading will be encouraged in
increasing number of agricultural commodities was indicative of welcome change in the
government policy towards forward trading.
Secondly, strengthening of infrastructure and institutional capabilities of the regulator
and the existing exchanges received priority. Thirdly, as the existing exchanges are slow
to adopt reforms due to legacy or lack of resources, new promoters with resources and
professional approach were being attracted with a clear mandate to set up demutualized,
technology driven exchanges with nationwide reach and adopting best international
practices.
The year 2003 marked the real turning point in the policy framework for commodity
market when the government issued notifications for withdrawing all prohibitions and
opening up forward trading in all the commodities. This period also witnessed other
reforms, such as, amendments to the Essential Commodities Act, Securities (Contract)
Rules, which have reduced bottlenecks in the development and growth of commodity
markets. Of the country's total GDP, commodities related (and dependent) industries
constitute about roughly 50-60 %, which itself cannot be ignored.

Most of the existing Indian commodity exchanges are single commodity platforms; are
regional in nature, run mainly by entities which trade on them resulting in substantial
conflict of interests, opaque in their functioning and have not used technology to scale up
their operations and reach to bring down their costs. But with the strong emergence of:
National Multi-commodity Exchange Ltd., Ahmedabad (NMCE), Multi Commodity
Exchange Ltd., Mumbai (MCX), National Commodities and Derivatives Exchange,
Mumbai (NCDEX), and National Board of Trade, Indore (NBOT), all these shortcomings
will be addressed rapidly. These exchanges are expected to be role model to other
exchanges and are likely to compete for trade not only among themselves but also with
the existing exchanges.

The current mindset of the people in India is that the Commodity exchanges are
speculative (due to non delivery) and are not meant for actual users. One major reason
being that the awareness is lacking amongst actual users. In India, Interest rate risks,
exchange rate risks are actively managed, but the same does not hold true for the
commodity risks. Some additional impediments are centered around the safety,
transparency and taxation issues.

WHY STRUCTURED COMMODITY MARKET?

Today the business is not limited to our area only. Where the production is less but,
demand is comparatively high prices of the product will go up. On the contrary where the
production is high but demand is comparatively low the prices will go down.

 If sellers and buyers come together at a place then it will create a market. Here
against one seller there will be more then one buyer. In this market buyers will
come across the country for transactions.
 In this market not only producer and seller are included but arbitrageur,
speculator, and hedger can tread. In this way the total area of market will become
broad.
 In our country agricultural products form 25% of GDP. Total turnover of
commodity of market is nearly Rs.1, 10,000 corer. In which 60,000 corer comes
from agriculture and left is coming from coal, crude, etc…
 Today in our country most of the trade is done in unorganized market. In the
market current and future contracts are done. Promissory contracts have been
started science 1875. But due to some restriction it was not properly worked.
Presently nearly in 122 commodities tread is being done
TRANSACTION IN THE ORGANIZED MARKET:

Organized markets have structured forms of transactions. The commodity

exchanges are regulated as per rules and regulations define in The Forward
Contracts (Regulation) Act, 1952 for regulating forward\future contracts. In
December 2003, the National Commodity and Derivative Exchange Ltd
(NCDEX) launched futures trading in nine major commodities.
MCX To begin with contacts in gold, silver, cotton, soyabean, soya oil, mustered
seed, rapeseed oil, crude palm oil and RBD Palmolive are being offered. Now
more then 40 commodity items are included. Day by day number of commodity
items is incising. The various commodities that tread on the NCDEX and look at
some commodity specific issues. In this commodity market classified as
agriculture products, precious metal, other metal and energy which we discuss
above.
SHAREKHAN COMMODITY ADVANTAGE

KEY BENEFITS OF COMMODITIES@ SHAREKHAN:

You are getting 20time exposer in MCX &10 time in NCDEX depends on commodity to
open an account

We have sms facility where u getting market information as well as buy/sell call

You are also getting yahoo chat,Where our dealer/RM are always help for market
information as well as buy/sell call
 INVESTING IN MUTUAL FUNDS THROUGH
SHAREKHAN

We're glad to announce that you will now be able to invest in Mutual Funds through us!
We've started this service for a few mutual funds, and in the near future will be
expanding our scope to include a whole lot more. Applying for a mutual fund through us
is open to everybody, regardless of whether you are a Sharekhan customer.

You have two choice through which you can invest in Mutual Fund.

A) On the main page of this micro-site and scheme snapshot page we have provided with
a link to PDF version of application form which you just need to download, print and fill
up relevant details. Submit the duly filled copy with payment either to Nearest Sharekhan
Branch Or Mutual Fund Company.

B) Alternatively you can call up our customer service 1600-22-7500 and give your
contact detail wherey we will arrange to mail you a hard copy of application of desired
schemes from the list offered by Sharekhan.
 PROBLEMS OF THE INDUSTRY

 Problems of awareness about mutual fund industry are urban areas only people of
rural areas are not aware of MF and 70% people belong to village areas and full of
money.
 Lack of communication like day to day NAV and when the dividend declared,
How much percentage of dividend will come etc. messages are not communicated
by Asset Management Company to the Broker or Intermediaries.
 Customers could not get the service properly like Statement of Investment,
Redemptions, which schemes and what percentage of return they are getting?
 The industry is highly depending upon the Primary market and no one can predict
about market whether it will go up (Boom) or down. Indian Market is highly
volatile.
 Performance of the various schemes of MF is again depending on the Fund
Manager. If the Fund Manager performs well, investors will get the handsome
return of their investment otherwise investors lose its amount, which is invested in
MF.
 A wrong commitment by the broker like Broker is giving the sure returns
commitment and neglects the risks factor.
 Investors also want high return and less risk. Expectations of the investor are high
and risk avers.
 Fact sheet of the various schemes are not coming on time and in quantity. It is
necessary because investors want it for their study. As well as the problem of
necessary forms.
 INTRODUCTION : RESEARCH METHODOLOGY
In a very common understanding research refers to a search for knowledge. One
can also define research as a scientific & systematic search for information on a scientific
topic. Some also regard research as a movement from unknown to known.

According to Clifford Woody research comprises defining & redefining problems,

formulating hypothesis or suggested solutions, and collecting, organizing, evaluating
data, making deductions & reaching conclusions, and at last carefully testing the
conclusions to determine whether they fit the formulating hypothesis. It can also be
described as the original contribution to the existing stock of knowledge making for its
advancement.

Research in other words can be said as searching for truth which has not been yet
detected due to some reasons. There are many purposes of conducting a research, but in
common it can be described as.

 To get familiarity with a phenomena or to achieve new insights.

 To portray accurately the characteristic of particular individual situation or a group.
 To determine the frequency with which something occurs or with which it is
associated with something else.
 To test a hypothesis of a casual relationship between variables.

Any research work that is to be conducted should be followed in a particular way.

It cannot be done is a haphazard manner. Each research have its own way but there are
common steps that needs to be followed. Like are define the problem, sample size, collect
the data, integrate it etc. even my research work follows the same steps or procedure
which can seen after this. (Introduction)

RELEVANCE OF THE STUDY

Any country of the world is measured by its economy. The economy indicates whether
the nation is strong or weak, developed or under – developed.

Financial market is one of the factor which affects the economy of any country. Stock
market affects Indian economy directly or indirectly.

In India stock market is fully developed but on the other side derivatives segment and
commodity segment are upcoming.

In the financial market, there are various instruments for investment or saving. The more
investment or saving in these instruments, the more development is possible.
 The instrument like F.D., Equity, Debenture, Cash segment, Bond, Mutual Fund,
derivatives and commodities. There are other bullion market, Real Estate, Precious
Objects, Insurance etc… are available.

There are so many investors in India are not much familiar with their instruments but one
fact is that there is immense scope for these instruments.
Thus to know the awareness about the investment pattern in stock market particular in
Baroda city this study is undertaken.

As a sharekhan member this study is undertaken to know the investment pattern in stock
market and also find out the way to attract such investor who like to trade in stock
market.

At last this study helps me to gain the knowledge and the company to attract new
customers.
RESEARCH PROBLEM
In the Baroda city, many people invest in stock market and mutual fund but most of the
investor never invest in government securities and other securities segment are remain
inaccessible.

Very few people in the Baroda who are invest in current capital market having immense
opportunities for developing of investment segments.

Sharekhan as a stock broking company needs to focus on increasing interest in stock

market investment because if trading on these instruments increase sharekhan will be
benefited by earning revenue in terms of brokerage.

So that this study is undertaken.

OBJECTIVES OF RESEARCH
The main objective of the study is to know literacy and total awareness of current capital
market ratio of different investment avenues and their potential market among the people
of Baroda City.

Some other secondary objectives are as under:

1. To know the awareness of Total Capital Market.

2. To know the scope for the Current Capital Market.
3. To know the investment habit of the people of Baroda City.
4. To know the purpose of investing in Current Investment Avenues.
5. To know the influencing force behind the decision making while invest in
currently available investment options.
6. To find out the best pattern to educate about different investment avenues.
7. To find out the medium which is the best suitable for investing in different
investment avenues.
 SCOPE OF THE STUDY

The research that is being conducted by us will be useful in the following respect.

 This will help the company, how to make people aware about capital market
mostly stock market by imparting best education.

 This will help the company to know the taste of masses and turn it towards best
available investment avenue.

 This will help the company to frame effective Marketing Strategy.

 This will also help to select the right media for advertising to create brand
awareness as well as to give knowledge of the products.

 Mind share of Sharekhan can be known.

 This will also help to select right medium for investing into the different
investment tools.

 This will help the company to reduce the obstacles which come in the way for the
development of its related investment products segment.

DATA COLLECTION
SECONDARY DATA

When data are collected and compelled from the published nature or any other’s primary
data is called secondary data.

So far as our research is concerned, we have not collected any information from any
sources. So, we have not used secondary data for our research

PRIMARY DATA
The data which is collected directly from the respondent to the base of knowledge and
belief of such research are called primary data.

MODE OF COLLECTION OF DATA

We have collected the data through questionnaire by personal meeting and tele – calling
with people.
 SAMPLING DESIGN
Sample design is definite plan for obtaining a sample from a given population. It refers to
the technique or procedure the researcher would adopt selecting items for the sample.

Sample design may as well as lay down the no. of item to be included in the sample i.e.
the size of sample.

Sample design is determined before the data are collected.

It is very true that it’s very difficult to do the research with the whole universe. As we
know that it is not feasible to go for population survey because of the numerous
customers and their scattered location. So for this purpose sample size has to be
determined well in advance and selection of sample also must be scientific so that it
represents the whole universe.

So far as our research is concerned, we have taken sample size of 200 respondents. We
have selected Income Earners with savings to invest in Baroda city.

As we select the questionnaire as our INSTRUMENT for the research purpose.

TESTING OF HYPOTHESIS
H0: “There is no significant difference in level of knowing the different
investment avenues in the current capital market among the people of
Baroda City.”

H1: “There is significant difference in level of knowing the different

investment avenues in the current capital market among the people of
Baroda City.”

TESTING OF HYPOTHESIS USING Z TEST (TWO TAILED):

1) The Null Hypothesis (H0): “There is no significant difference in level of knowing the
different investment avenues in the current capital market among the people of Baroda
City.”

Therefore, H0 : u = 50%
H1: u ≠ 50%

2) Level of Significance : σ
The Level of significance should be set at α = 0.05
3) The Statistical Test :
Z = X – u / σx
Where, Z = No. of standard deviations for the desired level of
confidence.
X = Mean of the sample
U = Mean of the population or hypothetical mean
σx = Estimate for the standard error or the mean
4) The Decision Rule
1.000 (1-0.025) = 0.975
1.9+ 0.6 = 1.96 & - 1.96 (the result will be between two)

σx = 5 / root of 300 - 1
= 15/17.29
= 0.8676

Z = 55 – 50 / 0.8676
= 5.763
5.) Draw a statistical conclusion
The absolute value of the computerized Z statistic (5.763) is larger than 1.96,
therefore null hypothesis is rejected.

So, Alternate Hypothesis is accepted.

H1: “There is significant difference in level of knowing the different investment
avenues in the current capital market among the people of Baroda City.”
 DATA ANALYSIS & INTERPRETATION
1. GENDER RATIO

MALE FEMALE
219 81

GENDER RATIO

81

MALE
FEMALE

219

Interpretation:

From the given data we can say that male & female has interest to invest their
money in stock market.
2. AGE GROUP

NO OF
PARTICULARS PERSONS
BELOW 30 89
31-45 123
46-60 60
ABOVE 60 28

140

120

100

80
123
60
89
40 60
20 28

0
BELOW 30 31-45 46-60 ABOVE 60

Interpretation :

From the above Data we can say that age group in this research is mostly below 31-
45 years. i.e. 123 respondents out of 300 are of this age group.
3. EDUCATION

NO OF
PARTICULARS PERSONS
UNDER
GRADUATE 87
GRADUATE 135
POST GRADUATE 78

EDUCATION

78 87

UNDER GRADUATE
GRADUATE
POST GRADUATE

135

Interpretation:

From the above data we can say that mostly graduate people are interested to
invest in stock market.
4. OCCUPATION

NO OF
PARTICULARS PERSONS
PROFESSIONAL 27
BUSINESSMAN 143
WORKING IN PVT
FIRM 67
GOVT. EMPLOYEES 63

27
63

PROFESSIONAL
BUSINESSMAN
WORKING IN PVT FIRM
67 GOVT. EMPLOYEES
143

Interpretation :

As we see that mostly Business people like to invest in stock Market as we can say
that 143 respondents out of 300.
5. OF THIS INVESTMENT OPTION WHERE DO YOU INVEST YOUR
SAVINGS ?

NO. OF % OF
AVENUES PERSONS PERSONS
STOCK MARKET 192 64
BANK Fixed Deposits 235 78.33333
POST OFFICE SAVINGS
SCHEME 210 70
INSURANCE 189 63
MUTUAL FUND 170 56.66667
COMMODITY 205 68.33333
REAL ESTATE 148 49.33333

NO. OF PERSONS

235
250 210
192 205
189
200 170
148
150
NO. OF PERSONS
100
50
0
ESTATE
MUTUAL
MARKET

SAVINGS
STOCK

OFFICE

FUND

REAL
POST

% OF PERSONS

49.33333333 64
1
2
68.33333333
3
78.33333333
4
5
56.66666667 6
70 7
63
6. IF YOU INVEST IN STOCK MARKET WHICH WOULD BE YOUR
PREFERENCE ROM BELOW

NO OF % OF
PARTICULARS PERSONS PERSONS
EQUITY 189 63
FUTURE &
OPTIONS 67 22.33333
COMMODITY 44 14.66667

NOOFPERSONS

200 189
150
100
67
50
44
COMMODITY
FUTURE &
EQUITY

OPTIONS

0 NOOF NOOFPERSONS
PERSONS

% OF PERSONS

14.666666
7
1
22.333333 2
3 63 3
7. WHICH FACTOR PLAYS A CRUCIAL ROLE WHEN YOU MAKE A
DECISION TO INVEST IN STOCK MARKET ?

NO OF
PARTICULARS PERSONS RANK
RISK REDUCTION 45 4
LEAVERAGE
BENEFIT 41 5
ARBITRAGE
BENEFIT 54 3
SPECULATIVE
MOTIVE 72 2
INVESTMENT
PURPOSE 88 1

100% 4 5 3 2 1
90%
80%
70%
60% RANK
50% 45 41 54 72 88
40% NO OF PERSONS
30%
20%
10%
0%
N

IT

VE

SE
T
IO

FI

EF

O
TI
CT

NE

RP
O
BE
DU

M
BE

PU
E
RE

E
E

V
AG

T
G

TI

EN
K

RA

LA
TR
S

M
RI

VE

U
BI

ST
EC
AR
A

VE
LE

SP

IN

Interpretation:

From the above Chart we can rank investment purpose as the first priority of an
investor as 88 respondents out of 300 have given first & foremost preference to the
investment purpose and last to leverage benefit. So we can say that today’s investor
are not just doing Business blindly but they do business for investment purpose also.
8. HOW DO YOU TAKE DECISION IF YOU WANT TO INVEST IN STOCK
MARKET ?

FACTOR PERCENTAGE(%) RANK

INDEPENDENTLY 14.3 1
BROKER/AGENT'S ADVICE 11.6 5
NEWS CHANNEL 9.3 8
NEWS PAPER 8 9
INTERNET 11.3 6
ADVICE OF
FRIENDS/COLLEAGUS 12 2
ADVICE OF CA/TAX
CONSULTANTS 9.7 7
WELL KNOWN TOCK BROKING
HOUSES 12 2
BUSINESS MAGAZINES 11.8 4

100% 1
90% 2 2 4
80% 5 6 7
8 9
70%
60% RANK
50% 14.3
40% 12 12 11.8 PERCENTAGE(%)
30% 11.6 11.3
9.3 8 9.7
20%
ADVICE OF CA/TAX

10%
INDEPENDENTLY

NEWS CHANNEL

MAGAZINES

0%
INTERNET

CONSULTANTS

BUSINESS

Interpretation :

From the above Chart we can rank Independently as the first priority of an investor
as 14.3% have given first & foremost preference to the Independent thought and
last to Newspaper. So we can say that today’s investor are not just doing Business
on any other kind of NEWS or Information but they do Business independently.
9. WHICH STOCK EXCHANGE WOULD YOU PREFER TO CARRY OUT
YOUR TRANSACTION ?

NO OF
EXCHANGES PERSONS
BSE 133
NSE 81
NCDEX 45
MCX 41

NO OF PERSONS

140 133

120
100
81
80
NO OF PERSONS
60 45 41
40
20
0
BSE NSE NCDEX MCX

Interpretation:

From the above Chart it is very clear that most investor has to prefer to invest in
BSE. Because BSE is the one of the oldest Exchange of India. It has vital range of
Script Traded in it.
10. DO YOU CONSIDER INVESTMENT IN STOCK MARKET ARE SAFER
THAN OTHER INVESTMENT AVENUES ?

NO OF
PARTICULARS PERSONS
YES 137
NO 163

NO OF PERSONS

137 YES
163 NO

Interpretation :

Yes, it is very clear from the above question that many of the respondents have lose
money in the current scenario of Sensex. so they think that stock market is very
riskier than other investment avenues.
11. IF NO THAN WHICH CONSTRAINTS THAT HOLDING YOU BACK ?

NO OF
CONSTRAINTS PERSONS
LACK OF KNOWLEDGE 38
LACK OF GUIDENCE FROM
BROKER 16
LACK OF AVAILABILITY OF
FUND 42
LAKE OF RISK TAKING
ABILITY 67

NO OF PERSONS

100%
80%
60%
38 16 42 67
40%
20%
0%
LACK OF LACK OF LACK OF LAKE OF RISK
KNOWLEDGE GUIDENCE AVAILABILITY TAKING
FROM BROKER OF FUND ABILITY

NO OF PERSONS

Interpretation :

From the above Chart we can interpret that 67 respondents think that lack of risk
take ability is the main hurdle with comparison by other mentioned Hurdles.
12. HOW MUCH TIME WILL YOU ABLE TO DEVOTE FOR LEARNING
STOCK MARKET ?

NO OF
TIME PERSONS
1 DAY 54
2 DAY 45
3 DAY 42
2 HR PER DAY OVER A
WEEK 47
CAN'T SAY 112

NO OF PERSONS

CAN'T SAY 112

2 HR PER DAY OVER A

WEEK 47

3 DAY 42 NO OF PERSONS

2 DAY 45

1 DAY 54

Interpretation :

Yes we can say that in my research in the occupation of respondents is mainly

Business. So they don’t get time to studying and on the other side they can get time
for study in comparison with other occupational people, mainly service class, so we
can say that this question have a mix response among the respondents of the
reaserch.
13. ACCORDING TO YOU WHICH MEDIUM IS THE MOST RELIABLE FOR
TRADING IN STOCK MARKET?

NO OF
PARTICULARS PERSONS
STOCK
BROKING CO 113
FRANCHISES 56
BROKER 56
ONLINE 75

NO OF PERSONS

STOCK
ONLINE, 75
,BROKING CO
113

BROKER, 56
,FRANCHISES
56

Interpretation :

From the above data we can say that respondents are mainly brand oriented people
as they choose their medium as stock broking companies. Because it is safer among
the other option.
14. GIVE THE RANK FOR RECOMMEDATION TO STOCK BROKING
COMPANIES.

COMPANY NO OF
NAME PERSONS RANK
ICICI
DIRECT.COM 89 1
KOTAK
STREET 56 3
SHAREKHAN 78 2
INDIA
INFOLINE 34 4
INDIABULLS 27 5

INDIABULLS
27

INDIA INFOLINE
34

SHAREKHAN
78

2
KOTAK STREET
56

ICICI DIRECT.COM
89

0 20 40 60 80 100

NO OF PERSONS RANK

Interpretation :

From the above Chart we can rank to icici direct has the first position in online
stock broking companies. From them Sharekhan has the second position on it.
 LIMITATION OF THE STUDY
1. Personal Bias:
People may have personal bias towards particular investment option so they may
not give correct information and due to which conclusion may be derived.

2. Time Limit:
The time duration of the research is short that’s why the information is not
covered fully.
3. Area:
The area was limited to Baroda city only, so we can not know the degree of the
literacy outside the city.

4. Sample Size:
The last limitation is Sample size, taken by us is of 300 only; due to which we
may not get the proper results.
 FINDING AND SUGGESTIONS

• Share khan needs to make its marketing team strong and also it should
increase marketing activities such as promotional campaigns.

• Company may appoint special team for giving education & attracting people
towards trading on Derivatives & Commodities.

• First and foremost things we found that most of the retail investor invests
through local broker like Shah Investors.

• Lack of knowledge of investing through online trading. Many of the retail

investors do not have proper knowledge of computer and internet. Major
portion of the investor do not have time to stick in front of computer during
market session. And so they trading through ground level trading.

• Most of the retail investor thinks that the Depository Participant is the safe
way to invest in equity shares.

• The another thing is the competitors of Sharekhan like India bulls, 5

paisa.com, Goldmine, Anand rathi etc. have low brokerage than Sharekhan.

• If the retail investor already have account with one of the above competitors
than they do not change the Depository participant.
 CONCLUSION

• Most of the people in Baroda are investing in fixed return Instruments.

• But there are investors who use Equity as an investment tool.

• Those people who want to invest in Derivatives & Commodities are investing
mainly for reducing risk and they consider them as investment tool.

• People generally want to take trading decisions independently or under the

guidance of Friends or Well Known Stock Broking Houses.

• Literature and Self Experience can be taken as the best method to impart
education about derivatives & commodities

• More than 40% of the respondents are interested to invest into the stock
market.
 BIBLIOGRAPHY

• Kothari C.R., Research Methodology, New Delhi, Vikas Publishing House

pvt.Ltd. 1978
• Pathak Bharti v.,Indian Financial System,Delhi,Person Education(Singapore)
pvt.Ltd.

WEBSITES:
1. www.Google.com
2. www.bseindia.com
3. www.nseindia.com
4. www.sharekhan.com
5. www.ncdex.com.
6. www.mcx.com

NEWSPAPERS:

• ECONOMIC TIMES
• TIMES OF INDIA
• FINANCIAL EXPRESS
• SHAREKHAN’S VALUE LINE MAGAZINE
 APPENDIX
INVESTMENT PATTERN IN STOCK MARKET

1. Gender: Male Female

2. Age: Below 30 31-45 46-60 Above 60

3. Education: Undergraduate Graduate Post graduate

4. Occupation: Professional Businessmen

Employees working Govt. Employee
in Pvt. Firms
5. Of this investment options, where do you invest your savings ?
Bank FD Postal Scheme Jewellary
Mutual Funds Insurance
Shares/Equity Real Estate

6. If you Invest in stock market which would be your preference from below :
Equity Derivatives (F&O) Commodity
7. Which factor plays crucial role when you make a decision to invest in stock
market :

Risk Reduction Speculative Motive

Leverage Benefit Investment
Arbitrage Benefit

8. How do you take decisions if you want to invest in stock Market (Give Rank)
Independently Advice of Friends/colleagues
Broker/Agent’s advice Advice from CA/Tax consultant
News channels Well-known Stock Broking Houses
Newspapers Business Magazines
Internet

9. Which Stock exchange would you prefer to carry out your transactions
BSE NCDEX
NSE MCX

10. Do you consider investment in stock market are safer than other investment
avenues ?
YES NO
11. If no than which constraints that are holding you back.
Lack of knowledge Lack of guidance from broker
Lack of fund availability Lack of Risk Taking ability

12. How much time will you be able to devote for learning Stock Market.
1 day 2 days 3 days
2 hrs per day over 1 week Can’t say

13. According to you, which medium is the most reliable for trading in Stock
Market ? (Give Rank)
Stock broking cos. (Branded) Brokers
Franchisees Online

14. Name any 6 stock-broking companies that you like to Recommend(Give

Rank).

Sharekhan Kotak Street(Online)

Indiabulls Motilal Oswal
5.Paisa.Com ICICI direct.com