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CHAPTER 1 INTRODUCTION

1.1 General Introduction


What is Stock Market A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. Definitions of Stock Market Where stocks and shares are bought and sold. A general term used to refer to the organized trading of securities through various exchanges and through the over-the-counter market. A "stock exchange" is a specific form of a stock market, a physical location where stocks and bonds are bought and sold, such as the Bombay Stock Exchange, NASDAQ or American Stock Exchange.

This market can be split into two main sections: the primary and secondary market. The primary market is where new issues are first offered, with any subsequent trading going on in the secondary market.

PRIMARY MARKET A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or equity based securities. Primary markets are facilitated by underwriting groups, which consist of investment banks that will set a 1

beginning price range for a given security and then oversee its sale directly to the investors.

Some of the important features of Primary Markets are as follows: It is the market that deals with new long-term securities, not the existing ones. That is, the securities are sold for the first time in the Primary Market. Here, the securities are sold by the company directly to the investors. However, it is not so in the Secondary Market. New security certificates are issued to the investors once the company receives money from them. The funds from selling the securities are used by companies for starting new business or expanding the existing ones. It facilitates capital building in the economy. Thus, affecting the economic sector to a great extent. It doesn't include other new long-term external finance sources, like loans from financial institutions. Only the original holder of the securities has the authority to redeem the sold securities or issues. The main source of any updates about the upcoming shares is the Primary Market. In Primary Market, the securities can be issued through any of the following methods: Initial public offering: It refers to the initial sale of securities by a private company to the public sector. Generally small and young companies are a part of Primary Market. However, large-scale private companies that desire to be publicly traded also become a part of this market. Rights issue (for existing companies): It refers to a special form of shelf offering or shelf registration. Under these rights, the existing shareholders enjoy the freedom to buy a specified number of new shares from the firm at a particular

price and time. It is the opposite of Initial public offering where shares are issued to the general public through stock exchange. Preferential issue: Issue of shares kept aside for the designated buyers. For example, the employees of the issuing company. The investment banks play key role in Primary Market. They decide the starting price range for a particular security and then direct its sale to investors. SECONDARY MARKET A stock that is considered riskier than blue chips because it has a smaller market capitalization.

1.2 INDUSTRY PROFILE


A. ORIGIN AND DEVELOPMENT OF INDIAN STOCK MARKET
The origin of the stock market in India goes back to the end of the eighteenth century when long-term negotiable securities were first issued. However, for all practical purposes, the real beginning occurred in the middle of the nineteenth century after the enactment of the companies Act in 1850, which introduced the features of limited liability and generated investor interest in corporate securities. An important early event in the development of the stock market in India was the formation of the native share and stock brokers 'Association at Bombay in 1875, the precursor of the present day Bombay Stock Exchange. This was followed by the formation of associations/exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). In addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. Stock exchange means any body of individuals, whether incorporated or not, constituted for the purpose of regulating or controlling the business of buying, selling or dealing in securities. These 3 securities include:

(i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like nature (ii) in or of any incorporated company or other body corporate; and Government securities;

(iii) Rights or interest in securities. 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 established themselves as the two leading exchanges and account for about 80 per cent of the equity volume traded in India. The NSE and BSE are equal in size in terms of daily traded volume. The average daily turnover at the exchanges has increased from Rs 851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and further to Rs 2,273 crore in 1999-2000 (April - August 1999). NSE has around 1500 shares listed with a total market capitalization of around Rs 9, 21,500 crore. The BSE has over 6000 stocks listed and has a market capitalization of around Rs 9, 68,000 crore. Most key stocks are traded on both the exchanges and hence the investor could buy them on either exchange. Both exchanges have a different settlement cycle, which allows investors to shift their positions on the bourses. The primary index of BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks. The BSE Sensex is the older and more widely followed index. 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. Market Basics Electronic trading Exchanges in India Index Execute an order Need a broker 4

Contract note Split Buy Back Settlement cycle Rolling settlement Short selling Auction Separate market for auctions If the shares are not bought in the auction Bad Delivery Stock & Exchange Board of India REGULATION OF BUSINESS IN THE STOCK EXCHANGES Under the SEBI Act, 1992, the SEBI has been empowered to conduct inspection of stock exchanges. The SEBI has been inspecting the stock exchanges once every year since 1995-96. During these inspections, a review of the market operations, organizational structure and administrative control of the exchange is made to ascertain whether:

the exchange provides a fair, equitable and growing market to investors. the exchange's organization, systems and practices are in accordance with the Securities Contracts (Regulation) Act (SC(R) Act), 1956 and rules framed there under:the exchange has implemented the directions, guidelines and instructions issued by the SEBI from time to time.

Importance of stock Markets: Accelerate Economic Growth. Sources for Companies to raise Money. Investors.

Brokers. Technological Development.

B.GROWTH AND PRESENT STATUS OF THE INDIAN STOCK MAREKT


The financial services sector contributed 15 per cent to India's GDP in FY09, and is the second-largest component after trade, hotels, transport and communication all combined together, as per the Banking & Finance Journal, released by an industry body in August 2010. Financial services, banking, insurance and real estate sectors rose by 8 per cent during the quarter ended march 2011. There are a total of 1,732 foreign funds registered with the Securities & Exchange Board of India (SEBI). Overseas funds infused US$ 4.78 billion in the capital market in November 2010, taking the year-to-date total to US$ 39 billion. The total inflows of foreign institutional investors (FIIs) as on December 2, 2010 have crossed the record US$ 38.76 billion mark. According to data available with SEBI, FIIs have made investments worth US$ 4.11 billion in equities and invested US$ 667.71 million into the debt market. As on November 26, 2010, India's foreign exchange reserves totalled US$ 293.9 billion, according to the Reserve Bank of India's (RBI) Weekly Statistical Supplement. According to Venture Intelligence, a research firm, private equity investment in India totalled US$ 6.57 billion in the first three quarters of 2010, which is more than double the US$ 2.5 billion invested during the same period last year. As of December 7, 2010, as many as 114 private equity investments have come from domestic funds compared to 126 foreign ones, according to data available with Venture Intelligence. In terms of value, PE firms promoted by Indians invested US$ 1,751 million 6

so far this year, as against US$ 4,377 million put in by foreign fund investments, according to Venture Intelligence. The study said the main market for PF in 2009 was the domestic Indian market, which raised US$ 30 billion, accounting for 21.5 per cent of the global PF market. This was up from US$ 19 billion in 2008. Over the recent years, there has been a considerable growth in Indian market which has led to high Gross Domestic Product (GDP) with an average annual growth of around 6 to 7%. In the financial year 2008-09, the factor cost of the GDP was around 6.7 %. To keep up this favorable growth, the government is also taking steps. The present Indian Prime Minister, Dr Manmohan Singh, has stressed that the government is taking various steps to make the yearly economic growth go up to 9 %. In fact, the World Bank too has projected that the market growth rate of India will reach around 8 % in the year 2010. Stock markets Market capitalization of India as a proportion of world market cap has risen to a record high. According to data sourced from Bloomberg, the country's market capitalization as a proportion of the world market cap is currently 3.34 per cent. India's current market-cap is US$ 1.55 trillion as compared with world market-cap of US$ 46.5 trillion. This is higher than 3.12 per cent share India enjoyed at the market peak of January 2008. Twenty Indian companies raised a significant US$ 1.2 billion through initial share sale offers in the first three months of 2010, a period when global IPOs were worth over US$ 53 billion, according to a report by global consultancy firm Ernst & Young. With 20 IPOs in the first quarter of the year, India had the third largest number of IPOs across the globe. Overall, the primary market has witnessed robust inflows from FIIs this year and cornered around 27 per cent of equity market inflows. Of the total FII investment of US$ 28.4 billion, about US$ 7.7 billion have come into the primary markets, according to SEBI data.

Fund raising by way of initial public offerings (IPOs), follow-on public offerings (FPOs) and qualified institutional placements (QIPs) have totalled a record US$ 19.49 billion as of November 17, 2010, as per data from SMC Global Securities, beating the previous high of US$ 14.51 billion in calendar year 2007.

C. FUTURE OF THE INDIAN STOCK MARKET


Now people are busy searching about 2011 Indian Stock Market Outlook, Sensex and Nifty Prediction for 2011, Economic Outlook for 2011, Best Sectors for 2011, etc. Predictions for 2012 : India will lead with 9% GDP growth. Stock markets in India is likely to stabilize and will remain at current level for the next 2 3 months. Before end of 2011 markets are likely to reach new highs. BSE Index will reach around 22000 before end of 2011. This year India has received good monsoons which will help India to achieve 9 % GDP growth this year. FIIs are bullish on Indian and Chinese economy. They consider India as one of the most favorite destinations. In near future market may remain flat or may correct by around 800 1000 points (on Sensex). Small investors should hold investments at current level. Currently, the capital market in witnessing volatility and process are edging down on account of fears of impending interest rates hikes due to global commodity supply shock induced spiraling inflation and this might have a negative impact on stock prices as high input costs would erode corporate profit margins. However, further declines would improve valuations and make equity buying attractive Infrastructure and cement, engineering and metal stocks are likely to remain FIIs and DIIs hot favorites. Falling prices may not be good for traders, but in stock market one's loss is somebody else's profit. Fallen down prices opens up opportunity for Investors to

look out for the good, top and best sectors to Invest in 2011-2012 which complements the growing Indian Economy.

CHAPTER 2 PROFILE OF THE ORGANISATION

2.1 ORIGIN OF THE ORGANIZATION


Bonanza is established in the year 1994, Bonanza developed into one of the largest financial services and broking house in India within a short span of time. Today, Bonanza is the fastest growing financial service with 5 mega group companies under it. With diligent effort, acknowledged industry leadership and experience, Bonanza has spread its trustworthy tentacles all over the country with pan-India presence across more than 1611 outlets spread across 550 cities. With a smorgasbord of services across all verticals in finance, Bonanzas offers you the perfect blend of financial services right from Equity Broking, Advisory Services that cover Portfolio Management Services, Mutual Fund Investments, Insurance to exceptional Depository Services. Bonanza believes in being technologically advanced so that we can offer you our techsavvy customers - an integrated and innovative platform to trade online as well as offline. Besides, we also have one of the finest and most dedicated research teams with experts who have in-depth, unsurpassed knowledge of the market place. All this and more makes Bonanza the perfect place for you to take your first step in the direction of financial success. Bonanza is affiliated with the best in the industry right from the NSE, BSE MCX,

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MCX-SX to CDSL, NSDL, etc. These affiliations prove our worth in the market and make Bonanza a name to reckon with.

2.2 GROWTH AND DEVELOPMENT OF THE ORGANIZATION


It provides an extensive smorgasbord of services in equity, commodities, currency derivatives, wealth management, distribution of third party products etc. Keeping in par with the modern tech-savvy world , Bonanza makes an integrated and innovative use of technology; it also enables its clients to trade online as well as offline and the strategic tie-ups with the latest technology partners has earned Bonanza this prestigious place in one of the top brokerage houses in the country. Client -focused philosophy backed by memberships of all principal Indian Stock and Commodity Exchanges makes Bonanza stand apart from its competitors and a preferred service provider in the industry for valuebased services. To add to our ever-growing achievements, a study by Dun and Bradstreet has rated Bonanza as the SIXTH largest broking house in terms of equity terminal listings in the country. If this is not enough, Bonanza Portfolio Ltd was recently nominated amongst the Top 3 Retail Financial Advisors of the country in an event conducted by CNBCTV18 and OptiMix Financial Advisor Awards 2008. Also Bonanza has been awarded by BSE the "Major Volume driver for the year 2004-2005, 2006-2007 and 2008-2009". ACHIEVEMENTS 1. Top Equity Broking House in terms of branch expansion for 2008*. 2. 3rd in terms of Number of Trading Accounts for 2008*. 3. 6th in terms of trading terminals in for two consecutive years 2007- 2008*. 4. 9th in terms of Sub Brokers for 2007* 5. Awarded by BSE 'Major Volume Driver 04-05, 06-07, 07-08. 6. Nominated among the Top 3 for the "Best Financial Advisor Awards '08" in the category of National Distributors - Retail instituted by CNBC-TV18 and OptiMix. * As per the survey by DUN & BRADSTREET. 11

CORPORATE TIE UPS The company has Corporate Tie ups with Birla Sunlife ,Bajaj Allianz, ICICI Prudential, SBI , Aviva , Kotak Mahindra and Reliance for Life Insurance and General Insurance. In General Insurance, Bonanza provides Insurance for Motor, Health, Travel, Housekeeper, Shopkeeper, Marine, Personal and Group Insurance.

2.3 PRESENT STATUS OF THE ORGANIZATION


There are certain benefits which defines the status of the BONANZA 1 Secure Order by Voice Tool Dial-n-Trade. 2 Automated Portfolio to keep track of the value of your actual purchases. 3 24x7 Voice Tool access to your trading account. 4 Personalized Price and Account Alerts delivered instantly to your cell phone & email address. 5 Special Personal Inbox for order and trade confirmations. 6 On-line customer service via web chat. 7 Anytime Ordering SERVICE PROVIDED BY BONANZA 1. Mutual Funds 2. Insurance 3. PMS 4. Share Broking 5. IPO 6. Currency Derivatives 7. Share Broking 12 Life Insurance General Insurance

8. Commodity Broking

2.4 Functional departments of the organization


Administration: The role of this department is to provide all the assistance regarding anything to the all other departments which they need to deliver their efforts more efficiently in the interest of the company. Human resource department: The role of HR department is to recruit the efficient workers for the company, and to keep eye on the grievances, problems which the employees are facing in performing their work. This department also takes care of various works like calculating salaries, leave status, attendance of employees, etc. Finance: As the name suggests this department is concerned with the all finance related matters of the company be it the salary payment or the financing the various requirements of the business. Talent and Knowledge Management: The role of this department is to take care of all the activities of the various production departments. This department is responsible for organising the various trainings which are needed by the employees to work with more efficiency. Quality Control: The work of this department is to make sure that the services and information provided by the all three production department is up to the quality measure set by the clients. This department randomly checks the services and information to make sure the company is standing on clients expectations and is truly reliable. 13

Software: This department deals wit the software side of the company. All the three production departments use various software design by the software department to do work more easily and efficiently. this department keeps on updating the software so that work can be done in time.

2.5 ORGANIZATION STRUCTURE & ORGANIZATION CHART

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Corporate Hierarchy

The users of the trading system can logon as either of the user type. The 15

Significance of each type is explained below: Corporate Manager: The corporate manager is a term assigned to a user placed at the highest level in a trading firm. Such a user receives the End of Day reports for all branches of the trading member. The facility to set Branch Order Value Limits and User Order Value Limits is available to the corporate manager. Branch Manager: The branch manager is a term assigned to a user who is placed under the corporate manager. The branch manager receives End of Day reports for all the dealers under that branch. The branch manager can set user order value limit for each of his branch. Dealer: Dealers are users at the lower most level of the hierarchy. A dealer can view and perform order and trade related activities only for oneself and does not have access to information on other dealers under either the same branch or other branches.

2.6 Market Profile Of the Organisation


REASONS TO CHOOSE Bonanza Portfolio LTD . EXPERIENCE Bonanza Portfolio ltd has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money brokers poll held recently, SSKI won the Indias best broking house for 2004 award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has been providing institutional-level research and broking services to individual investors. TECHNOLOGY With our online trading account you can buy and sell shares in an instant from any PC with an Internet connection. You will get access to our powerful online trading tools that will help you take complete control over your investment in shares. ACCESSIBILITY Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for 16

investors. These services are accessible through our centers across the country (over 250 locations in 123 cities), over the internet (through the website www.sharekhan.com) as well as over the voice tool. KNOWLEDGE In a business where the right information at the right time can translate into direct profits, you get access to a wide range of information on our content-rich portal, sharekhan.com. You will also get a useful set of knowledge-based tools that will empower you to take informed decisions. CONVENIENCE You can call our Dial-N-Trade number to get investment advice and execute your transactions. We have a dedicated call-centre to provide this service via a toll free number from anywhere in India. CUSTOMER SERVICE Our customer service team will assist you for any help that you need relating to transactions, billing, Demat and other queries. Our customer service can be contracted via a toll-free number, email or live chat on sharekhan.com.

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CHAPTER 3 DISCUSSION ON TRANNING

3.1 My Work Profile (Role and Responsibility)


I worked with Bonanza Portfolio Ltd. as a Management Trainee. During my training period, I was not confined to any particular work and responsibility rather I was given an exposure of all departments and operations like Depository Department, Marketing and Sales Department, Branch Coordinating Department, Accounts & Finance Department, Trading Department, etc. The exposure during the training period was vital since I got the knowledge about motivation techniques, means of controlling power, financial services sector etc. During my training period, I made my project under the guidance of the Incharge Manager and I completed the same to the best of my ability. I decided to choose some stocks listed in NSE for conducting the fundamental analysis. I had sorted out all my queries after having the discussions with the concerned staff members and Incharge Manager of the training. I noted all important figures and facts about financial market and updated my Project Report accordingly. Achievements: The main achievement which I gained during my entire training was the knowledge about the financial market and most importantly, the technical and fundamental analysis which gave me a great exposure. I had successfully completed my training with the support provided to me by the Incharge Manager and the MD of the company. Key Learning's: In my entire training period, I had learnt how to control the managerial work existing in all departments by practically implementing my skills and knowledge. The cordial support by the staff members and the Incharge Manager is a prerequisite to 18

work smoothly in an organization. I learnt how to analyze the equities for investing money through both the methods of analysis i.e. technical and fundamental analysis. I had learnt alot more, the department-wise details of which are described in following points:-

DEPOSITIORY OPERATIONS During my training, the complete process of Depository Operations was taught to me. The following is the list of the tasks which I had learnt: Opening Demat Accounts of the Investor

Maintenance of beneficial holdings Dematerialization

Stock Lending and Borrowing TRADING DEPARTMENT AND RMS OPERATIONS I learnt the whole process of Trading Department during my training period. The following are the tasks included in Trading Department: Practical knowledge of the trading softwares. ( Diet ODIN, NEAT ) Trading for different types of market. ( NSE, BSE, F&O, NCDEX & MCX and Currency trading) Proper telecon Interaction with clients regarding net position, trading, etc. Giving suggestion on Buying or Selling of Stocks to clients for better profits. Observing the clients thought process. Control over the client trade with RMS. Locking of their trading limit according to their token amount. RMS functions. ACCOUNT DEPARTMENT AND BILLING DEPARTMENT I learnt the whole process of Trading Department during my training period. The following are the tasks included in Trading Department: Billing work. 19

Dispatch trading statement to client on quarterly basis or according to client preference. Lock the limit of client with the help of RMS. Fix a Brokerage before start the trading. Get money back from client on their credit or extra limit with help of recovery department. MARKETING & SELLING DEPARTMENT I learnt the whole process of Trading Department during my training period. The following are the tasks included in Trading Department: Handling of Promotional work and making more promotion strategies. Selling strategy. Determined target for Branches & Franchises for Demat Account and Brokerage. Development of more Branches or Franchises. Corporate Tie-ups. Strategy development for expansion of an organization. PORTFOLIO MANAGEMENT DEPARTMENT Portfolio management is very difficult, tedious and requires very strong analytical skills. It includes the best combination of investment through the working knowledge of Portfolio Manager. I made one of my clients profile under the guidance of Portfolio Manager. Portfolio includes the continuous watch on invested money and predetermined the certain level of return on investment. The tasks which are included in Portfolio Management Department are as follows: Making of best portfolio for Clients money invested in. Measurement of the risk involved in the investment. Diversified risk with a maximum return on investment. 20

Regular watch on the portfolio. Calculate the return on invested money which may be positive or negative. ANALYSIS DEPARTMENT Analysis department includes both technical and fundamental analysis. Technical analysis refers to the chart analysis and daily fluctuation in the share price. Analyst makes intraday calls, weekly and monthly calls on buying and selling of share with the help of Technical or Chart Analysis. Fundamental analysis refers to the analysis of a company or a sector with the help of Economic, Industrial and Company Analysis. Analyst makes the report on a stock or sector for a certain period like this auto sector will decrease from the current level after 3 months or same as a Companys stock also. Analysis Department includes the following features: Make intraday calls & reports on the stock with a target and stoploss with the help of chart analysis and technical indicators. Fundamental analysis on stocks. Give financial advisory services to the clients. Financial Analyst work. Calculation of return on stocks Analyze the performance of share price. TOOLS AND TECHIQUES I gained the knowledge about the stock market as a tool and technique. The following are the tools and techniques: Knowledge about operating any type of computer and process to learn any new software or technology. My communication skills. My knowledge about share market supported me in my training. With the help analysis and portfolio management, work was easy to operate & understand. I used Technical indicators as my techniques in technical analysis. 21

Fundamental analysis was also used as a technique for stock analysis. Portfolio Theory or Model (Markowitz, Sharpes Index model, CAPM model, arbitrage price theory )

Challenges Faced: Busy schedule of training period and got short time to learn. I had to wait the whole day for learning process of technical or fundamental analysis. There was as such no operational work in the head office. Technical analysis was quite risky so learning the same was a tedious job. Sometimes, I used to generate the intraday calls with the help of the chart which was objected by my Manager.

Reasons for Success: The main reason for the successful completion of this training is my dedication & determination of work, passion, cordial relations with all staff members and assistance being provided by the Incharge Manager of the training.

Project Detail
This study suggest that people are reluctant while investing in stock market due to lack of knowledge The Project is to analyze the equities to invest the money for getting the higher return on investment in future. The Report is meant for the investors who want to invest their money in equities. But they should analysis the securities before investing the money as the money plays a vital role in everybodys life. I chose this title because I wanted to analysis the equities from investors point of view so that they can get good returns in future. Also, wanted to do the fundamental and technical analysis of securities through the various theories, able to understand the fluctuation and performance of stocks and also known the factors that affect the fluctuation of stock prices in the Indian Stock 22

Markets. Through this project, I was also able to understand, what are the positive and strong points of our Company ( Bonanza portfolio Ltd.), on the basis of which we came to know what could be the basis of pitching to a potential client. I also gave suggestions to the company, what improvements could be done for our products & services. Fundamental and technical analysis go hand in hand and compliment with each other. Since all the investors in the stock market want to make the maximum possible profits, they just cant afford to ignore the fundamental or technical analysis. Team: This is my solo project assigned by project guide and supported by the all staff members of the Head Office. I did my analysis with the Finance Manager. Duration: The time was very crucial factor in making the Project Report. The training was for 69 days so I spent as much as time to learn from the internship and prepare this report to share my golden time with you. Key Deliverables: The company was expecting me to give my 100% dedication for making this project, sorting out the queries about project to the best extend feasible and submits a detailed Report accordingly at the Head Office.

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CHAPTER 4 STUDY OF THE SELECTED RESEARCH PROBLEM

4.1- Statement of research problem NECESSITY OF DEFINING THE PROBLEM A research problem properly is a prerequisite for any study and is a step of the highest importance. In fact, formulation of a problem is often more essential than its solution. It is only on careful detailing the research problem that we can work out the research design and can smoothly carry on all the consequential steps involved while doing research. A common proverb is a problem clearly stated is a problem half solved: This statement signifies the need for defining a research problem. The problem to be investigated must be defined unambiguously for that will help to discriminate relevant data from the irrelevant ones. A proper definition of research problem will enable the researcher to be on the track whereas an ill-defined problem may create hurdles. Defining TECHNIQUE INVOLVED IN DEFINING A PROBLEM A brief description of all these points will be helpful. 1) Statement of the problem in a general way: First of all the problem should be stated in a broad general way, keeping in view either some practical concern or some scientific or intellectual interest. For this purpose, the researcher must immerse himself thoroughly in the subject matter concerning which he wishes to pose a problem. 2) Understanding the nature of the problem: The next step in defining the problem is to understand its origin and nature clearly. The best way of understanding the problem is to discuss it with those who first raised it.

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3) Surveying the available literature: All available literature concerning the problem at hand must necessarily be surveyed and examined before a definition of the research problem is given. This versan means that the researcher must be well cont with relevant theories in the field, reports and records as also all other relevant literature. 4) Developing the ideas through discussions: Discussion concerning a problem often produces useful information. Various new ideas can be developed through such an exercise. Hence, a researcher must discuss his problem with his colleagues and others who have enough experience in the same. 5) Rephrasing the research problem: Finally, the researcher must sit to rephrase the research problem into a working proposition. Once the nature of the problem has been clearly understood, the environment (within which the problem has got to be studied) has been defined, discussions over the problem have taken place and the available literature has been surveyed and examined, rephrasing the problem into analytical or operational terms is not a difficult task.

4.2 Statement of research objective


Objective of the Research The objective behind this exercise is to get an in depth knowledge of the financial sector. This proposal is prepared with some objectives which are stated below: To gain an in depth knowledge of Indian mutual fund industry. To get an exposure of the real working environment in the corporate sector. To have a better understanding of the investment options available. To learn and understand the behavior exhibited by individual consumer in the course of making an investment. 25

Acquire knowledge of financial terminologies and the financial products.

Which option is better to do trading i.e. online or offline

4.3- Research design and methodology


RESEARCH METHODOLOGY OBJECTIVES: To study about the stock market industry. To study the approach of investors towards online trading.. To study the behaviour of the investors whether they prefer trading in the share market. SCOPE OF THE STUDY:

Subject matter is related to the investors approach towards the online trading in the share market People of age between 20 to 60 Area limited to Delhi. Demographics include names, age, qualification, occupation, marital status and annual income. STEPS OF RESEARCH DESIGN:

Define the information needed:- This first step states that what is the information that is actually required. Information in this case we require is that what is the approach of investors while investing their money in mutual funds and ulips e.g. what do they consider while 26

deciding as to invest in the share market.. Also, it studies the extent to which the investors are aware of the various costs that one bears while making any investment. So, the information sought and information generated is only possible after defining the information needed.

Design the research:-

A research design is a framework or

blueprint for conducting the research project. It details the procedures necessary for obtaining the information needed to solve research problems. In this project, the research design is explorative in nature.

Specify the scaling procedures:- Scaling involves creating a continuum on which measured objects are located. Both nominal and interval scales have been used for this purpose.

Construct and pretest a questionnaire:-

A questionnaire is a

formalized set of questions for obtaining information from respondents. Where as pretesting refers to the testing of the questionnaire on a small sample of respondents in order to identify and eliminate potential problems. Population All the clients of Bonanza and the regular employees and also the person in the various market from where I have collected the data, who are investing money in Share market.

Sample Unit:

Investors and non-investors.

Sample Size:

This study involves 104 respondents. Sampling Technique: 27

The sample size has been taken by non-random convenience sampling technique. Data Collection:

Data has been collected both from primary as well as secondary sources as described below:

Primary sources Primary data was obtained through questionnaires filled by people

through direct communication with respondents in the form of Interview.

Secondary sources

The secondary sources of data were taken from the various websites , books, journals reports, articles etc. This mainly provided information about the mutual fund and ulips industry in India. LIMITATIONS: No study is free from limitations. The limitations of this study can be:

Sample size taken is small and may not be sufficient to predict the results with 100% accuracy.

The result is based on primary and secondary data that has its own limitations. The study only covers the area of Chandigarh that may not be applicable to other areas.

RESEARCH METHODOLOGY Research Methodology is the way to systematically solve the Research Problem is done scientifically. In it we study the various steps that are generally adopted by researcher in 28

studying his logic behind them. It was quite hard to collect primary data by meeting each individual and interview him/her so I have collected primary data with the help of questionnaire. Secondary data was also available to get information about the study. All the executives and official person were quite helpful and provided full support. Data was collected in the following manner: Interacting with some of the customers of Bonanza By questionnaire seeking information Interacting with the employees of Bonanza

Primary Data Questionnaire seeking information Interaction with the employees of Sharekhan and with the customer of Sharekhan Secondary Data There are following things that have been the source of secondary data: Journal Magazines Manual of Bonanza Welcome kit of Bonanza SAMPLING PLAN Methodology for Market Research I divided the entire city into zones and drew out samples out of each zone. The size of samples drawn from each zone depended on the prospective ness of the particular area. For e.g., if a particular research area consisted of Offices then the sample size would obviously be higher than an area like Shopping mall or PVR. This is because Office employees constitute the service sectors that are the active investors of today. Also, the office areas consist of people from the business class who have always been in the hunt 29

for quick money, not to forget that smart and timely investment in the share market can yield to enormous returns. After dividing the city into zones, the Target audience was probed using Interviews and questionnaires. These were later analyzed to draw out conclusive results. The Research Area Comprised of the following places: Zone East West North South Areas Covered Karkarduma Punjabi Bagh Delhi University Vasant Kunj Sample Size 14 24 6 25

Methodology for Customer Acquisition The leads for customer acquisition primarily came from the questionnaires filled up by prospective customers. Apart from these customers were also pitched through personal references and contacts. Moreover the organization takes every possible effort in order to spread mass awareness. As a result of this publicity campaign, influenced prospective customers approach the organization. There are various ways to make people aware about the organization as such Marketing Research, Canopy, Personal References, Pop-up windows having collaboration with various portals e.g. Rediffmail.com etc. Person with adequate interest leaves his contact information. Later on these leads are contacted personally for further development. Thus all these factors sum up into a result oriented work force. These leads were the contacted through tele-calling and after developing a relationship, they were pitched in at the addresses provided by them. After giving them a presentation about the product and its advantages over its competitors, they were promised of a Demo by company sales force in case a sale had resulted. Also references were collected from such people and the same methodology was repeated. For each and every customer personal quarries have been entertained after the sale is done.

CHAPTER 5
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ANALYSIS

5.1 ANALYSIS OF DATA


ANALYSIS OF QUESTIONNAIRE
In which of these Financial Instruments do you invest into? Instrument Shares Mutual Funds Bonds Others Total Frequency 70 19 6 9 104 Percent 67.3 18.3 5.8 8.7 100.0

PEOPLE WANT TO INVEST INTO


8.70% Others

5.80% Bonds 18.30% Mutual Funds

67.30% Share

Findings:

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This question was meant to closely study the pulse and investment pattern in the stock market. It is clearly evident that 67.3% of the respondents prefer to invest in the share market to other Financial Instrument.
Which type of trading do you prefer? Type of trading Online Offline Not Applicable Total Frequency 77 16 11 104 Percent 74.0 15.4 10.6 100.0

Findings: The result shows that Online Trading has taken the drivers seat over the conventional trading ever since Internet triggered a revolution across the globe. 74% of the respondents prefer online trading.

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If you prefer Online Trading then the reason for it? Reasons Privacy User Friendly and time saving Convenient All the above Total Missing System Total Frequency 20 27 20 21 88 16 104 Percent 19.2 26.0 19.2 20.2 84.6 15.4 100.0

Findings:

The preferred choice of online trading itself is a proven fact that 26% of the respondents find it user friendly, time saving and convenient. Hence it does not come as a surprise as 20% of the respondents preferred all the options.

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What factors motivated you to invest in securities? Factors New IPO's Entry of FII's More returns in less time Others Total Frequency 25 9 63 7 104 Percent 24.0 8.7 60.6 6.7 100.0

Findings:

This question was meant to understand why more and more investors have started creeping in the share market as never before. About 60% of the respondents believe that there is a possibility in multiplying there money within a short period of time and about 24% of the respondents is driven by the IPOs issued by potential companies.

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Does Online Trading motivate you to deal in securities? Respondents Yes No Total Frequency 84 20 104 Percent 80.8 19.2 100.0

Findings:

It is clear and transparent that Online Trading has become more convenient way to deal in securities as majority (as much as 81%) of the sample population voted for it.

Have you heard about BONANZA? Respondents Yes No Total Frequency 85 19 104 Percent 82.74 18.26 100.0

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Findings: Out of the total sample size surveyed, BONANZA has its slice of share, as it is familiar and popular among 82% of the total sample population. Hence Bonanza is a well heard off name among the investors. Which brokerage firm do you prefer for online trading? Brokerage Firms ICICI Direct Bonanza Indiabulls Kotak Securities 5 Paisa HDFC Securities Total Frequency 14 27 23 21 18 1 104 Percent 13.5 26.0 22.1 20.2 17.3 1.0 100.0

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Findings: This question was framed to understand the effectiveness of Bonanza among its competitors. The push and pull factor worked out well for Bonanza as it grabbed 26% of the market share out of the total people surveyed. But the survey also reveals an interesting point that there is not much variation among the players in terms of investors consideration for a brokerage firm.
How often do you trade? Duration Daily Weekly Monthly Yearly Total Frequency 53 31 17 13 104 Percent 51.0 29.8 6.7 12.5 100.0

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Findings:

This shows that how stock market has swept the nation as a whole. Most of the investors prefer daily and weekly trading to keep a watch on the volatility of the stock market so as to take decisions accordingly.
In which category does your income fall? (Per month in Rs.) Rs. Per Month 0-15000 15000-35000 35000-60000 Total Frequency 26 61 17 104 Percent 25.0 58.7 16.3 100.0

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Findings: People from different categories of income group have taken their chance to invest in the booming stock market. The upper middle and middle class (income category ranging from 15000 35000) people have taken the primary seat as far as the number of people involved in trading is concerned. What percentage of your earning do you invest in share trading? Frequency Up to 10% Up to 25% Up to 50% Above 50% Total 40 35 15 14 104 Percent 38.46 33.65 14.42 13.46 100.0

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Findings:

About 70% of the respondents feel that not more than 25% of their earning will be pushed into the market that clearly signifies that how volatility in the stock market can influence the investors.
Rank the attribute customer service of a share trading company? Frequency Most Important Important Neutral Less Important Not Important at all Total 27 24 22 18 13 104 Percent 26.0 23.1 21.2 17.3 12.5 100.0

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Findings:

Investors feel that they should be provided with the best of the services in order to associate themselves with a brokerage company over a long period of time. Hence more than half of the respondents preferred it to be an important parameter of a brokerage firm.
Rank the attribute proper guidance of a share trading company? Frequency Most Important Important Neutral Less Important Not Important at all Total 14 41 24 21 4 104 Percent 13.5 39.4 23.1 20.2 3.8 100.0

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Findings:

More than 50% of the sample population felt that they require proper guidance from the brokerage company in order to execute their operation effectively.
Rank the attribute regular updates of a share trading company? Frequency Most Important Important Neutral Less Important Not Important at all Total 20 14 17 35 18 104 Percent 19.2 13.5 16.3 33.7 17.3 100.0

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Findings:

Surprisingly about 35 respondents out of the 104 surveyed thought that the regular updates provided by the company were not that important. Only 34 of the respondents felt that the importance of regular market updates.
Rank the attributes trustworthiness of a share trading company? Frequency Most Important Important Neutral Less Important Not Important at all Total 10 7 28 25 34 104 Percent 9.6 6.7 26.9 24.0 32.7 100

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Findings:

A mere 20% of the respondents consider the significance of the trustworthiness of the brokerage company with whom they have been associated.
Rank the attribute brokerage charge of a share trading company? Frequency Most Important Important Neutral Less Important Not Important at all Total 36 15 13 5 35 104 Percent 34.6 14.4 12.5 4.8 33.7 100.0

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Findings:

The brokerage charges imposed on the investors makes a significant impact on 50% of the respondents whereas another 35% felt that this is of no significance at all. Rank the company BONANZA according to the quality of service?
Frequency Excellent Very Good Good Average Below Average Total 31 24 29 17 3 104 Percent 29.8 23.1 27.9 16.3 2.9 100.0

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Findings: More than half of the sample population was satisfied with the kind of service that Bonanza offers its customers.

5.2 SUMMARY OF FINDINGS The Major competitors are:


5paisa.com KotakSecurities.com India bulls ICICIDirect.com HDFCsecurities

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1) 5paisa- Company Background


Indiainfoline was founded in 1995 and was positioned as a research firm. In 2000 ebroking was started under the brand name of 5 paisa.com. Apart from offering online trading in stock market the company offers Mutual funds online. It also acts as a distributor of various financial services i.e. GOI securities, Company Fixed Deposits, Insurance. Limited ground network, present in 20 Cities Online Account Types:

Investor Terminal Trader Terminal

: Investors / Students : Day Traders / HNIs

PRICING FOR RETAIL CLIENTS

Investor Terminal Account Opening : : : : Rs 500 Rs 250 Rs 2500(Compulsory) Rs 1000

Demat 1st Yr Initial Margin Min Margin Retainable Brokerage : -Trading 0.05% each side + ST -Delivery 0.50% each side + ST PRICING FOR HNI CLIENTS Trader Terminal Account Opening

Rs 500

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Demat 1st Yr Initial Margin Min Margin Retainable Brokerage : Trading 0.05% each side + ST Delivery 0.50% each side + ST (Negotiable to 0.05% each side & 0.25%) Account Access Charges

: : :

Rs 250 Rs 5000(Compulsory) Rs 1000

Monthly Rs 800, adjustable against Brokerage Yearly Rs 8000, adjustable against brokerage

Deal Clinchers v/s 5 Paisa Company Background Not having a very positive image, relatively new in the broking arena, limited network Downtime Recent past 5 paisa Trader Terminal (T.T) is experiencing high frequency downtime between 3 3:30 p.m due to server load ( as their T.T is feature heavy compared to Speetrade charting) Manual Accounting The 5 paisa accounting system is manual; online fund transfer through bank is not credited instantly. Limit is provided EOD for shares sold from DP, or call 48

Similarly limit released for shares sold under BTST is manual Delay in receiving pay-out of clear funds from trading to Bank Account

Min Account Balance Concept of Min Rs 1,000 to be maintained in form of cash / securities to keep account active. This can be withdrawn only on closure of account.

2. KOTAK SECURITIES Company Background: Kotak Securities is the sister concern of Kotak Mahindra bank. Kotak Securities limited is a joint venture between Kotak Mahindra Bank and Goldman Sachs. Online Account Types

KEAT desktop version, Sms charge Kotak Gateway Account : Rs 100, KEAT premium at RS 500 pm, Min margin Rs 20000

Kotak Value Account

KEAT desktop version, Sms charge Rs 75, KEAT premium at Rs 500 pm,

PRICING OF KOTAK

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Account Opening

: Rs 550 with kotak savings account, Rs 750 with margin of Rs 50000, otherwise Rs 1200.

Demat

: Rs 30 pm

Min Margin Retainable : Rs 1000

Brokerage Slab Wise

: Higher the volume, lower the brokerage. Even older customers (on 0.25% & 0.40%) have been moved to the slab wise structure wef 1/4/2004. Slab Structure of Kotak

Delivery volume pm < 1 lakh 1 lakh 5 lakhs 5 lakhs 10 lakhs 10 lakhs 20 lakhs 20 lakhs 60 lakhs 60 lakh 2 Cr > 2 Cr

Brokerage 0.59% 0.55% 0.45% 0.36% 0.27% 0.23% 0.18% Gateway Acc Gateway Acc Gateway Acc Value Acc. Value Acc. Value Acc. Privilege Circle

Delivery volume pm

Brokerage Square off

<25 lakhs 25 lakhs 2 Cr 2 Cr 5 Cr > 5 Cr

0.06% both sides 0.05% both sides 0.04% both sides 0.03% both sides

Gateway acc Value acc. Value acc. Privilege acc.

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Derivative Brokerage Slab Delivery volume pm Daily Sq. up Settlement

2 Cr 2 5.5 Cr 5.5 Cr 10 Cr 10 Cr 25 Cr > 25 Cr

0.07% both sides 0.045% both sides 0.036% both sides 0.027% both sides 0.023% both sides

0.09% both sides 0.073% both sides 0.046% both sides 0.046% both sides 0.032% both sides

Deal Clinchers v/s Kotakstreet Rigid Account Opening Terms No Flexibility of A/c opening charges (Rs 550) + Compulsory margin Rs5000/No Customisation of commercial Terms No Flexibility in Leverage Dependent on Type of Account ( 4 to 6 times No flexibility in Brokerage, driven by slab structure Many Other Charges Rs 30 p.m towards DP AMC charges DP incoming charges extra, 0.02% Rs 1,000 as retainable Margin to keep account active Rs 25 per call after 20 calls for the month 51 only)

Restricted Access to Terminal Like product KEAT Desktop restricted distribution on payment of Rs 500, Non refundable

3. INDIABULLS Company Background IndiaBulls is a retail financial services company present in 70 locations covering 62 cities. It offers a full range of financial services and Products ranging from Equities to Insurance. 450 + Relationship Managers who act as personal financial advisor Online Account Type Signature Account : Plain Vanilla Account with focus on Equity Analysis. The equity analysis is a paid service even for A/c holders. Power Indiabulls: Account with sophisticated trading tools, low commissions and priority access to R.M Pricing of IB Accounts Signature Account Account Opening Demat Initial Margin Brokerage : : : : Rs 250 Rs 200 if POA is signed, No AMC for this DP NIL Negotiable Power IndiaBulls Account Opening Demat Initial Margin Brokerage : : : : Rs 750 Rs 200 if POA is signed, No AMC for this DP NIL Negotiable 52

PAID Research SCHEME WebBased-1-Month-500 WebBased-1-Year-6000 PrintReport-1-Month-750 : : : FACILITY View & Print on website View & Print on website View & Print on website + 10 Reports Delivered PrintReport-1-Year-9000 : View & Print on website + 10 Reports Delivered

Deal Clinchers v/s IndiaBulls POA for Clients DMAT: All shares held by client trading with IB are moved to IB Pool Account and the same is shown as a reflection in client DP account. Charges are levied to move shares from IB pool Account to client DP account Paid Research Services Access to an research even for an IB trading account holder is charged a min of Rs 500 a month Margin Funding hoax The interest on funding starts on leveraged delivery trades from T+1 day itself @21% p.a, on a daily basis The role of Relationship Manager Each RM is looked upon as a revenue generator and he gets a % on business generated from client. This can lead to over leveraged (Interest) & high frequency (Brokerage) trading, which may not be in the best interest of the client.

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4. ICICI Direct Company Background ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an Affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank Limited. Account Types ICICI Direct e-invest Account : Plain Vanilla Account with focus on 3 in 1 advantages. Differentiated in services within the account 1.Cash on spot 2.Margin Plus Premium Trading interface of ICICIDirect Link is given to DBC partners and HNIs Account Opening : Rs 750 Schemes : For short periods Rs 750 is refundable against brokerage generated in a qtr. These schemes are introduced 3-4 times a year. Demat: NIL, 1st year charges included in Account Opening Plus a facility to open additional 4 DPs without 1st yr AMC Initial Margin : Nil Brokerage All brokerage is inclusive of stamp duty and exclusive of other taxes. Delivery Vol per qtr < 10 lakhs Brokerage * : Square Vol off p m 0.75% 54 Brokerage **

10 lakhs - 25 lakhs 25 lakhs -50 lakhs 50 lakhs 1 Cr 1 Cr 2 Cr 2 Cr 5 Cr > 5 Cr

: : : : : :

0.70% 0.55% 0.45% 0.35% 0.30% 0.25%

Deal Clinchers v/s ICICIDirect Poor online Interface Slow website interface with no real-time quotes creates a dissatisfaction among high frequency traders Margin trading restriction The margin trading system is available up to 2:45 p.m, with outstanding net positions under margin segment automatically squared off at any time between 2:45 3:30 p.m. Thus no control of square off price. Morning Trades Issue Being one of the websites with largest no of after hour orders which are pushed 1 st thing in the morning, creates a choking of orders to the exchange, causes delay of confirmations for new order placed during the early morning trades Restriction of BTST The sale of shares purchased is restricted to T+1 day and is not permitted on T+2 Day. No leverage for Delivery trades Delivery is restricted to the total money allocated into the trading account. No flexibility on leverage on Intra-day trades The leverage of 4 times is available for intra- day trades. 55

5. HDFC SECURITIES Company Background The HDFC BANK, HDFC and ChaseCapital Capital Partners and their associates promote HDFC SECURITIES LTD. Pioneers in setting up Dial-a-share services with the largest team of Tele-brokers Online Account Type: HDFC Online Trading A/c : Plain Vanilla Account with focus on 3 in 1 advantage Pricing of HDFC Account Account Opening Demat Initial Margin : : : Rs 750 NIL, 1st year charges included in Account Opening Rs 5000/- for non HDFC Bank customers (AQB)

Brokerage: Trading 0.05%* each side + ST Delivery 0.50%** each side + ST * Rs 25 Min Brokerage per transaction ** Rs 8 Min Brokerage per transaction

FINDINGS People with an eye for investment prefer to invest in shares. This is mainly due to the fact that shares provide high returns in less time. People investing in shares prefer online trading because of convenience and time saving. People who recently started trading were mainly motivated by online share trading concept. 56

Bonanza is a known entity in the online business. In online share trading brokerage and research reports are the major criteria for selecting a broking company. 60-65 % of the people are satisfied with Bonanza.

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CHAPTER 6 SUMMARY AND CONCLUSSIONS

6.1

SUMMARY OF LEARNING EXPERIENCE

While working for this research problem, I discovered the in depth efforts being put in working with bonanza. The forming of customer relations and service departments, to extend knowledge and experience for the well being of different customers. The mind set of the customer, what a customer is really thinking before investing. THE PRIME EXPERIENCE: Understanding the customer satisfaction. Understanding the mind of upcoming customers and there requirement. Analyzing different customers and interacting with them was all together a great experience and understanding their needs. Interacting the corporate people and understanding there demands with the customer satisfaction. Talking with the various talented people and coordinating with different people was a new experience. The up and downs of market and the expectations of the customers with the services given and handling them was another thing which I learned while working for this project. Under the guidance of our esteem panel of subordinates and top management it was a great learning experience

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6.2 CONCLUSION AND RECOMMENDATION


Indian economy has been globalize and the capital market has been linked to the international financial market. Foreign individuals and institutional investors are now encouraged to participate into it. So, there is a need for raising the Indian Capital market in to the international standards in terms of efficiency and transparency. One such measure is the passing out of the Depository Act during the year 1996. Dematerialization of securities and under this system is one of the major steps aimed at improving and modernizing the capital market and enhancing the levels of investors protection measures which aims at eliminating the bad deliveries and forgery of shares and expediting the transfer of shares.

Thus online share trading is gaining its popularity. Though it still has to go a long way but it has established its foothold in the metropolitan cities like Delhi, Mumbai etc. The dematerializing of shares coupled with the huge growth of Internet has been the fuel for the online trading which is now a considerable part of the total trading.

It can therefore be said that online share trading is here to stay and will only grow to bigger proportions and will penetrate deeper into the economy. So online trading would become the order of the day, taking over the traditional norms in the years to come. LIMITATIONS
Usual sampling errors may exist. The universe selected was Delhi region. So the result cannot be generalized.

Some of the customers may be uninterested and may not have replied correctly. Respondent may also be biased due to several reasons. Sample size was small which may affect the reliability of the result. Internet fraud Still many of Indian customer do not know to use Internet

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RECOMMENDATION Company should invest more in its marketing strategies by giving ads in newspapers, magazines, TV commercials etc.

The Account opening time taken is about 7 working days. Improving logistics should reduce this.

The account opening charges should also be reduced to attract customers.

Customer care is not its best at Bonanza. Prompt customer handling should improve this.

Some of the customers do not get the service promised to them. There should be a check on the promises made.

Form should be simplified.

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