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EXECUTIVE SUMMARY

India’s main capital market regulator has approved online share trading in a move designed to
boost the country’s equity markets. The body also announced that individuals and foreign
investors would be allowed to invest in Indian shares up to 5% of a company’s total equity. The
head of the securities and exchange board (SEBI), D R Mehta, announced internet share trading
could take place in India “within the existing legal framework-although cyber laws need
strengthening”. However, online trading would still have to be done through brokers.

Mr. Mehta said the necessary guidelines would be issued to various exchanges and brokers, who
could then decide when they wanted to start. A SEBI panel submitted a report on internet stock
trading in December recommending procedures and other details for domestic stock exchanges.
The country’s biggest exchange- the national stock exchange (NSE)-has got the necessary
software, and is currently testing interconnectivity with brokers’ systems

Mr. C.J. George and Mr. Ranajit Kanjilal founded Geojit as a partnership firm in the year 1987.
In 1993, Mr. Ranajit Kanjilal retired from the firm and Geojit became a proprietary concern of
Mr. C .J. George. In 1994, it became a Public Limited Company by the name Geojit Securities
Ltd. The Kerala State Industrial Development Corporation Ltd. (KSIDC), in 1995, became a co-
promoter of Geojit by acquiring 24% stake in the company, the only instance in India of a
government entity participating in the equity of a stock broking company. Geojit listed at The
Stock Exchange, Mumbai (BSE) in the year 2000. In 2003, the Company was renamed as Geojit
Financial Services Ltd. (GFSL). The board of the company consists of professional directors;
including a Kerala government nominee with 2/3rd of the board members being Independent
Directors. With effect from July 2005, the company is also listed at The National Stock
Exchange (NSE). Geojit is a charter member of the Financial Planning Standards Board of India
and is one of the largest DP brokers in the country.

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METHODOLOGY:

The value of any systematic scientific research lies in its methodology giving a clear idea
of the forms of study & procedure adopted in conducting the study.
For the study, the methodology adopted is based on survey method. For primary data a
sample of respondents are contacted & data obtained from them through questionnaire.

Sample design
a) Sample size: It refers to the members of respondents to be included in the survey.
The study is of thirty respondents, which includes investors, intermediaries and
others.

b) Sample area: It refers to the place where the studies are conducted. Sample is
selected for the study is sindhanur town.

2.4 TOOLS FOR DATA COLLECTION


The data collection method includes primary and secondary data

sources of data
(a) Primary data
(b) Secondary data

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a) Primary Data

Primary data are those that are collected as fresh for the first time & thus happen to be
origin in character. Here primary data was collected through a structured questionnaire.
The selection of respondents is based on simple random sampling. Information was
collected from personal interview & discussion with the manager of Geojit financial
service ltd.& also with the respondents

b) Secondary data

The secondary data are those, which have collected by same others that have been
processed.
For the study, the secondary data is called from various publications and journals of
stock exchanges, newspapers, books, business and investment magazines, articles &
websites.

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CHAPTER 1
1. INTRODUCTION

1.1 ONLINE TRADING IN INDIA:


India’s main capital market regulator has approved online share trading in a move designed to
boost the country’s equity markets. The body also announced that individuals and foreign
investors would be allowed to invest in Indian shares up to 5% of a company’s total equity. The
head of the securities and exchange board (SEBI), D R Mehta, announced internet share trading
could take place in India “within the existing legal framework-although cyber laws need
strengthening”. However, online trading would still have to be done through brokers.

Mr. Mehta said the necessary guidelines would be issued to various exchanges and brokers, who
could then decide when they wanted to start. A SEBI panel submitted a report on internet stock
trading in December recommending procedures and other details for domestic stock exchanges.
The country’s biggest exchange- the national stock exchange (NSE)-has got the necessary
software, and is currently testing interconnectivity with brokers’ systems.

The Bombay stock exchange (BSE) should be ready in another month and a half and is currently
in the process of developing a central web server who can be accessed by all brokers registered
with the exchange. According to some analysts, the introduction of internet trading should boost
business volumes and further fuel a bull run on the Indian markets. However, the BBC,s Sanjeev
Srivastava in Bombay says other analysts are not so optimistic. He says they believe that the
country’s internet infrastructure is still not advanced enough, and that effective online trading
will be difficult until bank, brokers and exchanges are all successfully interconnected. India is
believed to have about 30m domestic investors at the moment.

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HISTORY OF STOCK BROKING:


To understand how brokerages compete contemporaneously with the advent of internet
related technology, it is necessary to look briefly into how the securities industry has changed in
the last three decades. In 1974, charles schwab changed the competitive landscape of the
securities industry by becoming the first discount brokerage. In 1982, Tradepils, the predecessor
of E*trade came to life after its founder, bill porter envisioned a world where everyone would
soon own a computer and trade stocks through them (Wyatt). And in 1984, Charles schwab
begins offering on-line trading service. One half of today’s 1.5 million on-line accounts belong
to schwab (Young).

Online trading initially caught on slowly. But the crash of 1987 caused the trading volume to
virtually dry up (Wyatt). Next, enter the “cyberbrokerages”who then changed the competitive
landscape to full service brokerages versus cyber brokerages using internet technologies.
E*trade’s early success with internet based trading forced traditional brokers into the internet
game(Lux “on the net…”) the result is three distinct intra industrial rivals who differ
significantly to the extent in which internet technologies is part of the distribution channel.

Full service brokerages are reluctant to offer internet or online trading. Kizman Reeves of
Merrill lynch suggested that internet trading is not for everybody and the internet will merely
lynch force full service brokers prove they really do offer comprehensive financial advice
(Weasel “internet joy…”.). Firms similar to prudential, Smith Barney, and Merrill lynch are
positioning themselves as reliable and secure places to visit. They cannot compete or find it quite
difficult to compete with online discounts on price (Deck). Full service brokers tend to charge
five to six times more in commissions than discount brokers (Hoffmann).

Customers are attracted to them because their web sites offer savings strategies and advice,
retirement fund calculators and college fund formulas (Decj). For them, web sites can be used to
guide visitors to regional offices and toll free telephone numbers to connect with staff members

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(Deck). Merrill lynch&co. don’t allow customers to conduct electronic trades on their sites.
However, in the first quarter of 1998, Merrill lynch& co. will offer web based trading. The trades
must be channeled through an investment advisor though (Hoffman) this strategy reflects the
position of traditional brokerages who have high fixed cost. They are trying to keep customers in
their traditional relationship.

Merrill lynch views internet Technologies has a way to tighten customer relationship
nevertheless, Merrill finds itself struggling to find the appropriate mix between there
commissions driven sales structure and customer demand of internet trading services Smith
Barney is looking for ways to leverage their work force via internet technologies such as e-mail.
As the potential to increase productivity. But some say e-mail would decrease destroy of other
wise undermine client –broker relationship however, in the opinion of smith Barney there would
no negative effects upon the client broker relationship.

With cyber brokerages, internet based trading is the main channel for distribution. There are
about 30 well known on line brokerages (stir land). A visit to internet site rivals 53 companies
offering online trading business_and_ecconomy / companies/ financial services/ investment
services/brokerages/ online trading) sea appendix a to view this listing these new entrants to the
business of stock broking are promoting bold but captivating message to potential
customers.they are asserting customers are being “ripped of” by the traditional wall street firms
(lux the search for…) e*trade ran another ad with a kid sticking his tong out that said “boot your
broker” while yet another ad read “don’t let high commissions bite your assets.” (qt dib Wyatt).
These advertisements are apparently working. “Cyber brokerages,” such as E*trade and
Lombard brokerage, are attracting technically proficient investors who in the past, have relieved
on discount for low cost trade executions (Hoffman). E*trade estimates 70 percent of its
customers are defecting from discount brokers while 20 percent defect from full service brokers.

The cyber brokers are following self-service approach as advocated by C.H.lovesick and
R.F. young. The service process is enhanced by having the customer via the internet, a greater
role in the production (research and execution of trades for example) of the service. In general
customers like self-service it puts the customer in control (chase etal 118) when it is taken into

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account the shift that customers have taken and demanded over the last twenty or more years
toward self service (examples include automatic teller machines, self service gas stations, etc.), it
is no surprise that customers like and want to have the option of internet based trading. On the
other end of this spectrum is the full service brokers who view allowing the client to take more
control will result in many mistakes. In the middle is schwab who has a large share on trades
conducted online. Yet, the firm still offers “hand holding” to minimize mistakes and is not taken
the extreme approach of the customer being heavily involved in the production of the service.

These deep discount cyber brokerages, who also are called deep discounters, have contributed
to an evolution in the financial services industry. Discount brokers are being compelled to offer
more research and value added services similar to those offered by the full service brokers
(Hoffman). The low cost structure or these deep discount firms allows them to have a
competitive advantage over traditional brokerages and traditional discounters. They are able to
attract customers away from traditional discount brokerages because they can compete on the
basis of price (Lux. “on the net…”). To gain some insight in the disparities in the price of a stock
or option trade among the various brokers from full service brokerages to deep discount
brokerages, visit the following internet site: http://www.intrepid.com/~robertl/commissions-
pricer1.html the site calculates the price of a trade among various brokerages with you inputting
the stock price and number of shares traded. A report is generated showing the cost of the trade
with many different brokerages listed by both alpha and by ascending commissions cost. See
appendix barter visiting this site, it is very easy to see why online trading is increasing given the
piece advantage. The lower price of trades is a direct result of the lower cost structure of firms
offering internet trades. However, this low cost structure advantage is also a disadvantage.
Competition from within the deep discount brokers is fierce. For example, E*trade has dropped it
pieces at least seven times since 1992(Wyatt). Low barriers to entry result in difficulty in
maintaining a competitive edge among the deep discounters (Wyatt).of utmost importance to
their ability to compete on price is the low cost structure they enjoy because of technology online
trading allows and information dissemination allows stockbrokers their time more productively.
They are feed from the time consuming task of information and quote tasks. The paper trail is
shortened dramatically. Online trading leads to greater profits resulting from improved

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efficiencies (prins 81). The internet technology results in the virtual firms who do not need
branch offices. The connectivity of clients with their brokers enables brokers to communicate
more easily with their clients (Weisul “internet joy…”). Cost efficiencies are not limited to just
brokerages offering online trading. The full service brokers can enjoy cost efficiencies as well.
Some firms to distribute research use the internet. Thus, they save on paper, printing, and
postage cost (Weisul “the new planning…”). In essence, internet related technology is “geared”
to helping firms make money in the front office. The technology of the past was just geared to
processing he work in the back office(schmerken “net clearing…”). Other firms, such as schwab,
a traditional discounted, see internet based trading as a part of the firm’s multi-distribution
channel. At schwab, they call their strategy “open architecture” which means they offer many
options for making a purchase. Schwab wants to build up the volume by attracting customers
with as many options as possible (Wines). Schwab still finds local branches to be an important
element in their multi-channel distribution network. This is evidenced by the fact that schwab
has opened 22+branch offices as in 1997. in contrast, cyber brokerages are virtual brokerages
who do not utilized branch offices. Not surprisingly, schwa’s cost structure is higher than firms
who utilized online/internet as their main distribution channel. Accordingly, schwa’s prices are
higher than the deep discounters. The firm does not strive to be the cheapest. Rather, they think
of themselves as a value story (schmerken “schwab sweeps internet…”)

Schwab believes they still need a distribution channel that offers face to face contact with
their customers along with guidance (schmerken “schwab sweeps internet…”) customers have
the option of using the telephone (tiebreaker), pc or internet, call centers and branch offices.
Schwab is focusing on giving consumers a choice in the customers interact with the company
(Clark). However, the cyber brokerages have proven to be serious competition to schwab and
other traditional discount brokerages (schmerken “schwab sweeps internet…”). Web based
trading allows schwab to compete internationally. Schwab gas customers 88 countries that use
the web for schwab, the internet has been very successful internationaly.the success is due in part
to the fact that customers can get direct access any time of the day or night for just the local
phone call(power).thus, Schwab is truly reaps the benefits of the internet: greater connectivity,
speed and efficiency even though online trading phenomena into perspective. as of

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approximately December 1996,actual trades comprised only two percent of all transactions
according to a survey conducted by FIND/SVP and Jupiter communications, research firms
based in New York .it is projected to increase to eight percent by 2001 according to SRI
consulting in Menlo park, California(prins).estimates have been made by Forrester research, a
consulting firm in Cambridge, \Massachusetts, that the number on online brokerage accounts will
accelerate from 1.5mn to 10mn in five years(Wyatt 190)there is about 60 million brokerage
accounts now (Wyatt) e*trade may be the leader in the internet trading with over 6000 internet
based transactions a day .schwab is leader in online trading consisting of direct dial connections
and the internet(Wyatt).

Even with all online tracing’s potential, there are problems. Internet brokerage does result in
unhappy customers\.the Securities and Exchange Commission notes the complaints about online
brokerages are the rise. However, the percentage of complaints, 1.4 percent is minute to
traditional brokerages (Fredrick).the connectivity that internet related technologies offers
experiences occasional interruptions.

In the heavy trading on July 16, 1997, i.e schwab Online’s computer went down for about 15
min (hill131) E*Trade had a significant mishap with online trading in may 1996(Wyatt).their
computer briefly went down resulting in costing the company two)weeks worth of work and 1.7
mn dollars (Wyatt),however, there are ways to diminish or eliminate these costly interruptions.
For schwab uses a backup network in the event of of an internet outage or an access problem
with a client’s internet service provider. the issue of fraud remains at the forefront of potential
problems with online trading . schwa’s position is the web is sufficiently secure enough to bear
the risk putting customer accounts online (smith91)art Shaw of schwab ,senior vice president for
electronic brokerage, acknowledges security is incredibly important(smith91). Art Shaw of
schwab, senior vice president for electronic brokerage, acknowledges security is incredibly
important (smith 91) but the biggest problem revolves around the perception of security on the
web (smith 91). it is commonly believed web fraud is running rampant. However, statistics show
the internet to be the least vulnerable of several commerce vehicles (smith91) there are effective
preventative measures to minimize the possibilities against fraud. They include not allowing
maintenance functions, such as address changes, of redemption’s to take place through a Webster

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(weisul “schwab gives go-ahead...”) Blake Darcy, president of DLJ direct (formerly known as
PC financial network), believes confidence in online trading is growing. He believes most of the
assets being traded online previously was basically an experimentation by customers “..To see
whether this (online trading) woks ...” (srirland). Another way the internet has the potential to
impact the securities industry is to either exacerbate or diminish panic selling by investors
whenever there is a “market hiccup.” Investors, armed with current portfolio information via the
internet, could avoid making poor decisions. Alternatively, the opposite could happen because of
the increased velocity of transactions via the internet (rule.)Even with these potential problems,
internet technology has had a profound effect on the stock broking industry. How critical
offering internet based trading distribution channel for a full service stock-broking firm is not
determinable yet. However, they will be of a significant importance if you agree with the
consultant who advocates an internet distribution channel. For instance, Julio Gomez, a
consultant and president of Gomez advisors in Boston recommends that firms start an internet
delivery strategy now. He believes it could take three to four years for firms just to learn World
Wide Web technologies and how those technologies can affect the firm’s business (power). Paul
Davis, vice president and technology equity research analyst at JP Morgan echoes this “early
start” approach because “there’s a big learning curve in terms of presentation, style and learning
how to communicate effectively on it. For example, although graphics are great. You have to use
them prudently because it takes so long for the average computer to download them. “(Lux” wall
street wires...”).

It is hard to predict what the future of online trading will be. Intuitively, is seems reasonable
to believe the online trading will always be a part of the distribution channel. It may be only on a
limited basis similar to how Merrill lynch utilizes internet trading because of competitive forces
and customer demand. However, just how many trades that will be conducted online in the future
will depend on the competitive forces and the fortunes of the internet and the related
technologies. Also, since the current bull market is a significant driver of the rapid growth of the
online trading phenomenon, a bear market is certainly how some detrimental effect on online
trading. Trading volume could easily be halved in a severe downturn (Wyatt). It has been said
that the fate of online trading is tied to the fortunes of the internet and the related technologies.

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Both of these appears to be unlimited (wyatt190). And just because the cyber brokers are able to
offer huge savings in commissions, they want necessarily depart from their current broker deal.
Therefore it is difficult to predict the timing of technology’s impact on stock brooking services
(the economist 15). Furthermore, the rapid growth of internet technology is not an indicator that
the legacy systems are in decline. The legacy systems are just essential to firms operations as
they were in 1987 (Coffey).

Interestingly, 20% of prospective electronic financial services users who own computers rank
the television ahead of the personal computer as the preferred means of conducting electronic
transactions (“technology that talks back”). Perhaps when web television becomes popular , if ir
ever does, there may be a potentially viable way of offering yet another distribution channel for
clients to interact with the stock broking firms.

The tower group, a research and consulting firm in association with the securities industry
association has recently completed a major review of information technology in the securities
industry. The resulting report, “new frontiers for internet trading technology” by Lawrence tab
was presented at the internet securities trading conference, September 22-03.1997

Wall Street is anticipated to be relying heavily on TCP/IP protocols and java based
applications in the near future. Internet technology is leading Wall Street’s efforts in new
application development in the internet affects distribution channels as well. Internet technology
standardizes internal and external messaging and firms seems to be simplifying communications
to be TCP/IP. Furthermore, the report shows that 91%are redesigning their systems to be TCP/IP
compliant. Larry tab expects technology to play a more important role in facilitation the
investment process. The key technology will be that of the internet. He says “Every single area
you look at in the firm, people are examining the internet or internet enabled technologies to
enhance distribution and simplify communication.” (Coffey).

1.2 INDIAN STOCK MARKET OVERVIEW:

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The Bombay Stock Exchange (BSE) and the National Stock Exchange of India LTD (NSE)
are the two primary exchanges in India. In addition, there are 22 regional stock exchanges.
However, the BSE and NSE have establishes themselves as the two leading exchanges and
account for about 80 per cent of the equity volume traded in India. The NSE and BSE are equal
is size in terms of daily traded volume. The average daily turnover at the exchanges has
increased from Rs851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and further to Rs 2,273
crore in 1999-2000 (April- august 1999). NSE has around 1500 shares listed with a total market
capitalization of around Rs 9, 21,500 crore (Rs 9215- bn). The BSE has over 6000 stocks listed
and has a market capitalization of around Rs 9,68,000 crore (RS 9680-bln). Most key stocks are
traded on both the exchanges and hence the investor could buy them on either exchange. Both
exchanges have different settlement cycle, which allows investors to shift their positions on the
bourses.

The primary index of BSE is BSE sensex comprising 30 stocks. NSE has the S&P NSE 50
index (nifty) which consists of fifty stocks. The BSE sensex is the older and more widely
followed index. Both these indices are calculated on the basis of market capitalization and
contain the heavily traded shares from key sectors. The markets are closed on Saturdays and
Sundays. Both the exchanges have switched over from the open outcry trading system to a fully
automated computerized mode of trading known as BOLT (BSE on line trading) and NEAT
(National Exchange Automated Trading) system. It facilitates more efficient processing,
automatic order matching, faster execution of trades and transparency. The scrip’s traded on the
BSE have been classified into ‘A’, ‘B1’,’B2’, ‘F’,and ‘Z’, groups. The ‘A’ group shares
represent those, which are in the carry forward system (Badla). The ‘F’ group represents the debt
market (fixed income securities) segment. The ‘Z’ group scrip’s are the blacklisted companies.
The ‘C’ group covers the odd lot securities in ‘A’, ‘B1’, &’B2’, groups and rights renunciations.
The key regulator governing stock exchanges, brokers, depositories, depository participants,
Mutual funds, FIIs and other participants in Indian secondary and primary market is the
securities and exchange board of India (SEBI) LTD

ROLLING SETTLEMENT CYCLE:

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In a rolling settlement, each trading day is considered as a trading period and trades executed
during the day are settled based on the net obligations for the day. At NSE and BSE, trades in
rolling settlement are settled on a T+2 basis i.e. on the 2nd working day. For arriving at the
settlement day all intervening holidays, which include bank holidays, NSE/BSE holidays,
Saturdays and Sundays are excluded. Typically trades taking place on Monday are settled on
Wednesday, Tuesday’s trades settled on Thursday and so on.

WORKING OF A STOCK MARKET:

To learn more about how you can earn on the stock market, one has to understand how it
works. A person desirous of buying/selling shares in the market has to first place his order with a
broker. when the buy order of the shares is communicated to the broker he routes the order
through his system to exchange. The order stays in the queue exchange ‘system and gets
executed when the order logs on to the system within buy limit that has been specified. The
shares purchased will be sent to the purchaser by the broker either in physical or demat format.

1.3 TRADING SYSTEM:

The fully computerized, on-line trading system used in the WDM segment of the exchange has
changed the very manner in which trading is perceived in the indian securities market. Beside the
fact that the system helped increase in trading velocities and cut time frames, it has also managed
to incorporate the critical aspect of security in its functioning. The exchange provides a facility
for screen based trading with order matching facility. The members are connected from their
respective offices at dispersed locations to the main system at the NSE premises through a high-
speed, efficient satellite tele-communication network. The trading system is an ordered-driven,
automated order matching system, which does not reveal the identity of parties to an order or a
trade. This helps orders whether large or small to be placed without the members being
disadvantaged by disclosure of their identity. The trading system operates on a price time

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priority. Orders are matched automatically by the computer keeping the system transparent,
objective and fair. Where an order does not find a match it remains in the system and is
displayed to the whole market, till a fresh order which matches, comes in or the earlier order is
cancelled or modified. The trading system provides tremendous flexibility to the users in terms
of the type of orders that can be placed on the system. Several time-related, price-related or
volume-related conditions can easily be placed on an order. The trading system also provides
complete on-line market information through various inquiry facilities. Detailed information on
the total order depth in a security, the best buys and sells available in the market, the quantity
traded in that security, the high, the low and last traded prices are available through the various
market screens at all the points of time.

TRADING ACCOUNT:
Trading account positions can be taken purely for intra day purposes. All trading
account positions have to be compulsorily squared off before the end of the market or any
other specified by the trading stock broker. In case any outstanding position remains the
stock broker will square off the same at the prevailing market price. In case the square off
cannot be done, the trading account will get shifted to investment account off the client.

STANDARD DOCUMENT REQUIRES OPENING AN INTERNET TRADING


ACCOUNT:

I. PROFF OF RESIDENCE: (Address proof)


 Driving license
 voters ID
 passport
 photo credit card
 photo ration card

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 utility bill (Telephone bill, Electricity Bill)

II. PROFF OF IDENTITY:


 Driving license
 Voters ID
 Passport
 Photo ration card
 PAN card
 Two photographs

1.4 THEORETICAL BACK GROUND

The rapid economic growth and globalization of financial market is perhaps one of the most
significant developments at the international level. The past two decades have witnessed a
process of accelerating changes in the global financial market. Driven by an interacting process
of liberation and innovation, controls and regulation have been removed, new financial products
have emerged and old boundaries between financial intermediaries have blurred.

Financial innovations have brought many advantages, a large number of financial assets and
liabilities are now available to end users. The costs of financial intermediation have fallen. Risk
management tools have become increasingly sophisticated. Global economics have found new
ways to mobilize domestic and international savings.

The indian financial market plays a crucial role in economic development through the savings
investment, also known as capital formations.

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In indian contest, Government of India,RBI,SEBI are the major regulators that play a crucial
role both pro-active and reactively in the development of financial market, financial reforms viz.
Globalization, liberalization and deregulation along with technological advancement has
integrated international market which has facilitated the scope for uninterrupted mobility funds
in various financial markets the world.

1.5 INDIAN FINANCIAL SYSTEM:


Indian financial system is broadly classified into two groups:
1. Unorganized market

2. Organized market

1. Unorganized market:
The unorganized financial system comprises of money lenders, indigenous bankers, lending
pawn brokers, landlords, traders, etc. there are also a host of financial companies, investment
companies, chit funds, etc. in the unorganized sector. The central bank or the government does
not regulate these in a systematic manner.

2. Organized market:
This market consists of
a) Money market

b) Capital markets

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a. Money market: Money market deals with all transaction in short instruments which have a
maturity period of one year or less. in other words the money market is the market in which
short term funds are barrowed and lend. the leading money market institutions are.

1.Discount and finance house of India ltd(DFHI)

2.Securities trading corporation of India ltd (STCI)

Money market sub divided as fallows

1. Call money market :The call money market forms part of the national money market, where
day to day surplus fund, mostly banks are traded. the call money loans are of very short term in
nature and the maturity periods of these loans vary from 1 to 15 days . the money that is call
money market.

2. Treasury bills: These are short term barrowing instruments issued by govt of India .they are
of two durations 91 day and 364 day. Treasury bills have been issued ever since the inception of
reserve bank of India in the year of 1935.treasury bills also called t-bills, are negotiable securities
and sine they can be rediscounted with RBI,they are highly liquid.

3. Commercial paper: These introduced in January 1990,to enable highly rated corporate
barrowers to diversify their sources short term ,unsecured and to provide an additional
instrument to the investor. The holder issues commercial papers in the form of promissory notes,
redeemable at par on maturity. Commercial papers can be issued only by corporate who have a
minimum net worth of 5 crores and an investment grade rating from credit rating agencies.

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4. Certificates of deposits: These are shorterm deposit certificates issued by a bank/financial


institution with maturity ranging from 3 months to one year. They are bank deposits, which are
transferable from one party to another. Banks are issuing certificates deposits in since 1989,
either directly to the investor or through the dealers.

5. Commercial bills: bills of exchange are negotiable instruments drawn by the seller on the
buyer for the value of goods delivered to him. When such type of bills are accepted by
commercial bank, they are called commercial bills

b) Capital market: this market is tenor of more than one year. This is the place where corporate
(which have credibility in the market) can raise money to funds/ existing business. the capital
market is divided into as follows.
1) Industrial securities market
2) Government securities
3) Long term loans market

1.Industrial securities market: it consist of


 Equity shares
 Preference shares
 Debenture bonds

It is further divided as

 Primary market/New issue market


 Secondary market/Stock market

Primary market
The main objectives of the capital issue are:
 To promote a new company
 To expand an existing company

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 To diversify the production


 To meet the working capital requirements .
 To capitalize the reserves.

In this primary market a company can raise capital in three ways.


• Public issue
• Rights issue
• Private placement

Public Issue :In public issue capital raised through sale of securities to public or it is nothing but
first issue to public parties involved in public issue are lead manager, underwriters
,bankers,advertising agency, financial institutions and govt/statutory agencies.

Right Issue: As per sec 81 of the companies act 1956, if public company wants to increase its
subscribed capital by allotment of further shares after 3-years from the date of its formation or 1
year from the date of its first allotment whichever is earlier ,should offer share at first to the
existing share holders in proportion to the shares held by them at the time of offer.

Private placement;Issue is placed with a small number of financial institutions ,corporate


bodies and high net worth individuals .the financial intermediaries purchase the shares and sell
them to investors at a later date for a suitable price. The special feature of the private placement
is that there is need for underwriting .the private placement technique is gaining importance in
the Indian capital market. It is increased from 12.8% to 49.1% of the total resources mobilized
by the government and non-governmental companies in 1996-97.public sector are the major user
of private placement i.e.83.4% in 1997.

Merits
o Cost effective
o Time effective

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o Structure effectiveness
o Access effective

Secondary market: secondary market is for secondary sale of securities .i.e. securities which
have already passed through the new issue markets, are traded in the this market. such securities
are quoted in the stock exchange and it provides a continuous and regular market for buying
and selling of securities .

Government securities market: This market is also called as Gilt-edged securities market. it is
market where government securities are traded .there are both short term and long term
government securities, long term securities are traded in this market. securities issued by central
government, state government: semi government authorities like city corportions,port trust etc.
the forms of government securities are stock certificates,promisory notes and bearer bonds.

Long terms loans market: Development banks and commercial bank play a significant role in
this market by supplying long term loans to corporate customer, again this market is sub divided
as.
• Term loans market
• Mortgages market
• Financial guarantees market

Term loan market :The government both at the national and regional to supply long term and
medium terms loans to corporate customers directly or indirectly has created industrial financing
institutions like IDBI,IFCI,ICICI and other state financial corporate come under this category.

Mortgages Market: The transfers of interest in a specific immovable property to secure loan is
called mortages,these loans mainly for individual customers .the HUDCO and LIC play a
dominant role in financing residential projects.

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Financial Guarantees Market: Guarantee is a contract to discharge the liability of a third party
in case of his default. a guarantee market as a centre where finance is provided against the
guarantee of a reputed person in the financial circle. these guarantees are provided by
commercial banks, development banks, central and state governments and institutions like export
credit guarantee corporation (ECGC) and deposit insurance and credit guarantee
corporation(DICGC)

1.6 SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI)

In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government
of India through an executive resolution, and was subsequently upgraded as a fully autonomous
body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange

Board of India Act (SEBI Act) on 30th January 1992. In place of Government Control, a
statutory and autonomous regulatory board with defined responsibilities, to cover both
development & regulation of the market, and independent powers have been set up.
Paradoxically this is a positive outcome of the Securities Scam of 1990-91.

The basic objectives of the Board were identified as:


• To protect the interests of investors in securities;
• To promote the development of Securities Market;
• To regulate the securities market and
• For matters connected therewith or incidental thereto.
Since its inception SEBI has been working targeting the securities and is attending to the
fulfillment of its objectives with commendable zeal and dexterity. The improvements in the
securities markets like capitalization requirements, margining, establishment of clearing
corporations etc. reduced the risk of credit and also reduced the market.

FUNCTIONS

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(a) Regulating the business in stock exchanges and any other securities markets;

(b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents,
bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters,
portfolio managers, investment advisers and such other intermediaries who may be associated
with securities markets in any manner;

1
[13][(ba) registering and regulating the working of the depositories,2[14] [participants,]
custodians of securities, foreign institutional investors, credit rating agencies and such other
intermediaries as the Board may, by notification, specify in this behalf;]

(c) Registering and regulating the working of 3[15][venture capital funds and collective
investment schemes],including mutual funds;

(d) Promoting and regulating self-regulatory organizations;

(e) Prohibiting fraudulent and unfair trade practices relating to securities markets;

(f) Promoting investors' education and training of intermediaries of securities markets;

(g) Prohibiting insider trading in securities;

(h) Regulating substantial acquisition of shares and take-over of companies;

SEBI has legal and investigation departments. It has got separate committees for the primary and
secondary market to assist the policy formulation. It has regulated:

• Primary market
• Secondary market
• Mutual funds

1
2
3

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REFORMS:

SEBI has introduced a few reforms, but the stock brokers have been slow to accept the need for
reform. Reform measures include improved transparency, computerisazation, and enactment
against insider trading, improved capital adequacy, restrictions on forward trading, and
provisions to encourage corporate membership in the stock exchanges. The restriction on
forward of Contango trading referred to in Indian as ‘Badla’ has been met with cynicism,

New measures include provision for cash margin, and need for physical transfer of settlement
date.

What is Stock Exchange?

The stock exchange is an organize market for purchase and sale of listed industrial and financial
securities. The securities trader on stock exchanges includes share and debentures of public
limited companies. Govt, securities etc.

According to securities contract (regulation) Act 1956 “stock exchange is an association,


organization of body of individuals, whether incoporated of act, established for the purchase of
assisting, regulation & controlling business in buying and selling and dealing securities.

1.7 NATIONAL STOCK EXCHANGE (NSE):

The national stock exchange of India started its operation in 1995 in Mumbai. The genesis of the
NSE lies in the recommendation of the pherwani committee (1991). The main promoters of NSE
are IDBI, IFCI, LIC, GIC, SBI, Bank of Baroda, CanaraBank, Corporation Bank, Indian Bank
and Union Bank of India, Punjab National Bank IL&FS, and SHCIL.

The National Stock Exchange (NSE), located in Bombay, is India's first debt market. It was set
up in 1993 to encourage stock exchange reform through system modernization and competition.
It opened for trading in mid-1994. It was recently accorded recognition as a stock exchange by
the Department of Company Affairs. The instruments traded are, treasury bills, government
security and bonds issued by public sector companies.

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The Organization: The National Stock Exchange of India Limited has genesis in the report of
the High Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations, NSE
was promoted by leading Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the
country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in
April 1994, NSE commenced operations in the Wholesale Debt market (WDM) segment in June
1994. The Capital Market (Equities) segment commenced operations in November 1994 and
operations in Derivatives segment commenced

The main objectives of NSE are as follows.

 To establish the nation wide trading facility for equities, debt instruments and hybrids.
 To ensure equal access to investors all over the country through appropriate
communication network.
 To enable shorter settlement cycle and bulk entry settlement system,
 To meet current international standards of securities market.

1.8 BOMBAY STOCK EXCHANGE (BSE):

The premier stock exchange is the oldest stock exchange in Asia. The origin of Bombay stock
exchange dates back to 1875. It was organized under the name of ‘the native stock and share
brokers association as voluntary and non-profit making association. It was recognized on the
permanent basis in 1957. In March 1995, the Bombay stock exchange has introduced screen
based trading called BOLT (Bombay Online Trading).

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The Stock Exchange Mumbai, popularly known as “BSE” was established in 1875 as “The
Native Share and Broker Association”. It is the oldest one in Asia, even older than the Tokyo
Stock Exchange, which was established in 1878. It is an voluntary non-profit making
Association of Persons (AOP) Ana 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 reprisal of their grievances
whether against the companies of its own member-brokers. It also strives to educate and
enlighten the investors by conducting investor education programmed 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 A board consists of 9 elected directors,
who are from the broking community (one third of them retire ever year by rotation), three SEBI
nominees, six public representatives and an Executive Director & Chief Executive Officer and a
Chief Operating Officer.

The Executive Director as the Chief executive Officer is responsible for the day-to-day
administration of the Exchange and the chief operating officer and other heads of department
assist him.

The Exchange has inserted new role no.126 A in its rules, bye-laws & regulation pertaining to
constitution of the executive committee of the exchange. Accordingly, an executive committee,
consisting of three elected directors, three SEBI nominees or public representatives, executive
director and CEO and chief operating officer has been constituted. The committee considers
judicial and quasi matter in which the governing board as powers as an appellate authority,
matters regarding annulment of transaction, admission, continuance and suspension of member

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brokers, declaration of a member broker as a defaulter, norms, producer and other matters
relating arbitration, fees, deposits, margins and other money payable by the member broker to
the exchange.

The main objective on the stock exchanges is

 To safeguard the interest of investing public having dealing on the exchanges.


 To establish and promote honorable and just practices in securities transactions.
 To promote, develop and maintain well-regulated market for dealing in securities.
 To Promote industrial development in the country through efficient resource mobilization by
way of investment in corporate securities

1.9 OVER THE COUNTER EXCHANGE OF INDIA (OTCEI)

OTCEI was started in 1992 with the objective of providing a market for the smaller companies
that could not afford the listing fees of the large exchanges did not fulfill the minimum capital
requirement for listing. It is aimed at fully transparent market. Here counter refers to the location
of the dealer or member of the OTCEI where the deal or trade takes place. The promoters are
IDBI, IFCI, LIC, GIC, SBI, Canara Bank, and SBI Capital market.

The players activities in the market are:

 Act as brokers, buy and sell securities according to the instruction of the investors.
 Market maker in securities, they quote the price at which members are willing to buy and sell
specified number of securities.

1.10 DEPOSITORY NATIONAL SECURITY LIMITED (NSDL)

In order to solve the myriad problems associated with trading in physical securities, NSE joined
the hand the with Industrial Development Bank Of India (IDBI) and Unit Trust Of India (UTI).
To promote dematerialization of the securities. Together they set of National Securities
Depository Limited (NSDL), the first depository in India.

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NSDL commenced operations in November 1996 and has since established a national
infrastructure of international standard to handle trading and settlement in dematerialized from
and thus completely eliminated.

NSDL is an organization established to provide electronic depository facilities for security traded
in the equity and debt market. IDBI, UTI, and National Stock Exchange of Indian Ltd promote it.
The functions of NSDL are

 Helps in enables surrender and withdrawal of securities to and from depository


 To maintain investors holding in electronic form.
 Settlement of security traded of exchanges.
 To carry out settlement of trader that has not been done on the stock exchange.

NSDL operates on two tier structures where in it maintains accounts of its DP and DP’s maintain
the account of their clients. And all the transactions are made through brokers only. While
dealing with securities all transaction should be made through electronic form. So de-
materialization and Re-materialization exist.

1.11 NATIONAL SECURITIES CLEARING CORPORATION LTD. (NSCCL)

The National Securities Clearing Corporation Ltd. (NSCCL), a wholly owned subsidiary of NSE
was incorporated in August 1995. It was set up to bring and sustain confidence in clearing and
settlement of securities; to promote and maintain, short and consistent settlement cycle; to
provide counter-party risk guarantee, and to operate a tight risk containment system. NSCCL
commenced clearing operations in April 1996.

NSCCL carries out the clearing and settlement of the trades executed in the Equities and
Derivatives segments and operates Subsidiary General Ledger (SGL) for settlement of trades in
government securities. It assumes the counter-party risk of each member and guarantee financial
settlement. It also undertakes settlement of transaction on other stock exchange like, Over
Counter Exchange of India. NSCCL has successfully brought about an up-gradation of the

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clearing and settlement procedures and has brought Indian financial market in line with
international market.

1.12 NSE.IT LTD

NSE.IT was spun off as an independent company in October 1999. Prior to this it was the IT
department of NSE right from it incorporation in Nov 1992. It had the mandate to serve the
trading community with state of the art software products and services, in addition to its
continued role as the Operation and Technology arm of the National Stock Exchange. From
October 2006 , the part of the organization supporting NSE's operations was demerged from
NSE.IT Limited in to a separate entity called NSE InfoTech Ltd.

NSE.IT Limited is head quartered in India and is a 100% subsidiary of the National Stock
Exchange of India Limited (NSEIL) - the 3rd largest exchange in the world. A Vertical Specialist
Enterprise, NSE.IT offers end-to-end Information Technology (IT) products, solutions and
services. NSE.IT Ltd has expertise in a wide range of business applications including high-end
mission critical applications requiring real-time processing speeds.

NSE.IT specializes in providing complete IT solutions to Stock Exchanges, Clearing


Corporations, Brokerage Firms, and other organization in the financial sector. We also offer a
wide range of IT solutions and support to NSE, its member and associated companies.

NSE.IT is focused on developing mission-critical technology solutions for the Financial Services
market and the facilitation of change within these markets. With over 4000 + online trading
terminals spread across the country, NSE.IT has emerged as the preferred technology partner for
deploying high end solutions for the financial services sector both in national and in the
international markets.

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With a pool of around 300 + highly experienced IT professionals and Business Domain
specialists, NSE.IT offers Software Products, Enterprise Management Services (EMS),
Consultancy Services, Turnkey Solutions and Application Software Development for the
securities market. Our top of the line software products encapsulates the operations of Front
Offic

CHAPTER-2
PROFILE OF THE COMPANY

2.1 INTRODUCTION

Mr. C.J. George and Mr. Ranajit Kanjilal founded Geojit as a partnership firm in the year
1987. In 1993, Mr. Ranajit Kanjilal retired from the firm and Geojit became a proprietary
concern of Mr. C .J. George. In 1994, it became a Public Limited Company by the name Geojit
Securities Ltd. The Kerala State Industrial Development Corporation Ltd. (KSIDC), in 1995,
became a co-promoter of Geojit by acquiring 24% stake in the company, the only instance in
India of a government entity participating in the equity of a stock broking company. Geojit listed
at The Stock Exchange, Mumbai (BSE) in the year 2000. In 2003, the Company was renamed as
Geojit Financial Services Ltd. (GFSL). The board of the company consists of professional
directors; including a Kerala government nominee with 2/3rd of the board members being
Independent Directors. With effect from July 2005, the company is also listed at The National
Stock Exchange (NSE). Geojit is a charter member of the Financial Planning Standards Board of
India and is one of the largest DP brokers in the country.

2.2 MILESTONES
The company crossed the following milestones to reach its present position as a leading retail
broking house in India.

1986

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 Geojit becomes a member of the Cochin Stock Exchange.

1994
 The Kerala State Industrial Development Corporation (KSIDC), an arm of the Government of
Kerala, becomes a co-promoter of the company by acquiring 24% equity stake in Geojit Financial
Services Ltd., based on the evaluation report of Ernst & Young. This is the only venture in India
where a state owned development institution is participating in the equity of a stock broking
company. Geojit becomes a corporate broking house.

1995
 Geojit comes out with a small Initial Public Offer (IPO) of Rs.9.5 million, which was
oversubscribed by 15 times. Geojit's issued and subscribed equity capital increased to Rs.30
million and KSIDC's equity stake comes down to 17%.
 Geojit becomes a member of the National Stock Exchange (NSE) and installs its first trading
Terminal in Cochin, Kerala.

1996
 The company launches Portfolio Management Services after obtaining required registration
(Portfolio Management) from Securities Exchange Board of India (SEBI).

1997
 Geojit becomes a Depository Participant under National Securities Depository Limited
(NSDL) and begins providing Depository Services through its branches.

1999
 Geojit becomes a member of The Stock Exchange, Mumbai (BSE) and activates Bombay
Online Terminals (BOLT) in different branches.
 The customer base of Geojit crosses the 50,000 mark.

2000

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 Geojit becomes the first broking firm in the country to offer online trading facility. The then
SEBI Chairman, Mr. D.R.Mehta inaugurates the facility on 1st February, 2000.
 Commences Derivative Trading after obtaining registration as a Clearing and Trading
Member in NSE.
 Establishes the first Bank Gateway in the country for Internet Trading.

2001
 Geojit’s customer base crosses 100,000.
 Becomes India's first DP to launch depository transactions through Internet.
 Establishes Joint Ventures in the UAE for serving NRI clients.
 The company issues bonus shares in the ratio of 1:1.

2002
 Geojit ties up with MetLife for the marketing and distribution of insurance products
Across the country.
 The company becomes the first online brokerage house to launch integrated internet trading
system for both cash and derivatives segments.
 Sheikh Sultan Bin Saud Al Oassemi, a member of the ruling family of Sharjah, UAE, joins the
Board of Directors of Geojit.

2003
 Geojit Commodities Limited, a wholly owned subsidiary of Geojit, becomes member of
National Multi-Commodity Exchange of India Ltd., National Commodity & Derivatives
Exchange Ltd., and Multi Commodity Exchange and launches Commodity Futures Trading in
rubber, pepper, gold, wheat and rice.
 Geojit Commodities Limited launches Online Futures Trading in multiple commodities
namely, agri-commodities, precious metals like gold and silver, other metals like steel,
aluminium, etc. and energy futures namely, crude oil and furnace oil.
 Geojit raises more than Rs.100 million through issue of preferential shares.

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2005
 Barjeel Geojit Securities LLC becomes a member of Dubai Gold Commodity Exchange.
 Customer base of Geojit crosses 250,000.
 Geojit's reach spreads through a network of more than 300 branches.
 The company issues bonus shares in the ratio of 1:1.
 Geojit Credits, a subsidiary of Geojit Financial Services Ltd. registers with Reserve Bank of
India as a Non-Banking Financial Company (NBFC).
 The company gets listed on National Stock Exchange of India Limited.
 The company implements Employees Stock Option Scheme.
 The company opens a first of its kind - all women's branch in Cochin.

2006

Geojit relaunches Internet trading on Reuters TIB Mercury Platform.

2007

 On March 13, 2007 the formation of Geojit BNP Paribas Financial Services Ltd., was
announced in Mumbai and Paris. Through a preferential allotment, BNP Paribas had taken 27%
stake in Geojit, which will eventually increase to 34.35%. With this final step, the French banking
major has become the largest shareholder in Geojit Financial Services Limited. BNP Paribas has
one of the largest international banking networks with significant presence in Asia and the United
States. With presence in more than 85 countries the bank has a headcount of more than 1,38,000.

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2.3 MANAGEMENT
Mr. C. J. George Managing Director
Mr. Satish Menon Director (Operations)
Mr. A. Balakrishnan Chief Technology Officer
Mr. K. Venkitesh National Head - Distribution
Mr. Stefan Groening Director (Planning and Control)
Mr. Jean-Christophe
Director (Marketing)
GOUGEON
Mr. Binoy .V.Samuel Chief Financial Officer
Chief of Human Resources
Mrs. Jaya Jacob
Alexander

2.4 BOARD OF DIRECTORS

Mr. A. P. Kurian Non


Mr. C. J. George Man
Mr. P.H.Kurian Non
Mr. Mahesh Vyas Non
Mr. Rakesh Jhunjhunwala Non
Mr. Ramanathan Bupathy Non
Mr. Punnoose George Non

2.5 PRODUCT AND SERVICES

Geojit, a member of NSE and BSE, has a network of over 300 branches in India and abroad,
rendering quality equity trading services. Geojit not only has a strong offline presence but also
provides automated online trading service.

Geojit also provides a Call & Trade facility to its customers wherein they can place and track

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their orders through our dedicated Call Centre Desk by dialing the toll free number 1800-425-
5501 or 91-484-2405822 (Standard Rates Apply).

Geojit's retail spread caters to the need of individual investors. Trading in equities is made
simple, safe and interesting with smart advice from the research desk through daily SMS alerts,
market pointers, periodical research reports, stock recommendations and customer meets
organized frequently.

The online trading system allows customers to track the markets by setting up their own market
watch, receiving research tips, stock alerts, real-time charts and news and many more features
enable the customer to take informed decisions.

The brokerage structure* makes Geojit's Online trading all the more attractive:

• 0.03% for day trading (applicable on both sides)


• 0.30% for delivery

Choose your platform


You can choose the trading platform that suits you best. Geojit offers three versions to meet
customer needs:

• Silver
Silver platform is browser based solution wherein one can enquire and get the stock prices,
market depth, etc. for each scrip at a time. Minimum brokerage concept does not apply for
Silver Platform. A normal investor who does not engage in large volumes may find the
Silver version most suited to his needs.

• Gold
This platform is a web-based solution and the customer can login to the trading platform

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from anywhere in the world. During market hours the stock prices are refreshed seamlessly
and the delay in transmission would be a few seconds, which is mostly dependant on the
bandwidth connectivity used by the customer. In this, the trader will receive live quotes as
the rates are refreshed every second. A minimum brokerage of Rs.300/- per month is
required to be generated to avail this platform. Those who are generally on the move and
may not be able to use their own computer for trading generally use this platform. Since it is
a web-based system, one can login from any where in the world and take advantage of the
price movements.

• Platinum
The Platinum version acts as a virtual dealers terminal providing live updates and
confirmation. The executable program is downloaded on the customers computer so that he
can trade from the comfort of his home / office. Stock prices are real-time and continuously
updated once logged in.

A minimum brokerage of Rs.2000/- per month is required to be generated to avail the


Platinum system. This is generally used by those who trade heavily intra-day and take
very little delivery. Therefore the need for real-time prices and the quick order entry like
that of a dealer terminal come handy to these customers.

 Applicable to Ordinary Resident account only

DERIVATIVES INFORMATION
The National Stock Exchange and The Stock Exchange, Mumbai have commenced trading
in Derivatives Market with Index Futures being the first instrument. Now both the exchanges
provide trading in Index Futures and Options and Stock Futures and Options.

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A derivative is a financial contract, between two or more parties, which is derived from the
future value of an underlying asset. At any point of time there will always be available near
three months contract periods. For e.g. in the month of Jan 2006 one can enter into Jan, Feb
or Mar contracts. The last Thursday of each month is the expiry day for that months contract.
When one contract expires, a new contract is introduced. For instance, on expiry of Jan 2006
contract, April contract shall get activated.

Currently, settlements of all Derivatives trades are in cash. There is Daily as well as Final
Settlement. As long as the position is open, the same will be marked to Market at the Daily
Settlement Price, the difference will be credited or debited accordingly and the position shall
be brought forward to the next day at the daily settlement price. Any position which remains
open at the end of the final settlement day (i.e., last Thursday) shall be closed out by the
Exchange at the Final Settlement Price which will be the closing spot value of the underlying.

There are two types of margins collected on the open position, viz., Initial Margin which is
collected upfront and Mark to Market Margin to be paid on T+1 day. As per SEBI Guidelines
it is mandatory for clients to give margin, failing which the outstanding positions may Be
closed out.

Futures and Options Segment:

Trading Members are only eligible to trade, their trades are settled by the Clearing
Members.
Trading cum Clearing members are members who are eligible to trade and also settle
trades on their own behalf and also settle on behalf of other trading members
.
Professional Clearing Members are members who are only specialized in the clearing and
settlement activities. They do not trade on their own behalf or on behalf of other members

Self Clearing Members are those who trade and settle only their own trades

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Geojit Financial Services Ltd is Trading cum Clearing member at NSE.

MarginTradingFundingScheme

Geojit Financial Services Ltd. offers Margin Trading Funding facility to all offline customers
under the scheme of Margin Funding approved by SEBI.

Key features of the Scheme are as follows:

1. Easy and prompt account opening formalities

2. No processing fees

3. Margin funding of up to 50% of the purchase value

4. Shares purchased are credited to customers Demat account maintained specifically for the
purpose of Margin Trading

5. Bonus, and Rights are also directly credited to the customers said demat account. Similarly
dividend shall be credited to the bank account stated in the said demat account.

6. Margin calls are made if there is fall of 10% in the Margin Funded Portfolio. Margins can
be replenished by cheque or by transferring funds from Normal Trading account.

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7. Liquidation if margins are not topped up on a 20% falls in the Margin Funded Portfolio. In
such an event liquidation will be at the lenders discretion.

8. This is a product to facilitate investments for short term. Interest is charged a monthly rests
at the rate of 1.50% per Month.

9. Purchases can be made only against clear funds

10. We provide Margin Funding only for scrip’s traded at NSE only

Margin Ratios

• Margin Ratio: 50:50

• Maintenance margin/ Call Margin: 40 %

• Liquidation Margin: 30 %

Registration Procedure:
Currently, customers who have an offline trading account with Geojit Financial Services can
avail the Margin Trading Funding facility. Clients desirous of registering for Margin Trading
Funding Scheme are required to complete / provide the documents given below. Rs.300/- is
recovered towards Agreement and documentation charges for opening the Margin Trading
Funding Account.

MARGINAL TRADING ACCOUNT

Separate Demat account to be opened for the purpose (standard demat charges shall apply)

a. POA to be issued in favor of Geojit Financial Services Ltd. to operate the said demat
account.

b. Authorization to Geojit’s DP to debit demat account for shares sold

c. Undertaking that MTFS has been availed of from only one broker

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d. Authorization letter to transfer funds from/to MTF ledger

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LoanAgainstShares

_____________________________________________________________________________
Geojit Credits Pvt. Ltd., a subsidiary of Geojit Financial Services Ltd, registered as a Non-
_
Banking Finance Company (NBFC) offers Loans against security of shares. The facility is
Loans fortoCommodities
available all customers Trading
of Geojit Financial Services Ltd.

Key Features of the Scheme:

1. Loan against Shares are extended against security of over 600 scrip’s traded on BSE/ NSE

2. Loan is provided against a minimum of two securities and minimum loan amount is
Rs.50000/-

3. Loan up to 50% of the current market value of approved shares.

4. Upper ceiling on quantum of loan shall be as determined by Geojit Credits P Ltd on a case to
case basis

5. Speedy disbursal through RTGS / direct credit to the customer’s bank account / cheque

6. Hassle free processing and simple documentation

7. Securities are to be transferred to Geojit Credits Pvt. Ltd

8. The credit is provided as an overdraft facility for a period of One year at a time, renewable
by mutual consent.

9. Loan can also be redeemed by instructing Geojit Credits Pvt. Ltd to sell the securities.

10. Loans are re-valued daily.

11. Margin calls are made if the value of the securities fall by 10% which can be met with either
by redeeming the loan partially or placing additional securities

12. Securities may be sold to ensure adequacy of stipulated margins with out reference to clients
in case the margins are not maintained .

13. Rate of Interest

Annual Fixed Interest on daily outstanding (Compounded


Description
Interest Monthly)
Loans
REGIONAL up to Rs 10OF CO-OPERATIVE MANAGEMENT,BENGALURU-70
INSTITUTE
1 %. 17% 40
Lacs
10 Lac to 20 Lac 1 %. 16%
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_

Geojit Credits Pvt. Ltd offers loans against Pledge of Warehouse Receipts for delivery at
Commodity Exchanges.

Key Features of the Scheme

1. Loans against Pledge of Physical and Demat warehouse receipts

2. Loans up to 80% of sale value price contracted for Futures delivery

3. Loans are also considered against Pledge of warehouse receipts without Futures Sell contract
on a case-to-case basis at higher margins ranging from 30% to 50% of the value

4. Loans available till sale proceeds are realized on settlement from the Commodity Exchange
else up to a maximum of three months

5. Provision to switch between different future contracts (subject to validity of warehouse


receipts)

6. Simple documentation

7. Speedy disbursal of loans through RTGS

Registration Procedure:

 It is essential to have a Trading account with Geojit Commodities and DP account with
Geojit Financial Services Ltd.

 KYC norms of Geojit Credits also need to be complied with.

 Commodities Loan Application to be submitted along with necessary Resolutions and


Letter of authority for operating the account by partners/ directors/ officers, etc.

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Documents required for Geojit Credits KYC compliance:

1. Proof of identity- Passport/ Voter Identity/ Driving License / PAN

2. Proof of residence and place of business / Telephone / Electricity Bill

3. Photograph 3 copies of proprietor/ partners/directors

4. Partnership deed/ Memorandum and articles of association/ Trade License

5. Sales Tax Registration and TIN

6. Product license

7. Copy of Last three years Financial Statements with Tax Audit report

8. Credit Limit sanction letter from customers Bank (where they enjoy credit facilities) OR
copy of Bank Statement for 6 months

Check list for availing Loan against Pledge of Commodities Warehouse Receipts

1. Separate application for each disbursement.

2. Physical Warehouse receipts must be endorsed and delivered to Geojit Credits / Demat
receipts must be pledged in favour of Geojit Credits Pvt. Ltd.

3. Original Contract Note duly acknowledged by the Borrower.

4. Signed DIS & Pledge Forms for each ISIN

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5. The sale position against which Loan has been availed shall not be squared off

Rate of interest ( subject to change from time to time) 15% pa.

DEPOSITORY

A depository can be compared to a bank. It holds securities such as shares, debentures, bonds,
government securities, units etc. of investors in electronic form. There are two depositories in
India, The National Securities Depository Limited (NSDL) and Central Depository Services
Limited (CDSL). An individual who desires to avail the depository services can approach a
Depository Participant (DP). Banks, financial institutions, custodians, brokers or any other entity
eligible as per SEBI (Depositories and Participants) Regulations, 1996 can apply to the
Depository to become a Depository Participant. As on 31st March, 2006 there are 526
Depository Participants in India.

Geojit, is a depository participant of NSDL & CDSL. Investors can open demat accounts with
NSDL & CDSL through Geojit. One can approach the nearest branch of Geojit for opening an
account. Agreement charges (statutory charges) along with Annual Maintenance Charge (AMC)
are collected upfront while opening an account. It takes two to three days to open a demat
account. Upon activation of the demat account, a Welcome Letter is sent to the customer along
with the Delivery Instruction Slip book.

DP facilities offered by Geojit

 De-materialization: You can convert your physical shares into electronic form by
surrendering the shares for dematerialization at the Geojit branch.

 Re-materialization: Re-materialization enables you to convert the dematerialized shares into


physical form.

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 Repurchase: This facility helps you to submit the units of open-ended Mutual Funds in case
of re-purchase.

 Pledge: You can pledge securities to avail a loan.

 Transfer: You can transfer securities from one demat account to another.

 IPO’s: In case you have applied for an IPO and receive an allotment then the securities are
transferred directly to your demat account. The same applies for bonus and rights issues.

 Commodity De-mat Account: If you are a commodity player, you may need to open a
commodity de-mat account with Geojit.

 Speed-e: If you register for Speed-e services, then transfer instructions can be placed online
over the internet to pre-notified Clearing Members Pool a/c. This does away with the need
to submit a physical delivery instruction slip.

 Internet Services : If you have access to Internet then you can register with us to view your
demat account over the Internet. This is very beneficial as you can avail of a host of services
at no extra cost. You will be able to view your holdings, reports, ledger and will have free
access to our research reports at any time.

 SMS Alert Facility : The alert messages for debits(transfers) and IPO credits would be sent
to the account holders who have subscribed to this facility. Depository provides this facility
and no charge is levied on DPs for providing this service to investors.

Introduction to Commodity Futures Trading

Geojit Commodities, a subsidiary of Geojit Financial Services Limited, is mainly engaged in the
business of Commodity Futures Trading. Geojit Commodities is a member of:

 National Multi – Commodity Exchange of India limited (NMCE)


 National Commodity & Derivatives Exchange Limited (NCDEX)
 Multi – Commodity Exchange (MCX)

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 India Pepper and Spice Trade Association (IPSTA)


 Singapore Commodity Exchange (SICOM)
 Dubai Gold Commodity Exchange (DGCX).

Geojit provides information on commodity futures, along with technical and fundamental
analysis online at its website and also through the company's large branch network. The
company conducts Seminars, distributes free in-house literature and holds interactive sessions
that help raise awareness on the futures market. The number of participants is continuously on
the rise thus leading to increased volumes and market efficiency.

Geojit Commodity offers futures trading through multiple exchanges in varied commodities such
as:
 Agri commodities: oilseeds, Soya, groundnut, pulses, rice, wheat, sugar, spices, rubber, guar,
pepper, cardamom, coffee, etc
 Precious metals: gold and silver,
 Base metals: steel, aluminum, nickel, zinc, copper, etc
 Energy products: crude oil and furnace oil

Geojits clientele in commodities range from investors, co-operative societies, state and national
institutions to dealers, traders, manufacturers, financiers, speculators, arbitragers, etc.
Geojit does not have proprietary interest in any commodity and therefore is price neutral.
Transaction costs are highly affordable attracting a spectrum of investors. Membership in
multiple exchanges gives clients the added advantage of arbitrage. Geojit has specialized staff
that provide the required guidance, help and enable clients to enter at the appropriate price.

How to trade in Commodities @ Geojit

 Open a trading account and maintain initial margin with Geojit.


 When an order request is entered for buying/selling for a match with the existing orders in
the Exchange system. If the order matches another order in the system it results in a trade.

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 Contract note is issued in the exchange specified format containing details such as
transaction, quantity, price etc. Contract note is a legal document enforceable in the court of
law.
 Mark to market margin are levied on the contract.
 The open purchase/sale positions can be squared off at any time during the contract period.
 NMCE however does not allow members to enhance their position during the settlement
month. Existing positions can be squared off.
 On the first (tenth in case of gold & silver) day of settlement month, margins on existing
position are increased by 20%.
 From 1st to 15th of the contract month (10th to 15th in case of gold & silver), seller can
tender warehouse receipt for settlement.

This means that the seller has the right to make delivery of the sold position any time between
the 1st to 15th (10th to 15th in case of gold & silver) of the contract month. The first buyer (as
per the exchange records) shall have to necessarily take delivery of the same. The seller shall
receive payment from the exchange on T+3 day while the buyer has to make payment on T+1
day. (T is the transaction day)

 The seller who places his commodity with Central Warehousing Corporation (CWC) is
issued a CWC receipt against this delivery. This receipt is accepted by Geojit and sent to the
exchange that gives it to the buyer. The buyer presents it at CWC and takes delivery of his
commodity

Commodity Depository

1. The Commodity Depository account can be opened by individuals, partnerships firms,


companies, etc. unlike in the capital market segment where Partnership firms cannot open the
demat account in the firm name.
2. The content of the Agreements shall differ for each category
3. Depository charges differ for each category

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4. Only warehouse electronic receipts are considered for the purpose debiting / crediting
depository account
5. Commodities depository account can be availed at both the Depositories i.e. NSDL and
CDSL
6. The Commodities Identification number i.e. INC is akin to the ISIN

The Commodities Depository account may be credited in the following situations:

1. Demat
2. Revalidation
3. Actual purchase from market.

Demat:
If the customer has some commodities with him, he may unload it in the warehouse and take the
warehouse receipt after due verification of the Assayer appointed by NCDEX AND MCX . To
convert the warehouse receipt in demat form, he has to fill up necessary details in the
Commodity Deposit Form available in the Warehouse. The Warehouse shall inform the Registrar
and Transfer Agents (RTA) with the required details who shall then arrange to credit the
depository account of the customer through NSDL/CDSL. Currently, there is only one RTA for
commodities i.e. Karvy

Revalidation:
If the client doesn’t wish to open the DP account then he may trade directly in the market with
the physical warehouse receipts ( in MCX AND NMC)

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Normally the warehouse receipt (whether demat or physical) is for duration of 3 months. After
the expiry of 3 months the owner of the receipt needs to revalidate it. He will request the
Warehouse to revalidate the receipt. The assayer will examine the commodity and take into
account the wear and tear (normal as well as abnormal) for revalidating the warehouse receipt

Present charges for the commodities depository are as under:

Particulars Charges
Account Opening Charges Nil
Annual Maintenance Charges Rs.500/-
– Resident
Demat Request Rs.50/- per request
Remat Request Rs.100/- (Rs.50/- towards NSDL charges)
Custody Charges Nil

Transaction Charges
Market Trades
Debit (sales) Rs.25 per transaction
Credit (purchase) Nil

Off-Market Trades
.Debit (sales) # Rs.100/- per transaction Or 0.01% of the value
whichever is higher
Credit (purchase) Nil

Pledge
Pledge Creation Rs.100/- per transaction

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Pledge Closure Nil


Pledge Invocation Rs.100/- per transaction

Miscellaneous
Additional Statement printout Rs.25/- per statement per account

Note: All levies and taxes extra

PORTFOLIO MANAGEMENT SERVICES

Geojit, a SEBI registered Portfolio Manager (Reg. No.INP000000316) offers discretionary


portfolio management services. Geojit has a team of experts who carefully take investment
decisions based on the clients' objectives. The Portfolio Management team has a successful track
record of more than 10 years in the capital market. The team has access to Geojit's strong Equity
Research, and Fundamental & Technical Analysis

Investment Objective

To generate medium to long-term capital growth (2-3 years) by identifying undervalued stocks
and those with growth opportunities from a select list of well researched stocks.

Strategy
Identifying growth stocks from a select list through extensive research.

Minimum Investment

Rs.10 lakhs for resident Indians and Rs.25 lakhs for Non-Resident Indians.

Reports
Portfolio and NAV are communicated bi-weekly via e-mail.

Risk factors

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As the stocks are normally held for medium to long term, the net asset value will be affected by
market volatility.

PMS fee Option 1: 3% p.a. (charged @0.75% at the end of every quarter on the average of
beginning and ending NAV)

Option 2: 1% p.a. (charged @0.25% at the end of every quarter on the average of beginning and
ending NAV) and performance fee

DISTRIBUTION

Geojit undertakes the distribution of variety financial instruments such as mutual funds, bonds,
life insurance products, fixed deposits etc. The wealth centre team understands the universe of
investment options, analyzes the risk and return from these options and recommends investment
options to clients to help them achieve their financial goals.

Geojit has a tie up with all the Mutual Funds across the country. Geojit offers life
insurance products of the following life insurance companies:

 MetLife India Life Insurance Company


 LIC of India
 ICICI Prudential

For general insurance, Geojit has partnered with the following:

 Bajaj Allianz General Insurance Company


 National Insurance Company Ltd

Geojit also helps its customers in investing in 8% RBI taxable bonds, Capital gain bonds (Sec 54
EC bonds), fixed deposits (KPFC, KTDFC) etc. through its tie- up with the required
organizations.

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Geojit Commodities Limited

Geojit Commodities, a subsidiary of Geojit Financial Services Limited is mainly engaged in the
business of Commodities Futures Trading. Geojit Commodities is a member of:

• National Multi – Commodity Exchange of India limited (NMCE)


• National Commodity & Derivatives Exchange Limited (NCDEX)
• Multi – Commodity Exchange (MCX)
• India Pepper and Spice Trade Association (IPSTA)
• Singapore Commodity Exchange (SICOM)
• Dubai Gold Commodity Exchange (DGCX).

GeojitTechnologies(P)Limited

Geojit Technologies a subsidiary of Geojit Commodities Ltd. is engaged in providing software


solutions using open computing and web standards where possible. Geojit Technologies has
strong domain expertise in financial services such as Broking, Depository, Derivatives, Banking,
etc. It also offers development, procurement assistance, implementation, guidance and support
services.

Geojit Financial Distribution (P) Limited

This is a subsidiary of Geojit Commodities Limited, engaged in the distribution of Mutual Funds
and Insurance products.

Geojit Financial Management Services (P) Limited

This is a subsidiary of Geojit Commodities Limited, engaged in providing wealth management


services.

Geojit Credits (P) Limited

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Geojit Credits, a subsidiary of Geojit Financial Services Ltd. is registered with Reserve Bank of
India as an NBFC. It is engaged in the business of margin funding for securities trading, loan
against shares, loan against commodity futures, etc.

Barjeel Geojit Securities L.L.C

Barjeel Geojit Securities LLC is a joint venture between Geojit Financial Services Ltd and Al
Saud Group. Al Saud is a Sharjah based company having diversified interest in the area of
Construction, Real Estate and Investments and belongs to the family of Sheikh Sultan Bin Saud
Al Qassemi from the royal family of Sharjah. Barjeel Geojit Securities offers online and offline
trading services to NRI clients.

A product for every need : ICICI direct.com is the most comprehensive website, which allows
you to invest in shares, mutual funds, derivatives (futures and options) and other financial
products. Simply put we offer you a product for every investment need of yours.

1. Trading in shares:

Geojit financial service Ltd offers you various options while trading in shares.
Cash trading: this is a delivery based trading system, which is generally done with the intention
of taking delivery of shares or monies.

Margin trading: you can also do an intra-settlement trading upto 3to4 times your available
funds, wherein you take long buy/short sell positions in stocks with the intention of squaring off
the position within the same day settlement cycle.

Margin Plus Trading : through margin PLUS you can do an intra-settlement trading up to 25
times your available funds, wherein you take long buy/short sell positions in stocks with thaw
intention of squatting off the position within the same day settlement cycle. Margin PLUS will
give a much higher leverage in your account against your limits.

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Spot trading : this facility can be used only for selling you’re demat stocks which are already
existing in your demat account. When you are looking at an immediate liquidity option, ‘cash on
spot’ may work the best for you, on selling shares through “cash on spot”, money is credited to
your bank a/c the same evening &not on the exchange payout date. This many can them be
withdrawn from any of the kotak securities ltd authorized bank ATMs.

BTST : buy today sell tomorrow (BTST) is a facility that allows you to sell shares even on 1st
and 2nd day after the buy order date, without you having to wait for the receipt of shares into your
femat account.

Call and trade : call and trade allows you to call on a local number in your city & trade on the
telephone through our customer service executives. This facility is currently in over.
OPTION
An option is a contract, which gives the buyer the right to buy or sell shares at a specific price,
on or before a specific date. For this, the buyer has to pay to the seller some money, which is
called premium. There is no obligation on the buyer to complete the transaction if the price is not
favorable to him.

To take the buy/sell position on index/stock option, you have to place certain % of order value as
margin. With options trading, you can leverage on your trading limit by taking buy/sell positions
much more than what you could have taken in cash segment.
The buyer of a CALL OPTION has the right but not the obligation to purchase the underlying
asset at the specified strike price by paying a premium whereas the seller of the call has the
obligation of selling the underlying asset at the specified strike price.

The buyer of a PUT OPTION has the right but not the obligation to sell the underlying asset at
the specified strike price by paying a premium whereas the seller of the put has the obligation of
buying the underlying asset at the specified strike price.

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By paying lesser amount of premium, you can create positions under OPTIONS and take
advantage of more trading opportunities.

4. IPO’s and Bonds online:


You could also invest in initial public offers (IPO’s) and bonds online without going through the
hassles of filling ANY application form/paperwork.
Get in-depth analyses of new IPO’s issues (initial public offerings) which are about to hit the
market and analysis on these. IPO calendar, recent IPO listing, prospectus/offer documents, sync
IPO analysis are few of the features, which help you, keep on top of the IPO markets.

RESEARCH
Geojit has a team of experts who track the markets and related events very closely. Sophisticated
tools are used for technical analysis and research to offer recommendations, technical analysis
and research reports. Each day Geojit Research team brings to table information that helps you
profit from it.

• Daily Market View: Technical Analysis - Market, a daily report on markets gives a clear
picture on the expected market movements (NSE and BSE). It also covers the key support
and resistance levels. It also provides clues on market direction and the expected profit
booking levels.

• Daily Stock View: Technical Analysis - Stocks, a daily report on the stocks for the day.
These are prepared with "Departure Oscillators" tool that have a high degree of accuracy on
stock readings; which in turn helps investors, day traders, High Networth Individual's with
stock ideas that may benefit them.

• F&O Analysis: F&O Analysis is a daily report that gives near 100% accurate reading on
both Futures and Options. Tools such as PC ratios, Open Interest and volatility combined

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with RSI indicator are used for the purpose. It is helpful for day traders, long-term holders
and HNI clients

• SMS: SMS alerts are sent to those who have registered for the service. These are prepared
with utmost care, ensuring that it is suitable for both the Bulls and the Bears. It provides
instantaneous buy/sell/hold recommendations purely on technical. It also provides option
strategies with the use of Implied/Historical Volatility study. SMS is especially handy for
Index Traders.

• Geo Data: Geo Data is a monthly research report covering most financial instruments. It is
quite comprehensive, and provides in-depth information on stocks to watch out for,
recommended Mutual Funds, performance of schemes, Futures and Options update and a
review of the commodities markets.

BROKERAGE

Brokerage rates applicable w.e.f. December 1, 2006 for Online Retail Trading ** provided
linked demat account is with Geojit Financial Services Ltd.

Delivery-based Volumes *
Volume *(Rs.) New Brokerage Rate
< 10 lacs 0.30% (current)
> 10 lac < 50 lac 0.25%
> 50 lac < 1 cr 0.20%
> 1 cr < 2 cr 0.15%
> 2 cr 0.10%

Intra-day Volumes *
Volume *(Rs.) New Brokerage Rate
< 2 cr 0.030% (current)
> 2 cr < 6 cr 0.025%
> 6 cr < 12 cr 0.020%
> 12 cr < 15 cr 0.015%
> 15 cr 0.010%

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F&O Volumes *

* Applicable for a calendar month and should be achieved through online channels.
* Applicable to Ordinary Resident account only
Subject to minimum brokerage as under:

• Rs.20 per scrip or 1 paisa per share whichever is higher subject to 2.5% per share.
• In case the contract note is delivered by post then Rs.20/- per scrip or 5 paisa per share
whichever is higher
• subject to a maximum of 2.5% per share.

STATEMENT OF FINANCIAL RESULTS FOR THE YEAR ENDED March 31,2009.

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For the year Ended


For the year Ended
Sr. No. Particulars
03/31/2008 03/31/2009

1 Income From
14,151 19,087
Operations
2 Other Income 897 1,196
3 Total Income 15,048 20,283
4 Expenditure
-Staff Cost 3,051 4,081
-Operating Expenses 4,192 5,750
-Administrative & Other
1,697 2,982
Expenditure
-Depreciation 620 859
5 Interest & Finance
9 12
Charges
6 Total Expenditure 9,569 13,684
7 Profit Before Tax &
5,479 6,599
Exceptional item
8
Exceptional Item

Profit on sale of long


term non trade 474 474
investment
9 Profit from ordinary
5,953 7,073
activities before tax
10 Provision For Tax
-Current Tax 1,972 2,477
-Deferred Tax (94) (239)
-Fringe Benefit Tax 34 31
-Earlier Years - -
Total Tax 1,912 2,269
11 Net Profit for the
4,041 4,804
period
12 Paid-UP Equity Capital 2,090 2,090
(Face Value of Re.1
each)
13 Reserves Excluding
Revaluation Reserves as
per balance sheet of
previous accounting
REGIONAL
year INSTITUTE OF CO-OPERATIVE MANAGEMENT,BENGALURU-70
14 Earnings per Share (in
57
Rs.) - not annualised
Basic 1.93 2.30
15 Aggregate of public
share holding
No.of shares 86,579,240 86,579,240
_____________________________________________________________________________
-% of Share holding 41.43% 41.43%
_

CHAPTER-3
3.0 RESEARCH DESIGN:
An investment means employment of funds on assets (i.e. securities mutual funds or any other
investment avenues) with the aim of earning of income as well as capital appreciation. There are
manly two attributes while investing any of the means, i.e time &risk. There are mainly four
objectives which the investments activities will carry on those are
 return
 risk
 liquidity
 hedge against inflation
 safety
There are many alternatives which investment avenues are open to the investers to suit their
needs and nature. The selection of investment alternatives depends upon the required level of
return and risk tolerance level. These alternatives range from financial securities to traditional
non security investment alternatives
Negotiable and fixed income securities
 Equity shares

 Preference shares

 Debentures

 Bonds

 Government securities

 Money market securities (i.e. treasure bill, commercial paper, certificate of deposits etc.)

Non- negotiable securities


 Bank deposits

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 Post office deposits


 NBFCdeposits

 Tax saving schemes

 Public provident funds schemes

 National saving scheme


 Life insurance
 Mutual funds

 Real estates etcs

Securities market
Company raises funds to finance their projects through various methods. The funds may raise
through issue of fresh shares, or preference shares, debentures or globally depositary receipts
(GDR).there are mainly two markets from which any company can raise their funds; Those are
primary market where new shares are issued and secondary market where existing shares are
traded. The companies raise funds for following purposes
 To promote new company
 To expand an existing company
 To diversify the production
 To meet the regular working capital requirements
 To capitalize the reserve

Stock exchanges are established in different centers like Mumbai, Chennai, Delhi, Nag poor,
Hyderabad and Bangalore. At present we have twenty three stock exchanges. The main activity
of stock exchanges are maintain active trading, fixation of prices, ensure fair dealing, aids in
financing the industry, dissemination of information performance inducer’s and self-regulating
organization.

There are mainly two stock exchanges that control all the trading and investments of stocks
on India. Those are Bombay stock exchangers and National stock exchange. And there are many
depositary services such as NSDL and CDSL and OTCEI

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Securities market is a wider term, which includes number of markets in which securities are
bought and sold. Securities market may be classified by the types of securities bought and sold
there i.e. whether the securities are new issues or are already outstanding and owned by investors
if the securities are new, they are traded in primary markets and if they are already out standing
and owned by investor are usually bought and sold on a secondary market

The Indian stock market as come to a long way since the early 18th century when securities
trading was initiated under a scrolling banyan tree in front of town hall in Mumbai. The
companies act , passed in 1850 singled the beginning of the era of joint stock companies in
India.in1874, dalal street became the place where brokers meet to conduct this business. On
july9, 1875 their brokers organized themselves in to the native charea brokers association.

The early 1980’s witnessed the equity cult gaining ground. The government constituted the
Securities and Exchange Board Of India (SEBI) in April 12, 1988. subsequently the over counter
the exchange of India (OTCEI)was formed in 1992 to encourage small companies list their
securities.

The creation of the National Stock Exchange (NSE)by leading financial institution in 1992
triggered the mood to screen based trading for equities, debt instruments and hybrids.

The process of globalization began with opening up of the Indian capital market to foreign
institutional investors (FII) in1992.This lead for an custodians and brokerages setting up base in
India.

A significant reform was the 1996 decision to move a dematerialized demand form
settlement. Prior to December 1996, securities were traded and settled only in the physical mode,
result in delays and other operational Hansel. Today, 90%of markets trisection in the demat
form.

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Derivatives –trading began in june2000 with index futures of first product. Since then, a host
of other derivatives instruments such an index options have been introduced by exchanges.
Recently, SEBI approved trading in single stock futures. In further efforts to integrate with
international markets, SEBI introduced the compulsory rolling settlement on a T+5 basis for 409
scripts on July 2,2001. to stream line settlement system. In a parallel a slew of risk containment
measure and new margining norms were introduced.

Today, the capital market is poised to take a significant leap in to the future with the
following developments, a move towards a T+3 settlement and introduction of continuous net
settlement (CNS) enabling real time from settlement (RTGC). Margin trading for canalization
and utilization of bank funds in the secondary markets will help investors borrow money to
finance purchase of securities or borrow of securities needed for sale.

However, the globalization of markets as made the Indian financial markets more
vulnerable to external events as a result of which any movement in the global market have
corresponding ripple-efforts in India. While integration and compatibility or critical driven for a
robust market, it is bent to maintain a steady pace up the development curve.

3.1 STATEMENT OF THE PROBLEM


The sum of all things companies stand for that it will not for sake in good times or bad.
Good value system creates goodwill in the market and this begets better customer, better
vendors, better and motivational employees and in general happier relationship with online
traders.

The online trade process reflects how a company approaches rights of online traders. This
online trading process is a electronic system, it involves buying and selling of various scrip’s in
any place, where online trading brokers available. Brokers like Geojit s financial services ltd,
kotak securities ltd, karvy finapolish etc.

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Topic: “The process of online trading in Geojit Financial services Ltd.”

3.2 OBJECTIVES OF THE STUDY


Objectives of this study are as fallows
 To know the online screen based system adopted by Geojit financial services ltd and about its

communication facilities for the appropriate configuration to set the network, which link

securities to individual brokers/members.

 To study about the back up measure with respect to primary communication facilities in

order to active network availability and connectivity and back up options

 To know about the latest and future developments in the stock exchange trading system

 Clearly defining each and every term of stock exchange procedures

 To get the practicable knowledge about operations of online trading system

 To know the background of Geojit financial services ltd.

3.3 NEED FOR THE STUDY


In September1996 SEBI has issued guidelines to the stock exchange to go for on-line trading
procedure by the end of year1996. Following its directives Geojit financial services ltd has
installed on-line trading system, as on around90’s .the major need for thus is to know
effectiveness of the on-line trading system, to study its advantages and recommended for
beneficial and effective use of the system. the study also includes the emergency of the
depositary system in the country to rule out the drawback of the system if physical transfer of the
shares.

METHODOLOGY:

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The value of any systematic scientific research lies in its methodology giving a clear idea
of the forms of study & procedure adopted in conducting the study.
For the study, the methodology adopted is based on survey method. For primary data a
sample of respondents are contacted & data obtained from them through questionnaire.

Sample design
a) Sample size: It refers to the members of respondents to be included in the survey.
The study is of thirty respondents, which includes investors, intermediaries and
others.

b) Sample area: It refers to the place where the studies are conducted. Sample is
selected for the study is sindhanur town.

3.4 TOOLS FOR DATA COLLECTION


The data collection method includes primary and secondary data

sources of data
(a) Primary data
(b) Secondary data

a)Primary Data
Primary data are those that are collected as fresh for the first time & thus happen to be
origin in character. Here primary data was collected through a structured questionnaire.
The selection of respondents is based on simple random sampling. Information was
collected from personal interview & discussion with the manager of Geojit financial
service ltd.& also with the respondents

b) Secondary data

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The secondary data are those, which have collected by same others that have been
processed.
For the study, the secondary data is called from various publications and journals of
stock exchanges, newspapers, books, business and investment magazines, articles &
websites.

Data sources

Tools used for the techniques of analysis


Major tools used for the analysis of the data are tables, percentages, bar charts and pie
charts.
The analysis of both primary and secondary data in the light of objectives lay down in
order to support the conclusion with referenced statistical tools.

Lastly in addition to the necessary data was collected from the various website like
 www.geojit . com
 www. kotak .com
 www.nse.com
 www.bse.com
 www.icicidirect.com

PERIOD OF STUDY:
Period of study include a period of thirty days as in plant trainee in trading procedure
in the Geojit financial services limited from 5th Feb,2010to 05th march,2010.

3.5 SCOPE OF THE STUDY


The research on a study of investor’s preference towards online market helps to know
the attitude, awareness & preferences on the investors. Based on the information

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investment brokers can carry out further research on specific problem. The research
suggestion through report will help them to improve their services. Many services will be
undertaken to attract new investors. This study helps to give value-added services &
maintain healthy investor relationship.

The scope extends to various classes of investors being classified as employees,


professionals, and businessmen and other. Concerning to the fact that, there is a need of
institutional support which may be broker, agents or even financing institutions. The
study extends to these areas too.

3.6 REVIEW OF LITERATURE

Review of literature means the literature review followed for the purpose of preparing this
report. If the literature followed is sound in nature ,surely the report is going to be shaped
literally sharp, which not only attracts the reader but also gives him the quality of the work done

Firstly for the introduction and other aspects the literature was taken from daily newspapers
business magazine company journals etc . For the second chapter, i e research methodology of
the study .the information were taken from previous project report and guidelines provide by the
university. Information regarding the industry was taken from magazine industry journals
company journals and previous insurance related projects review from college library.
Information regarding the company profile was taken from company journals. company

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brochures and yearly magazines. Lastly for the analysis and interpretation of the study the
sources literature was previous projects reviewed from the libraries of college and books.
the literature processed from these sources was made use of in an organized manner to shape
this study or report. The following literature I followed.

3.7 LIMITATION OF STUDY


 The study is confirmed to Bangalore city with minimum sample size.
 The information provided by respondents was assumed to be true.
 The survey was conducted only for the sample size respondents.
 The limitation of time is another factor.

CHAPTER-4

DATA ANALYSIS AND INTERPRETATION


4.1) INTRODUCTION:
Internet share trading has been generalized. The traditional system of open outcry
has been replaced by ‘screen based trading’. The stock exchanges have setup their
terminals in major cities across the country. The basic purpose is to ensure the
accessibility of trading system and stock exchanges index to all those who seek
investment in capital market. The investors can quote their orders at specified prices
from their places to carry on the transactions. The order placed is further compared

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with order sleeked and the transactions are tallied virtually with conformity of both
parties. This current system still is not accessible to many cities in the country and
hence is violent.

The government and stock exchanges need to analyze and study awareness and
attitude of investors towards online share trading. The attitude of investors is the
function of their reactions to risk, return, safety, and liquidity. The awareness has
major influence from technology awareness and the extent of trading through online.
Such a study enables the stock exchanges to take the measures to build awareness and
attitude towards capital market.

The questionnaire is prepared in accordance with the objectives laid down for the
study. It is designed to collect the primary data for the analysis of ‘investors’
perception. The arrierepensee of project is the questionnaire which tries to analyze
investor’s attitude and perception towards online share trading Geojit financial
services ltd sindhanur town.
Table .1
Number of respondents investing their surplus in trading
Investing No. of respondents Percentage
in trading
Yes 18 60%

No 12 40%

The Table -1 tells that 60% of respondents invest their surplus in trading and
40% of respondents are not interested to invest their surplus in trading.

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60

50

40
Yes
30
No
20

10

0
No. of respondents Percentage

Table. 2
Reasons for investing in Shares, Bonds, Mutual Funds etc.
Reasons for investing No. of respondents Percentage

21 70%
To earn high profit
To meet future needs 03 10%

To meet future contingencies 03 10%

If any other purpose 03 10%

The table-2 reveals that 70% of respondents said that the reason for investing in trading
is quick yield, higher profit & remaining 30% of respondents express the
reasons to meet the future contingencies and other purposes.

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No. of respondents
To earn high profit
To meet future needs
To meet emergency
If any other purpose
10%
10%

10%

70%

Table .3

The respondents aware of various sources of investment


No. of respondents Percentage
Aware of various sources of
investment
Bank deposits 12 40
Insurance 06 20
Equity market 07 23
Bonds 00 0
Mutual fund 03 10
Others 02 7

Table-3 indicates that out of 30 respondents 40% of them are aware of the sources of
investment “Banks Deposits” only remaining 60% of them are aware of

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insurance, Equity,Mutualfunds Etc.However none of them are aware of Bonds,


In spite of financial sector growing at faster rate.

No. of respondents
Field / other deposits Insurance
Equity market Bonds
Mutual fund Others
7%
10%
0%
40%
23%

20%

Table - 4
Respondents know how to buy & sell shares in online
Respondents know No.of respondents Percentage
buy & sell shares in
online
yes 18 60
No 12 40

Table -4 tells that 60% of respondents know to buy & sell shares through online trading and
40% respondents are not.

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Graph showingthat investor knowtheonlinetrading&how


to buy &sell sharesin online

80

60
Percentage
40
No. of respondents
20

0
yes No

Table – 5
The No. of respondents who can give better advice for investment in online
trading.
Better advice for investment in No. of respondents Percentage
online trading

Share Brokers 10 33
Magazine 3 10
TV channels 8 27
Friends & relatives 5 16
News paper 4 14

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Table-5 highlights that 60% of the respondents feel that share brokers, TV channels can give
better advice for investing in online trading and remaining 40% of respondents come to know
from magazines, news papers & friends and relatives.

Graph showingtheNo. of respondentswho


can give better adviceforinvestment in online
trading

35
30
25
20
15
10
5
0 No. of
respondents

Table – 6
The number of respondents would you like to invest in online trading.
Respondents No. of respondents Percentage
invest in online
trading
yes 19 63
No 11 37

Table-6 informs that 63% of respondents would like to invest in online trading and
37% of respondents not interested in online trading.

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Table – 7
The number of respondents for factors influence for investing in online trading

The factors influence No. of respondents Percentage


investing in online trading

Returns 14 47
Liquidity 02 7
Tax concession 09 30
More investments in others 07 16

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Table-7 reveals that the 47% of respondents would like to invest in online trading
because of higher quick returns, 30% of them invest for tax concession, 7% for
liquidity and remaining 16% of respondents are liking to invest in more in other
securities.
Graph showingthenumber of respondentsfor
factorsinfluencefor investingin onlinetrading

50

No. of respondents
0 Percentage

Table – 8
The no of respondents are more preferred to invest.

Respondents are more prefer No. of respondents Percentage


to invest
Long term investment 20 67

Short term investment 10 33

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Table- 8 tells that 67% of respondents preferred to invest in long term investment &
33% of them preferred to invest in short term investment.

Graph showingtheno of respondentsare


morepreferred to invest.

70
60
50
40
No. of respondents
30
20 Percentage
10
0
Longterm Short term
investment investment

Table – 9
The no. of respondents are heard about Geojit financial services ltd.
Heard about geojit No. of Percentage
financial services Ltd respondents
Yes 24 80%

No 6 20%

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Table-9 indicates that 80% of respondents are aware about Geojit Financial services Ltd &
remaining 20% of the respondent donot know about Geojit financial services ltd

Graph showing the no. of respondentsare


heardabout Geojit financial services ltd.

20%

Yes
80% No

Table – 10
The No of respondents are satisfied with the service provided by Geojit financial
services ltd.

Services provided by No.of respondents Percentage


Geojit financial services
ltd.
High Satisfied 4 13
Satisfied 18 60

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Moderately satisfied 8 27
Dissatisfied 0 0

Table-10 tells that 60% of the respondents are satisfied with the service provided by
Geojit financial services ltd., 13% of the respondents are highly satisfied, 27% of the
respondents’ were moderately satisfied and none of them were dissatisfied. This
indicates that cent percent are satisfies with the customer services provided by this
company.

Graph showing the No of respondents are satisfied


withtheservice provided by Geojit financial
servicesltd.

No. of respondents Percentage


60
18 27
4 13 8 0 0

Table – 11

The Stock exchange at which internet trading are commonly done.


No. of respondents Percentage
Stock
exchange

NSE 18 60

BSE 12 40

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Table-11 indicates that 60% of respondents trade with NSE and remaining
40% of respondent trade with BSE.

Graph showing Stockexchangeat which


internet tradingarecommonlydone.

40% NSE
60% BSE

Table – 12

Investors trading habits.


Trading habits No. of respondents Percentage

Daily 18 60
Weekly 06 20
Monthly 04 13
Ocassionally 02 07

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Table-12 indicates that 60% of investors are trading regularly, 20% of the
investors trading weekly, 13% of the investors trading monthly and 07% of investors
trading occasionally. Thus it can be concluded that 60% of total customers are
engaged trading every day

Graphshowinginvestorstradinghabits
0%
0%
Regular
13%
Occasionally
20%
Weekly
60%
Monthly
Others
7%

CHAPTER -5

FINDINGS, SUGGESTIONS, RECOMMENDATIONS & CONCLUSION

FINDINGS

From the analysis we have found that most of the individual investors are other i.e. retired
person & other persons because they know the advantages they get stock broking.

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 Out of 30 respondents 40% of them are aware of the sources of investment “Bank
deposits” only, remaining 60% of them are aware of insurance, Equity, Mutual
fund, etc.

 60% of investors know to buy and sell shares through online trading and 40% are
not.

 47% of investors would like to invest in online trading because of higher quick
returns,30% of them invest for tax concession, 7% for liquidity and remaining 16%
of investors are liking to invest more in other securities.

 60% of respondents are aware of Geojit Financial services ltd. And remaining 40%
of the respondents do not know about Geojit Financial services ltd.

 13% of the investors are highly satisfied , 27% of the investorsrs are moderately
satisfied and 50% of investors are satisfied with services provided by Geojit
Financial services ltd.

 In Geojit Financial services ltd. 57% of investors are not ready to take risk, they are
risk averse.

 67% of investors investment decisions depend on the advice of Geojit financial


services ltd.

 50% of investors invested their money after through study of company, but 50%

of based on advisory service by Geojit financial services

SUGGESTIONS:

 The company should give the best of services in its industry, so that customers get
satisfies &they get the new customer, which would reduce the promotional costs &
activities.

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 The company should maintain a good relationship in realty & should render quick
services according to the customers, in case of necessary.

 The company should go for door step services, which would help the customers to get
educated regarding the services and be the prospective customers.

 The company should have a separate customer care department, so that they keep in
touch with customers, which makes them feel that they are cared, loved &needed.

 The company should keep up its image in the industry, by keeping up its words, so
that it can reach the pinnacle.

 The existing system can be further improved by the introduction of STOP-LOSS,


facility, which will help reduce trader’s losses.

 They need to give more services, because only 13% of the respondents are highly
satisfied 27% of the respondents are moderately satisfied.

 They need to set up standing and to issue press release because 60% of respondents
only aware about Geojit financial services ltd.

RECOMMENDATIONS:

 The company should give wide publicity and propaganda for popularising, the
mutual funds, bonds etc. Through all medias.

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 Awareness about online trading should be increased by


a) Publishing articles in regional languages
b) Conducting seminars, workshops through advertisements in regional
Languages and through online education

 Educating the investors by supplying materials regarding online trading and its
benefit by capital market research analysis.

 Advisors should give proper information to the investors about investing in shares
through online trading.

 To attract new investors to share market for improving the portfolio management,
which gives more returns in a short term period and with less risk.

 More advertisement is necessary to reach all the common public to invest in


shares, strong networking system should be adopted. Changes in the pattern of
advertisements with changing scenario and suiting to the needs of the investors
should be followed.

 Most of the investors prefer fixed deposits rather than shares. So comparative
advantages of investing in stock market should be convinced.

CONCLUSION:

Issues like entry of large international players, interest rate changing technology, privatization,
inflation, acquisition and political turmoil’s are facing India’s economy frequently and severally.
In such an environment in Geojit financial service ltd is performing on a consistent basis. It is not

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a result of luck, but service misfortune of the competitors but service schemes ltd. geojit
financial service ltd sustained efforts are yielding superior long term result.

The above study showed that most of the investor’s investment decision in on-line trading
depended on advisory service of geojit financial service ltd, but they give more importance to
risk, tax, safety and return. So geojit should consider these factors before advice. They need
more experience and trained people in their company.

BIBLIOGRAPHY

BOOKS REFERRED

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 Investment and Portfolio Management by Prasanna Chandra.

 Security Analysis and Portfolio Management by Punithavathy Pandian.

 Internal records of the company.

www.geojit.com

www.kotak.com

www.nse.com

www.bse.com

ANNEXURE

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I am ASHOK studying in final year M.B.A in Regional Institute of Co-Operative


Management, Bangalore. As a part of academic program I am pursuing a project work on
the topic entitled " THE PROCESS OF ON-LINE TRADING “ with reference to
Geojit Financial Services Limited, Hence, I kindly request you to spare few minutes in
answering the following questions.

The information provided by you will be used only for academic purpose. I hope you
will co-operate for this.

DATE : ASHOK
PLACE:

1) Name:

2) Address:

3) Age :

4) Qualification:

(a) Post Graduate (b) Graduate

(c) Under Graduate (d) others

5) Occupation:

(a) Service (b) Business

(c) Self employment (d) others

6) Do you currently invest a part of your income in trading?

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(a) Yes. (b) No

7) What is your objective of investing in Shares, Bonds and Mutual Funds etc?

(a) To earn high profit (b) To meet future needs

(c) To meet emergency (d) If any other purpose

8) Tick the investment option you are aware of: -

(a) Fixed / other Deposits (b) Insurance

(c) Equity market (d) Bonds

(e) Mutual Fund (f) Others

9) Do you know online Trading and how to buy and sell shares in online?

(a) Yes (b) No

10) Who can give better Advise for investment in online Trading?

(a) Shares Brokers (b) Magazine

(c) T.V. Channels (d) News Papers

(e) Friends & Relations

11) Would you like to invest in Online Trading?

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(a) Yes (b) No

12) What factors influence you for investing in online trading?

(a) Returns (b) Liquidity

(c) Tax concession (d) more investment option

13) How often do you trade?

(a) Regular (b) Occasionally

(c) Once in a week (d) once in a month

(e) Other time

14) Do you trade at?

(a) NSE (b) BSE

15) Which more preferred to invest?

(a) Long Term Investment b) Short term Investment

16) Have you heard about Geojit Financial Services Ltd?

(a) Yes (b) No

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If yes, who influence you to deal with Geojit Financial Services Ltd

(a)News paper (b) Magazine

(c)T.V. Channels (d) Friends & Relatives

17) Are you satisfied with the service provided by Geojit Financial Services Ltd.?

(a)Satisfied (b) High Satisfied

(c)Average (d) Dissatisfied

18) Your Opinion about the survey.

__________________________________________________________

__________________________________________________________

______________________________________________________ .

-THANKING YOU-

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