You are on page 1of 66

A PROJECT REPORT ON EQUITY, COMMODITY & CURRENCY ARE BETTER WAY OF

INVESTMENT IN RECENT ERA.


THE STUDY WAS CONDUCTED FROM 1st OF JUNE 2011 TO 20th OF AUGUST 2011 AT

RELIGARE SECURITIES LTD, KOLKATA By

ADITYA MONDAL
COMPANY GUIDE MR. NILADRI SENGUPTA RELIGARE SECURITIES LTD FACULTY GUIDE Prof. SUJIT MUKHERJEE HOD (MARKETING DEPARTMENT)

BIMS, KOLKATA

ACKNOWLEDGEMENT
First and foremost, I would like to thank and express my gratitude to Religare Securities Limited which is a leading organization in Stock & Commodity trading, for giving me the opportunity to work in their esteemed organization. I express my sincere gratitude to my faculty guide Mr. SUJIT MUKHERJEE of BHAVANS INSTITUTE OF MANAGEMENT SCIENCE Kolkata, for helping me and providing me with useful information. Interacting with him I learnt basics of the security and technical analysis and I am sure the knowledge imparted will go a long way in enriching my career. I would also like to thank Mr. Subarno Saha ,Branch manager , Religare Securities ltd South City Branch for providing me this wonderful opportunity to undergo my summer internship in their division. Along with my mentor, I would like to give my sincere thanks to my project guide Mr. Niladri Sengupta. The success of this project also depends on the encouragement and guidelines provided by him. I take this opportunity to express my gratitude for all the opportunities, time and help he gave me.

Big thanks to BHAVANS INSTITUTE OF MANAGEMENT SCIENCE for providing me with adequate knowledge for the successful completion of this project. I would also like to thank all friends, seniors and other faculty member of the institute who helped me in some way or the other in completing the project. Last but not the least I would like to thank my family without whose support and motivation this project could not have been completed.

Table of content
SL. NO
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.
3

TITLE
Executive Summary Industry Profile Company Profile Organization structure Religare Joint venture Religare Diversification Competitor Services offered to customers Product SWOT STP Technology used Religare Proposal Consumer behavior Objective Methodology Introduction to stock market BSE Indices S&P CNX (NIFTY)

Page No
4 7 8 12 13 14 16 18 19 21 23 24 24 25 26 27 28 30 33

20. 21. 22. 23. 24.

INDICES NSE INDEX as on 16th September BSE INDEX as on 16th September ANNEXTURE REFERENCE

34 36 38 40 57

Executive Summary
This training has been the simulation of the real life situations in the corporate world. It has added value to the concepts learnt inside the four walls of our campus. After all, being in the textbooks for the last few years no one wasnt prepared for anything like this. Concept learned in the classroom, information got about the corporate or even the best of the books of management cannot compensate the first hand working experience gone through. Religare Securities Limited which deals in securities, it has added new real life learning as in how to deal with customers, how to talk with them, corporate ethics etc. A thorough interaction with the consumers about different aspects like reason for investment, risk and return factor and why indices etc, enabled to gain idea as to why they are using them and for what purpose. The interaction with consumers gave the opportunity to understand their preference and they reason for their selection? As the company deals in shares and securities, making of the client essentially depends on the sense of familiarity and trusts that branding can create with customers .Analysis was conducted on whether the company is able to provide what it promises to its client or is providing more then what it promises, at the same time client behavior towards the product and service offered to them was also looked upon.
4

This project will envision about the stock market and its indices in general. The objective of my project is to understand the Importance of indices in the equity market along with selling financial services. This project has been a great learning experience; at the same time it gave enough scope to implement ones ability. The whole project can be divided into two parts: First part of the project portrait an image of Religare as a company showing its venture capital and types of product offered by them. It also gave an insight about the importance of Demat account which is necessary for dealing in stock market and dealing in the indices. The charges (Brokerage plans) for trading in the Religare securities limited and different competitors has also been discussed. Second part of the project give an insight about the stock market, when it all started and the importance of Indices in the broking industry as well as in the concern economy along with this it also shows how indices work, what are the uses of indices, why is it necessary at all. It also throw some light on the different methods used in computing the indices along with type of method used for computing Sensex and Nifty. This report is purely based on whatever learned and gathered through internet and practical work.

Work done at Religare


As an intern, I have carried out research to track different variables for different financial companies and Religare has the edge over most of the companies. I went for the field work, spoke to customers and tracked their investment pattern to help them suggest the kind of financial product they should use according to their risk appetite. Adding to this, I have been communicating with different types of customers through various media, including client visits and tele calling who fall under the space for this project. My job there was to advise the client to take the suitable products offered by the company which suit them the best, in order to make investing easier for them. I have also worked as a part of sales force of the company and sold De-mat account. I have been talking to existing and potential clients of the company over the phone, asking for an appointment following which there will be client visit. In the visit the main focus would be to convince the clients to do business with the company and telling them about the benefits provided by the company. I have concentrated on existing as well as prospect clients trying to know their opinion about their association with different financial firms. Interaction with the clients helped to know the image of the company in the minds of the customers.

INDUSTRY PROFILE
A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialization of his holdings and transferring securities. There are two depositories operating in India i.e. NSDL & CDSL NSDL The first depository in India established in August 1996 and promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialized form in the Indian capital market CDSL Bombay Stock Exchange Limited (BSE) promoted CDSL jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank. CDSL was set up with the objective of providing convenient, dependable and secure depository services at affordable cost to all market participants. Some of the important milestones of CDSL system are:

CDSL received the certificate of commencement of business from SEBI in February 1999. Settlement of trades in the demat mode through BOI Shareholding Limited, the clearing house of BSE, started in July1999.All leading stock exchanges like the National Stock Exchange, Calcutta Stock Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmedabad, etc have established connectivity with CDSL.

COMPANY PROFILE
Religare is a financial services company in India, offering a wide range of financial products and services targeted at retail investors, high net worth individuals and corporate and institutional clients. It is promoted by the promoters of Ranbaxy Laboratories Limited. As on September 30, 2007 it operated from 6 regional offices and 40 sub-regional offices and had presence in 392 cities and towns controlling 1,217 locations managed by it and its Business Associates all over India, as well as a representative office in London. While the majority of offices provide the full complement of services, it also has dedicated offices for its investment banking, institutional brokerage, portfolio management services and priority client services. The company has divided its product and service offering under three broad client interface categories: Retail Spectrum, Wealth Spectrum and Institutional Spectrum. Retail Spectrum covers equity brokerage services, commodity brokerage services, personal financial services (financial planning for the retail investor, including the distribution of mutual funds, savings products, life insurance and initial public offerings (IPOs) and personal credit (personal loans services (PLS) and loans against shares (LAS). Historically, the service offered in this spectrum has been the most substantial part of its business. Retail Spectrum services in India are being offered through
8

a network of 1,217 Business Locations spread across 392 cities and towns and also through our online platform, www.religareonline.com, which is being developed as an integrated portal to offer financial and other services. Business Locations include intermediaries, or its Business Associates, who deliver a standard quality of service offering on the basis of a pre-determined revenue sharing ratio for the business generated through them. Retail Spectrum focuses on clients who keep less than Rs. 2.5 million on a continuing basis, in the form of either equity trading account margin, mutual fund investment, portfolio management investments or insurance premiums paid up. It has also increased its local commodity locations (or mandis) from 42 as of March 31, 2007 to 50 as of September 30, 2007 in order to expand retail commodity brokerage services. Wealth Spectrum covers products and services which are geared to service high net worth individuals and provide wealth advisory services (on an asset allocation model), PMS (discretionary equity investments), priority client equity services (non-discretionary equity trading services), art initiatives (an art fund which we intend shortly to launch as an investment diversification product) and international equity investment advisory services. The firm has entered into an exclusive arrangement with Wall Street Electronic, Inc., a New York broker-dealer, to give Indian clients access through it to U.S. markets. Wealth Spectrum focuses on clients who keep at least Rs. 2.5 million on a continuing basis or more in the form of equity trading account margins, mutual fund investments, portfolio management investment or insurance premiums paid up. Institutional Spectrum covers products and services which cater under one service offering to corporate and institutional clients, including domestic mutual funds, FIIs, banks and corporate customers. The Institutional Spectrum
9

provides services to the institutional investor community through institutional brokerage and investment banking services. We also link corporate clients with a transaction advisory group, which consists of account managers through whom institutional clients are able to access the full range of our services.

VISION
"To be the leading emerging markets financial services group driven by

innovation, delivering superior value for all stakeholders globally". MISSION


PROVIDING COMPLETE FINANCIAL CARE DRIVEN BY THE CORE VALUES OF TRANSPERANCY AND DILIGENCE

BRAND ESSENCE

Core brand essence is Diligence and Religare is driven by ethical and Dynamic processes for wealth creation

DIRECTORS OF RELIGARE SECURITIES LTD

CHAIRMAN:- MR. HARPAL SINGH MANAGING DIRECTOR:- MR. SUNIL GODHWANI DIRECTOR:- MR. VINOD KUMAR KAUL DIRECTOR:- MR. MALVINDER MOHAN SINGH DIRECTOR: MR. SHIVENDER MOHAN SINGH 10

RELIGARE SECURITIES LTD


Member of National stock exchange of India and Bombay stock exchange of India and depository participant with national securities depository limited (NSDL) and central depository services limited (CDSL). A SEBI approved portfolio manager. RSL provides platform to all segments of investors to leverage the immense opportunity offered by equity investing in India either on their own or through managed funds in portfolio management. The A.R.N NO. Of Religare securities limited are 33764. The A.R.N NO. It is required by the brokers who deal on behalf of the investors or sell the mutual funds of different companies present in the market.

THE RELIGARE EDGE


Diverse offerings Dynamic management team State of the art technology Vast distribution and reach Robust brand recognition
11

Synergistic partnerships Innovative initiatives Pan India footprint Powerful research and analytics supported by a pool of highly skilled research analysts Ethical business practices Single window for all investment needs through your unique CRN

Organization structure

12

RELIGARES JOINT VENTURES

AEGON RELIGARE LIFE INSURANCE

RELIGARE MACQUARIE WEALTH MANAGEMENT COMPANY

VISTAAR RELIGARE- THE FILM FUND

MILESTONE RELIGARE-PRIVATE EQUITY FUND GROUP COMPANIES OF RELIGARE

FORTIS HEALTHCARE LTD

13

SUPER RELIGARE LABORATORIES LTD

RELIGARE WELLNESS LTD.

RELIGARE TECHNOVA LTD.

Religare diversification
Religare Finvest Limited
Lending and Distribution business

Religare Finance Ltd.


Capital Market Financing

Religare - Milestone
JV with Milestone Capital to manage a healthcare and education fund

Vistaar Religare Capital Advisors Ltd.


JV with Vistaar Entertainment Ventures for film fund India's first ever film fund

Religare Insurance Broking Limited


Life Insurance Broking Business
14

Non-Life Insurance Broking Business

Religare Arts Initiative Limited


Business of Art Art Gallery Art Advisory

Religare Macquarie Wealth Mgmt. Ltd.


JV with Macquarie for Wealth Management Business

Religare Venture Capital Limited


Private Equity and Investment Manager

Religare Capital Markets Limited


PE and M&A Advisory Institutional Broking Investment Banking

Religare AMC Limited


Asset Management Business Portfolio Management

Religare Commodities Limited


Commodity Broking Business

15

AEGON Religare Life Insurance Co. Ltd.


Life Insurance Company JV with Aegon(26%) Religare (44%), and Bennett & Coleman (30%)

Religare Securities Limited


Retail Equity Broking Online Investment Portal Depository Services

COMPETITORS
There are several financial securities companies playing their roles in Indian equity market but Religare faces competition from these few companies.

INDIA BULLS: They are fast in implementation of orders and real-time


quotes. Good rate of brokerage is their plus points, over and above Relationship Manager Responsiveness. Receiving funds from them is the worst part of their customer Service. They do not care to reply to your queries, complaints and client instructions

KOTAK SECURITIES: Kotak Securities are generally good, but they do not
allow more than 25 scripts at a time. You have to shut down one screen to open the other. The computer programme is a bit more cumbersome than others. Brokerage
16

rate is higher. No special benefit in having online trading a/c. with them. However, their Biggest plus point is daily Trading Calls. Their batting average is higher.

HDFC SECURITIES: HDFC securities are good as we have banking a/c with
them and the payment gateway enables immediate transfer of funds either way. Order placement for buy or sell is time consuming as it takes longer time compared to other Online trading brokers . Excellent security feature of a bank is the greatest safety for dealing with them. DP charges are higher. It looks into the bank a/c. balance before Placing purchase orders . That way it saves on interest on funds not used till order is executed.

ICICI DIRECT: ICICI direct is par excellence compared to others except that
they do not provide Online Real time TICKER Trading. If this feature is enabled, then nobody could beat it the most user friendly company . All facilities of trading in equities, MFs and now Post Office Savings are a dream of investor of any category. However, the order execution is a weak link in their system. Perhaps huge number of customers accessing their servers slows down the operations. May be they can think of having Mirror Sites or similar to reduce the burden on limited access. It needs funds earmarked for trading from the savings/current a/c held with the bank.

SHARE KHAN: Share khan is an Intuitive Trading place to deal in shares:


both cash and derivatives. You can go on adding scripts and customize your trading. All de-mat data and buying selling obligations etc are available on the report screen.
17

Envisaged Group Structure RELIGAREs

18

PRODUCTS
19

Equity

and derivatives: Trading platform for equities and equity

derivatives on NSE and BSE- the Company has a reach of over 1500 locations in the country to cater to retail and high net worth individuals. The branches constitute of self-owned hubs and franchise/sub broker through whom the business is sourced.

Commodities: Trading platform for commodities on NCDEX and MCXCommodity trading Facility is provided to all the clients at all the centers and location. The company is planning to establish itself as a leading research centre for commodities market in the country.

Distribution: Distribution of retail finance products Mutual Funds and IPOs.


The group is empanelled with all the Fund Houses in the country to sell their Mutual Fund and NFOs using the retail network. IPOs selling is undertaking from all the branches of the company. Portfolio Management Service (PMS): The share company takes a lump sum amount from their customers and trade with that money in their own account by the help of a knowledgeable and experienced fund manager.

Investment Banking: An Investment Bank is a financial institution that deals


with raising capital, trading in securities and managing corporate mergers and acquisitions. Investment banks profit from companies and governments by raising money through issuing and selling securities in the capital markets (both equity, bond) and insuring bonds (selling credit default swaps), as well as providing advice on transactions such as mergers and acquisitions. At Religare Securities Ltd, Investment Banking business is dedicated to providing corporations, entrepreneurs and investors, the highest quality independent financial advice and transaction execution.
20

Insurance (ULIP): Unit linked insurance plan (ULIP) is life insurance solution
that provides for the benefits of risk protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained known as Net Asset Value (NAV).The policy value at any time varies according to the value of the underlying assets at the time. In a ULIP, the invested amount of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund. A Unit is the component of the Fund in a Unit Linked Insurance Policy. The returns in a ULIP depend upon the performance of the fund in the capital market.

Loan: A Loan is a type of debt. It entails the redistribution of financial assets over
time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount.

Financial advisory services: Investment and trading advisory services to its


clients based on technical, fundamental and market research- The Company has one of the best fundamental research and technical analysis teams in the company. It releases reports based on fundamental research of industries, sectors, companies and individual stock to our clients on a basis. The technical research team gives the clients recommendations using charting tools like Falcon and Meta stock. Comprehensive reports on volume breakouts, delivery reports and F&O open interest positions are given to all the clients.

21

SWOT OF RELIGARE SECURITIES LTD(RSL)


Strengths:
No annual maintenance charge for online broking services Diverse portfolio under one roof Offer one of the lowest brokerage Best equity research team No Stamp duty Company having young management team which consists of very talented and

knowledge professionals from different fields

Highly user friendly trading website with full of intelligent tools Company has innovative products and services Company is unaffected in this global recession which shows companys never say die sprits. It means company is armed with proper resources to fight any adverse situation Companys research team provides tremendous research calls to their

clients which almost hits and generates level of satisfaction to clients

Weakness:
Website is not updated Investors are not completely aware of Religare Securities Limited, so the brand value of the company not yet created

22

The market share of the company in commodity and equity market in terms of turnover is not significant Customers are not satisfied irresponsibility of the RM

OPPORTUNITY:
Religare is coming up with their own Banking Religare is changing working culture drastically which might lead more satisfied customers and employees The growth of capital market is very high. Investors are now ready to invest their money in this market because the return is much higher compare to other place for investment, so they are ready to bear risk factor associated with it. It means volume will increase year by year in this sector

Threats:
Cut throat competitions Awareness of the company is still not there in public. High volatility in the market

23

Segmentation, Targeting and Positioning


Segmentation:
Branch: South City Reason for choosing south city as the branch Potential New entrance Existing investor Brand switcher opportunity

Targeting:
High middle class income people Posh resident near by which will bring huge potential customer

Positioning:
Positioning the branch and the brand as the best alternative available there Offering the mix of all the financial services excluding personal, home and education loan
24

TECHNOLOGY
Odin , used for trading purpose LD, back office data entry FAST TRADE , used for trading purpose AXIS, used for back office purpose

RELIGARE PROPOSAL

No DP a/c opening charges


Trading a/c opening charges 500

Free sms alert facility Free technical calls provided Online and offline facility No charges for courier services
Brokerage 0.015% as intraday basis Brokerage 0.15% as delivery basis

No DP incoming charges
Online and offline transaction confirmation everyday

Full back office support


25

Special technical person support


Full guidance by dealer and managers

Account opening within 3 days


15. T+15 day facility

CONSUMER BEHAVIOR
The consumer want to invest with a long term strategy rather than short term in equity market

As silver is rising everyone wants to work in silver

Consumer dont want to keep huge money as margin

Many consumers are still waiting for another correction to happen in the market at that time only they will invest

26

OBJECTIVES
THE RELIGARE SEURITIES LIMITED is a share trading firm and objective of this project is to understand the importance of Indices in equity market. The training also include making public aware of the share trading, de mat account and selling financial services. The analysis of different indices and the method of constructing those indexes is also the part of the project. The type of product and services offered by Religare is also being emphasized upon.

Analysis of the various Indices To improve customer acquisition and retention To know the most prominent types of indices in India Mapping up potential customers for Religare securities ltd

27

METHODOLOGY
Collection of data is through Primary Research and Secondary Research. Primary Research: Primary research includes qualitative research, in which
direct approach will be used; one of the method will be interview Telephonic interviewing: This method will include calling a number of samples, and asking them a series of questions, about their interests in investment and trading. Here, no fixed questionnaire was prepared, samples were questioned according to their profile Personal interviewing: This method includes different ways of interviewing respondents face to face at their place. At first the respondent would be asked about their investment and then the conversation would continue according to their requirement which emerge during the interview

Secondary Research: There are various ways of collection of secondary data,


in this project intranet and internet method is being used

28

Intranet : information regarding the various financial services like equity, commodity, mutual the internal website of Religare

funds, portfolio management services,

insurance etc and information about the company was gather through Internet database: information accessed and searched on the internet, which will help to locate proper information about the Market and the Indices

Introduction to stock market


Its ironical that something as huge as a stock market which should be stable

as it represents the economy of a nation, is actually extremely volatile since it is driven more by the sentiments of the people Stock Market is a place where the stocks of a listed company are traded. A single figure that sums up the overall performance of the market on a daily basis is the Stock Index. A good Stock Index captures the movement of the well diversified and highly liquid stocks. For a lay man it is the pulse rate of the economy. Index movements reflect the changing expectations of the stock
29

market about future dividends of the corporate sector. The index is calculated by finding the weighted average of the prices of the most actively traded companies in the market, where the weights are generally in proportion to the market capitalization of the company. A stock index is generally a portfolio of stocks, bonds or other kinds of investments which are used to represent either segments of an exchange or the whole exchange. One of the most common ways to understand a stock index is to have a look at the composition of the stocks it represents. Generally, the set of rules require the stocks to satisfy certain criteria, such that.

All the investments in the index are subject to selection Includes calculations and rules for weighting of the index components Provides specific instructions for adjustments to maintain consistency

But when and where did it all started?


Stock Exchanges as a centre for trading were established as early as the 16th century. In Antwerp, a major financial hub in Belgium, traders gathered together in 1531 to speculate in shares and commodities. This was the world's first Stock Exchange. London and Paris set up Exchanges sometime near the end of the 17th century. Close to hundred years later, in 1792, the New York Stock Exchange (NYSE) was established, which is still one of the worlds most powerful exchanges today. The reason for establishment was primarily the need for financing businesses and for providing returns for the finances. In India, the Stock Exchange, Mumbai, was established in 1875 as "The Native Share and Stockbrokers Association" (a voluntary non-profit making association) and is now popularly known as the Bombay Stock Exchange (BSE). The other major exchange is the National Stock Exchange of India Limited (NSE) and was incorporated in November 1992. Combined the two trading zones are responsible for 99.9% of the trading done in India. Types of Indexes available:30

Broad-Market Index: This consists of all the large, liquid stocks of the

country and becomes the benchmark for the entire capital market of the country. An example for this is the S&P CNX 500
Specialized Index: We can either have Industry or Sector specific Index for any

particular sector of the economy which then serves as the benchmark for that particular industry or we can have an index for the highly liquid stocks Taking an example for an industry specific index we have the S&P Banking Index which is a capitalization-weighted index of 26 domestic equities traded on the New York Stock exchange and NASDAQ, the stocks in the Index are high-capitalization stocks representing a sector of the S&P 500. Similarly, The S&P CNX Nifty is a relevant example for an index composed of highly liquid stocks.

BSE INDICES

For the premier stock exchange that pioneered the securities transaction business in India, over a century of experience is a proud achievement. A lot has changed since 1875 when 318 persons by paying a then princely amount of Re. 1,
31

became members of what today is called Bombay Stock Exchange Limited (BSE).Over the decades, the stock market in the country has passed through good and bad periods. The journey in the 20th century has not been an easy one. Till the decade of eighties, there was no measure or scale that could precisely measure the various ups and downs in the Indian stock market. BSE, in 1986, came out with a Stock IndexSENSEX- that subsequently became the barometer of the Indian stock market. The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE National Index (Base: 1983-84 = 100). It comprised 100 stocks listed at five major stock exchanges in India - Mumbai, Calcutta, Delhi, Ahmedabad and Madras. The BSE National Index was renamed BSE-100 Index from October 14, 1996 and since then, it is being calculated taking into consideration only the prices of stocks listed at BSE. BSE launched the dollar-linked version of BSE-100 index on May 22, 2006. SENSEX today is widely reported in both domestic and international markets through print as well as electronic media. It is scientifically designed and is based on globally accepted construction and review methodology. With a view to provide a better representation of the increasing number of listed companies, larger market capitalization and the new industry sectors, BSE launched on 27th May, 1994 two new index series viz., the 'BSE-200' and the 'DOLLEX-200'. Since then, BSE has come a long way in attuning itself to the varied needs of investors and market participants. In order to fulfill the need for still broader, segment-specific and sector-specific indices, BSE has continuously been increasing the range of its indices. BSE-500 Index and 5 sectoral indices were launched in 1999. In 2001, BSE launched BSE-PSU Index, DOLLEX-30 and the country's first free-float based index - the BSE TECk Index. . Since September 1, 2003, SENSEX is being calculated on a free-float market capitalization methodology. The 'free-float market capitalization-weighted' methodology is a widely followed index construction methodology on which majority of global equity indices are based; all major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the free-float methodology.
32

Right from early nineties, the stock market witnessed heightened activity in terms of various bull and bear runs. In the late nineties, the Indian market witnessed a huge frenzy in the 'TMT' sectors. More recently, real estate caught the fancy of the investors. SENSEX has captured all these happenings in the most judicious manner. One can identify the booms and busts of the Indian equity market through SENSEX. As the oldest index in the country, it provides the time series data over a fairly long period of time (from 1979 onwards). Small wonder, the SENSEX has become one of the most prominent brands in the country. As of 21 April 2011, the market capitalization of SENSEX was about billion (US$348 billion). 29,733 billion (US$660 billion) (42.34% of market capitalization of BSE), while its free-float market capitalization was 15,690

BSE disseminates information on the Price-Earnings Ratio, the Price to Book Value Ratio and the Dividend Yield Percentage on day-to-day basis of all its major indices. The values of all BSE indices are updated on real time basis during market hours and displayed through the BOLT system, BSE website and news wire agencies. All BSE Indices are reviewed periodically by the BSE Index Committee. This Committee which comprises eminent independent finance professionals frames the broad policy guidelines for the development and maintenance of all BSE indices. The BSE Index Cell carries out the day-to-day maintenance of all indices and conducts research on development of new indices. Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the SENSEX has over the years become one of the most prominent brands in the country.

33

S&P CNX Nifty


The Standard & Poor's CRISIL NSE Index 50 or S&P CNX Nifty nicknamed Nifty 50 or simply Nifty (NSE:NSEI),is the leading index for large companies on the National Stock Exchange of India. The Nifty is a well diversified 50 stock index accounting for 23 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds. Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon the index as a core product. IISL has a marketing and licensing agreement with Standard & Poor's. The S&P CNX Nifty covers 23 sectors of the Indian economy and offers investment managers exposure to the Indian market in one portfolio. The S&P CNX Nifty stocks represent about 60% of the total market capitalization of the National Stock Exchange (NSE). The index is a free float market capitalization weighted index. From inception, the index used full market capitalization as weight assigned to different constituents. From June 26, 2009, the index is computed based on free float methodology. As of November 2010, top four scrips in the index (Reliance Industries, Infosys Technologies, ICICI Bank and Larsen &

34

Toubro) account for about one third of the weight in the index whereas the top eight scrips account for about half the weightage in the index. The base period for the S&P CNX Nifty index is November 3, 1995, which marked the completion of one year of operations of NSE's Capital Market Segment. The base value of the index has been set at 1000, and a base capital of Rs 2.06 trillion The S&P CNX Nifty Index was developed by Ajay Shah and Susan Thomas. The components of the Nifty 50 represent 77% of all the trading volume on the NSE and 60% of the total market capitalization. Criteria for inclusion of Stock in Nifty50

Average market capitalization of Rs.5, 000 million or more during the last six months Liquidity: Cost of transaction (impact cost) of less than 0.75% for more than 90% of trades, over six months
At least 12% floating stock (not held by promoters of the company or their associates)

Indices
The Index SENSEX as the benchmark index of the Indian Capital Markets with wide acceptance among individual investors, institutional investors, foreign investors and fund managers.The objectives of the index are:
To measure market movements Given its long history and its wide

acceptance, no other index matches the SENSEX in reflecting market movements and sentiments. SENSEX is widely used to describe the mood in the Indian Stock markets
Benchmark for funds performance The inclusion of blue chip companies

and the wide and balanced industry representation in the SENSEX makes it the ideal benchmark for fund managers to compare the performance of their funds

35

For index based derivative products Institutional investors, money

managers and small investors all refer to the SENSEX for their specific purposes The SENSEX is in effect the proxy for the Indian stock markets. The country's first derivative product i.e. Index-Futures was launched on SENSEX However, the market index is a double edged sword. Because the index is influenced by expectations of the future performance of the stocks, it leads to a self fulfilling prophecy. Suppose an investor thinks that the stock of the company is going to go down and this feeling prevails across the market then everyone would want to get out of the companys stock. This will automatically lead to the stock prices crashing. The Stock Index can often also act as a trigger to herd mentality. Any downturn in the market would be reinforced by the collective action of the investors to hedge against any losses and get out of the market. This would further depress the market. This herd mentality is often used to the advantage of speculators. The speculator buys long thus creating waves in the market that the stock he is investing in is hot. Thus everyone would follow suit giving the speculator a good short term profit margin. The stock index is often more a representation of investors perceptions (noise element) rather than real news. The dot com bubble of 2000 is a case in point. There was a rush of investment in anything even remotely connected with information-technology driving up the stock prices way above what they should have been according to their P/E ratios. Thus it can be seen that though the index is a popular investors guide, it is riddled with imperfections which can often confuse rather than help. The index popularly used in India is the NSE CNX Nifty. There are processes afoot to reduce the pure noise element and speculative margin of the index. The basic problem arises due to imperfect information reflected by the inclusion of illiquid stocks in the calculation of the index. Illiquid stock is one which is not actively traded in the market or has been lying dormant for a long time. Inclusion of such stocks leads to problems of stale prices, bid-ask bounce and ease in manipulation.
36

Bid-ask bounce: Illiquid stocks have a wide bid-ask spread. Thus even when no news is breaking, when a stock price is not changing, the `bid-ask bounce' is about prices bouncing up and down between bid and ask. Such changes are spurious in nature. Stale prices: A stock index is supposed to represent the state of the stock market at the closing time (3:30 pm in NSE) on a particular day. However the last traded price of an illiquid stock (if included in the index) may be even a week old thus distorting the index. Hence to make an index useful, there has to be continuous evaluation of the stocks listed and any stock which remains inactive for a period of time should be de-listed or removed from the index. A prudent investor is one who exercises caution while interpreting the market index, taking into account all its inconsistencies.

Findings
NSE INDICES as on 16th SEPTEMBER, 2011

37

Index P r e v C l o s e
S&P CNX NIFTY CNX NIFTY JUNIOR CNX IT BANK NIFTY INDIA VIX CNX 100 S&P CNX DEFTY S&P CNX 500 CNX MIDCAP NIFTY MIDCAP 50 CNX INFRA CNX 38 REALTY CNX ENERGY CNX

Open

High

Low

Last

% Change

5075.70

5123.35

5143.60

5068.10

5114.75

0.77

10147.65 10153.95 10218.60 10123.05 10194.30

0.46

5550.15 9660.35

5620.35 9744.65

5620.35 9798.75

5515.50 9590.15

5533.85 9729.65

-0.29 0.72

30.79 4995.40 3692.55

30.79 5035.05 3742.45

30.79 5055.15 3757.65

28.40 4988.40 3698.20

29.38 5031.30 3734.60

-4.57 0.72 1.14

4097.00

4123.10

4136.00

4093.55

4124.15

0.66

7340.40

7341.60

7385.25

7320.25

7365.65

0.34

2197.85

2205.90

2212.95

2189.00

2201.35

0.16

2739.10

2753.10

2771.80

2737.95

2766.35

0.99

239.70

241.05

243.10

238.25

240.95

0.52

7879.20

8000.15

8015.10

7918.35

7982.80

1.31

10152.20 10158.30 10197.15 10096.30 10124.05

-0.28

CNX MNC CNX PHARMA

4785.00

4781.60

4804.25

4767.80

4782.50

-0.05

4543.85

4545.35

4574.85

4533.10

4573.50

0.65

BSE Indices3124.65 3162.20 3121.70 3141.25 2011 as on 16th SEPTEMBER 1.59 CNX PSE 3091.95
CNX PSU BANK CNX SERVICE Category/Index Broad SENSEX MIDCAP SMLCAP BSE-100 BSE-200 BSE-500 Thematic SHARIAH 50 Investment Strategy BSE IPO DOLLEX-30 DOLLEX-100 DOLLEX-200 Sectoral PSU AUTO OIL&GAS CG POWER METAL HC 7,700.51 8,777.88 8,875.70 7,791.68 8,886.36 8,907.87 7,700.51 8,768.95 8,779.51 7,737.31 8,838.49 8,809.61 12,114.58 2,199.69 12,281.08 5,978.86 7,635.26 8,733.52 8,729.55 12,005.94 2,183.13 12,195.25 5,950.57 102.05 104.97 80.06 108.64 16.56 85.83 28.29 1.34 1.20 0.92 0.90 0.76 0.70 0.48 1,637.18 2,942.53 1,940.78 736.41 1,647.56 2,963.32 1,954.83 741.67 1,632.60 2,924.48 1,930.90 733.17 1,637.11 2,933.08 1,937.39 735.59 1,633.93 2,912.99 1,925.54 731.28 3.18 20.09 11.85 4.31 0.19 0.69 0.62 0.59 1,116.91 1,122.81 1,112.72 1,115.06 1,109.92 5.14 0.46 17,047.73 17,122.54 16,889.58 6,366.98 7,215.49 8,923.49 2,103.88 6,619.75 6,410.39 7,273.43 8,963.53 2,113.13 6,647.01 6,353.66 7,207.99 8,852.85 2,088.67 6,575.63 16,970.44 6,372.63 7,209.95 8,892.00 2,097.80 6,602.44 16,876.54 6,367.04 7,213.76 8,853.40 2,089.23 6,578.21 93.90 5.59 -3.81 38.60 8.57 24.23 0.56 0.09 -0.05 0.44 0.41 0.37 3218.65 3232.00 3267.30 3196.95 3251.35 1.02

6009.30 6067.50 6093.90 5986.95 6044.80 0.59 Open High Low Current Value Previous Close Change(Pts) Change(%)

12,079.70 12,182.44 12,035.87 2,189.31 2,212.65 2,189.31

12,300.69 12,384.54 12,236.61 5,957.01 5,993.39 5,945.61

39

REALTY BANKEX CD IT FMCG TECk Volatility Index

1,786.33

1,801.46

1,770.63

1,785.81 11,081.21 6,574.06 5,127.06 3,967.80 3,205.40

1,779.38 11,062.05 6,569.56 5,145.76 3,982.33 3,217.28

6.43 19.16 4.50 -18.70 -14.53 -11.88

0.36 0.17 0.07 -0.36 -0.36 -0.37

11,159.58 11,222.46 10,983.05 6,569.56 5,192.68 3,987.14 3,244.89 6,626.22 5,217.15 4,001.31 3,250.96 6,542.24 5,113.80 3,960.84 3,199.04

This data was last updated on Thursday, September 15, 2011

REALVOL1MTH REALVOL2MTH REALVOL3MTH

--

--

--

23.80

24.12

-0.32

-1.33

--

--

--

21.28

21.39

-0.11

-0.51

--

--

--

23.80

24.12

-0.32

-1.33

ANNEXTURE
QUESTIONNAIER
40

Q1. Are you aware of online share trading? a. yes b. no

Q2. In which of these Financial Instruments do you invest into? a. Shares b. Mutual Fund c. Bonds d. Derivatives

Q3. Heard about RELIGARE? a. yes b. no

Q4. Do you know about the facilities provided by RELIGARE? a. yes b. no

Q5. With which company do you have your DEMAT account? a. Religare b. ICICI Direct c. Kotak Mahindra d. India Bulls

e. Others(please specify)______________

Q6. Are you currently satisfied with your share trading? a. yes b. no

Q7. How often do you trade?


41

a. daily

b. weekly

c. monthly

d. yearly

Q8. What percentage of your earning do you invest in share trading? a. upto10% b. upto 20% c. upto 50% d. above 50%

Q9. Is broking firm is always risk free? a. yes b. no

Q10. What more facilities do you think you require with your DEMAT account? a. _______________________________________________ _______ b. _______________________________________________ _______ c. _______________________________________________ ________ d. _______________________________________________ ________

42

PREFERENCE OF INVESTMENT

Financial Instruments Shares Mutual Fund Bonds Derivatives 37 8 4 1

No. of Investors

43

derivatives bonds 2% 8%

mutual fund 16%

shares 74%

Interpretation:

This show that although the mutual funds market is on the rise yet, the most favored investments continues to be in the share market can definitely be increased.

44

45

Awareness of Online Trading


YES
45

NO
5

no 10%

yes 90%

yes

no

46

Interpretation:

With the increase in cyber education, the awareness towards online trading has increased by leaps and bounds. The awareness is expected to increase in internet education.

47

Awareness of RELIGARE as a Brand

YES 39

NO 11

48

YES NO

Interpretation: This chart shows that RELIGARE has a


reasonable amount of brand awareness in terms of a premier retail
49

stock broking company. The company to increase its market share over its competitors should further leverage its brand image.

50

Awareness of the facilities provided by RELIGARE

YES
42

NO
8

51

16%

84%
YES NO

Interpretation: although there is low brand equity among the


target audience yet, it is to be noted that the customers are not aware of the facilities provided by the company meaning thereby, that, the
52

company should concentrate towards promotional tools and increase its focus on product awareness rather than brand awareness.

53

DEMAT Account Market


BROKING FIRMS RELIGARE Securities ICICI Direct KOTAK Securities INDIA BULLS Others INVESTORS 11 12 4 10 13

54

26%

22%

20% 8%

24%

RELIGARE SECURITIES KOTAK SECURITIES OTHERS

ICICI DIRECT INDIA BULLS

Interpretation:-

This shows that even with sufficiently high brand equity, religare ranks second among the Demat account providers. This is probably because of two reasons : 1. Lack of promotion and unfocussed approach towards product awareness. 2. Non-transparent marketing policies of the company.
55

56

Satisfaction level among customers with current Broker


YES 46 NO 4

57

YES 92%

NO 8%
YES NO

58

Interpretation: This chart accentuates the fact that strategic


marketing, today , has gone beyond only meeting sales targets and generating profile volumes. It shows that all the competitors are are striving hard not only to woo the customers but also to make them brand loyal by generating customer satisfaction.

59

Trading

Frequency of Trading Daily Weekly Monthly Yearly

No. of Investments 26 13 5 6

60

6 5

26 13

DAILY MONTHLY

WEEKLY YEARLY

Interpretation: Maximum no. of investors engaged in daily


trade.

Percentage of Earning Invested in Share Trading

% of Earning Invested Upto 10% Upto 25% Upto 50%


61

No. of Invested 35 9 4

Above 50%

upto 25%

upto above 50% 50%

upto 10%
upto 10% upto 25% upto 50% above 50%

Interpretation: This shows that people invest only upto 10% of


there earnings in the stock market , again reiterating the volatile and non-transparent structure of the Indian stock market. Hence ,
62

effective and efficient steps should be under taken to woo the customers to invest more in the lucrative stock market.

63

Reference

www.religare.com www.religaresecurities.com www.nseindia.com www.bseindia.com www.stockmarketindian.com www.tradersedgeindia.com

64

65

66