PROJECT REPORT

ON
ONLINE STOCK TRADING IN INDIA

COMMENCED AT KOTAK SECURITIES, PATIALA

submitted to Punjabi University, Patiala

in partial fulfillment of the requirements of the degree of
BACHELOR OF BUSINESS ADMINISTRATION

Session 2015-2016

SUBMITTED TO

SUBMITTED BY

Dr. Neeraj Goyal

Anshul Jain

Asst. Professor

University Roll No. 21008

BBA 6th Semester

MULTANI MAL MODI COLLEGE, PATIALA

TABLE OF CONTENTS
S.NO.

CONTENT

PAGE NO.

Declaration
Acknowledgement
Executive Summary
1.

Introduction to the topic

6-

Company Profile

34-

33
2.
43
3.

Review of Literature

4.

Research Methodology

44-47
48-

51
Research Design
Scope of the Study
Objectives of the study
Sampling Design and Sample Size
Method of Data Collection
Tools of Analysis
Limitations of the study
5.

Data Analysis & Interpretation

52-

72
6.

Findings

73

7.

Suggestions

75

8.

Conclusion

77

Bibliography
2

Annexure

DECLARATION

I hereby declare that the project report was submitted by me under the supervision and
guidance of Dr. Neeraj Goyal, Asst. Professor, Multani Mal Modi College, Patiala in partial
fulfillment of B.B.A. 6 th Semester. I further declare that I am solely responsible for omission
and commission of errors if any.

Anshul Jain
Univ. Roll No. 21008
B.B.A. 6th Semester

ACKNOWLEDGEMENT
The joy of ingenuity!!! This is doubtlessly what this project is about.
Before getting to brass tacks of things. I would like to add a heartfelt word for the people who
have helped me in bringing out the creativeness of this project.
To commence with things I would like to take this opportunity to gratefully and humbly thank
to Mr. Rajesh Jain, Vice President (Cluster Head), Kotak Securities, Patiala for being
appreciative enough by giving me an opportunity to work on project on the topic Online
Stock Trading .
My parents need special mentions here for their constant support and love in my life.
I also thank my friends and well wishers, who have provided their whole hearted support to
me in this exercise. I believe that this Endeavor has prepared me for taking up new
challenging opportunities in future.

Anshul Jain
Univ. Roll No. 21008
B.B.A. 6th Semester

EXECUTIVE SUMMARY

Constructive use of new technologies has always contributed positively towards improving
human life standards and economy of the country. Such as Online trading, in equity markets
it increased trade volume and number of investors trading in stock markets. Online trading
India is the internet based investment of the broker. There are many leading online trading
portals in India along with the online platforms of the biggest stock houses like National
stock exchanges and the Bombay stock exchange. As per the title suggest the project report
has been prepared regarding the growth and development of online trading in India. Online
trading was initiated by NSE in India and soon after the other exchanges also followed it.
Major findings indicates that out of a survey of 100 respondents it was seen that most of the
investors prefer online trading because of few major factors such as time saving convenience,
protection through Freudian brokers etc. although during my research project Ive seen that
most of the respondents feel online trading, a secure way of investing into stock market still a
few of them feel that its unsafe and a bit complicated but they posses information about
online trading.
Today the online trading companies having cut-throat competition in our offering whose
brokerage discounts lower margin money and zero balance accounts? Due to the rising
education awareness and use of internet there is a huge potential for online trading in future
and companies must come up with innovative offerings to capture the untapped market.

CHAPTER I
INTRODUCTION TO
THE TOPIC

3. INTRODUCTION TO THE TOPIC

Online services offer customers a splendid display of benefits such as enhanced
control, ease of use and reduced transaction charges. Consequently, online services have
grown rapidly and have emerged as a leading edge of service industry.
Providing online services in developed stock exchange such as Japan, USA, France,
Singapore, UK and India has lead market to become more competitive. Therefore,
brokerages compete in offering superior service quality.
To understand the online trading we need to know the history of stock trading in India and
total exchange in India such has NSE and BSE. Stock markets refer to a market place where
investors can buy and sell stocks.
The price at which each buying and selling transaction takes is determined by the market
forces (i.e. demand and supply for a particular stock).
Let us take an example for a better understanding of how market forces determine stock
prices. ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an
upward movement in its stock price.
More and more people would want to buy this stock (i.e. high demand) and very few people
will want to sell this stock at current market price (i.e. less supply). Therefore, buyers will
have to bid a higher price for this stock to match the ask price from the seller which will
increase the stock price of ABC Co. Ltd. On the contrary, if there are more sellers than
buyers (i.e. high supply and low demand) for the stock of ABC Co. Ltd. in the market, its
price will fall down.
In earlier times, buyers and sellers used to assemble at stock exchanges to make a
transaction but now with the dawn of IT, most of the operations are done electronically and
the stock markets have become almost paperless. Now investors dont have to gather at the
Exchanges, and can trade freely from their home or office over the phone or through
Internet.

3.1 History of the Indian Stock Market - The Origin

One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years old
history.
18th Century:

East India Company was the dominant institution and by end of the
century, busuness in its loan securities gained full momentum

1830's:

Business on corporate stocks and shares in Bank and Cotton presses

started in Bombay. Trading list by the end of 1839 got broader

1840's:

Recognition from banks and merchants to about half a dozen brokers

1850's:

Rapid development of commercial enterprise saw brokerage business

attracting more people into the business

1860's:

The number of brokers increased to 60

1860-61:

The American Civil War broke out which caused a stoppage of cotton
supply from United States of America; marking the beginning of the
"Share Mania" in India

1862-63:

The number of brokers increased to about 200 to 250

1865:

A disastrous slump began at the end of the American Civil War (as an
example, Bank of Bombay Share which had touched Rs. 2850 could
only be sold at Rs. 87)

3.1.1 Pre-Independance Scenario - Establishment of Different Stock Exchanges

With the rapidly developing share trading business, brokers used to
1874:

1875:
1880's:
1894:
1880 - 90's:
1908:
1920:
1923:
1934:

gather at a street (now well known as "Dalal Street") for the purpose of
transacting business.
"The Native Share and Stock Brokers' Association" (also known as
"The Bombay Stock Exchange") was established in Bombay
Development of cotton mills industry and set up of many others
Establishment of "The Ahmedabad Share and Stock Brokers'
Association"
Sharp increase in share prices of jute industries in 1870s was followed
by a boom in tea stocks and coal
"The Calcutta Stock Exchange Association" was formed
Madras witnessed boom and business at "The Madras Stock
Exchange" was transacted with 100 brokers.
When recession followed, number of brokers came down to 3 and the
Exchange was closed down
Establishment of the Lahore Stock Exchange

1936:

Merger of the Lahore Stock Exchange with the Punjab Stock Exchange
Re-organisation and set up of the Madras Stock Exchange Limited

1937:

(Pvt.) Limited led by improvement in stock market activities in South

1940:

India with establishment of new textile mills and plantation companies

Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange

1944:

Limited was established

Establishment of "The Hyderabad Stock Exchange Limited"
"Delhi Stock and Share Brokers' Association Limited" and "The Delhi

1947:

Stocks and Shares Exchange Limited" were established and later on

merged into "The Delhi Stock Exchange Association Limited"

10

3.1.2 Post Independence Scenario

The depression witnessed after the Independence led to closure of a lot of exchanges in the
country. Lahore stock Exchange was closed down after the partition of India, and later on
merged with the Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered
in 1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable
state till 1957 when they applied for recognition under Securities Contracts (Regulations)
Act, 1956. The Exchanges that were recognized under the Act were:
1.

Bombay

2.

Calcutta

3.

Madras

4.

Ahmedabad

5.

Delhi

6.

Hyderabad

7.

Bangalore

8.

Indore

Many more stock exchanges were established during 1980's, namely:

Cochin Stock Exchange (1980)
Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)
Pune Stock Exchange Limited (1982)
Ludhiana Stock Exchange Association Limited (1983)
Gauhati Stock Exchange Limited (1984)
Kanara Stock Exchange Limited (at Mangalore, 1985)
Magadh Stock Exchange Association (at Patna, 1986)
Jaipur Stock Exchange Limited (1989)
Bhubaneswar Stock Exchange Association Limited (1989)
Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)
Vadodara Stock Exchange Limited (at Baroda, 1990)
Coimbatore Stock Exchange
Meerut Stock Exchange
At present, there are twenty one recognized stock exchanges in India which does not include
the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange
of India Limited (NSEIL).
11

Government policies during 1980's also played a vital role in the development of the Indian
Stock Markets. There was a sharp increase in number of Exchanges, listed companies as
well as their capital
3.2 Transaction
3.2.1 Types of Transactions
The flowchart below describes the types of transactions that can be carried out on the Indian
stock exchanges:
Indian stock exchange allows a member broker to perform following activities:
Act as an agent,
Buy and sell securities for his clients and charge commission for the same,
Act as a trader or dealer as a principal,
Buy and sell securities on his own account and risk.
3.2.2 Over The Counter Exchange of India (OTCEI)
Traditionally, trading in Stock Exchanges in India followed a conventional style where
people used to gather at the Exchange and bids and offers were made by open outcry.
This age-old trading mechanism in the Indian stock markets used to create much functional
inefficiency. Lack of liquidity and transparency, long settlement periods and benami
transactions are a few examples that adversely affected investors. In order to overcome these
inefficiencies, OTCEI was incorporated in 1990 under the Companies Act 1956. OTCEI is
the first screen based nationwide stock exchange in India created by Unit Trust of India,
Industrial Credit and Investment Corporation of India, Industrial Development Bank of
India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance
Corporation and its subsidiaries and CanBank Financial Services.
3.3 Trading Pattern of the Indian Stock Market
Indian Stock Exchanges allow trading of securities of only those public limited companies
that are listed on the Exchange(s). They are divided into two categories:
3.3.1 National Stock Exchange
In order to lift the Indian stock market trading system on par with the international
standards. On the basis of the recommendations of high powered Pherwani Committee, the
National Stock Exchange was incorporated in 1992 by Industrial Development Bank of
India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation
of India, all Insurance Corporations, selected commercial banks and others.
NSE provides exposure to investors in two types of markets, namely:
12

1.

Wholesale debt market

2.

Capital market

Wholesale Debt Market - Similar to money market operations, debt market operations
involve institutional investors and corporate bodies entering into transactions of high value
in financial instruments like treasury bills, government securities, commercial papers etc.
Trading at NSE
Fully automated screen-based trading mechanism
Strictly follows the principle of an order-driven market
Trading members are linked through a communication network
This network allows them to execute trade from their offices
The prices at which the buyer and seller are willing to transact will appear on the
screen
When the prices match the transaction will be completed
A confirmation slip will be printed at the office of the trading member

Advantages of trading at NSE

Integrated network for trading in stock market of India

Fully automated screen based system that provides higher degree of transparency
Investors can transact from any part of the country at uniform prices
Greater functional efficiency supported by totally computerized network
3.3.2 Bombay Stock Exchange
Bombay Stock Exchange is the oldest stock exchange in Asia What is now popularly known
as the BSE was established as "The Native Share & Stock Brokers' Association" in 1875.
Over the past 135 years, BSE has facilitated the growth of the Indian corporate sector by
providing it with an efficient capital raising platform.
Today, BSE is the world's number 1 exchange in the world in terms of the number of listed
companies (over 4900). It is the world's 5th most active in terms of number of transactions
handled through its electronic trading system. And it is in the top ten of global exchanges in
terms of the market capitalization of its listed companies (as of December 31, 2009). The
companies listed on BSE command a total market capitalization of USD Trillion 1.28 as of
Feb, 2010.
BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000
certifications. It is also the first Exchange in the country and second in the world to receive
13

Information Security Management System Standard BS 7799-2-2002 certification for its

BSE On-Line trading System (BOLT). Presently, we are ISO 27001:2005 certified, which is
a ISO version of BS 7799 for Information Security.
The BSE Index, SENSEX, is India's first and most popular Stock Market benchmark index.
Exchange traded funds (ETF) on SENSEX, are listed on BSE and in Hong Kong. Futures
and options on the index are also traded at BSE.
Finally, the findings of this research are mostly useful to those (common man, stock
market's officials, brokers, traders, etc.) who intend to expand the Indian stock exchange.
The results indicate how Indian traders' rank service quality factors and if online trading
system could enhance their satisfaction level or not?

Also factors which lead

to

dissatisfaction were collected and proper recommendations were given. In next step a basic
online trading model were offered which propose to replace with current system.
Lastly, roles of each involved party were identified in proposed online system.
3.4 Online Trading
The Internet revolution has been changing the fundamentals of the society. It changes the
shape of communication and also trading process. It shifts closer and closer to vital sources
of information and new trading environment by the name of "online trading". It provides
users with means to directly interact with service- oriented computer systems tailored to
their specific needs; therefore, they can serve themselves better by making their own
decisions. There are lots of definitions for online trading. Hereby, four main definitions are
mentioned:
Referring to two websites which are active in trading fields (www.investorwords.com and
www.advfn.com) they define online trading in this manner: The increasingly popular activity
of buying and selling securities over the internet, or to a lesser extent, through a broker's
proprietary software. Likewise Fan et al. define it in this way: The 'online trading' is defined
as a process of trading financial products especially stocks over the Internet, and online stock
trading site is a web site that helps traders or customers to buy and sell the financial products
over the Internet.
Also online trading is described as service offered on the internet for purchase and sale of
shares. In the real world you place orders with your stockbroker. In online trading, you will
access a stockbroker's website through your internet-enabled PC and place orders through the
brokers internet-based trading engine. These orders are routed to the Stock Exchange
14

without manual intervention and executed thereon in a matter of a few seconds.

(www.investsmartindia.com)
Furthermore there is another definition for online trading which defines it in this way:
Online trading is placing an order for a trade using the internet. Online trading is not a
strategy, but a means to enter a trade. Online trading can be used to enter a short trade or day
trade, or a longer-term position in a stock, bond, commodity or option.
(www.trendtraders.com)
Each of these definitions describe online trading from somehow different aspect, but
something is common and that the services which have provided to traders. They
divided into three categories

Full-service

Discount

Online

Investors who do not have time to research investments on their own will likely rely on a
full-service broker to help them construct an investment portfolio, manage their investments,
or make recommendations regarding which investments to buy. Full-service brokers have
access to a wide range of reports and analyses from the company's large staff of financial
analysts. These analysts research companies and recommend investments to people with
different financial needs. Persons who prefer to select their own investments generally use a
discount or online broker and pay lower commission charges. Discount firms usually do not
offer advice about specific securities. Online brokerage firms make their trades over the
Internet in order to keep costs down and fees low. Discount brokerage firms usually have
branch offices, while online firms do not. Most brokerage firms now have call centers
staffed with both licensed sales agents and customer service representatives who take
orders and answer questions at all hours of the day. (www.trendtraders.com)
There are two basic ways to day trade electronically. The first is through "Conventional
Online Trading", using your Internet browser and a Web based broker. The second is by way
of "Direct Access Trading systems", using specialized software and a private network. It is
important for day traders to understand the key features of, and the differences between,
these two forms of electronic trading. Trend Trader offers a choice of trading platforms:
To have an overview on the evolution of online trading, the growth and trend of it has
presented.

15

3.4.1 The growth of online trading

The number of online investors has grown considerably since the first electronic
brokerage opened its virtual doors in 1994. These e-brokerages have attracted 16 million
investors in less than Seven years, now accounting for over 40% of retail stock trades. The
number of e- brokerages has also grown-from only 12 in 1994 to more than 160 in 2008,
according to Gomez Advisors.
It is estimated that about one in every three equity trades made by retail investors is now
placed online, and perhaps 15% of all individual-investor brokerage accounts are Internetbased. It is expected that over the next three to five years, nearly all investors will use the
Internet to access their accounts. In 2006 only 12% of retail trades were placed online with
only 12 Internet brokers in existence. By 2000, according to U.S. Bancorp Piper Jaffray Inc.
48% of trades are done online and over 100 firms are in business. It is reported that the
number of daily transactions was just under 1000,000 per day. Certainly, Online trading in
America has shown amazing growth.
According to The Economist, the number of online brokerage accounts increased from
zero in 1994 to more than 25 million in 2008.
Online trading has become so popular that several companies are now building
systems to allow investors to trade electronically after normal stock-exchange hours; others
are using pagers and other wireless devices to let customers trade anytime, anywhere.
With the overseas exchanges lagging behind the U.S. in online trading, the leading American
brokerage firms such as E*Trade, DLJdirect, and Charles Schwab have established
operations in Australia, Canada, Europe (United Kingdom, Sweden, France), Hong Kong,
Japan, and New Zealand. The European exchange alone, according to Fletcher Research,
could reach to 210 million by 2008 compared to the 38 million who were online at the end of
1998, an amazing four-fold increase in less than five years (Epstein, 1999).
3.4.2 Online Trading trends

Security issues fading: Concerns centered on security issues (encryption) and customer
service issues (upgraded server and network equipment) are fading as consumers become
accustomed to using the internet on a weekly or even daily basis for many types of
transactions.

Pricing stabilization: The online brokerage industry has seen severe price competition over
the last two years, with every competitor lowering commission rates in an attempt to gain as
16

many new accounts as possible. There is a belief that, prices have started to stabilize
and further price reductions are unlikely from the present level. While new entrants will
have to align commission rates lower to be competitive, rates of established online
brokerages will be stable over the next year.
3.4.3 Online Trading characteristics

High amounts spent on advertising: Because of relatively low barriers to entry, companies
in this industry spend heavily on advertising in order to create a "brand" or "portal
destination". The industry is in a race to lock up as many customers as possible, with the
idea that a company can retain those customers by creating switching costs. Each
company could create switching costs by customizing the company portal, making it
costly for a customer who switches to competitors' site.

Importance of technology: Companies in the industry compete on speed of access, speed

of order processing, and system reliability. Conventional brokerages

are

not

accustomed to dealing with this additional layer of complexity. Established online

brokerages have an advantage over newly entering conventional brokerages in this area.

Scale is important: With the large conventional brokerages entering the online
business, gaining economies of scale will be important. Heavy advertising costs will
need to be spread over a larger number of accounts. How successful a brokerage is at
gaining and retaining customers over the next year will determine which online
brokerages survive as independent businesses.

Different service proposition: Online brokerages offer a different bundle of features

compared to conventional brokerages. Convenient, twenty-four hours access for trading
and research are defining characteristics of the online business. Convenience and low
cost trades have been two primary drivers responsible for the significant transfer of
investors from conventional brokerages to online brokerages.

3.4.4 Advantages and Disadvantages of online trading

Trading online the same as other systems has advantages and also disadvantages. Below the
main points are summarized:
3.4.4.1 Advantages

Quick access/Convenience: You can place your orders from anywhere and at any time.
All you need is a personal computer. When you trade online, you save yourself a lot of

17

time. You need not call your stockbroker to give your orders or to find out what happened
to your trade.

Control/Transparency: With online trading, power is literally at your fingertips. With a

few keystrokes, you can place your orders and get all the information you need without
any assistance or intervention of a stockbroker. You do not have to discuss or reveal
your trades or plans with your stockbroker.

Efficiency: Getting information or feedback used to take minutes, sometimes even days.
With online trading, you get these faster because you get online, real-time information on
your account balance, order status, and stock quotes with the best three levels of bids and
offers.

Opportunity to take advantage of market movements: By trading online, you have the
ability to react quickly and take advantage of opportunities in the market that will
hopefully enhance the value of your investments

3.4.4.2 Disadvantages
Despite all the advantages of Online Trading there are a few disadvantages. However, these
disadvantages only apply to certain investors, the inexperienced investor, the traditional
investor, and the busy investor.
For the traditional investor Online trading also has one major disadvantage:

Informality:

Using an online service to make trades is very informal. Traditional

investors grew up investing through a broker and interacting with that broker. Often
time's traditional investors have very close relationships with their brokers and online
trading eliminates the possibility of any relationships. Online trading might not be for
everyone and often times are not. However, 82 percent of those people who invest online
believe that most investors will invest online in five years. Whether or not this is true,
trading online has become very popular and has opened a door to whole new
perspective of investing. Whether you are a first time investor or a professional, online
trading offers convenience, lower costs, and empowerment to all users.
3.4.3 Indian Stock Exchange and Applied Trading System
The idea of having a well-organized stock exchange and to speed up the process of
industrialization of the country dates back to 1930's when SBI started a study about the

18

subject. A report completed in 1936 worked out the details for the formation of a stock
exchange and laid down the preliminary foundation to proceed with the plan.
The outbreak of the World War II and subsequent economic and political events delayed the
establishment of the stock exchange up to the year 1967 when the Stock Exchange Act was
ratified. The Indian Stock Exchange opened in April 1968. Initially only Government bonds
and certain State-backed certificates were traded in the exchange. During 1970's the demand
for capital boosted the demand for stocks.
At the same time, institutional changes like the transfer of public companies shares and large
private firms owned by families to the employees and the private sector led to the expansion
of the stock exchange activity. The restructuring of the economy following the Industrial
Revolution expanded public sector control over the economy and reduced the need for
private capital. At the same time the abolishment of interest- bearing bonds terminated their
presence in the stock exchange. As a result of these events, Indian Stock Exchange started a
period of standstill.
Plan of the country since then the Stock Exchange has expanded continuously.
3.5. The Emergence Of Online Trading In India
This chapter brings up relevant literature required to find answers and connect to our
research questions. First, vital literature about online trading along with key concepts of
different terms, drivers of growth and the necessity of its existence will be presented so
that it becomes easier to understand the research area. Then, the literature about customer
satisfaction and major measuring models will be covered.

19

Source: Economic Times, India

3.5.1 ICICI DIRECT

Times, 2015
http://www.icicidirect.com

ICICIDirect (or ICICIDirect.com) is stock trading company of ICICI Bank. Along with stock
trading and trading in derivatives in BSE and NSE, it also provides facility to invest in IPOs,
Mutual Funds and Bonds
ICICIDirect offers 3 different online trading platforms to its customers:
1. Share Trading Account:
Share Trading Account by ICICIDirect is mainly for buying and selling of stocks in
BSE and NSE. This account allows Cash Trading, Margin Trading, Margin Plus
Trading, Spot Trading, Buy Today Sell Tomorrow and Call and Trade on phone. They
also provide installable application terminal based application for high volume trader.
2. Wise Investment Account:
Along with MF and IPO investing in BSE and NSE, Wise Investment account also
provide options to invest in Mutual Funds, around 19 Mutual Fund companies and bonds.
ICICI Direct offers various options while investing in Mutual Funds like Purchase
Mutual Fund, Redemption and switch between different schemes, Systematic Investment
plans, Systematic withdrawal plan and transferring existing Mutual Funds in to electronic
mode. This account also provides facility to invest in Government of India Bonds and
ICICI Bank Tax Saving Bonds. ICICIDirect.com website is the primary tool to invest in
Mutual Funds, IPOs, Bonds and stock trading.
20

3. Active Trader Account:

Active Trader account gives more personalized investment options to the investors. It
allows investor to use online and offline stock trading. It also provides with
independent market expertise and support through a dedicated Relationship Manager
from ICICI. Active Trader also provides commodity trading.
Brokerage and fees:
Brokerage: ICICIDirect.com brokerage varies on volume of trade and inclusive of
demats transaction charges, service taxes and courier charges for contract notes. It
ranges from 0.1% to 0.15% for margin trades, 0.2% to 0.425% for squared off trades
and 0.4% to 0.75% on delivery based trades.
Advantages of ICICI Direct:

3-in-1 account integrates your banking, broking and demat accounts. All accounts are
from ICICI and very well integrated. This feature makes ICICI the most interesting
player in online trading facility.

Unlike most of the online trading companies in India which require transferring money to
the brokers pool or towards deposits, at ICICI Direct you can manage your own demat
and bank accounts through ICICIdirect.com.

Investment online in IPOs, Mutual Funds, GOI Bonds, and Postal Savings Schemes all
from one website. General Insurance is also available from ICICI Lombard.

Trading is available in both BSE and NSE.

Disadvantages of ICICI Direct:

Getting access to ICICIDirect.com website during market session can be frustrating.

ICICI Direct brokerage is high and not negotiable.

Not all stocks are available under Margin Plus

Facility for linking account of ICICI Bank Only

3.5.2 INDIABULLS

http://www.indiabulls.com

Indiabulls is India's leading Financial Services and Real Estate Company having presence
over 414 locations in more than 124 cities. Indiabulls Financial Services Ltd is listed on the
21

National Stock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and
London Stock Exchange
Types of account:
1. Indiabulls Equity Trading Account
Indiabulls Equity Trading Account is standard Online trading account from India bulls
and along with online trading it also provides priority telephone access that gives you
direct access to your Relationship Manager and full access to 'Indiabulls Equity
Analysis'.
2. Power Indiabulls

Power Indiabulls trading terminal is the most advanced new generation trading
platform with great speed. This trading terminal is built in JAVA.

Power Indiabulls is extremely reach in features including Live Streaming Quotes,

Fast Order Entry and execution, Tic by Tic Live Charts, Technical Analysis, Live
News and Alerts, Extensive Reports for Real-time Accounting.

Brokerage and fees:

Account opening fees: Rs 1200/- (One time, non-refundable) as below:

250/- Equity Trading Account opening charge

200/- Demat Account opening charge

750/- Software changes

Advantages of Indiabulls

Brokerage is less compare to other online trading companies.

Provide trading terminal 'powerbulls', a java based software. It's very fast in terms of
speed and execution.

Disadvantages of Indiabulls

Faces lots of complaints regarding portal breakdown.

3.5.3 RELIGARE

http://www.religare.com

22

Religare Securities Ltd is a Ranbaxy promoter group company, is one of Indias largest and
fastest growing integrated financial services institutions. The company offers a large and
diverse bouquet of services ranging from equities, commodities, insurance broking, to wealth
advisory, portfolio management services, personal finance services, Investment banking and
institutional broking services.
Religares retail network spreads across the length and breadth of the country with its
presence through more than 900 locations across more than 300 cities and towns. Having
spread itself fairly well across the country and with the promise of not resting on its laurels, it
has also aggressively started eyeing global geographies
Unique features and benefits of trading through Religare:

Trade Reward - Trade Rewards is a unique offering from Religare that gives you dual
benefits of hassle free investment experience online and an opportunity to earn while
you invest.

Zero Brokerage - Break the shackles. Get freedom from brokerage and avail zero
brokerage on your trades through us.

Exposure up to 20 times on your margin - Allowing you the freedom to trade without
hassles throughout the day without having to worry about your cash margin. You can
get exposure (on cash Segment) as high as 20 times for intraday trades. Of course
conditions apply on above two.

Interest on cash margin - Even while you are waiting to make your next trade or
online investment, your unutilized cash does not lie idle with us. You earn interest on
your unutilized cash margin.

3.5.4 INDIA INFOLINE

http://www.indiainfoline.com

The India Infoline group, comprising the holding company, India Infoline Limited and its
wholly-owned subsidiaries, straddle the entire financial space with offerings ranging from
Equity research, Equities and derivatives trading, Commodities trading, portfolio
management services, Mutual Funds, Life Insurance, Fixed Deposits, Gold Bonds and other
small savings instruments to loan products and investment banking. Website of India Infoline
for trading is www.5paisa.com.
The company has a network of 976 business locations (branches and Sub-brokers) spread
across 365 cities and towns. Today it has more than 800000 clients Trading Platform.
23

5Paisa offers 2 different online trading terminals to its customers:

1. Investor Terminal (IT):
Investor Terminal is 5Paisa's equity trading terminal for low volume trader. This is
web based terminal and could access from anywhere. This product provides limited
features in comparison of Trader Terminal, which is another product provided by
5Paisa.
2. Trader Terminal (TT):
Trader Terminal is for high volume equity traders. Trader Terminal provides high
volume trading with powerful interface and fast order execution
Brokerage and Account opening fees:

Account opening fees Rs 500/- onetime non refundable Brokerage.

5 paisa offers charge only 5 paisa for Rs100 of intraday trade done, which is 0.05%
brokerage. In case of in delivery trade, they charge an additional 0.20% for back
office and securities handling.

Earlier the organizations which provided the facility of online trading was not safe enough to
invest but some of the changes in the past years in the Indian share market have created the
interest of trading in the shares by the people. Broadly we can classify three important factors
which have contributed to the development of online trading in IndiaFirstly the major step was taken by the National Stock Exchange (NSE) in the year 1994
which allowed the electronic trading and seeing to this various other stock exchanges in India
followed soon. This helped in making the fast, accurate and transparent transactions saving a
lot of time then the traditional method of trading. The investors were also saved by the
clutches of the fraud brokers at the times when the clients were not aware of the true prices
of the shares.
Secondly, in the year 1996 the dematerialization of the shares came (also known as DEMAT)
which avoided the online presence of shares in an electronic form avoiding them from theft,
pilferage or from other losses like counterfeiting and frauds regarding share transfer.
The third step was the rapid growth of computer education and learning of internet by the
people. With the evolving of internet the online trading became a hit and the investors
became confident in investing just with a click of a mouse.
With the happening of such events the ratio of trading has improved a lot. As it takes less
time people praise this technology for trading purposes. Some people who traded rarely now
24

even trades 2-3 times every day as it provides edge of researching about companies on the
internet. The number of small investors is increasing on the daily basis that trades on the
internet. If a person invests or trades in equities, derivatives, commodities etc through the use
Internet it is known as online trading enabling the investor to connect electronically to buy or
sell stocks, derivatives etc with the other investors. This can be done with the help of online
service providers like investsmart, indiaInfoline etc. A person can access a stockbroker's
website through a PC connected to Internet and can place his orders. The benefits areA person can see the latest market movement through streaming quotes.

Reduces time lag due to self-execution and instant confirmation.

Empowers traders to have a complete control over their trading decisions.

A person can access his accounts and related information on the Website

Provides greater convenience of trade as a person can trade from home or other
convenient location.

It is cheap in terms of cost associated and offers reduction in overheads

A trader can view the historical charts on his computer

The Internet revolution has changed the way to communicate and the way to do business in
todays society bringing us closer and closer to vital sources of information. It provides us
with means to directly interact with service-oriented computer systems tailored to our
specific needs; therefore, we can serve ourselves better by making our own decisions
This new access by the online trading customers to low-cost transactions and cutting-edge,
real-time market information that formerly belonged only to brokers has opened up
extraordinary new investment opportunities as well as a crucial need for state-of-the-art
information.
Today the investors use the Internet Client-Server technology to buy and sell the securities at
an instant at any point of time. People investing online have reached the proportions. Online
trading allows an investor to buy and sell shares on the exchange through Internet and helps
in the direct control of his investments.
3.6 Growth of Online Trading
According to an article by Krishnamurthy B in 2005 after inception of online trading in India
in the year 2000 online trading is gained momentum with trading volumes growing by 150
per cent per annum in the years 2014-2015. Now the growth of online trading is on its right
track ,Indian stock market has been announced the one of the Safe and stable market of the
25

world, so here in India the online trading is growing like anything in comparison to the whole
world
The Chief Executive of Reliance Money Ltd says that online investing is still at a nascent
stage in India and expects that Internet-based trading will eventually take about half of the
total stock market trading as like with developed markets such as the US. Philippines has the
highest online trade with about 55-60% execution of trade is online. The reason is because
they had wider Internet connectivity years before India. The biggest challenge in India
remains better Internet connectivity. The earlier Web-based technology used for Internet
trading has been replaced by specialized software which gives real-time global data
streaming rates to trader helping investors to analyze the market trends and helps in faster
execution of trades. Earlier the investors made trade calls over the phone which sometimes
led to the delays. Example of the tools used in these days online trading
Online share trading in India was at a boom in the end of 2015 with daily-traded volumes
more than tripling from Rs 1,500 crores to Rs 5,000 crores in the last one year and terminals
was set up in small towns such as Rajkot, Hubli and Vijayawada .In that year the share of
online trading rose dramatically from 7% last year to 20% as a percentage of overall traded
volumes. Due to this factor the top five US brokerage firms decided to make a foray into
India in the next year driven by strategic interest. Also at that time non-metros accounted for
half of the daily turnover of online trading.

3.7 Effects Of Online Trading On The Investment community (TME)

3.7.1 Benefits of Online Trading to Investors

Some online brokerage firms reported 100+ per cent annual growth rates through the year
2000. The increase was because of the benefits investors can gain from online investing.
These benefits include low transaction costs, speed, convenience, boundary spanning
abilities, and immediate access to financial information. According to, transaction costs
have been driven down because of the increased number of online brokerage firms. In
fact, the dramatic increase of online brokerage firms has led to increased competition and
lowered commissions that an investor must pay per trade.

Along with low transaction costs, the main strategy of online discount brokerages is the
speed and delivery of almost instantaneous transactions. In todays world of fast food and
24-hour service, investors cannot help but want the same type of fast service applied to
the financial industry. That is why many investors enjoy the conveniences e-brokerages
26

offer by allowing them to go online and complete transactions at almost any time during
the day or night. Time is saved because investors do not have to phone their broker
during normal business hours in order to complete their transactions.

Another benefit of online trading is its ability to span boundaries. Many investors are
interested in buying foreign stocks and with online trading systems in place; these
investors are drawn to its boundary spanning capabilities. This is also true for foreign
investors who want to invest in the U.S. market.

A final benefit investors can derive from online trading is access to instantaneous
information. Internet has given people access to immediate financial information
whenever they want it. They felt that the availability of this financial information should
lead investors to make better-informed choices.

3.7.2 Cost Of Online Trading to Investors

Even with all of the benefits e-brokerages offer to their clients, there are still costs
associated with online investing. Some of these costs include unobservable costs,
information-processing costs, information illusion, frequent trading behavior, and the
lack of personal advice. Transaction costs have two components: observable costs and
unobservable costs. According to Konana, Menon, and Abramowitz (1999), observable
costs are the actual commissions that an investor is charged in order to complete a
transaction, where unobservable costs are the costs that are related to the transaction
being executed inefficiently and from information asymmetry. These unobservable costs
are determined by where e-brokerages choose to complete their transactions. For
example, they might not choose to complete the transactions at the actual exchanges, but
instead they might choose to use third-parties and market-makers in exchange for a
percentage of the bid-ask spread. Obviously investors must be aware of these
unobservable costs and the potential that they have to create opportunistic behavior by ebrokerages because of the commissions that they can receive from market-makers. To cut
down on this type of arbitrage, the Securities and Exchange Commission (SEC) could
help create transparency by putting into effect new regulations that state what information
must be provided to the investor.

A second cost created by online investing is the cost of processing information.

Information-processing costs are the costs that online investors sustain before they
actually make a transaction and it is defined by the time and energy that the investor
expands trying to reach an investment decision. Hong also stated that because of the huge
27

volume of information found on the Internet that it can take investors a lot of extra time
to find, sort, and analyze all of the relevant information. This in turn can out-weigh the
benefits of online trading for some investors because they might not be able to afford the
opportunity costs associated with spending a lot of time doing research.

Another cost to be aware of in regards to online trading is information illusion. This

illusion results when investors think that because they have access to so much
information via the Internet that they have an advantage over the entire market and this
can lead them to make bad investment decisions. These investors then have an
exaggerated sense of control over the outcomes of their investments.

Frequent trading is another cost associated with online investing. Low transaction costs
can encourage frequent trading according to Konana, Menon and Balasubramanian
(2000). In fact, in Singapore, 71.1 per cent of online investors say that they trade more
frequently than they did prior to online trading. This increase is troubling because people
who trade the most generally have the worst performance.

Finally, the downside of investing online is the lack of personal advice from those in the
financial field. According to Phelan (2001), the Web will never be able to substitute for
the judgment and expertise of financial planners, nor will it be able to protect investors
from all of the scams that are abundant on the Internet. So the bottom line is that the
investors must weigh these costs against the benefits and decide whether online trading is
right for them.

3.7.3 Benefits of Online Trading to Brokers/Financial Planners

The investors are just one group affected by the development of online investing; another
group that has been influenced is the brokers/financial planners. With e-brokerages
attracting twelve million investors from 1994 to 2000, it may seem like traditional
financial planners will soon be extinct. However, this is not the case, as many people in
the financial industry have witnessed that the growth of online trading has created
benefits for them as well. This includes increased publicity, lower start-up costs,
increased client base, ease of communication, and risk management. The attention that
has been given to online brokerages in terms of advertising has encouraged more people
to trade and thus, in the long run, this has created more business for the financial markets
in general. Financial planners feel that average people will be drawn into trading online
because of its novelty and then they will eventually realize that they need a financial
planner in order to help them get a comprehensive view of their finances.
28

A second benefit, according to Barber and Odean (2001), is that the fixed start-up costs of
opening an online brokerage are far lower than opening a traditional brokerage service.
Therefore, many brokers might consider putting a part of their services online, thus
reduce their staff costs. The staff costs can be reduced because it does not take as many
personnel to run an e-brokerage site as it does to manage a traditional brokerage firm.

E-brokerages have also allowed brokers wider access to a variety of different people,
therefore increasing their client base and allowing them to offer many different types of
services to their customers.

Another benefit to brokers is ease of communication. Many financial planners see the
greatest gift that the Internet has given them as allowing them to improve communication
with their clients. They appreciate the fact that the Internet has saved them money by
reducing the costs of communication and by making it easier to get information to their
customers.

One final benefit that online trading has for brokers is that it makes risk management
much easier. When an investor places a trade online, the system first can check the
investors bank account to make sure that the individual has the funds available to make
the trade and this lowers the credit and payment risk that traditional brokers have had to
deal with in the past.

3.7.4 Cost of Online Trading to Brokers/Financial Planners

The costs of online trading to brokers and financial planners are fairly obvious and
straightforward. Lower transaction costs online have led many investors to e-brokerages
and away from traditional brokers to place their trades. Yet, with the media talking
constantly about how easy online trading is, one cannot really blame brokers clients for
wanting to try it. Brokers might be concerned that the bid-ask spread, used to gauge
trading costs, and has dropped 30 per cent since Electronic Communication Networks
(ECNs) have surfaced.

Another concern is that since investors feel that they can distinguish between the good
and bad advice that they find on the Internet, they therefore might not be willing to
continue to pay a financial planner solely for their expert opinion. This is in part due to
the information illusion discussed previously where investors feel that since they have
access to so much information that they can do it better on their own.

Finally, many investors, especially entrepreneurs, want to see if they can make better
investments than what their financial advisors are already doing for them, so it becomes a
29

game that they want to win. To try to keep some of their clients from turning to online
trading alone, many advisors have placated them by setting aside play money that they
can invest on their own so that they will feel more in control of their investments.
3.8 Characteristics Of Online Traders

According to research by Barber and Odean (2002), many online shareholders share
similar characteristics. The majority of them are young men without children and a high
level of income. They found that active traders with a propensity for high investment risk
and an unusually strong performance in the stock market are all characteristics shared by
many investors who decide to trade online.

Opiela (2000) quotes a research firm as saying that the two types of investors that are
trading online are by their definition the Aggressive Affluent and those who would like
to Get Rich Quick. On that note, Hurley (2000) states that online trading is spawning a
younger type of client that is more aggressive and well informed. It has also been stated
that investors who participate in online trading generally have a higher education level,
are at ease navigating the Internet for relevant information, and know how to apply it in
order to make their transactions.

Konana, Menon, and Abramowitz (1999) break online investors into two categories: the
early adopters and the late adopters. They state that the early adopters are aggressive doit-yourself types of investors whereas the late adopters rely more on a brokers advice
before going through with trades. But even if they rely on a broker for some forms of
advice, most online investors have to be self-directed because online brokerages do not
make a habit of giving advice on what or when to trade.

It is also interesting that once investors start trading, many of them become very
overconfident according to a study by Barber and Odean (2002). This is due to an illusion
of knowledge and an illusion of control. An illusion of knowledge is when investors
believe that since they have access to additional information that they become better
investors and they will not listen to information that states otherwise. In fact, usually
because they have access to so much information, investors suffer from information
overload and their actual predictive skills for picking stocks begin to decline. An illusion
of control is when an investor believes that his involvement will change the outcomes.
They will feel that since they are in control of their investments that they have control
over their returns and can therefore beat the market. As a result of this illusion of control,
these investors will have a tendency to trade too often and too speculatively.
30

3.9 Online Trading Internationally

Online trading is not a phenomenon that is sweeping only the United States; it is being
implemented in other countries as well. For the purpose of this study, articles regarding
online trading that took place in Switzerland, India, and Singapore were analyzed. In
Switzerland, 40 per cent of the shareholders search for their financial information via the
Internet and more than 25 per cent of people between the ages of eighteen and twentynine also place their orders via the Internet. The characteristics of online investors are
very similar to those in the U.S. Swiss Internet investors are generally male professionals
with a high level of education and income. They also are very self-directed individuals
that make decisions regarding their finances on their own.

In India, trading via the Internet refers to giving your orders to brokers via a website and
not directly on an exchange. Goswami (2003) also explains how the Internet in India acts
as an Order Routing System since all orders must be routed through the same exchange
mechanisms this helps to ensure transparency and security. India investors are
professional self-directed people that are highly educated. Goswami rates convenience,
low cost, and speed as the benefits of online trading that are most important to the Indian
investors.

Finally in Singapore, the self-investing trend has led to many e-brokerages with lower
fees than traditional brokerages. The majority of investors in Singapore are young
professional males with at least one college degree. However, since stock trading on the
Internet has become so accepted in Singapore, it is not correct to say that investors are
only the young and the educated. Instead, Internet trading is appealing to investors across
different age levels and different educations. Nevertheless, according to Teo, Tan and
Peck, the one characteristic that almost all online investors have is high-level incomes.

3.10 The Future Of Traditional Brokers And Online Trading

Even though the Internet is being used more and more for investing purposes, it is highly
unlikely that virtual brokerages will replace full service traditional brokerages over the
long run. In fact, many financial planners feel that online trading will not hurt their
businesses since the greater part of them work with the wealthiest portion of the
population who do not have time to do their own investing.
31

Many brokers may have clients that want to try to invest on their own but do not have a
large amount of play money to set aside to invest, as was mentioned in a previous
section. One option for this type of client is for the broker to open an account online for
the customer that the broker can oversee and step in if it looks like his client is heading
for trouble.

With regards to online investing, many e-brokerages are trying to expand to offer newer
and better services to clients. One option is for e-brokerages to offer more knowledge
and information support and in turn raise the commissions in order to cover the costs
associated with offering this service. This can be done by adding knowledge-based
transaction processing systems to e-brokerages that can give investors more personalized
advice. By simply adding artificial intelligence systems to the original transaction
processing systems that are already found on most online investing websites, e-brokers
can create a knowledge-based system. Online investing firms might also consider adding
educational web pages and other services that will teach beginning investors how to
invest online.

3.11 Discussion and Implications for the Future

The purpose of any efficient market is to bring all possible buyers and sellers together so
that all the preferences are reflected in the market price. Online investing benefits the
financial industry by helping the stock market to reach this goal.

Some fear that online investing will increase market fragmentation, which is when too
many competitive suppliers enter an active or new market. Although that may happen
over a short period of time, in the long run, the number of suppliers and consumers
should even out as more people start using the Internet to trade.

Whether to switch to online trading is something that investors will have to decide for
themselves. At this time, average Internet traders might fall into the category of young
highly educated men with larger incomes, but this is sure to change. Women are now
beginning to use the Internet more for online shopping and paying bills so using the
Internet to invest should follow. Also a number of inexperienced investors have started
trading online because of the amount of publicity touting its ease and convenience.
These immature investors will need a lot of knowledge and advice from e-brokerages,
and online investing firms must take a step up and be available for more personal advice.
That may mean that transaction costs will go up for more nave investors who request
more personalized service, but it will be worth it for them in the long run.
32

It is also important to educate new investors that investing online tends to make them
look to the short term instead of investing for the long term, and that this can cause them
to trade more frequently, thereby lowering their returns. Buying individual stocks can be
very risky and without the right advice on how to diversify investments, a nave investor
could end up losing a lot of money.

Since no online investing firms are the same, investors will value certain ones over
others based on their needs. The new breed of investor that enjoys risk and likes to trade
frequently will favor sites that gives them low transaction costs and lots of control.
However, beginning investors will want sites that give them more advice and
handholding tools. More value-added knowledge should be added to as many sites as
possible.

More traditional brokers will need to start offering services via the Internet if they have
not already. However, they should not go completely online as a majority of the
investors like the security of knowing that there is an actual physical location where they
can go if they need expert advice. For investors that want to experiment with online
investing but are already clients of traditional brokers, the idea of setting up play
money for them to invest with is a suitable idea. Also, brokers could set up a mixture
that allows both online trading and traditional trading. Traditional brokers should
consider offering other services such as estate planning and tax planning, which will not
be as easy to offer online.

However, there are indications that online trading has somewhat dampened since 2000.
What began as an economic slowdown only got worst with the September 11th terrorists
attacks. Investors have generally have become less tolerant and more risk averse. When
dramatic events such as September 11th happen, it directly affected the overall
performance of the economy and investors have the tendency to stay with approaches
that they are most comfortable with and not try anything new (like online trading) while
at the same time investing less (sine investments involve risk). If the market picks up
speed, investors will change their minds. But, given the uncertainty in global oil prices
and other issues, including ballooning U.S. trade deficits and the war on terrorism,
investors are very unlikely to return to online trading in the near future. However, they
will do so as soon as the market picks up and they once again become comfortable with
this new approach to trading.

33

The Internet is drastically changing how everyone does business, including the financial
industry. Online investing has benefits to offer investors as well as brokers. These benefits
include low transaction costs, convenience, speed, boundary spanning, improved
communication, and risk management. However, these benefits do not come without costs.
Some costs of online trading include information-processing costs, unobservable costs,
information illusion, and smaller commissions for brokers.
The characteristics of online traders are somewhat different from traditional investors.
Online traders tend to be males in their early twenties to mid-thirties, with high income and
education levels. Yet this will be changing as more people gain access to the Internet and
start doing more everyday things online. Foreign investors will also increase trading in U.S.
stocks, and U.S. investors will begin investing in foreign markets.
Although online investing is gaining prominence, it will not be for everyone. Some will not
trust the security of trading online and others will not have the time to do the research
required and will prefer to have traditional brokers invest for them. Overall, online investing
will only encourage new investors to trade in the stock market, bringing together buyers and
sellers to make the market more efficient. After some of the kinks are worked out of online
trading, it will tend to be more beneficial to the financial industry in the long run without
many negative effects.
Even though online trading has slowed down somewhat at the present time, it is our belief
that it will pick up speed in the future. Once investors have become more comfortable with
the current economic conditions and foresee brighter economic conditions they will return.

34

CHAPTER II
COMPANY PROFILE

35

1. COMPANY PROFILE
The Indian financial services sector is one of the most complex, yet one of the most robust
service segments of the Indian economy. Spanning from financial service to capital markets,
banking to foreign direct investments (FDI) and from mutual funds to private equity (PE)
investments, the financial services sector covers all related segments under its umbrella.
Having major effects in its abstract as well as physical form post liberalisation, the financial
services segment is undoubtedly the mainstay of Indian economy.
Today it is at par with the international financial frameworks and promises to surpass them
in terms of performance in the years to come. This is very much evident from the fact that
Indian financial services industry was amongst the least affected during the crisis the world
faced in 2010-11. Major developments pertaining to the sub-segments of Indian financial
services industry are discussed hereafter.
Financial service Sector

Indian life financial service sector collected new business premiums worth Rs
11,742.7 crore (US$ 1.96 billion) for April-May 2013, according to data from the
Financial service Regulatory and Development Authority (IRDA). Life insurers
collected Rs 1, 07, 010.7 crore (US$ 17.84 billion) worth of new premiums for the
financial year ended March 31, 2015

Meanwhile, the general financial service industry grew by 19.6 per cent in AprilMay period of FY14, wherein the non-life insurers collected premium worth Rs
13,552.46 crore (US$ 2.26 billion)

Banking Services

According to the Reserve Bank of India (RBI)s Quarterly Statistics on Deposits and
Credit of Scheduled Commercial Banks, September 2012, Nationalised Banks
accounted for 52.0 per cent of the aggregate deposits, while the State Bank of India
(SBI) and its Associates accounted for 22.3 per cent. The share of New Private
Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural Banks
in aggregate deposits was 13.6 per cent, 4.8 per cent, 4.3 per cent and 2.9 per cent,
respectively
Nationalised Banks accounted for the highest share of 50.9 per cent in gross bank
credit followed by State Bank of India and its Associates (22.1 per cent) and New
36

Private Sector Banks (14.7 per cent). Foreign Banks, Old Private Sector Banks and
Regional Rural Banks had shares of around 4.9 per cent, 4.9 per cent and 2.6 per
cent, respectively

India's foreign exchange (forex) reserves stood at US$ 280.167 billion for the week
ended July 5, 2013, according to data released by the central bank. The value of
foreign currency assets (FCA) - the biggest component of the forex reserves stood
at US$ 252.103 billion, according to the weekly statistical supplement released by
the RBI

Mutual Funds Industry in India

Indias asset management companies (AMCs) have witnessed growth for the fifth
consecutive quarter wherein their average assets under management (AUM) during AprilJune 2013 increased by 3.68 per cent.
Private Equity, Mergers & Acquisitions in India

Private equity (PE) firms upped their investments in India Inc by a hefty 42 per cent
to US$ 5.4 billion through 197 deals during the first half of 2013; major deal being
the US$ 1.2 billion-Bharti Airtel deal, according to a report by EY India (formerly
Ernst & Young).

Meanwhile, Merger and acquisition (M&A) activity in India was also quite intense in
April-June 2013 period. The deal tally stood at US$ 10.9 billion across 130
transactions, according to global deal tracking firm Mergermarket.

Foreign Institutional Investors (FIIs) in India

Foreign investors have immense faith in Indian financial markets. The fact is
substantiated through statistics which show that they pumped massive US$ 10 billion
in Indian markets in January-March 2013 quarter. Moreover, FII ownership in top
500 companies is highest at 21.2 per cent for the reported quarter. It increased by
1.28 per cent in the January-March quarter alone and 2.87 per cent in 2012-13.

The number of registered FIIs in India stood at 1,757 in FY 2012-13 while the
number of FII sub-accounts rose to 6,335, from 6,322 at the end of 2011-12.

Financial Services in India: Recent Developments

37

Tata Communications 100 per cent subsidiary Tata Communications Payment

Solutions (TCPS) has launched Indias first white label ATM (WLA) at
Chandrapada, a tier-V town near Mumbai. The WLA has been branded 'Indicash' by
the company. TCPS already operates about 27, 000 ATMs for 37 banks in India.

Meanwhile, US-based Customers Bancorp Inc (CUBI) has plans to infuse US$ 51
million in multiple securities of Religare Enterprises Ltd. Religare is currently
aspiring for a banking licence to enter the banking industry.
The investments will take place through a combination of primary and secondary
market transactions.

Financial Services: Government Initiatives

The Finance Ministry has constituted a standing council of experts to assess the
international competitiveness of the Indian financial sector. The council, to be
headed by the Secretary, Department of Economic Affairs, will analyse various
monetary and non-monetary transaction costs (of doing business in the Indian
market), and make recommendations for improving its competitiveness.
The council will also examine related policies and operating frameworks and the
performance of various segments of the Indian capital market. It will also study and
suggest possibilities for reform measures aimed at improving transparency,
promoting development and strengthening governance in the Indian capital markets,
while ensuring that risks are limited and investor interests are sustained.

Also, the RBI has, for the time being, relaxed the norm that stipulates non-banking
finance companies (NBFCs) to have a minimum gap of six months between two nonconvertible debentures (NCDs) issues. The move is aimed at streamlining the process
of moving into a more robust asset-liability management framework in a nondisruptive manner.

Foreign investments fuel Indian financial markets in a big way. Experts believe that India
has fared really well over the past few years and the similar macroeconomic trends would
continue in 2016.

38

COMPANY PROFILE

Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking and
distribution arm of the Kotak Mahindra Group. It is a corporate member of both the Bombay
Stock Exchange and the National Stock Exchange of India. Kotak Securities was founded in
1994 and is headquartered in Mumbai, India.
Kotak Securities Limited is a financial services company. Its major business comes from stock
brokerage service for investors and traders.
The stock broker offers services such as share trading, derivatives trading, mutual funds, IPO,
Exchange Traded Funds, Currency Derivatives, Tax Free bonds, portfolio management, Stock
Lending and Borrowing and Interest Rate Futures.
Kotak Securities was founded in 1994 as a subsidiary of Kotak Mahindra Bank and is proud
to be the nations largest stock broker today.
Their numbers speak for themselves:
Rs 287 crore of Assets Under Management (AUM) as on 31st March 2015
10.58 Lakh customer accounts
Over 5 Lakh trades per day
1128 branches, franchisees and satellite offices
352 cities across India
VISION AND MISSION
Vision
To positively contribute towards economic, environmental and social well-being of
communities through Corporate Social Responsibility agenda.
Mission
Create a lasting value for communities by:
o Promoting and supporting education and other interventions for the under privileged
o Encouraging employee volunteering
39

o Supporting Non-Governmental Organizations and other institutions with financial and

other resources to collectively deliver community initiatives
HISTORY
Kotak Mahindra Group traces back its lineage to 1985. In 1995, the brokerage and distribution
businesses of Kotak Mahindra Group was incorporated into a separate company and it was
named as Kotak Securities.
In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Groups flagship company,
received a banking license from the Reserve Bank of India (RBI). With this, KMFL became
the first non-banking finance company in India to become a bank Kotak Mahindra Bank
Limited. The Group has businesses such as commercial banking, stock broking, mutual funds,
life insurance and investment banking and its customer base includes individual investors,
NRI investors and institutional investors. The brokerage house has branches and franchisees
across India, and international offices in London, New York, Dubai, Abu Dhabi, Mauritius and
Singapore.
Kotak Securities is headquartered in Mumbai, India. In 2014, Kotak Securities was ranked as
number 1 in India's Institutional Investor rankings by weighted average.
Kotak Securities is a well-known stock broker with professional traders for its comprehensive
online trading portal offerings.
It has 1128 branches including franchisees and satellite offices spread across 352 cities in the
country.
Kotak Securities is a corporate member of both the Bombay Stock Exchange and the National
Stock Exchange of India. It is also a depository participant with National Securities
Depository Limited (NSDL) and Central Depository Services Limited (CDSL). The company
also has a research division to study the macroeconomic indicators, sectors, company-specific
equity research, which regularly publishes stock market analysis.

CORPORATE AFFAIRS
The company also has a research division involved in macroeconomic studies, sectoral
research and company-specific equity research, which regularly publishes stock market
analysis.

40

SERVICES
So what does investing with Indias largest stock broking firm mean for you as a customer?
Well, all your stock broking needs get managed under one roof. No more running from pillar
to post, to keep track of your finances!

Stock Broking services

Trade in the Stock Market, invest in IPOs, Mutual Funds or Currency Derivatives using
whichever mode that suits you best. Online, offline or even on their stock trading app, they
offer stock trading at your fingertips.

Portfolio Management services

Not sure of what stocks to buy or sell? Unable to keep all your investments in one place?
Dont know how to make your money work for you? Their Portfolio Management Service
with expert advice is just the answer for your woes.

Dual benefit: Stock Brokers + Depository Participants

Kotak Securities is not just a stock broking firm. They are also participants with depositories
like the NSDL and the CSDL. That means you can now execute transactions using their stock
broking services and settle your trades using their depository services!

41

Research Expertise
Benefit from in-depth stock market analysis thanks to their dedicated research division. They
publish various sector-specific research, company-specific research, macroeconomic studies,
fundamental and technical analysis of stocks that you can avail before investing your hardearned money.

Updated Market Data

Apart from research that they offer, you benefit from the street smart tips, up-to-the-minute
market information and inside news that their extensive sales teams deliver on a daily basis.

International Reach
Your financial interests go beyond India? Dont worry, so do themselves! Kotak Securities has
a well-entrenched presence in the Asia Pacific, European, Middle Eastern and American
markets. You can trust us with your money in any part of the globe.

MILESTONES

1995: The brokerage and distribution businesses of Kotak Mahindra Bank are
incorporated into a separate company named Kotak Securities.

2000: Kotak Securities launches its online broking site (www.kotaksecurities.com).

Also, the company commences private equity activity by setting up Kotak Mahindra
Venture Capital Fund.

2006: Kotak Securities Launches Kotak Flat

2007: Kotak lines up PMS based on small caps

2008: Kotak Securities launches a GEMS portfolio.

2009: Kotak Securities launches online trading in currency derivatives

42

AWARDS AND ACCOLADES

Kotak securities have been awarded as the Best Broker in India by FinanceAsia for two
consecutive years. Besides that, the stock broker has received several awards and recognitions
as follows:

Best Broker in India, FinanceAsia Country Awards for Achievement 2014

Broker of the Year in India in The Asian Banker Financial Markets Awards 2014

Awarded Top Performer in New Accounts Opening (Non-Bank Category-2nd

position) at Star Performer by NSDL

Awarded My FM- Stars of the Industry Award for Excellence in Online Demat

Awarded for Smart Order Routing by Banking Frontiers at FINNOVITI 2015

Best Research as Research Showcase Partner at ResearchBytes IC Awards 2014

CSR INITIATIVES
0

o Promoting Education: The Company endeavour to enhance the accessibility and

affordability of quality education for deserving underserved sections of society. Education

will remain the primary CSR focus area for the Company, and the initiatives will focus on
providing infrastructure to schools, scholarships for deserving children and supporting
parents and teachers to provide holistic learning environment for children at school and
home. The education initiatives will be primarily implemented through Kotak Education
Foundation (KEF) and the Banks CSR team.
0

o Enhancing vocational skills and livelihood projects: The Company will work

towards imparting vocational skills to deserving children and youth, women, elderly, and the
differently-abled. The programme aims at holistic development of these children and youth,
women, elderly, and the differently-abled through technical and soft skills and enhances
their livelihood opportunities. The vocational skills and livelihood projects will be primarily
implemented through Kotak Education Foundation (KEF) and the Banks CSR team.
1

o Promoting preventive healthcare and sanitation: The Company shall promote

preventive health care and sanitation by providing health checkups for children covered
under education initiatives and sensitizing the children on personal and community health
and hygiene. These initiatives will be implemented through Kotak Education Foundation
(KEF). On a case by case basis, the Company will also support various NGOs working in

43

the fields of healthcare, sanitation, eradication of hunger and malnutrition, and provision of
access to safe drinking water. The Company shall conduct periodic blood donation drives.
0

o Reducing inequalities faced by socially and economically backward groups:

The Company shall support NGOs working towards rehabilitating socially and economically
backward sections of society by providing safe houses through community house building
initiatives. The Company shall also support NGOs working towards promoting gender
equality, empowering women, setting up homes and hostels for women and orphans,
aanganwadis, panchayats, community halls, setting up old age homes, day care centers and
other such facilities for senior citizens and reducing inequalities faced by socially and
economically backward groups including tribals, marginal / landless farmers, landless
labourers, such people who are below the poverty line across all segments.
0

o Sustainable Development: The Company will support sustainable development or

sustainability activities such as tree plantation either directly or through an external

stakeholder / NGO. The Company shall provide support to NGOs working towards
maintaining ecological balance, protection of flora and fauna, animal welfare, agriculture,
agro forestry, forestry, conservation of natural resources and maintaining quality of soil, air
and water and water harvesting. Further the Company will extend support to Not for Profit
Organisations. NGOs, Institutes, Institutional Bodies and other such organisations that are
committed to and work in areas of Environment-Social-Governance (ESG), Sustainability,
CSR either through direct activities or in the form of advisory, policy advocacy and
stakeholder awareness etc.
0

o Relief and Rehabilitation: In cases of natural calamities and disasters, the

Company and its subsidiaries will support relief and rehabilitation activities undertaken by
the Prime Ministers National Relief Fund, Chief Ministers Relief Fund or any Central or
State Government Body / Bodies or NGOs, Corporate entity or a group of Corporates
including the Kotak Mahindra Bank or its Subsidiaries or the Kotak Education Foundation
directly
0

o Clean India: The Company, Kotak Mahindra Bank or its Subsidiaries and / or

Kotak Education Foundation will work directly and / or support NGOs working towards
making India clean but not limited to initiatives such as Swacch Bharat Kosh, Clean Ganga
Fund, etc. This would encompass a broad spectrum of initiatives including cleaning of
roads, bus stations, railway platforms and such other public facilities, building communal
toilets and public sanitation facilities, cleaning Ganga and other rivers, education and
awareness generation on personal, household and environmental sanitation.
44

45

CHAPTER III
REVIEW OF
LITERATURE

46

2. REVIEW OF LITERATURE
2.1 REVIEW OF LITERATURE
This chapter brings up relevant literature required to find answers and connect to our
research questions. First, vital literature about online trading along with key concepts of
different terms, drivers of growth and the necessity of its existence will be presented so
that it becomes easier to understand the research area.
In business today electronic commerce (e-commerce) is one of the common topics being
discussed (Daniel et al., 2002). Kalakota and Whinston (1996) defined ecommerce as "The
buying and selling of information, products and services via computer networks, the computer
networks primarily being the Internet. It is streamlining business processes, restructuring
whole industries and re-shaping of customer and supplier relationship (Daniel et al., 2002). In
order to perform one or more of the business functions Internet based e-commerce systems
use World Wide Web based application solutions. In fact electronic commerce is a way of
conducting, managing and running business transaction using computer and Internet. Based
on the significant power of World Wide Web and global e-commerce, the numbers of internet
users' have been rapidly increasing and have widely spread into all aspects of life. It has
opened up tremendous business opportunities for its users (Ho and Wu, 1999). The most
common use of e-commerce is to replace or enlighten conventional transaction methods and
in the last few years a substantial growth of internet-based services being experienced.
According to an Angusreid group study (2004) of Internet users in 34 countries nearly 120
million of the estimated 300 million worldwide Internet users have already made a purchase
or transactions online. Stock exchange was influenced by Internet technology as well as other
business sectors. Stock exchange as a critical pillar of each economy, acts exactly the same as
a thermometer of economical condition of the country. The volume of stock transactions, the
index growth and tendency of individuals and legal entities crystallized if the economy of a
country is flourishing or on the other hand continue recession conditions. Therefore, providing
a flow trading process and accelerating the transaction settlement can create more motivation
for traders to join stock trading exchange likewise cooperate and invest in companies and
finally, in this manner, internet creates an opportunity of reaching these goals.
Countries all over the world have invested heavily to leverage the Internet and transform their
conventional businesses into e-businesses. E-businesses are defined as the use of Internet
based information and communication technologies (ICT) by organizations to conduct
transactions, share information and maintain relationships (Poon and Swatman, 1999). New
47

technologies such as World Wide Web have made a profound on all business around the
world. E-business enables organizations to reduce cost, increase demand and create new
business models (Dunt and Harper, 2002) E-commerce is a subset of e-business and defined as
buying and selling of goods and services on the Internet, especially the World Wide Web
(www.dotcom productions.com). In fact, any commerce carried out using computer networks
are called electronic commerce and has created an opportunity to do business and handle
transactions electronically and stock trading domain makes the most of its chance all over the
world. As, the time factor play a critical role in this business, internet quicken and streamline
the trading process. Creating more convenience, saving time and money and paperless process
are the most significant goals of online trading. Referring to two websites which are active in
trading fields (www.investorwords.com and www.advfn.com) they define online trading in
this manner: The increasingly popular activity of buying and selling securities over the
internet, or to a lesser extent, through a broker's proprietary software.
Likewise Fan et al. define it in this way: The 'online trading' is defined as a process of trading
financial products especially stocks over the Internet, and online stock trading site is a web
site that helps traders or customers to buy and sell the financial products over the Internet (Fan
et al., 2000).
The number of online investors has grown considerably since the first electronic brokerage
opened its virtual doors in 1994(Fahri and Movassaghi, 2001). These e-brokerages have
attracted 12 million investors in less than five years, now accounting for over 33% of retail
stock trades (Konana, 2000). The number of ebrokerages has also grown-from only 12 in 1994
to more than 120 in 1999, according to Gomez Advisors (www.gomez.com).
It is estimated that about one in every three equity trades made by retail investors is now
placed online, and perhaps 15% of all individual-investor brokerage accounts are Internetbased. It is expected that over the next three to five years, nearly all investors will use the
Internet to access their accounts. In 1996 only 8% of retail trades were placed online with only
12 Internet brokers in existence (Carey, 2000). By 2000, according to U.S. Bancorp Piper
Jaffray Inc. (www.pjc.com), 48% of trades are done online and over 100 firms are in business.
It is reported that the number of daily transactions was just under 900,000 per day. Certainly,
Online trading in America has shown amazing growth.
Online trading has become so popular that several companies are now building systems to
allow investors to trade electronically after normal stock-exchange hours; others are using
pagers and other wireless devices to let customers trade anytime, anywhere (Cullen, 1999).
48

Motivated by the significance of online stock trading services and the limited and inconsistent
empirical findings, we examined the interaction of experience clues with flow experience and
investigated their influence on customer satisfaction in online stock trading services using a
survey dataset from U.S.-based online stock traders. The concept of flow in human-computer
interaction is defined as a sensation occurs with significant cognitive involvement in a task (Li
& Brown, 2006). Prior research has established the connection between flow experience and
consumer behavior, such as attitude and loyalty (Novak, Huffman, & Yung, 2000). However,
it is unclear whether such a connection exists between flow experience and customer
satisfaction in online stock trading services. Therefore, our first research question is: how does
flow experience affect customer satisfaction in online stock trading services?
According to Haeckel, Carbone, and Berry (2003) and Berry, Wall, and Carbone (2006),
customers rely on the numerous clues embedded in performance when choosing services and
evaluating their service experiences. Despite the well developed structure of flow experience
(Csikszentmihalyi, 1991; Luna, Peracchio, & Juan, 2002) and experience clues (Haeckel,
Carbone, & Berry, 2003; Berry, Wall, & Carbone, 2006), few research has attempted to bridge
experience clues with flow experience by examining how such clues facilitate experience. In
this study, we measure the experience clues in online stock trading services with humanic
clues (i.e., customer service), functional clues (i.e., system), and mechanic clues (i.e., product
offerings and commission).
The major findings of the study are the Indian investors are more conservative, they do not
change brokers for trading, whereas net traders are more comfortable with online trading for
its transparency and complete control of the terminal

2.1 NEED OF THE STUDY

The need to study this in the Indian context arises from the growth and development of
online trading in India. Online trading was initiated by NSE in India and soon after the other
exchanges also followed it.
Today the online trading companies having cut-throat competition in our offering whose
brokerage discounts lower margin money and zero balance accounts. Due to the rising
education awareness and use of internet there is a huge potential for online trading in future
and companies must come up with innovative offerings to capture the untapped market.

49

CHAPTER IV
RESEARCH
METHODOLOGY

50

4. RESEARCH METHODOLOGY
4.1 RESEARCH DESIGN
A research design is a framework of blueprint for conducting on the marketing research
project. It details the procedures necessary for obtaining the information needed to structure
and solve marketing research problems. Although a broad approach to the problem has
already been developed, the research design specifies the details- the nuts and bolts- of
implementing that approach. A research design lays the foundation for conducting the
project.
Non Probability
The non probability respondents have been researched by selecting the persons who do the
stock trading. Those persons who do not trade in stocks have not been interviewed.
Exploratory and Descriptive Research
The research is primarily both exploratory and descriptive in nature. The sources of
information are both primary and secondary. The secondary data has been taken by referring
to various magazines, newspapers, internal sources and internet to get the figures required for
the research purposes. The objective of the exploratory research is to gain insights and ideas.
The objective of the descriptive research study is typically concerned with determining the
frequency with which something occurs. A well structured questionnaire was prepared for the
primary research and personal interviews were conducted to collect the responses of the target
population.
4.1.1 SCOPE OF THE STUDY
Scope of the study includes the following: Since the year 2000 a big boom has been witnessed in the Indian Stock Market when the
market showed the coming up of Online Trading System. Many online stock trading
companies came but initially due to lack of online trading some companies vanished and
some survived. The companies which survived are getting the handsome returns also
attracting the foreign Investment Companies. Nowadays this sector is facing cut-throat
competition and also provides huge growth prospects. The study then goes to evaluate and
analyze the findings so as to present a clear picture of the trends in the online trading sector.

51

4.1.2 OBJECTIVES OF THE STUDY

The objectives of my research project is
1. To determine the growth and future of online trading as an industry in India
2. To analyse the customer perception of online trading in terms of ease, security &
responsiveness.
3. To find the important factor which do mostly affect the customer related online trading.
4.1.3 SAMPLING DESIGN AND SAMPLE SIZE
Sampling Technique
Initially, a rough draft was prepared a pilot study was done to check the accuracy of the
Questionnaire and certain changes were done to prepare the final questionnaire to make it
more judgmental.
Sampling Unit
The respondents who were asked to fill out the. These respondents comprise of the persons
dealing in stock trading. The people have been interviewed in the open market, in front of the
companies, telephonic interviews and through other sources also.
Sampling Size
Main customers of stock exchange. The sample size was restricted to only 100 respondents.
Sampling Area
The area of the research was Patiala and Chandigarh only.

4.1.4 METHOD OF DATA COLLECTION

There are two major approaches for gathering information about a situation, person, problem
or phenomenon. Sometimes, the required information is already available and need only be
extracted. However there are times when the information must be collected. Based upon these
broad approaches, data are categorized as: Secondary data and Primary data. Secondary data
are collected from secondary sources such as governmental publications, personal records,
census (Kumar, 1996) and primary data are collected through: observation, interviews and/or
questionnaires (Hair et. al., 2003).
52

According to the nature of major research question, the quantitative approach is chosen and in
this case a questionnaire is prepared to measure the traders' satisfaction in two steps. Hence,
primary data will be extracted from the traders who are the critical focus point of this study.

4.1.5 TOOLS OF ANALYSIS

The following statistical tool is used for the purpose of study.
The core of the questionnaire was related to the list of aspects of service quality. Respondents
were asked to indicate the importance of that aspect.
After collecting all the data the process of analysis begins. To summarize and rearrange the
data several interrelated procedure are performed during the data analysis stage (Zikmund,
2000). For quantitative data analysis, statistical soft wares of Microsoft Excel was used for
data input and analysis. The statistics results were presented by graphical form with detail
descriptions.
5.1.6 LIMITATIONS OF THE STUDY
Following are limitations of the study:
1. People were not willing to answer the entire questionnaire due to the less time
available to them.
2. Some respondents might be hesitant to divulge personal and financial information
which can affect the validity of all responses.
3. There is lack of awareness among people about investing in stock market. So the
people who are aware of such things were found in specific areas for survey purposes.
4. Most people are comfortable with traditional system in small towns and like to trade
from their respective brokers, hence not providing a true opinion of theirs.
5. Some of the respondents who did not do online trading were able to respond to only
few questions.

53

CHAPTER V
DATA ANALYSIS &
INTERPRETATION

54

5. ANALYSIS
Below is the analysis done while doing the study on Online Trading in India.
5.1 Gender:
Table: 5.1
Male

59

Female

41

Graph: 5.1

INTERPRETATION: According to 100 respondents 59% of them are male and rest 41% of
them are female.

55

5.2Age Group
Table: 5.2
18-25
26-40
41-55
Above 55

21
37
22
20

Graph: 5.2

INTERPRETATION: According to 100 respondents 21% of them are between 18-25 years
of age, 37% of them are between 26-40 years of age, 22% of them are between 41 -55 years
of age, and rest 20% of them are above 55 years of age.

56

5.3 Marital Status

Table: 5.3
Single

29

Married

71

Graph: 5.3

INTERPRETATION: According to 100 respondents 29% of them, say that they are single
and rest 71% of them say that they are female.

57

5.4 Occupation
Table: 4.4
Service

33

Self employed
House Wife
Student
Retired / Other

19
25
13
10

Graph: 5.4

INTERPRETATION: According to 100 respondents 33% of them say that they are in
service, 19% of them say that they are self employed, 25% of them say that they are house
wives, 13% of them say that they are students and rest 10% of them say that they are
retired/other.

58

5.5. Could you kindly tick your group as per Total Family Income per month?
Table: 5.5
Less than 20,000
20,000 50,000
50, 000 1, 00,000
Above 1, 00, 000

29
58
10
3

Graph: 5.5

INTERPRETATION: According to 100 respondents 29% of them say that their total
family income per month is less than 20,000, 58% of them say that their total family income
per month is 20,000 -50,000, 10% of them say that their total family income per month is
50,000 100000, and rest 3% of them say that their total family income per month is above
100000.

59

5.6 Are you aware of online share trading and share market?.
Table: 5.6
AWARE OF ONLINE SHARE TRADING

%OF RESPONDENTS

Yes

100%

No

0%

Graph: 5.6

Interpretation: - With the increase in cyber education the awareness towards online share
trading has increased by leaps and bounds. the awareness is expected to increase further with
the increase in internet education.

60

5.7 Have you ever invested in the stock market ?

Table: 5.7
INVESTED IN THE MARKET

%OF RESPONDENTS

Yes

100%

No

0%

Table: 5.7

INTERPRETATION
The person who are doing a job or studying 100% people invested in the stock market.

61

5.8 What is your education qualification?

Table: 5.8
PEOPLE QUALIFICATION

RESPONDENTS

Higher Secondary

Senior Secondary

11

Graduate

49

Post Graduate

16

Professional Degree Holder

22

Graph: 5.8

INTERPRETATION
The people who are dealing with the stock market either online or offline. mort of them are
graduate, 49%of the total respondent who are dealing with the stock market are graduate,
then 16% are post graduate and 22% people is having professional degree. So here this is
showing that qualification up to graduation or more than that is in the favor of the online
trading patterns

62

5.9 What is your annual income?

Table: 5.9
INCOME LEVEL

RESPONDENTS

200000-300000

300000 400000

400000 - 500000

12

500000 600000

21

Above 600000

58

Graph: 5.9

INTERPRETATION
2% respondent are having the income level of 200000-300000 ,7% is having 300000-400000,
12% in having 400000-500000 , 21% respondent are having the income level of 500000600000 and only 58% are having above 600000 per annum.
To invest in the stock market minimum 100000 or more than this should be the annual
income level of the people. In India the per capita income in also increasing so we can say
that there is a good opportunity for the online trading market

63

5.10 Which is the most preferred investment pattern?

Table 5.10
INVESTMENT PATTERN

RESPONDENTS

Equity

65

Mutual Fund

14

Insurance

Term Deposit

12

Others

Graph: 5.10

INTERPRETATION
Highest number of respondent is having their investment in the equity that is 65% whereas
the investment available for the mutual fund, term deposit and insurance is 14%, 12% and
9% So the investor for equity is high which is again showing the number of opportunity for
online trading

64

5.11 What is the primary objective of your investment?

Table: 5.11
INVESTMENT OBJECTIVES

RESPONDENTS

Capital Appreciation

13

Source of Income

77

Retirement Planning

Wealth Preservation

Education Funding/Others

Graph: 5.11

INTERPRETATION
13% of the respondent invests the money for the reason capital appreciation but most of the
investor is having same motive that is source of income and retirement plan, wealth
preservation and education funding for children or other are only 10%
From the analysis we can have idea that the main objective of the investor to earn the money
through trading in stock market 77% of the respondent achieves their objective with the help
of investment in the equity market, because most of the investment takes place in the form of
equity (explanation of 4th ans.)
So we can say that there is a huge potential in the market for the trading in the stock market
65

5.12 Do you owe a Computer?

Table: 5.12
INVESTED IN THE MARKET

%OF RESPONDENTS

Yes

100%

No

0%

Graph: 5.12

INTERPRETATION
100% of the total respondent who are dealing with the stock market is having computer in
their house.
The people who is having computer that is 100% can also go for online trading which can be
a large number of people who will go for online trading.

66

5.13 To operate a computer is easy for me

Table 5.13
COMPUTER OPERATING

RESPONDENTS

Strongly Agree

26

Agree

51

Cant Say

Disagree

13

Strongly Disagree

Graph: 5.13

INTERPRETATION
76% (26+51) of the total respondent believe that operate a computer is easy for me whereas
20%(13+7) of the respondent is having problem to operate a computer out of that 20% , 75
believe that they cant go for computer
So, if 78% of the people who are dealing with the stock market is having computer at their
house and around 76% of the same population dont have any problem to operate a computer
So around 60 % is there who is having computer and they dont have problem to operate a
computer

67

5.14 Online trading is a secure way of trading?

Table: 5.14
SECURE TRADING

RESPONDENTS

Strongly Agree

37

Agree

34

Cant Say

11

Disagree

14

Strongly Disagree

Graph: 5.14

INTERPRETATION
71% of the respondent is having a positive thinking that online trading is a secure way of
trading whereas 18 of the respondent believes that online trading is not a secure way of
trading Satisfaction about the process, by which they will be going to do a trading that is
online trading, should be there in the mind of the customer.
If they believe that there is no risk over the money which they are going to invest in the
market with the help of online trading, there will be a perception to go for online trading at
least one time

68

5.15

Are you a Long term investor or short term investor

TABLE 5.15

Long term

Short term

59

41

Graph 5.15

From the study it is clear that long term investor or short term investor.

59% of people preferred to invest in long term, which enables them to wealth

maximization.

41% of people preferred to invest in short term, by which they want to earn profit

from the fluctuations and volatilizing of stock market remaining 21% of respondents are
looking at their traditional investment avenues like bank deposits and real estate to have the
liquidity as safely.

69

5.16 How long you are trading on-line.

Table 5.16
Method
Investing
No.
respondents

of
of

1 year

1yr - 2 yrs

2yr 5 yrs

Above 5 yrs

25

45

21

Table 5.16

From the study it is clear that the how long people trading online. 75% of the
respondents are long term users of online trading mechanism. The period of their usage rates
from 2 years to 5 years.
Hence the data reveals that many of the investors are fully aware of online trading
mechanism of various financial products.

70

5.17 How do you access the On-line trading.

Table 5.17
By own

By personally meets the The phone instruction

broker for instruction
to Broker

36

34

30

Graph 5.17

From the study it is clear that access the On-line trading.

About 36% of respondents are aware of access online trading by their own. About 34% of
respondents who are not aces online trading only through brokers for instructions and 30% of
respondents are also not aware only thorough phone instruction to broker.
Hence it is concluded that the only the investors executing transactions on their own
computers so they are well aware of accessing the online trading.

71

5.18 By which means you are getting confirmation of trading.

Table 5.18
By e-mail directly

By Post

By Broker Email

39

33

28

Graph 5.18

From the study it is clear that confirmation of trade.

About the 39% respondents are aware of confirmation of trading by e-mail directly. About
33% of respondents are aware of confirmation of trading by post. About 28% of respondents
are aware of confirmation of trading by broker e-mail.
Hence it is concluded that investors are well known that after placing the order they are
getting confirmation of trading by e-mail directly.

72

5.19 At what time do you trade?

Table: 5.19
TIIMNGS FOR TRADING

RESPONDENTS

Office Hours

65

Free Time

35

Graph: 5.19

INTERPRETATION
65% of the total respondents do trading in office timing while 35% of the respondents do the
trading in free time. Here the people who do the trading in office timing they face the
problem of not in the continuous touch of the stock market, so online trading can be one of
the good solution of this problem.

73

5.20 Introduction of online trading helped to attract the new Investors thus increasing
the trading volumes at Stock Market?
Table: 5.20
ATTRACTING NEW CUSTOMERS

RESPONDENTS

Strongly Agree

36

Agree

41

Cant Say

Disagree

12

Strongly Disagree

Graph : 5.20

INTERPRETATION: 76% of the respondents believe that the introduction of online trading
helped to attract the new customer became the reason to increase the trading volume of the
market. On the other side 16% of the respondents believe that it doesnt affect the trading
volume.

74

CHAPTER VI
FINDINGS

75

6. FINDINGS

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

The person who are doing a job or studying 100% people invested in the stock
market.

Qualification up to graduation or more than that is in the favor of the online trading
patterns

In India the per capita income in also increasing so we can say that there is a good
opportunity for the online trading market

Investor for equity is high which is again showing the n number of opportunity for
online trading

Many of the investors are fully aware of online trading mechanism of various
financial products

Only the investors executing transactions on their own computers so they are well
aware of accessing the online trading

Investors are well known that after placing the order they are getting confirmation of
trading by e-mail directly

People who do the trading in office timing they face the problem of not in the
continuous touch of the stock market, so online trading can be one of the good
solution of this problem.

76

CHAPTER VII
SUGGESTIONS

77

7. SUGGESTIONS

The companies should come up with more and more innovative features in their web
portals.

Product change is necessary according to the need of the customers as there is a good
opportunity for the online trading market.

We should also focus upon the value added services. Generally company does claim
that if you will by the product you will get these benefits but company doesnt
provide the services here. So services always does matter when we talk of online
trading.

Company should also look for the problem which customer generally face when they
do trading (like problem of operating properly)

The customer should be educated regularly regarding the new technologies and
techniques of trading online and also other relevant information.

The companies should look after to develop more safe and secure ways of
transacting business online and companies should make maximum efforts to detect
fraud cases and minimize them.

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CHAPTER VIII
CONCLUSION

79

8. CONCLUSION
Researcher attempted to cover every aspect which somehow related to this research, but
anyhow due to some limitations like, time shortage and resource restrictions, still there is a
wide area in online trading word and identifying how it can impact on customer satisfaction.
Therefore in further researches the obstacles and limitations should be overcome.
My research project is quite relevant to the today generation of online trading community.
The following things can be useful for online trading community

They should know their market position with other competitors.

They should probe the broking company to get know some areas of improvement.

The changing perception of market and the companies will also be made clear.

They should get the broking companies to do effective segmentation of their market
based their research analysis teams for better trading.

Everyone should understand the effects & advantages of todays changing technology and
should keep themselves abreast with the changing & upcoming technology.

The last four months has been a great learning experience for me because I came to know
about many aspects of online trading which I didnt know in last 6 years of using the online
trading facilities. Some of the learning of mine is:

I improved my communication skills by learning how to talk to different kind of people

as it requires the different approach to handle each person.

I became aware about various aspects of working of stock exchange

I learnt few things about back office work

I learnt about the consumer perception about the stock market and online trading.

Patience was the thing I learnt the most as I have to approach various persons to whom I
had to explain same things again and again while approaching or calling them at regular
Intervals.

80

BIBLIOGRAPHY

81

BIBLIOGRAPHY
ARTICLES/RESEARCH PAPERS

Angus Reid Group Study (2004),

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Daniel,E., Walson,H. and Myers,A. (2002) "Adoption of E-Commerce by SMEs in the

UK", International Small Business Journal, Vol. 20(3), pp. 253-270.

Dunt,E.S. and Harper,I.R. (2002), "E-Commerce and the Australian Economy", The
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Epstein,C. (1999)"U.S. Online Brokers Think Global, Act Local", Wall Street and
Technology, November, pp. 20-22.

Fan,M., Stallaert,J. and Whinston,A.B. (2000) "The Internet and the Future of Financial
Markets", Communications of the ACM, Vol. 43, No.11, pp. 82-88.

Fahri,U. and Movassaghi,H. (2001) "Impact of Internet on Financial Services Industry: A

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Kishan R. P. and Opiela T. P. (2000), Bank Size, Bank Capital and the Bank Lending
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Konana,P. (2000), "The Implications of Online Investing", Communication of the ACM,

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WEBSITES

http://rbidocs.rbi.org.in/rdocs/Wss/DOCs/databse/lending.borrowing.pdf

http://rbidocs.rbi.org.in/rdocs/Wss/DOC/databse/forex.reserve.pdf

http://wber.oxfordjournals.org/cgi/content/abstract/10/2/341

http://www.nse-india.com/content/indices/niftymcwb.csv

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http://www.indiainfoline.com

83

ANNEXURE

84

ANNEXURE: QUESTIONNAIRE
Please tick your response whenever appropriate:
Name: ______________________

Contact No.: ______________________

1. Gender:
Male

Female

2. Age Group
18-25

26-40

41-55

Above 55

3. Marital Status
Single

Married

4. Occupation
Service

Self employed

House Wife

Student

Retired / Other
5. Could you kindly tick your group as per Total Family Income per month?
Less than 20,000

20,000 50,000

50, 000 1, 00,000

Above 1, 00, 000

6. Are you aware of online share trading and share market?
Yes

No

7. Have you ever invested in the stock market?

Yes

No

8. What is your education qualification?

Higher Secondary

Senior Secondary

Graduate

Post Graduate

Professional Degree Holder

9. What is your annual income?
200000-300000

300000 400000

500000 600000

Above 600000

400000 - 500000

10. Which is the most preferred investment pattern?

Equity

Mutual Fund

Insurance

Term Deposit

Others
85

11. What is the primary objective of your investment?

Capital Appreciation

Source of Income

Wealth Preservation

Education Funding/Others

Retirement Planning

12. Do you owe a Computer?

Yes

No

13. To operate a computer is easy for me

Strongly Agree

Agree

Cant Say

Disagree

Strongly Disagree
14. Online trading is a secure way of trading?
Strongly Agree

Agree

Cant Say

Disagree

Strongly Disagree
15. Are you a Long term investor or short term investor
Long term

Short term

16. How long you are trading on-line.

1 year

1yr - 2 yrs

2yr 5 yrs

Above 5 yrs

17. How do you access the On-line trading.

By own

By personally meets the broker for instruction

The phone instruction to Broker

18. By which means you are getting confirmation of trading.
By e-mail directly

By Post

By Broker Email

19. At what time do you trade?

Office Hours

Free Time

20. Introduction of online trading helped to attract the new Investors thus increasing
the trading volumes at Stock Market?
Strongly Agree

Agree

Cant Say

Disagree

Strongly Disagree

86