Comparision of Brokerage Rate of Different Companies : Y Pfu O M O Bu A (Mba)

PROJECT REPORT
ON COMPARISION OF BROKERAGE RATE OF DIFFERENT COMPANIES FOR
KOTAK SECURITIES LTD. MOHALI
Towards Partial Fulfilment Of Master Of Business Administration (MBA) GUIDED BY: MR. ARVIND SAINI SUBMITTED BY: NEHA
CT GROUP OF INSTITUTIONS
Maqsudan Campus Jalandhar,Punjab
A CK N O W L E D G E M E N T
I i h to xp y ost si c th ks to Mr. nuj Sh (Punj b Kot k S curiti s H ), Mr. rvind S ini (Branch Manager) Kotak Securities Mohali or providing e the opportunity to ork ith the renowned organization and enabling e to gain practical knowledge in the ield of Finance and Operations. A special note of thanks is also reserve to, training and placement officer ofCT INSTITUTES. Moreover I am also in debt to Mr.Amit Baruah, Director, CT INSTITUTES Maqsudan campus for their kind help and co-operation for completing this project work. I indeed thanks to Kotak Securities Ltd. Mohali and C INS I U E Maqsudan campus for giving me an opportunity to have experience in a professionally run organization.
NE A
Kot k S cu iti
PREFACE
Any kind of learning is incomplete till it is practically applied in the concerned field. Only then does a person understand and get hold of even the minutest details of what he/she has learnt in his stay at the institute doing his/her MBA. So, to practically apply what I had gained in the past one year in the MBA programme, I underwent two months summer training at Kotak Securities Mohali. It has been a wonderful learning experience, which has given me an insight into Management of modern business which requires an appreciation of multidisciplinary concept and in-depth knowledge of specific analytical tools, geared to the solution of real life problems. No doubt every real situation is unique but a set of theoretical tools of knowledge, itself based on empirical foundation, can help in developing the mechanism for handling such situation. So the MBA curriculum has been desired to provide to the future managers ample practical exposure to the business world. he summer training is essential for the fulfillment of MBA curriculum; it provides an opportunity to the student to understand the industry with special emphasis on the development of skills in analyzing interpreting practical problems through application of management.
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THE WHOLE STUDY HAS BEEN DIVIDED INTO VARIOUS PARTS:

he First chapter includes the introduction about derivatives and history of Kotak securities ltd. its awards and recognitions. 2. he Second chapter includes the objectives, significance, and research methodology and data collection. 3. he hird chapter has reported facts and information gathered by student in the course of study of topic. 4. he Fourth chapter is about the SWO Analysis, which can help the organization to solidify its position in the market. 5. he Fifth chapter includes the Suggestions and Recommendation for the further development and pointing out the weak points so that changes can be made. Lastly, there is a Bibliography of the books, which was used by the researcher. 1.
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CO N T E N T S
CHAPTE 1: verview a. Introduction of Kotak Mahindra Group b. History of Kotak Mahindra group c. Introduction of Kotak securities ltd. d. Structural organization of Kotak e. Awards and recognition of Kotak f. Products and services of Kotak CHAPTE 2: esearch profile a. Objectives of study b. Significance of study c. Research methodology and data collection CHAPTE 3: Facts and findings a. Introduction of SEBI, BSE and NSE b. Introduction about derivatives and participants in derivatives market c. What are futures and their trading strategies? d. What are options and their trading strategies? CHAPTE 4: nline trading a. Basic introduction about online trading b. Products available for trading c. rading tools provided by KEA Pro
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CHAPTE 5: SW T analysis a. Strength b. Weakness c. Opportunities d. hreats CHAPTE 6: Suggestions a. Suggestions and Recommendations CHAPTE 7: Bibliography a. Bibliography
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CHAPTER1 Overview . i . Introduction of Kotak Mahindra Group ii. iii. iv. v. vi. History of Kotak Mahindra group Introduction of Kotak securities ltd. Structural organization of Kotak Awards and recognition of Kotak Products and services of Kotak
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I N T R O D U C T I O N O F K O T AK M A H I N D R A GROUP
THE KOTAK MAHINDRA GROUP
Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. he group has a net worth of around Rs. 3,200 crore, employs around 10,800 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 300 cities and towns in India and offices in New York, London, Dubai, Mauritius and Singapore. he Group services around 2.6 million customer accounts. Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates.
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As on March 31, 2007, the group has a net worth of over Rs.3,200 crore, and the AUM across the group is around Rs. 224 billion and employs over 10,800 employees in its various
businesses. With a presence in 300 cities in India and offices in New York, London, Dubai, Mauritius and Singapore, it services a customer base of over around 2.6 million. he group specializes in offering top class financial services, catering to every segment of the industry. he various group companies include:
y Kotak Mahindra Capital Company Limited y Kotak Mahindra Securities Limited y Kotak Mahindra Inc. y Kotak Mahindra (International) Limited y Global Investments Opportunities Fund Limited y Kotak Mahindra (UK) Limited y Kotak Securities Limited y Kotak Mahindra Old Mutual Life Insurance Company Limited y Kotak Mahindra Asset Management Company Limited y Kotak Mahindra rustee Company Limited y Kotak Mahindra Investments Limited y KotakForex Brokerage Limited y Kotak Mahindra rusteeship Services Limited y Kotak Mahindra Prime Limited
he company has a full-fledged research division involved in Macro Economic studies, Sectorial research and Company Specific Equity Research combined with a strong and well
networked sales force which helps deliver current and up to date market information and news.
HISTORY OF KOTAK MAH INDRA GROUP
The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by UdayKotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a steady and confident journey to growth and success. 1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting 1987 Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market 1990 The Auto Finance division is started 1991 The Investment Banking Division is started. Takes over FICOM, one of India's largest financial retail marketing networks 1992 Enters the Funds Syndication sector 1995 Brokerage and Distribution businesses incorporated into a separate company - Kotak Securities. Investment Banking division incorporated into a separate company Kotak Mahindra Capital Company
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1996 The Auto Finance Business is hived off into a separate company - Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Group's entry into information distribution. 1998 Enters the mutual fund market with the launch of Kotak Mahindra Asset Management Company. 2000 Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business. Kotak Securities launches its on-line broking site (now www.kotaksecurities.com). Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund. 2001 Matrix sold to Friday Corporation Launches Insurance Services 2003 Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian company to do so. 2004 Launches India Growth Fund, a private equity fund. 2005 Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak Mahindra. Launches a real estate fund 2006 Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak Securities.
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INTRODUCTION OF KOTAK SECURITIES LTD.
Kotak Securities Limited, a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% one of the worlds leading investment banks and brokerage firms) is Indias leading stock broking house with a market share of 5 - 6 %. Kotak Securities Limited is one of the largest players in distribution of IPOs - it was ranked number One in 2003-04 as Book Running Lead Manager in public equity offerings by PRIME Database. It has also won the Best Equity House Award from Finance Asia - April 2004. The Company has a full-fledged Research division involved in macro-economic studies, sectorial research and Company specific equity research combined with a strong and well networked sales force which helps deliver current and up-todate market information and news. The Company has 113 branches servicing around 1,00,000 customers, through our own offices and a large franchisee network. Its has an Online presence through Kotakstreet.com where we offer Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited manages assets over Rs. 1700 crores through its Portfolio Management Services (PMS) servicing
high net worth clients with a large investible surplus through its preferred client services in the mass affluent and wealth management segments. Kotak Securities Ltd is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services wherein the investors can use the brokerage services of the company for executing the transactions and the depository services for settling them. Kotak Securities has 813 outlets servicing more than 3,15,000 customers and a coverage of 277 Cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited manages assets around 2300 crores of Assets Under Management (AUM) .The portfolio Management Services provide top class service , catering to the high end of the market. Portfolio Management from Kotak Securities comes as an answer to those who would like to grow exponentially on the crest of the stock market, with the backing of an expert. Kotak Securities is all about attracting new customers and building a long term relationship with its existing customers. Kotak Securities has a centralized Marketing department located in Mumbai. It broadly looks into four areas i.e. Brand Building Customer Acquisition Customer Retention and
Public Relations Various marketing strategies have been initiated to acquiring, building and retaining customers for Online and Offline
Broking division, Portfolio Management Services Distribution division and Kotak Securities as a whole.
&
Last year 2004 focused on Easy Mutual Fund and Easy IPO campaigns, which was appropriate as a wide range of IPO's and Mutual funds were offered in the retail market. There are many new marketing initiatives in the pipeline for this year. We give you a glimpse into Kotak Securities as you journey through this presentation and familiarize yourself with the organization; its structure, people and product offerings and know what makes Kotak Securities Limited one of the most enterprising and value driven players in the capital markets
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STRUCTURAL ORGANISATION OF KOTAK
Kotak Mahindra Bank:At Kotak Mahindra Bank, we address the entire spectrum of financial needs for individuals and corporates. we have the products, the experience, the infrastructure and most importantly the commitment to deliver pragmatic, end-to-end solutions that really work. Deposits accounts Savings account Loans Personal loans Investment services De mat Mutual fund Convenience banking Phone banking Net banking ATM Network Insurance Gold Home loans Loan against property Current account Term deposits
Kotak Mahindra Old Mutual Life Insurance Ltd. Kotak Mahindra Old Mutual Life Insurance is a 76:24 joint venture between Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual Life Insurance is one of the
fastest growing insurance companies in India and has shown remarkable growth since its inception in 2001. Old Mutual, a company with 160 years experience in life insurance, is an international financial services group listed on
the London Stock Exchange and included in the FTSE 100 list of companies, with assets under management worth $ 400 Billion as on 30th June, 2006. For customers, this joint venture translates into a company that combines international expertise with the understanding of the local market. Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd.(KMBL), and Old Mutual plc. At Kotak Life Insurance, we aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.
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KOTAK MAHINDRA ASSET MANAGEMENT COMPANY LIMITED (KMAMC)
Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 4 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. We are sponsored by Kotak Mahindra Bank Limited, one of India's fastest growing banks, with a pedigree of over twenty years in the Indian Financial Markets. Kotak Mahindra Asset Management Co. Ltd., a wholly owned subsidiary of the bank, is our Investment Manager. We made a humble beginning in the Mutual Fund space with the launch of our first scheme in December, 1998. Today we offer a complete bouquet of products and services suiting the diverse and varying needs and risk-return profiles of our investors. Products:
Individual
y KotakHeadstart Child Plans y KotakSukhiJeevan Plan y Kotak Term Plan y
y Kotak Gratuity Grouplan y Kotak Superannuation y Grouplan
y Kotak Preferred Term Plan y Kotak Privileged y Assurance Plan y Kotak Preferred Term Plan y Kotak Money Back Plan y Kotak Child Advantage Plan y Kotak Endowment Plan
Group
y y y y y Employee Benefits Kotak Term Grouplan Kotak Credit-Term Grouplan Kotak Complete Cover
Grouplan
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AWARDS AND RECOGNITI ON OF KOTAK SECURITI ES LTD.
Securities has been graced with include; Euromoney Award (2006 & 2007) - Best Provider of
Portfolio Management: Equities Asiamoney Award (2006)- Best Broker In India Euromoney Award (2005)-Best Equities House In India Finance Asia Award (2005)-Best Broker In India Finance Asia Award (2004)- India's best Equity House Prime Ranking Award (2003-04)- Largest Distributor of The accolades that Kotak Securities has been graced
IPO's.
with include: Prime Ranking Award (2003-04) - Largest Distributor of IPO's Finance Asia Award (2004) - India's best Equity House Finance Asia Award (2005)-Best Broker in India Euromoney Award (2005)-Best Equities House In India Finance Asia Award (2006) - Best Broker In India Euromoney Award (2006) - Best Provider of Portfolio
Management: Equities Kotak Securities Ltd. is India's leading stock broking house with a market share of around 8.5 % as on 31st March. Kotak Securities Ltd. has been the largest in IPO distribution. Kotaksecurities.com is a world class internet share trading website, offering investment and trading options to individuals with speed & easy access. Led by Prasanth Prabhakaran, Kotaksecurities.com has its presence in more than 78 cities in the Country today. Kotaksecurities.com is the only online trading website which gives real time Stock Market access to clients via KEAT, its in-house developed product. Kotaksecurities.com offers convenience of anywhere trading through the net and the telephone.
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KOTAK PRODUCTS AND S ETRVICES
Bank Life Insurance Mutual fund Car finance Securities Institutional Equities Investment Banking Kotak Mahindra International Kotak Private Equity Kotak Reality Fund
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CHAPTER 2
Research profile i. Objectives of study ii. Significance of study iii. Research methodology and data collection
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OBJECTIVES OF THE STUDY

The title of the study undertaken by the researcher is operations and services offered by Kotak Securities Ltd. and the procedure involved in online equity trading with more emphasis on customer preference. The title given to the researcher found to be very interesting and learning in nature. Although researcher faced various problems seeking information from various sources due to the competition of various banks, but due to co-operation from various friends, colleagues and specially the staff of Kotak Securities Ltd. she had completed the report.
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SIGNIFICANCE OF THE STUDY
Everyone put his or her time, money and efforts because to have some significance. My studies have some significance to: The organization:As organization has got valuable data regarding customer preference and market share of Kotak Securities Ltd. in finance industry. Now the Organization can take some significant actions in the direction of customer satisfaction so that the customer can avail more benefits and the organization can get good customers and more business. The Student:It also has significance to me that I got the precious knowledge about various operations of different department, policies and data regarding various brokerages rate of different brokerages companies. It will help me in my future for the practical application in real life.
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R E S E A R CH M E T H O D O L O G Y
Research Methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. Entire data has been collected and calculated up to the accurate extent is from primary as well as secondary sources i.e. no previous data was available on the basis of which calculation for graphical presentation is done. As it was assured to the respondents that their response would be kept confidential so they were very free and frank while giving their response. It was descriptive research. The researcher-collected data from personal interviewed with officials of different brockers, by filling questionnaires from various clients of different brokerages companies.
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DEFINE RESEARCH PROBLEM
REVIEW THE LITERATURE
FORMULATION HYPOTHESIS
DESIGN RESEARCH
COLLECT DATA
ANALYSE DATA
INTERPRET AND REPORT

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M E T H O D O L O G Y O F D A T A CO L L E C T I O N
To make the report more authentic and valid, the collection of data should be through reliable sources and the approach is very important. For the purpose of this report, the data and information were collected in the following manner: Direct Contact with the organization: The organization was visited daily to collect the information about their services and products offered. Their pamphlets were obtained and studiedBooks Available:The data was also collected from the book with us and the brochures also proved very useful. The data so collected was then sorted and classified to make it suitable for analysis. Several questions proved to be reluctant and were dropped in final analysis. Conclusions were drawn on the basis of the majority opinion. Some points were the conclusions were ambiguous were also removed from analysis.
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CHAPTER 3 Facts and findings i. Introduction of SEBI, BSE and NSE ii. Introduction about derivatives and participants in derivatives market iii. What are futures and their trading strategies? iv. What are options and their trading strategies?
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SEBI
The Securities and Exchange Board of India (Amendment) Ordinance, 2002, seeks to amend the SEBI Act, 1992 in order to enlarge the strength of its Board, Securities Appellate Tribunal, confer on SEBI power of search and seizure with court approval and enhanced penalty to Rs. 25 crores. This is intended to stabilize capital market and build confidence of investors for an effective regulation of listed companies to save them from predatory manipulators in tune with the emerging globalization of Indian economy.
THE BSE (CORPORATISATION AND DEMUTUALIZATION) SCHEME, 2005 Bombay Stock Exchange Limited (the Exchange) is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and preeminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporative entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualization) Scheme, 2005 notified by the Securities and
Exchange Board of India (SEBI).Bombay Stock Exchange Limited received its Certificate of Incorporation on 8th August, 2005 and Certificate of Commencement of Business on 12thAugustust, 2005. The 'Due Date' for taking over the business and operations of the BSE, by the Exchange was fixed for 19th August, 2005, under the Scheme. The Exchange has succeeded the business and operations of BSE on going concern basis and its recognition as an Exchange has been continued by SEBI. With demutualization, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organisation structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based. The day-to-day operations of the Exchange are managed by the Managing Director & CEO and a management team of professionals. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 20042005, the trading volumes on the Exchange showed robust growth.
The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing &settlement functions of the Exchange are ISO 9001:2000 certified.
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NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) is India's leading stock exchange covering various cities and towns across the country. NSE was set up by leading institutions to provide a modern, fully automated screen-based trading system with national reach. The Exchange has brought about unparalleled transparency, speed & efficiency, safety and market integrity. It has set up facilities that serve as a model for the securities industry in terms of systems, practices and procedures NSE has played a catalytic role in reforming the Indian securities market in terms of microstructure, market practices and trading volumes. The market today uses state-of-art information technology to provide an efficient and transparent trading, clearing and settlement mechanism, and has witnessed several innovations in products & services viz. demutualisation of stock exchange governance, screen based trading, compression of settlement cycles, dematerialisation and electronic transfer of securities, securities lending and borrowing, professionalization of trading members, fine-tuned risk management systems, emergence of clearing corporations to assume counterparty risks, market of debt and derivative instruments and intensive use of information technology.
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CAPITAL MARKET
The capital market (securities markets) is the market for securities, where companies and the government can raise long-term funds. The capital market includes the stock market and the bond market. Financial regulators, such as the U.S. Securities and Exchange Commission, oversee the capital markets in their respective countries to ensure that investors are protected against fraud. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded. The primary is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. Features of Primary Market are:1. This is the market for new long term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called New Issue Market (NIM). 2. In a primary issue, the securities are issued by the company directly to investors.
3. The company receives the money and issue new security certificates to the investors. 4. Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business. 5. The primary market performs the crucial function of facilitating capital formation in the economy. 6. The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as going public. Methods of issuing securities in the Primary Market 1. Initial Public Offer; 2. Rights Issue (For existing Companies); and 3. Preferential Issue. The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. Alternatively, secondary market can refer to the market for any kind of used goods. The market that exists in a new security just after the new issue is often referred to as the aftermarket. Once a newly issued stock is listed on a stock exchange, investors and speculators can easily trade on the exchange, as market makers provide bids and offers in the new stock.
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In the secondary market, securities are sold by and transferred from one investor or speculator to another. It is therefore important that the secondary market be highly liquid and transparent. Before electronic means of communications, the only way to create this liquidity was for investors and speculators to meet at a fixed place regularly. This is how stock exchanges originated; see History of the Stock Exchange. Secondary marketing is vital to an efficient and modern capital market. Fundamentally, secondary markets mesh the investor's preference for liquidity (i.e., the investor's desire not to tie up his or her money for a long period of time, in case the investor needs it to deal with unforeseen circumstances) with the capital user's preference to be able to use the capital for an extended period of time. For example, a traditional loan allows the borrower to pay back the loan, with interest, over a certain period. For the length of that period of time, the bulk of the lender's investment is inaccessible to the lender, even in cases of emergencies. Likewise, in an emergency, a partner in a traditional partnership is only able to access his or her original investment if he or she finds another investor willing to buy out his or her interest in the partnership. With a securitized loan or equity interest (such as bonds) or tradable stocks, the investor can sell, relatively easily, his or her interest in the investment, particularly if the loan or ownership equity has been broken into relatively small parts.
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This selling and buying of small parts of a larger loan or ownership interest in a venture is called secondary market trading. Under traditional lending and partnership arrangements, investors may be less likely to put their money into long-term investments, and more likely to charge a higher interest rate (or demand a greater share of the profits) if they do. With secondary markets, however, investors know that they can recoup some of their investment quickly, if their own circumstances change. In financial markets, stock is the capital raised by a corporation or joint-stock company through the issuance and distribution of shares. A person or organization which holds at least a partial share of stocks is called a shareholder. The aggregate value of a corporation's issued shares is its market capitalization. In the United Kingdom, South Africa and Australia, the term share is used the same way; but stocks there refer to either a completely different financial instrument, the bond, or more widely to all kinds of marketable securities. In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REIT's. In British English, the usage of the
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world share alone to refer solely to stocks is so common that it almost replaces the word stock itself. A share is one of a finite number of equal portions in the capital of a company, entitling the owner to a proportion of distributed, non-reinvested profits known as dividends and to a portion of the value of the company in case of liquidation. Shares can be voting or non-voting, meaning they either do or do not carry the right to vote on the board of directors and corporate policy. Whether this right exists often affects the value of the share. Voting and Non-Voting shares are also known as Class A and B shares. An initial public offering (IPO) is the first sale of a corporation's common shares to investors on a public stock exchange. The main purpose of an IPO is to raise capital for the corporation. While IPOs are effective at raising capital, being listed on a stock exchange imposes heavy regulatory compliance and reporting requirements. The term only refers to the first public issuance of a company's shares. If a company later sells newly issued shares (again) to the market, it is called a 'Seasoned Equity Offering'. When a shareholder sells shares it is called a "secondary offering" and the shareholder, not the company who originally issued the shares, retains the proceeds of the offering. These terms are often confused. In distinguishing them, it is important to remember that only a company which issues shares can make
a "primary offering". Secondary offerings occur on the "secondary market", where shareholders (not the issuing company) buy and sell shares with each other. A mutual fund is a form of collective investment that pools money from many investors and invests their money in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager trades the fund's underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. Legally known as an "open-end company" under the Investment Company Act of 1940 (the primary regulatory statute governing investment companies), a mutual fund is one of three basic types of investment companies available in the United States. Outside of the United States (with the exception of Canada, which follows the U.S. model), mutual fund is a generic term for various types of collective investment vehicle. In the United Kingdom and western Europe (including offshore jurisdictions), other forms of collective investment vehicle are prevalent, including unit
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trusts, open-ended investment companies (OEICs), SICAVs and unitized insurance funds. In Australia the term "mutual fund" is generally not used; the name "managed fund" is used instead. However, "managed fund" is somewhat generic as the definition of a managed fund in Australia is any vehicle in which investors' money is managed by a third party (NB: usually an investment professional or organization). Most managed funds are openended (i.e., there is no established maximum number of shares that can be issued); however, this need not be the case. Additionally the Australian government introduced a compulsory superannuation pension scheme which, although strictly speaking a managed fund, is rarely identified by this term and is instead called a "superannuation fund" because of its special tax concessions and restrictions on when money invested in it can be accessed.
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SECURITY A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt and equity securities such as bonds and common stocks respectively. The company or other entity issuing the security is called the issuer. What specifically qualifies as a security is dependent on the regulatory structure in a country. For example private investment pools may have some features of securities, but they may not be registered or regulated as such if they meet various restrictions. Securities may be represented by a certificate or, more typically, by an electronic book entry interest. Certificates may be bearer, meaning they entitle the holder to rights under the security merely by holding the security, or registered, meaning they entitle the holder to rights only if he or she appears on a security register maintained by the issuer or an intermediary. They include shares of corporate stock or mutual funds, bonds issued by corporations or governmental agencies, stock options or other options, limited partnership units, and various other formal investment instruments.
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PARTICIPANTS IN DERIVATIVES MARKET HEDGERS
Hedgers are traders who wish to protect themselves from the risk involved in price movements. They look for opportunities to pass on this risk to those who are willing to bear it. They are also keen to rid themselves of the uncertainty associated with the price changes that they may be even ready to do so at a predetermined cost.
SPECULATORS
While you may be averse to risks, there are people who embrace them, since risk and return always go hand in hand. Speculators, unlike hedgers, look for opportunities to take on risk in the hope of making returns. In the Indian markets, there are two types of speculators- day traders and the position traders. A day trader tries to take advantage of intraday fluctuations and the up and down movement in prices. They do not leave any position open at the end of the day. On the other hand, position traders greatly rely on tips and news and take a longer view, say a month, in order to realize better profits.
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MARGIN TRADERS
These are the speculators who make use of the payment mechanism, which is peculiar to the derivative markets. When you trade in derivatives products, you are not required to pay the total value of your position upfront. You are required to pay a fraction (called margin) of the value of your outstanding position. This is called margin trading and results in a high leverage factor in derivative trades, i.e., with a small deposit you are able to maintain a large outstanding position.
ARBITRAGEURS
Life is not perfect and capital markets have their share of imperfections too. Arbitrageurs exploit these imperfections and inefficiencies to their advantage. Arbitrage trade is a riskless trade where a simultaneous purchase of securities is done in one market and a corresponding sale is carried out in another market. These are done when the same securities are being quoted at different prices in the two markets.
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TYPES OF DERIVATIVES FUTURES
A future contact is an agreement between two parties- a buyer and a seller, wherein the former agrees to purchase from the latter, a number of shares or an index at a certain time in the future (expiry date) for a predetermined price, which is agreed upon when the transaction takes place. These are standardized in terms of expiry dates and contract sizes; they can be freely traded on exchanges. Every contact is guaranteed and honoured by the stock exchange, or more precisely, the clearing house of the stock exchange, which is an agency designated to settle trades of investors on the stock exchanges. Every stock futures contract consists of a fixed lot of the underlying share; this lot Determined by the exchange on which it is traded and differs from stock to stock. Futures contracts are available in durations of 1month, 2months; 3months (called near month, middle month and far month respectively) the month in which a contract expires is called the contract month for that contract. All three maturities are traded simultaneously on the exchange and expire on the last Thursday of their respective contract months.
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PRICING OF FUTURES CONTRACTS ON STOCKS AND INDICES
Two models try to explain what constitutes the difference between the spot price (i.e. the current market price of the stock in the cash market or the value of an index on that day) and the futures price. There are two theories that explain how futures contracts are priced.
THE COST OF CARRY MODEL
This model assumes that arbitrage between the cash market and the futures market eliminates the future imperfections in pricing, i.e., unaccounted for differences between the cash price and futures price. The difference that remains is due to a factor called The cost of Carry. The model also assumes, for simplicity sake, that the contract is held till maturity, so that a fair price can be arrived at. To put it briefly, once all distortions in the futures price have been erased by arbitrage, A fair futures price = the spot price+ the net cost of carry of the asset from today to the date on which the contract expires. The net cost of carry involves all costs that you may have had to incur in order to hold a similar position open in the cash market, less the returns that you would have received from this position. The costs typically include financing charges, at the prevailing rate of interest. This is because you may have
borrowed to finance a similar position in the cash market, and if not, you may have lost the interest on the capital that you invested to keep your position open. In the contrast in the futures market, you merely have to deposit a fraction of the value of your position in the form of margin. The returns that you receive could consist of dividends or bonuses that you may have received in case you had held stocks in the cash market. In the case of an index future, your returns may be gauged by the average return that an index delivers.
EXPECTANCY MODEL OF FUTURES PRICING
It says that the futures price is nothing but the expected spot price of an asset in the future. If there are more traders who expect the future price of an asset to rise in the future than those who expect it to fall, the current futures price of that asset will be positive. In fact, the theory suggests that it is not the relation between the cash market price and the futures price that is relevant, but the relationship between the expected spot price on the date of expiry of the contract and the futures price that is. BA There is usually a difference between the future price and the spot price. This difference is called the basis. The basis normally remains positive when the markets are not volatile or are in a secular run (not affected by short term, speculation driven volatility). However, when the markets are in bear grip
and cash market prices are expected to fall in the near term, the basis could turn negative.
Since a futures contract is settled at the cash market price on the date of the expiry of the Contract, as it reaches expiration, the futures price and spot price as shown below:
HOW TO BUY FUTURES
Before you actually begin trading, you must tie up with a broker who is a member of the stock exchange on which you plan to trade or you can trade through a sub-broker, who routes your trades through a broker to the stock exchange. As per the SEBI rules, you need to enter into a client broker agreement with the broker with whom they wish to trade. Once you have furnished your KYC form, broker sets up an account for you and allots you a unique code. Once you deposit your margin money, you can place your orders. The main types of orders are: Market orders- which is executed at the prevailing market price. Limit orders- it gets executed at the specific stated price Stop loss orders-you can direct to square up your position at a predetermined price in order to limit your losses.
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SETTLING STOCK FUTURE CONTRACTS

ON EXPIRY
In the Indian markets, buying a stock futures contract does not result in delivery of the underlying shares. The futures contract has to be settled on the expiry day at the closing price of the underlying stock in the cash market. Ill t tio of mark-to-market margi 3550
Index closed at Day of 3600 purchase Day 2 3500 MTM Margin
for 100 nifty bo ght at
Explanation
Credit of Rs.5000
Difference between purchase price and closing price i.e. (3600-3500)*100
Debit of Difference between the closing price on Rs.10000(100*100) the date of purchase day 2 closing price i.e., (3500- 3600)*100 Debit of Rs.1000 Difference between day 2 and day 3 closing prices, i.e. (3490-3500)*100
Day 3
3490
BEFORE EXPIRY
Although futures expire on a particular date, most traders do not hold on to their positions until the expiry date of the contract. They usually exit much before the expiry date by
offsetting or cancelling their position, i.e., selling their long positions or buying back their short positions. Here again your profits or losses will be returned to or collected from you ,
after adjusting them from the margins that you have deposited till the day on which you square off your position.
SETTLING INDEX FUTURE CONTRACTS

ON EXPIRY
Index futures contracts are settled in cash and the closing index value on the date of the expiry of the contract is considered as the settlement price for the index futures. Consider a case where you purchase one contract of Nifty future at 3560 say on July 7 .this particular contracts expire on July 27, being the last Thursday of the contract series. If you have not been able to sell the future till the date of expiry the exchange will settle your contract at the closing price of the nifty prevailing on the expiry day. So if on July 27, the Nifty stands at 3550, then you will make a loss of 1,000. Your broker will deduct the amount from your margins deposited with him and forward it to then stock exchange, which in turn will forward it to the seller who has made that profit.
BEFORE EXPIRY
In order to exit a position you do not have to wait in the futures market, you could have sold your long position on the
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day of purchase itself or on any day till the expiry date of the contract, if the price in the futures market looked attractive.
USING FUTURES
BY SPECULATORS
They take long or short positions in index and stock futures, depending on their perceptions of the market. Lets take the case of stock futures of RIL; Contract size: 600 shares; price of future: 960; spot price: 955; margin required: 10% of the contract value:
Perception Action
Margin Purchase/sell required for price one lot (600 shares) 57600 960
Amount required Leverage for the purchase of similar qty in cash market 576000 10 times
Bullish
Buy futures Sell futures
Bearish
57600
960
10 times
In the above case, any movement in the stock prices to say Rs.980 would make the futures buyer richer by Rs.12000 (600*20) for each contract. Similarly in the case of a fall in the prices to say Rs.950, the investor would lose Rs.6000 (600*10) for each contract. The seller, on the other hand,
would lose when the buyer gains and gain when the buyer loses, to the same extent.
BY ARBITRAGEURS
They stay focused on both cash market and futures markets in order to benefit from unexplained price differences. Lets take scrip-RIL; contract size: 600shares; price of future: 960; spot price: 950; margin required: 10% of the contract value.
Price in cash market Rs950
Price in futures market Action Condition
Rs960
Buy in cash market and sell in futures market Basis is more than the cost of carry and opportunity cost of investing
Since the arbitrageur looks for inefficiencies between the prices in the two markets, in the above case, he buys 600 shares of RIL in the cash market and takes delivery of the same. At the same time, he sells 600 shares in the future market by paying a 10 percent margin on the contract value. The arbitrageur would sell the physical shares on the expiry date and buy back the futures, which he had sold. In this
transaction, the arbitrageur has made a profit of Rs6000 (600*10).
BY HEDGERS
If the hedger wants to protect his portfolio, which consists of a variety of blue chip stocks, from the possibility of a fall in prices in the market, he may consider selling Nifty futures as this index generally represents the movement of market leaders. In order to completely cover his portfolio value, he will have to purchase 2 nifty contracts; (No. of contracts= value of portfolio / Nifty value, i.e., 6lakh/3lakh).
Value of portfolio holdings View Action Nifty futures level Value of one Nifty contract Rs6lakh Bearish for the next one month Sell Index futures 3000points Rs3lakh
Since our hedger is bearish about the market for the next one month, he will short sell two contracts of Nifty futures with a maturity period of 1 month each.
If they market falls by 10 per cent ,i.e., the value of the Nifty falls by 300points to 2700, the value of the hedgers portfolio would be reduced to Rs.5.4lakh (rs6lakh less 10 per cent),assuming that his portfolio is extremely well represented by the index. At the same time, since he has sold futures worth Rs6lakh, he will make a gain of Rs60000 due to the fall in index. As a result the value of his overall holdings remains unaffected by the fall in market. However, in case of rise in the market, the hedger would lose out on the upside, since he will have to bear losses on account of his short selling of futures contracts. Here, we have assumed a 1:1 ratio between the portfolio and the futures value. In case the hedger had decided to sell only one contract and the market rose by 10 percent, the losses from selling futures would be only 30000 while the gain in the value of his portfolio would have been 60000.
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OPTIONS
An option contract goes one step beyond a futures contract, towards capping risks. These contracts give you the right but not the obligation to buy or sell shares or an index, at a specified price (strike price), on or before a given date in future (expiration rate).So, if you have purchased an option contract, you have the right to simply ignore the terms of the contract if the price of the underlying shares or index goes against you. Of course you have to pay a price, called a premium, for this privilege. On the other hand of this transaction, there is an option seller, also called the option writer. This trader gives you the right to buy or sell the underlying asset in exchange for the premium that you pay. Himself has no rights and is obligated to comply with the contract if you choose to exercise your option. The lot sizes in the case of option contracts are the same as those for the futures. The expiration dates for the option contracts are also standardized to match those of the futures contracts
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STRIKE PRICE INTERVALS
These are the levels of strike prices for each index and stock options. The exchange authorities determine the strike prices. For every option type, the exchanges provide a minimum of five strike prices during the month. Two contracts will be above the spot price, two below the spot price and the last one will be equivalent to the spot price. Although the strike prices
are fixed, the strike prices that are added to the existing ones that are traded keep on changing with the change in spot price.
CALL AND PUT OPTIONS
On the basis of whether you want the option to buy shares or sell them at a specific price in the future, there are two types of options available in the derivatives markets .They are called the Call option and the Put option. The former gives you the right to buy shares or an index whereas the latter gives you the right to sell them, with no obligation. Lets take a look at these two options, one at a time.
CALL OPTION
When you purchase a call option, you purchase the right to buy a certain number of shares or index, at a predetermined price(strike or exercise price), on or before a specific date in the future(expiry date).In exchange for this facility, you have
to pay an option premium to the seller/writer of the option. This is because the value writer of the option assumes the risk that the market price will raise beyond your strike price on or before the expiry date of your contract and he will be obliged to sell you shares at the strike price, although it means making a loss. The premium payable is a small amount that is also market driven.
Illustration of a call option on an index As a trader you would choose to purchase an index option if you have a view on the price movement of the index rather than any expectation about the price movement of a particular share. Indices on which you can trade include the S&P Nifty CNX 50, CNX IT and Bank Nifty on the NSE and the Sensex on the BSE. Suppose the Nifty is quoting around 3000 points today. If you are bullish about the market and for see this index reaching the 3100 mark within the next month, you may buy the one month Nifty call at 3100.Lets say that this call is available at a premium of Rs 30 per share. Since the current contract size of the Nifty is 100 units, you will have to pay a total premium of Rs 3000 to purchase one call option on the index. If the index remains below 3100 points for the whole of the next month, until the contract expires, you would certainly not want to purchase 4 evict at 3100 levels. And you have no
obligation to purchase it either. You could simply ignore the contract and all you have lost is your premium of Rs3000. If, on the other hand, the index does cross 3100 points, as you expected, you have the right to buy at 3100 levels. Naturally, you would like to exercise your call option. But remember that you will start making profits only once the Nifty crosses 3130 levels, since you must add the cost you have incurred by paying the premium to the cost of the index. This is called your breaks even point a point where you make no profits and no losses. When the index is anywhere between 3100 and 3130 points, you begin to recover your premium cost, so it still makes sense to exercise your option at these levels, if you do not expect the index to rise further or the contract reaches its expiry date at these levels. Now lets look at how the writer of this option is fairing. As long as the index does not cross3100 and you do not exercise the option, he benefits from the option premium that he has received from you. If you exercise your option when the index is between 3100 and 3130, he is forced to part with some of the premium that you have paid him .once the index is above 3130 and you exercise your option, his losses are equal in proportion to your gains and both depend upon how much the index raises. In a nutshell, the option write has taken on the risk of a rise in the index for a sum of Rs30per share. Further, while your losses are limited to the premium that you pay and your profit potential is unlimited, the writers profits are limited to the premium and his losses could be unlimited.
Index levels
Payoff for the Index Call Purchaser Call Purchaser loses premium
Payoff for the Index Call Writer
Below 3100levels Between 3100and 3130levels At 3130levels Above 3130levels
The premium is the option writers income The option writer loses part of the premium
Call purchaser recovers part of the premium element but still making an overall loss Call purchaser breaks even Profit starts for the call owner
The option writer also breaks even Losses start for the option writer
Illustration of a call option on a stock In the Indian market, options cannot be sold or purchased on any and every stock. SEBI has permitted options trading on only certain stocks that meet its stringent criteria. These stocks are chosen from amongst the top 500 stocks in terms of average daily traded value in the previous six months on a rolling basis, amongst other technical criteria. Suppose the AGM of RIL is due to be held shortly and you believe that an important announcement will be made at the AGM, while the share is currently quoting at Rs 950, you feel that this announcement will drive the price upwards, beyond Rs.950. however, you are reluctant to purchase Reliance in the cash market as it involves too large an investment and you would rather not purchase it in the futures market as futures leave you to open an unlimited risk, in case the market goes against you. Yet you do not want to lose the opportunity to benefit from this rise in price due to the announcement and
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you are ready to stake a small sum of money to rid yourself of the uncertainty. An option is ideal for you. Depending on what is available in the options market, you may be able to buy a call option of Reliance at a strike price of Rs950 at present, by paying a premium of Rs10 per share. The total premium that you will have to pay is Rs 6000, since one contract of Reliance consists of 600 shares. You start making profits once the price of Reliance in the cash market crosses Rs980 per share (i.e. your strike price of Rs970 + premium paid of Rs10). Now lets take a look at how your investment performs under various scenarios. If the AGM does not result in any spectacular announcements and the share price remains static at Rs950 or drifts lower to Rs930 because market players are disappointed, you could allow the call option on reliance to lapse. In this case, your loss would be Rs10 per share, amounting to a total of Rs6, 000. However, things could have been worse if you had purchased the same shares in the cash market or in the futures segment. On the other hand, if the company makes an important announcement, it would result in a good amount of buying and the share price may move to Rs1000. You would stand to gain Rs20 per share, i.e. Rs1000 less Rs980 (strike price of Rs970 + premium of Rs10), which was your cost per share. As in the case of the index call option, the writer of this option would stand to gain only when you lose and vice versa, and to the same extent as your gain /loss.
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Price of Reliance Below Rs970
Payoff for the Reliance Call Purchaser at Strike Price of Rs970 Call purchaser loses the premium
Payoff for the Reliance Call Seller at Strike Price of Rs970 The premium is the option writers income The option writer loses part of the premium
Between Rs970 Call purchaser recovers part of the premium element but still making an and Rs980 overall risk At Rs980 Call purchaser exercises the option
The option writer also breaks even Option writer makes losses that are equivalent to the call owners profits.
Above Rs980
Call owner exercises the option and makes profits
PURCHASING A CALL OPTION
You must register with a broker by entering into Client Broker Agreement and completing all the legal formalities. Once registered you can place an order for an option contract based on your perceptions about the future movements in the market.
PAYMENTS/ MARGINS INVOLVED IN BUYING AND SELLING CALL OPTIONS
BUYING OPTIONS
When you buy an option contract you pay only the premium for the option and not the full price of the contract. The premium is payable to the broker based on the contract issued to you at the end of the day. Your broker then passes this
premium to the exchange on the next working day. Then exchange pays this premium to the broker of the seller option, who in turn passes it to his client.
SELLING OPTIONS
While the buyer of the opinion has the liability that is limited to the premium that he must pay, the seller has a limited gain but his potential losses are unlimited. Therefore, the seller of an option has to deposit a margin with the exchange, via his broker, as security in case of an adverse movement in the price of the options that he has sold. The margins are levied on the contract value and the amount (in % terms) that the
seller has to deposit is dictated by the exchange. This amount typically ranges from 15% to as high as60% in times of extreme volatility. So, the seller of a call option of Reliance at a strike price of 970, who received a premium of Rs10 per share would have to deposit a margin of Rs1,11,640, assuming a margin of 20% (20%of 970*600), although the value of this outstanding position is Rs5,82,000.
SETTLING A CALL OPTION
When you sell a call or purchase an index option, you can either exit your position before expiry date, through an offsetting trade in the market, or hold your position open till the option expires. Subsequently, the clearinghouse settles the trade. In the case of stock options, you can neither sell your long positions or buy back your short positions before the
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expiry of the contract or exercise your option anytime on or before the expiry date of the contract.
FOR THE BUYER OF A CALL OPTION
When you square off your position by selling your options in the market, as the seller of an option, you will earn a premium. The difference between the premium at which you bought the options and the premium at which you sold them will be your profit or loss. In case you exercise your option on or before the expiration date, the stock exchange will calculate the profit or loss on your positions. This is basically the difference between closing market price on the day you exercise the option and
the strike price. Your maximum loss will be restricted to the premium paid.
FOR THE SELLER OF A CALL OPTION
If you have sold call options and want to square off your position, you will have to buy back the same number of call options that you have written and these must be identical in terms of the underlying scrip and maturity date to the ones that you have sold. The profits and losses will be adjusted in against the margin that you have provided to the exchange.
PUT OPTION
When you purchase a put option it gives you the right to sell the underlying stock or index at a predetermined price (strike
price/exercise price) on or before a specified date in the future (expiry date).

SIMILARITIES OF A CALL AND PUT OPTION
A strike price and expiry date is predetermined by the stock exchange. The buyer of a put option places a buy order, through his broker, for an option that is available in the market, specifying the strike price and the expiry date and how much he is ready to pay for the option. The buyer of the put option must pay a premium, which is passed on to the seller by the exchange. The seller must maintain margins with its broker.
The buyer of a put option can exercise his option to sell the shares on or before the expiry date in the case of stock options and only on the expiry date in case of index options. The buyer could also sell off the put option to another buyer before the expiry date and receive a premium.
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CHAPTER 4 Online trading i. Basic introduction about online trading. ii. Products available for trading. iii. Trading tools provided by Kotak Securities.
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W H A T I S O N L I N E T R A D IN G ?
Online Trading is a service offered on the Internet for purchase and sale of equity, derivatives and commodities. In Online Trading, you will access a stockbroker's website through your internet-enabled PC and place orders through the broker's internet-based trading engine. These orders are routed to the concerned Stock or commodity Exchange without manual intervention and executed thereon in a matter of a few seconds. For doing online trading the customer needs to open a D-mat account with the organization.
DEMAT FORM V/S PHYSI CAL FORM:A COMPARISON OF INVESTMENT IN SECURITIES:Kotak Securities | 64
In physical form Insurance is required Laborious inventory verification during internal stock taking and audits.
In demat form No insurance is required The DPs makes periodic statement of holding available. Easy verification of audits.
No custody charges if using own premises Custody charges vary from 3 to 10 basis however, custodians charges- 20 to 40 basis points depending upon DP selected. points. Risk of theft Receipt of corporate benefits need monitoring and risk of loss in transit not ruled out No risk of theft Faster and hassle free receipt of corporate benefits.
BUYING:-
In physical form High brokerage Stamp duty at 50 basis points Posted and handling charges for lodgments and transfers Cost involved in follow up/rectification
In demat form Low brokerage No stamp duty No posted and handling charges
Guaranteed good delivery
No transaction charges
Transaction charges vary from 7 to 10basis points.
SELLING:In physical form In demat form
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High brokerage Transaction only in market lots Off market transaction are costly and risky Jumbo lots need to be split into market lots for selling
Low brokerage, NSE brokers charges half the brokerage on electronic trades No market lot concept Facility for off market transaction market transactions, specially within the group No need to split
The requirement for o ening an account are: PAN Card of the customer 2 passport size photographs Address proof Passport Bank statement showing latest transactions Cheque leaf of margin money Name declaration (if required) Photocopy of the previous holdings (if any) Signatures of the client Witness signatures Photograph of a nominee and his signatures Email id of the client The client can get his account linked to the organization if he/she is having a saving account in either of the following banks: HDFC, ICICI, Kotak Mahindra Bank or UTI. This will help the client in easy money transfer as and when required by the client.
BROKERAGE CHARGES WITH KOTAK DELIVERY

Less than 1 lakh 1 5 lakh 5 10 lakh 10 20 lakh 20 60 lakh 60 lakh 2 crore Greater than 2 crore 0.59% 0.55% 0.46% 0.36% 0.27% 0.23% 0.18% Kotak gateway account
Kotak value account Kotak privilege circle
CASH SQUARING UP
Less than 25 lakh 25 lakh 2 crore 2 crore 5 crore Greater than 5 Crores 0.06% 0.05% 0.04% 0.03% Kotak Gateway Account Kotak Value Account Kotak Privilege Circle
DERIVATIVES
Daily Sq. up 0.07% 0.45% 0.36% 0.27% 0.23% Settlement 0.09% 0.073% 0.046% 0.046% 0.032% Kotak Gateway Account Kotak Value Account KotakPrevilege Account
Less than 2 crore 2 5.5 crores 5.5 10 crores 10 25 crores Greater than 25 crores
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These charges are negotiable and can be further reduced if the client is able to produce the contract note of his earlier trading with some other organisation to the company.
Trading Account Opening Rs. 750 Only D-mat Account Rs. 500 Service Tax 10.30% of brokerage STT Delivery buy 0.125% o Delivery sale 0.125% o Cash market sq up 0.025% (seller) o Derivatives 0.017% (seller) Stamp Duty Cash Market 0.01% o Derivatives 0.002% Turnover Charges y Cash Market 0.01%
y Derivatives 0.002% y Option Premium 0.05%
DP Charges
y A/C Maintenance Rs. 30 p.m y Cash market (buy) nil y Cash market (sell) 0.04% (min. Rs. 23) y Off market (sell) - 0.04% (min. Rs. 23) Interest Rate y Margin Funding 15% p.a y Normal 18% p.a Stock as margin no interest on initial margin* Sharing with Franchisee 50% brokerage (max) Referral Co-coordinator Max 10% (case to case)
There are no charges payables at the time of opening account. All other charges will be billed on a monthly basis.
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In case of delays in the payment of charges, the D-mat account can be frozen for all operations in such time all dues are cleared. All market instructions for transfer must be received latest by 4.00p.m. on the previous working day prior to the pay in day as per SEBI guidelines. All instructions for transfer must be received at least 48 hours before the execution date. Late instructions would be executed at the account holders risk and responsibility. Charges are subjected to revision at the companys sole discretion and as per revisions in NSDL charges. Any service not quoted above will be charged separately. Value of transaction will be in accordance with rates provided by the depository.
Service tax and other statutory charges if applicable will also be levied.
DIFFERENT TYPES OF ORDERS THAT CAN BE PLACED ON KOTAK SECURITIES.COM
I.
II.
Normal orders: When you sell shares without marking delivery it is treated as a short sale and would be executed if there are sufficient funds available to execute the transactions. Delivery mark orders: This intimates the system to take delivery for the order placed. You need not mark delivery for a buy order, because if you dont square-off the transaction, the system automatically takes delivery. In case you mark delivery for a sell order, then it is not reckoned as a utilization of limits and hence your
III.
IV.
utilized margin will remain unchanged on execution of these transactions. The system will check your demat stock availability and the transaction will go through only if the stock is available in your demat account. Margin finance order: A margin finance order can be placed only if you have registered for margin funding. Using this facility you can buy shares at 50% margin, the balance 50% is provided by kotaksecurities.com at a nominal interest rate. Market order: An order placed for execution at the prevailing market price. To place a market order type 0 as the price column or the price displayed by default is taken as market order.
V.
VI.
VII.
Limit order: An order placed with a specific price that we want is a limit order. In such a case we may replace the market price with a price of our own. Stop loss order: An order placed, which gets activated only when the market price of the relevant scrip reaches or crosses a threshold price, which is called trigger price. Until then the order does not enter the market but sits with the NSE. Disclosed order quantity: The order quantity to be placed in the market can be any number with a minimum quantity of one share. In case of large quantity orders, there is an option of disclosing smaller quantity i.e., in lots of 10% of the total quantity. As and when the lot is executed, the next lot will be pushed into the market automatically for execution till the quantity is filled.
VIII.
IX.
Multiple orders: It is a facility provided by kotaksecurities.com which allows you to place an order in 5 scrips with a single click. Cover order: It is a facility by kotaksecurities.com wherein two orders will be accepted at the same time, one being a normal order and seconds a stop loss order with a trigger price. E.g.:- if you place an order to buy 200 shares of SBI at 886, you can simultaneously, place a sell order at 880 to restrict your losses. In case SBI does not reach 880, this order will be automatically cancelled at the end of the trading day. You need to mention the trigger price at which stop loss will be released in the system.
TRADING / PAYMENT CY CLE AT KOTAKSECURITIES.COM
For rolling settlements it is necessary to pay us the relevant amount at least a day (before 3.30p.m.) before the pay in date of the concerned settlement. Clear funds for share purchases are required to be in the clients bank account one day prior to the pay in date. Shares should be available in your demat account with the organization one day prior to the pay in date. Pay out money will be credited to your account by the next working day after receipt of the money from the exchange. The purchased shares will be transferred to your demat account on the next working day after the receipt from the exchange.
Payment cycle when customer buys the share (applicable on delivery trades)
Day Day 1 Day 2 Day 3 Day 3 Day 4 Transaction day T (Monday) T+1 (Tuesday) T+2 (Wednesday) T+2 (Wednesday) T+3 (Thursday) Party with obligation Customer Customer Kotak Securities Stock Exchange Kotak Securities Activity Order for buy shares of a particular company is executed Funds to be paid by customer to Kotak Securities for shares purchased Kotak Securities transfers funds to stock exchange Stock exchange transfers shear to Kotak Securities Shares purchase on day 1 are reflected in the customers demat account and are made available for delivery trade
Payment cycle when customer sells the share

Day Day 1 Day 2 Day 3 Day 3 Day 4 Transaction day T (Monday) T+1 (Tuesday) T+2 (Wednesday) T+2 (Wednesday) T+3 (Thursday) Party with obligation Customer Customer Kotak Securities Stock Exchange Kotak Securities Activity Sell Order for shares lying in his/her demat A/c is executed Shear to be sold should be available in the demat A/c with Kotak Securities Kotak Securities transfers shear to stock exchange Stock exchange transfers fund to Kotak Securities Funds due to customer for the share sold are reflected in his trading A/c
THE ONLINE PRODUCTS AVAILABLE WITH KOTAK SECURITIES LTD.

Kotak securities have a product for every investment need and period. Gateway Account, an Online Trading Account opens the gateway to a world of investing opportunities for you. You may be anywhere, anytime and still manage to place your trades using the Internet or our Call and Trade Facility. Note: Call n Trade First 20 calls free, Rs 20 from the 21st call onwards AutoInvest, provides a combination of Gold ETFs, Stocks and Mutual Funds recommended by our Advisors, depending on an investor's risk appetite and investment view. Advance Brokerage, based on investor requirement, investor can choose a plan which will best suit its need. There are various plans available starting from Rs.1000 with 6 months validity to Rs.4000 with 6 months validity.
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Kotak Securities make sure you get to enjoy premium and top of the line trading services only with Kotak Securities Privilege Circle (KPC).
Account Type Gateway Customer Target Group Basic, Entry level simple no frills Account Account positioning Self-Reliant service, Product Offering Brokerage Structure Varies with T/O 0.59% to 0.18% 0.49%
All Products and tools to be made available subject to charges SAME AS GATEWAY
Gateway Flat
Lower T/O customer seeking Flat Brokerage rate
Simple Brokerage Structure and as above Managed Account Consent of Customer Cheaper rates based on advance fee
AutoInvest
Regular Income/Investing
Quasi PMS
2%
Advance Brokerage
Lower Brokerage rates compared to Gateway
SAME AS GATEWAY except Sebi Margin Funding and Currency Derivatives SAME AS GATEWAY except Sebi Margin Funding and Currency Derivatives Invest in 24 stock exchanges, Advance Trader Platform
Variable
KPC
Rs 10 lac above client that requires RMs level service
Premium, Exclusive Service, host of freebies and discounts Premium Service
Starts with 0.18%
Kotak Trader
Invest in Global stock exchanges
0.75%
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KEAT PRO X AND KEAT PREMIUM:are two trading tools that enable you to view unlimited scrips, Intraday andHistorical charts for scrips use most of the charting tools, view the graphs type you want to, see Derivative chains, and see online order and trade Confirmations, view dynamic net positions, dynamic profit and loss, select indices/sectors or business groups and lots more. KEAT Premium runs faster than KEAT Pro as it runs on a separate server and has Scrip Alerts Charges for KEAT Premium are Rs 500
(provides a comprehensive set of tools for trading in a new GUI. Customizing capabilities help you to quickly gather and manage transaction data and reports.) y Real time streaming data - Watch the market at real time with free streaming stock quotes from NSE, BSE & NSE Currency. Available information also has details of Market Lot, Top Gainers/Losers, Indices Update, Top Active Scrips, Option Calculator. y Charting Tools - With available charting facility you can study and understand the pattern of the stock of your choice. y Live Account Information - Track your account information live, view placed orders; get trade
KEATPROX
confirmation; view, limits, positions, changing profit and loss etc. You can customise the reports as per your convenience. y Customisable - KEAT Pro X lets you create your own personalised view of the Indian share market so you can watch the data you want. You can create multiple watch lists that can have upto 50 scraps in each of them; these watch list can be set in tabs.
Trading Menu (Separate pane for Equity,Derivative,Currency Order Placement)

REPORT (Highly customizable filters)
ORDER FORM
Security Search Tab (Scrips can be added from pre-defined Watch list)
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Charts (based on time interval Daily, Weekly, Monthly, Quarterly, Half Yearly scrips movements)
CHAPTER 5 SWOT Analysis I. Strength II. Weakness III. Opportunities

IV. Threats
STRENGTHS:
Kotak Securities Ltd.is one of the largest players in distribution of IPOs. Its brokerage charges are almost half of those with ICICI Web trade. Highly co-operative and skilled staff. Sales oriented organization. Aggressiveness of sales force in selling products. The company has expertise in managing big business. Effective and wider distribution network. It has 113 branches serving around 100000 people.
It is currently managing assets worth Rs.1700 crores. Product designed for every area of personal. The office hours of the company for the customers are from 9am to 6pm. The company enjoys a very high brand loyalty and recall value among its customers. The company has a presence in all metros as well as in the most of the major cities in the country.
WEAKNESS:
o o o o
No presence in the rural and semi-urban segment. Lack in making follow-ups. Lack of corporate agents. Lack of customer services and promotional activities.
OPPURTUNITIES:
There is continuous growth in this sector. People have started turning towards the organization as they know that facilities are far better than the others.
Market is fully vacant to capture because the branch has recently setup its business.
THREATS:
y Competition in the sector is increasing with the entry of lots of private giants with the collaboration of foreign giants. y Selling attitude for the company always has to be maintained in order to compete with other companies. y Continuous follows up of the clients and customers. y As other organizations like ICICI web trade, India Info line, etc. are there in the city so it is a little bit difficult for them to capture the market.
COMPETITION
India Bulls Share Khan/SSKI HSBC MotilalOswal Angel Stock Broking KR Choksey AnandRathi ICICI Direct.com (Online)
R - Trade (New entrant) PrabhudasLiladhar India Infoline Karvy Magnum Securities SBI Capital L K P Shares & Securities Geojit Financial
Man Financial Religare Securities IL & FS Emkay Share & Stock Broking Enam Financial HDFC Securities Edelwise Capital UTI Securities Ambit Capital Ventura Capital
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CHAPTER 6
SUGGESTIONS AND RECOMMENDATIONS:
Some of the Suggestions and Recommendations for improving the present Image as well as the Services of Kotak Securities Ltd. are as follows: More Branches:Some more branches should be opened so it becomes more easy and approachable for the people to do their transaction. The branches should have well trained employees Customer Awareness: The people should be updated with the new issues and the schemes started by the organization to the exiting customers. The customers should be informed about the newly issued scrips as well as be given daily basis tips / news for profitable transactions. Regular contact with the customers through telephone can be maintained for smooth running of the business.
Feedback :
A proper feedback system should be designed to take care of the dissatisfied customers and solving their problem as their bad words of mouth publicity can make Kotak Securities Ltd. loose its potential as well as existing customers.
Well Trained Customers Care Staff: For satisfactorily handling queries to establish more good standards in trading can be done through outstanding performance, courteous services and a high ethical benchmark Higher Penetration in the Untapped Market: Approaching all the potential clients, making them aware about various instruments and convincing them. Newspaper and Agents: Newspaper and agents are most effective tools for awareness, so Kotak Securities Ltd. should use these tools more for Advertisement.
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CHAPTER 7
BIBLIOGRAPHY
i. Research Methodology: C.R. Kothari ii. Financial Management: Khan & Jain iii. Investment Management: Preeti Singh iv. Annual Report, Kotak Securities Ltd. v. Pamphlets and Brochures of Kotak Securities Ltd. vi. Organizational Profile of Kotak Securities Ltd. vii. Click by Click user manual of Kotak Securities Ltd. WEBSITES USED: a) www.kotaksecurities.com b) www.nseindia.com c) www.google.com d) www.businesstoday.com e) www.icicidirect.com
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Comparision of Brokerage Rate of Different Companies : Y Pfu O M O Bu A (Mba)

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PROJECT REPORT

ON COMPARISION OF BROKERAGE RATE OF DIFFERENT COMPANIES FOR

KOTAK SECURITIES LTD. MOHALI

THE WHOLE STUDY HAS BEEN DIVIDED INTO VARIOUS PARTS:

HISTORY OF KOTAK MAH INDRA GROUP

INTRODUCTION OF KOTAK SECURITIES LTD.

STRUCTURAL ORGANISATION OF KOTAK

KOTAK MAHINDRA ASSET MANAGEMENT COMPANY LIMITED (KMAMC)

y Kotak Gratuity Grouplan y Kotak Superannuation y Grouplan

AWARDS AND RECOGNITI ON OF KOTAK SECURITI ES LTD.

KOTAK PRODUCTS AND S ETRVICES

OBJECTIVES OF THE STUDY

SIGNIFICANCE OF THE STUDY

DEFINE RESEARCH PROBLEM

REVIEW THE LITERATURE

INTERPRET AND REPORT

NATIONAL STOCK EXCHANGE

PARTICIPANTS IN DERIVATIVES MARKET HEDGERS

TYPES OF DERIVATIVES FUTURES

PRICING OF FUTURES CONTRACTS ON STOCKS AND INDICES

HOW TO BUY FUTURES

SETTLING STOCK FUTURE CONTRACTS

for 100 nifty bo ght at

Difference between purchase price and closing price i.e. (3600-3500)*100

SETTLING INDEX FUTURE CONTRACTS

Buy futures Sell futures

Price in futures market Action Condition

transaction, the arbitrageur has made a profit of Rs6000 (600*10).

STRIKE PRICE INTERVALS

Payoff for the Index Call Writer

Below 3100levels Between 3100and 3130levels At 3130levels Above 3130levels

Price of Reliance Below Rs970

Call owner exercises the option and makes profits

PURCHASING A CALL OPTION

price/exercise price) on or before a specified date in the future (expiry date).

Guaranteed good delivery

Transaction charges vary from 7 to 10basis points.

SELLING:In physical form In demat form

BROKERAGE CHARGES WITH KOTAK DELIVERY

Kotak value account Kotak privilege circle

TRADING / PAYMENT CY CLE AT KOTAKSECURITIES.COM

Payment cycle when customer sells the share

THE ONLINE PRODUCTS AVAILABLE WITH KOTAK SECURITIES LTD.

Lower T/O customer seeking Flat Brokerage rate

Lower Brokerage rates compared to Gateway

Rs 10 lac above client that requires RMs level service

Premium, Exclusive Service, host of freebies and discounts Premium Service

Starts with 0.18%

Invest in Global stock exchanges

Trading Menu (Separate pane for Equity,Derivative,Currency Order Placement)

REPORT (Highly customizable filters)

CHAPTER 5 SWOT Analysis I. Strength II. Weakness III. Opportunities

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