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submitted by:
Priya Gupta 1027170022
submitted to:
(271) BIT SCHOOL OF MANAGEMENT PARTAPUR BY PASS ROAD MEERUT (AFFILIATED TO MAHAMAYA TECHNICAL UVIVERSITY,NOIDA)
DATE:
CERTIFICATE
This is to certify that Miss priya gupta,student of MBA (2010-2012),1027170022 has completed her work on A study on the analysis of stock market .
COMPANY CERTIFICATE
DECLARATION
I priya gupta student of MBA 3rd sem. studying at Bharat institute of technology, meerut hereby declare that the summer training report on Analysis of stock market in INDIA INFOLINE submitted to Mahamaya technical university, Noida in partial fulfillment of degree of Masters of Business Administration is the original work conducted by me.
The information and data given in the report is authentic to the best of my knowledge.
This Summer training report is not being submitted to any other University for award of any other degree , Diploma and Fellowship.
priya gupta
ACKNOWLEDGEMENT
It is my pleasure to be indebted to various people ,who directly or indirectly contributed in the development of this work and who influenced my thinking ,behaviour and acts during the course of study. I express my sincere gratitude to MR.Ritesh Paliwal(Branch manager) worthy principal for providing me an opportunity to undergo summer training at INDIA INFOLINE ltd. I am thankful to Mr.Amit gupta for his support,cooperation and motivation provided to me during the training for constant inspiration,presence and blessings. I also extended my sincere appreciation to Dr.Yasmeen Ansari who provided his valuable suggestions and precious time in accomplishing my project report. Lastly,I would like to thank the almighty and my parents for their moral support and my friends with whom I shared my day to day experience and received lots of suggestions that improved my quality of work.
Priya Gupta
PREFACE The objective of the project was firstly, based on a methodological study, as it required me to understand Stock market. To execute the study I preferred to study about Stock market and all the participants in the Stock market. Thus, the first part of the project was executed by learning the following in detail:
1.
Overview of stock Market. Company profile Investment in stock market Participants in equity Market Services of INDIA INFOLINE.
2. 3.
4. 5.
Peer comparison of other companies providing Online Share Trading is also done. Further, in operation I Learned about Share Trading and Process of Opening the accounts & in this process we have to follow the guidelines given by SEBI. In instruction I have also learned how the delivery instruction, procedure will be carried out. Finally, I had to do trading on behalf of the clients by giving them the advisory function. For providing the advice some of the advice is given by studying the market sentiments and by analyzing the stocks. The associates have its research division in Mumbai.
Chapter2:
2.1 objective of study 2.2.2 Scope of the study
chapter4: Research methodology chapter5: limitations of the study Chapter6: Data Analysis and interpretations Chapter7: Findings Chapter8: Conclusion Chapter9: Recommendations and Suggestions Chapter10: References
Chapter: Questionnaire
COMPANY PROFILE
we are INDIA INFOLINE ltd. one of the countrys leading player in the business of investment advisory and intermediation. This group has presence across India in various businesses through its wholly owned subsidiary. our business are broking in equities and commodities (where we are popular known by our brand name.(5paisa.com) and distribution of mutual fund and other personal investments products. we are also the no.1 corporate agent of the no.1 private life insurance company ,ICICI prudential life insurance company. we are members of both the leading stock exchange, of india viz. the stock exchange ,Mumbai(BSE) and National stock Exchange (NSE) and also a depository participant with NSDL.
INDIA INFOLINE ltd. The Groups principal activities are to provide brokerage and
financial services. It includes mutual funds, fixed deposits and government bonds. The Group is a corporate agency of life insurance and commodities and operates through 1,361 business locations spread over 428 cities. The INDIA INFOLINE group, comprising the holding company, INDIA INFOLINE limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from equity research, equities and derivatives trading, commodities trading, portfolio management services, mutual funds, life insurance, fixed deposits, goi bonds and other small savings instruments to loan products and investment banking. INDIA INFOLINE also owns and manages the websites www.indiainfoline.com and www.5paisa.com the company has a network of over 2100 business locations (branches and subbrokers) spread across more than 450 cities and towns. the group caters to approximately a million customers.
Client list read like whos who of business. A small team of 5-6 ,grew to 15-20 by 1999.
Focus on Transactions:
INDIA INFOLINE changed business model from information to transaction oriented in year 2000. INDIA INFOLINE distribution company ltd. INDIA INFOLINE securities ltd. Paid research report on india infolie.com.
Subsidiaries
The chart below shows the corporate structure of INDIA INFOLINE group with holding company, its subsidiaries and the businesses that each of the subsidiaries is engaged in:
Commodities Trading 5. INDIA INFOLINE Investment Securities Pvt. Ltd. Margin Funding
TOP MANAGEMENT
MANAGEMENT TEAM
He holds an MBA degree from IIM Ahmadabad and is charted accountant (All india rank2) And a cost accountant. He started his carrier in 1989 with Hindustan Lever limited. During his stint with Hindustan Lever, He handled a variety of responsibilities, including exports and trading in agro commodities with Rs.3 bn annual turnover.
He then joined hands with two local broker to set up their equity research divison,Inquire in 1994. His work set new standard for equity research in india. In 1995 he founded his own independent financial research company, now known a INDIA INFOLINE ltd.
Mr. Nilesh Shivaji Vikamsay joined the board with effect from Februaury 11,2005. Mr. Vikamsay qualified as a charted Accountant in 1985 and has been a member of the institute of Charted Accountants of india since 1985. In 1985,Mr. Vikamsay was inducted as partner in M/S Khimji Kunverji and company ,Charted Accountant and was in charge of the audit department till 1990 and thereafter also handles assignments related to financial services ,consultancy investigation,mergers and acquisition ,valuation etc.
board with effect from January Agra university with a Maters degree. He is currently the Managing Director of the Global institute for Financial and educational services (india) Private Limited (a wholly owned subsidiary of the Global institute,LLC,USA) Mr. Sinha is also on the board of directors of Hindustan Motor Limited, Lersen and Toubro limited and LICHHFL care homes limited. Mr. Sinha graduated from the
SWOT ANALYSIS
What is SWOT analysis? SWOT is an acronym for strengths, weakness, opportunities and threats. Here this are briefly described as follows: Strengths: Strength is the capability of the organisation, which is usedto gain strategic
advantage over its competitors. Weakness: Weakness is an inherent limitation or constraint of the organization, which
creates strategic disadvantage to it. Opportunity: An opportunity is a favourable condition in the Organizations
environment, which enables to strengthen its position. Threats: A threat is an unfavourable condition in the organizations environment, which
7.
1.
STOCK MARKET
Essentially a market is a place, which introduces a buyer to a seller. In the case of Stocks the buyer and seller are dealing in small ownership portions of competition or shares. Stock market performs the following functions: Create connecting those who seek money with those who can provide it. An auction mechanism in which prices can be decided for investment. Distributing the future risk of investments across many millions of individuals. Providing the claim tickets upon which future wealth can be staked. Connecting financial institution together to create money.
Overtime Stock Markets have become the very symbol of commerce in the modern world. They are truly unique in their scope and in the complexity of the number of transactions they handle each day. The economy of the world relies on the stock exchange to facilitate even trade in the stock of companies. In our current era anyone can easily hook themselves up the most popular stock exchange just by online brokerage account. Direct interaction with the selling floor of the exchange gives the modern investor more control than any other generation. Current stock market The current stock market is comprised of 30,000 computers situated on portrayer desks. These computers are networked together using sophisticated protocols. This level of information Sharing makes pricing an almost exact science. These 30000 computers are further linked to another 26 millions computers worldwide. The computers are located in banks, small business and large corporations. These computers comprise the banking networks which make computerized transactions. Finally, these computers are connected to another 300 million computers, which connect and disconnect from the financial markets daily. In New York City alone, these transactions amount to over $2.2 trillion dollars daily.
long term for companies. It directs the flow of capital in the most profitable channels. It induces companies to raise their standard of performance. It offers guidance to management about cost of capital
Measures of safety and fair Dealing The stock exchange operate under a regulatory framework which are approved by the central government, and meant to ensure that a reasonable measure of safety is provided to investors and transactions take place in competitive conditions which are faired to all concerned. Act of magic Most of the investors are interested in short term to medium term investments. The requirement of companies is long term in nature-they require equity capital on a more or less permanent basis and debenture capital for 3 to 15 years. Thanks to the negotiability and transferability of securities through the stock market, it is possible for companies to obtain their long term requirement from investor with short term and medium term horizons. Flow of capital to the most profitable Channels Companies, Which have more profitable investment opportunities, are normally able to raise substantial funds through the stock market, whereas companies which do not have such opportunities are normally not able to do, so as a result, the stock market facilitates the direction of the flow capital to the most profitable channels. Inducement to companies to raise their Standard of performance When the equity capital of a company is listed on a stock exchange, the performance of the company is reflected in the market price of the equity stock, which is readily available for public consumption. Put differentially, the company performance is more visible in the eyes of the public. Such a public exposure normally induces companies to raise their standard of performance. Guidance on cost of capital As discussed earlier in the chapter of cost of capital the market values of the securities of companies are required for computing its cost of capital. Such values
can be obtained from stock market quotations. Hence the stock market offers guidance on cost of capital.
re-admission of its members, appointment of authorized representatives and clerks, so on and so forth have to be approved by the government. These rules can be amended, varied or rescinded only with the prior approval of the government. The securities contracts regulation act vests the government with the power to make enquiries into the affairs of a recognized stock exchange and its business, withdraw the recognition and to take complete control. The central government has entrusted the task of regulating the stock exchange to the Securities Exchange board of India. Presently the recognized stock exchange in India has one of the following organizational forms: (a) voluntary non profit making organization (b) Public limited company and (c) Company limited by guarantee. The recognized stock exchange are managed by a governing body consisting of elected and nominated members. Stock exchanges are required to appoint an executive director with substantial powers to be the chief operating executives. Rule 8 of the securities contract ( regulation) act,1956 spells out the eligibility criteria for membership of a stock exchange. The important ones are: (1) He should be an Indian citizen and at least 21 years of age;(2) he should not have been adjudged bankrupt or proved to be insolvent; (3)he should nit be engaged in any other business or employment; if he is so engaged he must give an undertaking that he would server such connection on becoming a member. There has been a phenomenal growth in the operation of the stock market in India, particularly from the 1980s.Table reflects the pattern of this growth:
FINANCIAL MARKET
A financial market can be defined as the market in which the financial assets are created and exchanged. Financial markets are sometime classified as primary and secondary markets. But more often financial markets are classified as money markets and capital markets. The
distinction between two markets is based on the difference of period of maturity of the financial assets issued in these markets.
CAPITAL MARKET
Capital market is a long term debt and equity. In this market, the capital funds comprising the both equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as organized market like stock exchanges. Capital market can be further divided into primary and secondary markets. Capital market provides resources needed by medium and large scale industries for investment purposes, while money market provides resources for working capital needs. The capital market enables flow of funds between investors and corporate through: Buying and selling of securities Liquidity Price discovery
PRIMARY MARKET
The issuer (corporate) approaches the investor to collect the money. In the primary market, companies access the savers directly for funds. The other alternative for companies is to access the financial institutions and banks for funds. These two approaches are called Disintermediation and Intermediation respectively. The Primary market provides the channel for sale of new securities .Primary market provides opportunity to issuers of securities; Government as well as corporate ,to raise resources to meet their requirements of investment and/or discharge some obligations. They may issue the securities at face value ,or at discount/premium and these securities may take a variety of forms such as equity, debt etc. They may issue the hare in domestic market and/or in international market.
FACE VALUE OF A SHARE/DEBENTURE? The nominal or stated amount (in rs.) assigned to a security by the issuer .For share, it is the original cost of the shown on the certificate; for bonds. it is the amount paid to the holder at maturity .Also Known as per value or simply par n equity share, the face value is usually very small amount (Rs.5,Rs.10) and does not have much bearing on the price of the share ,which may quote higher in the market ,at Rs.100 or Rs.1000 or any other prices.
DIFFERENT KINDS OF ISSUE? Primarily, issue can be classified as a public Rights or preferential issue (also known as private placement ). While public and right issue involve a detailed procedure ,private placements or preferential issues are relatively simpler. The Classification of issue is illustrated below: INITIAL PUBLIC OFFERING (IPO) is when an unlisted company makes either e fresh cash of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing of the issuers securities. A FOLLOW ON PUBLIC OFFERING (FURTHER ISSUE) is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document.
RIGHT ISSUE is when a listed company proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue .This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders. A PREFERENTIAL ISSUE is an issue or of convertible securities by listed companies to a select group of persons under section 81 of the companies Act, 1956 which is neither a right issue nor a public issue .This is a faster way for a company to raise equity capital .The issuer company has to comply with the companies Act and the requirements contained in the chapter pertaining to preferential allotment in SEBI guidelines which inter-alia include pricing, disclosure in notice etc. ISSUE PRICE? The price at which a companys shares are offered initially in the primary market is called as the Issue price. When they begin to be traded, the market price may be above or below the issue price. DIFFERENCE BETWEEN PUBLIC ISSUE AND PRIVATE PLACEMENT? When an issue is not made to only a select set of people but is open to the general public and any other investor at large, it is a public issue. But if the issue is made to a select set of people, it is called private placement .As per Companies Act, 1956 an issue becomes public if it results in
allotment to 50 persons or more. This means in issue can be privately placed where an allotment is made to less than 50 persons.
SECONDARY MARKET
Secondary Markets are referred to the markets, where securities are traded after being initially offered to the public in the primary market and or listed on stock exchange. Majority of the trading is done in the secondary market. Secondary market comprised of equity markets and the debt markets. For the general investors .the secondary markets provides an efficient platform for the trading of securities. For the management of the company, secondary equity markets serves as a monitoring and control conduct by facilitating value enhancing control activities, enabling implementation of incentive based management contracts and aggregating information (via price discovery) that guides management decisions.
In the secondary market, capital movement takes place between two investors. The companies are not in the pictures. An investor buys shares (or other financial instruments) from other investors through other stock exchange. Therefore all the transactions take place in listed instruments.
Equity shares An equity shares, commonly referred to as ordinary shares also represents the form of fractional ownership in which a shareholder, as a fractional owner, undertakes the maximum entrepreneurial risk associated with a business venture. The holders of such shares are members of the company and have voting rights. A company my issue such shares with differential rights as to voting, payment of dividend etc RIGHT ISSUE/RIGHT SHARES The issue of new securities to existing shareholders at a ratio to those already held. BONUS SHARES Shares issued by the companies to their shareholders free of cost by capitalization of accumulated reserves from the profits earned in the earlier years.
PREFERRED STOCK/PREFERNCE SHARES Owners of these kinds of shares are entitled to a fixed dividend or dividend calculated at a fixed rate to be paid regularly before dividend can be paid in respect of equity share. They also enjoy priority over the equity shareholders in payment of surplus. But in the event of liquidation. their claims rank below the claims of the companies creditors, bondholders/debenture holders. CUMULATIVE PREFERENCE SHARES A type of preference shares on which dividend accumulated if remains unpaid. All arrears of preference divided have to be paid out before paying dividend on equity shares. CUMULATIVE CONVERTIBLE PREFERENCE SHARES A type of preference shares where the dividend payables on the same accumulates, if not paid. After a specified date, these shares will be converted into equity capital of the company. PARTICIPATING PREFERENCE SHARES The right of preference shareholder to participate in profits after a specified fixed dividend contracted for is paid. Participation right is linked with the quantum of dividend paid on the equity shares over and above a particular specified level.
SECURITY RECEIPTS Security receipts means a receipts or other security, issued by a securitization company or reconstruction company to any qualified institutional buyer pursuant to a scheme. Evidencing the purchase in acquisition by the holder thereof, of an undivided right, tide or interest in the financial assets involved in securitization. DEBENTURES Bonds issued by a company bearing a fixed rate of interest usually payable half yearly on specific dates and principal amount repayable on particular date on redemption of the debentures. Debentures are normally secured/charged against the asset of the company in favors of debenture holder. BOND
A negotiable Certificate evidencing indebtedness. It is normally unsecured. A debt Security is generally issued by a company, municipality or government agency. A Bond investor lends money to the issuer and in exchange, the issuer promises to repay the loan amount on a specified maturity date. The issuer usually pays the bondholder periodic interest payments over the life of the loan. The various types of bonds are as follows:
1.
ZERO COUPON BOND- Bond issued at a discount and repaid at a face value. No
periodic interest is paid. The difference between the issue price and redemption price represents the return to the holder. The buyer of these bonds receives only one payment, at the maturity of the bond. 2. CONVERTIBLE BOND-A Bond giving the investor the option to convert the bond into
COMMERCIAL PAPER
A short-term promise to repay a fixed amount that is placed on the market either directly or through a specialized intermediary. It is usually issued by companies with a high credit standing in the form of a promissory note redeemable at par to the holder on maturity and therefore doesnt require any guarantee. Commercial paper is a money market instrument issued normally for tenure of 90days.
TREASURY BILLS
Short term (up to 91 days) bearer discounts security issued by the government as a means of financing its cash requirement.
securities are traded among investors. Secondary market could be either auction or dealer market.Whille Stock Exchange is the part of an auction market, Over the counter (OTC) is a part of dealer market or capital market.
MONEY MARKET
Money market is a market for debt securities that payoff in the short term usually less than one year, for instance-the market for 90 days treasury bills. This market is compasses the trading and issuance of short term debt instrument including treasury bills, commercial paper ,bankers acceptance, certificate of deposits etc.
STOCK EXCHANGE
Stock exchange is a market place where industrial securities like equity shares .preference shares, debenture and bond of listed companies and the government securities are traded. The stock exchange is a prime institution in the security market. Its main function is to provide the mechanism of the exchange of securities which already existed. The stock exchange not only helps the business undertaking in the private sector but also the government for raising and management of public debts. It is useful for the government not only in time of piece but also in time of war. It provides mobility to capital and directs the flow of capital into profitable enterprise. It is a performance index and barometer of economic growth of country. Stock exchange has been defined under the securities regulation act,1956 as Any body of individual whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying ,selling, or dealing in securities.
1. 2. 3. 4. 5. 6.
Adequate marketability and price continuity to shares dealt there in Safety and fair dealing in buying or selling of securities Correct valuation of securities by setting their prices constantly and continuously disclosing their worth. Mobilizing the saving of community for investment into productive lines Helps in capital formulation of the country Widening the share ownership base.
fraud.SBTS enables distant participant to trade with each other, improving the liquidity of the markets. The high speed with which trades are executed and the large number of participants who can trade simultaneously allows faster incorporation of price sensitive information into prevailing prices. This increase the informational efficiency of market. with SBTS.it becomes possible for market participants to see the full market, which helps to make the market more transparent ,leading to increased investor confidence. The NSE started nation wide SBTS, which have provided a completely transparent trading mechanism. Regional exchanges lost a lot of business to NSE, forcing them to introduce SBTS.Today,India can boast that almost 100% trading takes place through electronic order matching. The National Stock Exchange seeks to (a) establish a nation- wide trading facility for equities, debt and hybrids (b) facilitates equal access to investors across the country.(c) fairness,effeciency and transparency to securities,(d) shorten settlement cycle and (e) meet international securities market standards.
The main objectives of NSE are as follows: 1. To establish a nation wide trading facility for equities, debt instrument and hybrids. 2. To ensure equal access to investors all over the country through appropriate communication network. 3. To provide a fair, efficient and transparent securities market to investors using and electronic communication network. 4. To enable shorter settlement cycle and book entry settlement system. 5. To meet current international standards of securities market.
3. The NSE has opted for an order driven sysytem.When a trading member places an order, the computer automatically generates a unique order number and the member can take the confirmation slip containing this number. 4. When a trade takes place a trade confirmation slip is printed at the trading members workstation. It gives details like quantitiy,price,code number of counter party and so on., 5. The identity of a trading member is not revealed to others when he places an order or when his pending orders are displayed.Hence,large orders can be placed on the NSE. 6. Members are required to deliver securities and cash by a certain day. The payout day follows the above. 7. All trades on NSE are guaranteed by the National securities Clearing Corporation (NSCC).This means that when A buys from B, NSCC becomes the seller to A and the buyer to B.This eliminates counterparty risk.
2. Jobbers play an important role on the BSE.A jobber is a broker who trades on his own account and hence offers a two way quote or bid-ask quote. The bid price reflects the price at which the jobber is willing to buy and the ask price represents the price at which the jobber is willing to sell. 3. Investors have to transact via a jobber/broker. The jobber/broker feeds his buy/sell quotes in his computer terminal, which is linked to the main server at the BSE.Since Both jobbers and brokers feed their orders, the BSE has adopted a quote-driven system and an order-driven system.
JASDAQ
(Japanese
Association
of
Securities
of
Dealers
Automated
Quotation).The OTCEI was started with the objective of providing a market for the smaller companies that could not afford the listing fees of the large exchanges and did not fulfill the minimum capital requirement for listing. It aimed at creating a fully decentralized and transparent market. Over the counter means trading across the counter in scripts. The counter refers to the location of the member or dealer of OTCEI where the deal or trade takes place. Every counter is treated as a trading floor for the OTCEI where the investor can buy and sell.
The members of dealers of OTCEI counters are linked to the central OTCEI computers. The member should have the computer and telecommunication facility.
you purchased 100 shares at 20.00 per share and the price rose to 25.00 a share, you are sitting on a profit of 500.00.This is possible in a matter or hours or days depending on the stock you choose to invest in. Many people choose to invest in the stock market for the long term. Stocks sometimes drop in value and you can loose money as well. There are no guarantees when you are investing in the stock market and you have to be prepared to take a loss as well as a gain.
development. Monitoring and surveillance was put in place in the stock exchanges in 1996-97 and strengthened in 1997-98. Objective of SEBIThe promulgation of the SEBI ordinance in the parliament gave statutory status to SEBI in 1992.According to the preamble of the SEBI, the three main objectives are: To protect the interest of the investors in Securities. To promote the development of securities market. To regulate the Securities market.
FUNCTIONS OF SEBI
The main function entrusted with SEBI is: Regulating the business in stock exchanges and any other securities market. Registering and regulating the working of stock brokers, sub-brokers, share transfer
agents, bankers to the issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities market in any manner. Registering and regulating the working of collective investment schemes including
mutual funds. Promoting and regulating self-regulatory organizations. Prohibiting fraudulent and unfair trade practices in the securities market. Promoting investors education and training of intermediaries in securities market. Prohibiting insiders trading in securities. Regulating substantial acquisition of shares and take-over of companies. Calling for information, undertaking inspection, conducting enquiries and audits of the
BOOK BUILDING
SEBI guidelines define the Book Building as a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built up and the price for such securities is assesses for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisements, document or information memorandum or offer document. Book Building is a basically a process used in an initial public offer (IPO) for efficiency price recovery. It is the mechanism, where during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.
be known everyday, as the book is build. But in the case of public issue the demand is known at the closure of the issue.
INVESTMENT
The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment.
One of the important reasons why one needs to invest wisely is to meet the cost of inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of good or services in the future as it does now or did in the past. For example, If there were 6% inflation rate for the next 20 years, an Rs.100 purchase today would cost Rs.321 in 20 years. This is why it is important to consider inflation as a factor in any long term investment strategy. Remember to look at an investment real rate of return, which is the return after inflation. The aim of investment should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. For Example, If the annual inflation rate is 6%,then the investment will need to earn more than 6%to ensure its increases in value. If the after tax return on your investment is less than the inflation rate, then your assets have actually decreased in value; that is, they wont buy as much today as they did last year.
Before making any investment, one must ensure to: 1. 2. 3. 4. 5. 6. 7. 8. 9. made. 10. 11. 12. Deal only through an authorized intermediary. Seek all clarifications about the intermediary and the investment. Explore the options available to you if something were go to wrong, and then, if satisfied, Obtain written documents explaining the investment. Read and understand such documents. Verify the legitimacy of the investment. Find out the costs and benefits associated with the investment. Assess the risk return profile of the investment. Know the liquidity and safety aspects of the investment. Ascertain if it is appropriate for your specific goals. Compare these details with other investment opportunities available. Examine if its fits in with other investment you are considering or you have already
Inflation rate The reserve Bank of India and the Government Policies which determine some of the
VARIOUS OPTIONS AVAILABLE FOR INVESTMENT? One may invest in: Physical assets like real estate ,gold/ jewellary. commodities etc and. or Financial assets such as fixed deposits with banks, small savings instrument with post
offices, insurance/provident/pension fund etc.or securities market related instrument like shares ,bonds, debentures etc.
entire principal along with the interest is paid at the end of the loan period. The rate of interest varies between 6-9% per annum for company FDs. The interest received is after deduction of taxes. Bonds: It is fixed income (debt) instrument issued for a period of more than one year with the purpose of raising capital. The central or state government, corporations and similar institution sell bonds. A bond is generally a promise to repay the principle along with a fixed rate of interest on a specified date, called the Maturity Date.
Mutual funds: These are funds operated by an investment company, which raises money from the public and invests in a group of assets (shares .debentures etc.) ,in accordance with a stated set of objectives. It is a substitute for those who are unable to invest directly in equities or debt because of resources, time or knowledge constraints. Benefits include professional money management, buying in small amounts and diversification. Mutual fund units are issued and redeemed by the Fund Management Company based on the funds net asset value (NAV),which is determined at the end of each trading session.NAV is calculated as the value of all the shares held by the fund, minus expenses, divided by the number of units issued. Mutual Funds are usually long term investment vehicle through there some categories of mutual funds, such as money market mutual funds which are short term instruments Equity/Shares? Total equity capital of a company is divided into equal units of small denominations, each called a share. For example, in a company the total equity capital of Rs.2,00,00,000 is divided into 20,00,000 units of Rs 10 Each. Each such unit of Rs. 10 is called a share. Thus ,the company then is said to have 20,00,000 equity shares of Rs 10 each. The holders of such shares are members of the company and have voting rights. Debt Instrument? Debt instrument represent a contact whereby one party lends money to another on predetermined terms with regards to rate and periodicity of interest, repayment of principal amount by the borrower to the lender. In the Indian securities markets, the term bond is used for debt instrument issued by the Central and State government and public sector organizational and the term debentures used for instrument issued by private corporate sector.
Derivative? A stock option is the right (or obligation) to buy or sell stock in future at a fixed price. Stock options are often part of the package of executive compensation offered to key executives. Some companies extend stock options to all (or nearly all) of their employees. This was especially true during the dot-com boom of the mid to late -1990s,in which the major compensation of many employees was in the increase in the value of stock options they held, rather than their wages or salary. Some employees at dot-com companies become millionaires on their stock options. This is still a major method of compensation for CEOs. The theory behind granting stock options to executives and employees of corporation is that, since their financial fortunes are tied to the stock price of the company, they will be motivated to increase the value of stock. Depository? A depository is like a bank wherein deposits are securities (viz. Shares, debentures, bonds, government securities, units etc.) in electronic form. Securities? The definition of Securities as per the Securities Contracts Regulation Act (SCRA) , 1956,includes instrument such as shares ,bonds, scripts, stocks or other marketable securities of similar nature in or of any incorporate company or body corporate, government securities, derivatives of securities, units of collective investment Scheme, interest and rights in securities, security receipt or any other instrument to declared by the Central Government. What are the securities one can invest in? Shares Government Securities Derivative products Units of Mutual Funds etc.., are some of the securities investors in the securities market can invest in. initial public offer (ipo)?
An initial Public offer (IPO) is the selling of securities to the public in the primary market. It is when an listed company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuers securities. The sale of securities can be either through book building or through normal public issue. public issue? When an issue is not made to only a select set of people but is open to the general public and any other investor at large, it is public issue.
price discovery through book building process mean? Book building is basically a process used in IPOs for efficient price discovery. It is mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date. how long does it take to get the shares listed after issue? It would take around 3 weeks after the closure of the book built issue.
what is the main difference b/w offer of shares through book building & offer of shares through normal public issue? Price at which securities will be allotted is not known in case of offer of shares through Book Building while in case of offer of shares through normal public issue, price is known in advance to investor. Under Book Building investors bid for shares at the floor price or above and after the closure of the book building process the price is determined for allotment of shares. In case of Book Building, the demand can be known everyday as the book is being built. But in case of the public issue the demand is known at the close of the issue. what is cut off price? In a book building issue, the issuer is required to indicate either the price band or a floor price band or a floor price in the prospectus. The actual discovered issue price can be any price in the price band or any price above the floor price. This issue price is called CUT-OFF PRICE. The
issuer and lead manager decides this after considering the book and the investors appetite for the stock. What does one mean by lock-in? Lock-in indicates a freeze on the sale of shares for a certain period of time. SEBI guidelines have stipulated lock in requirements on shares of promoters mainly to ensure that the promoters or main persons, who are controlling the company, shall continue to hold some minimum percentage in the company after the public issue.
listing of securities,? Listing means admission of securities of an issuer to trading privileges (dealings) on a stock exchange through a formal agreement. The prime objective of admission to dealing on the exchange is to provide liquidity and marketability to securities, as also to provide a mechanism for effective control and supervision of trading. What does Delisting of securities mean? The term delisting of securities means permanent removal of securities of listed companies from a stock exchange. As a consequence of delisting, the securities of that company would no longer be trade at that stock exchange.
STOCK TRADING
Screen Based Trading? The trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time Consuming and inefficient. This imposed limits on trading volumes and efficiency. In order to provide efficiency, liquidity and transparency, NSE introduced a nationwide, on-line fully automated screen based trading system (SBTS) where a member can punch into the computer the quantities of a security and the price at which he could like to transact, and the transaction is executed as soon as a matching sale or buy order from a counter party is found. NEAT? NSE is the first exchange in the world to use satellite communication technology for trading. Its trading system, called National Exchange for Automated Trading(NEAT) ,is a state of the art client server based application. At the server end all trading information is stored in an memory database to achieve minimum response time and maximum system availability for users. It has uptime record of 99.7%.For all trades centered into NEAT system; there is uniform response time of less than one second. how to place orders with broker? You may go to the broker, s office or place an order on the phone/internet or as definedin the Model Agreement, which every client needs to enter into with his or her broker. how does in investors get access to internet based trading facility? There are many brokers of the NSE, who provide Internet based trading facility to their clients. Internet based trading enables an investor to buy/sell securities through Internet, which can be accessed from a computer at the investors residence or anywhere else where the client can
access the internet. Investors need to get in touch with an NSE broker providing this service to avail of Internet based trading facility. contract note? Contract note is a confirmation of trades done on a particular day on behalf of the client by a trading member. It imposes a legally enforceable relationship between the client and the trading member with respect to purchase/sale and settlement of trades. It also helps to settle disputes/claims between the investor and the trading member. It is a prerequisite for filling a complaint or arbitration proceeding against the trading member in case of a dispute. A valid contract note should be in the prescribed form, contain the details of trades, stamped with requisites value and duly signed by the authorized signatory. Contract notes are kept in duplicate; the trading members and the client should keep one copy each. After verifying the details contained therein, the clients keep one copy and returns the second copy to the trading member duly acknowledged by him.
Exchange. Contract number, date of issue of contract note, settlemement number and time period for
settlement. Constituent (Client) name/code Number. Order number and order time corresponding to the trades. Trade number and Trade time. Quantity and kind of security bought/sold by the client. Brokerage and Purchase/sale rate. Service tax rates, Securities Transaction Tax and any other charges levied by the broker.
unregistered intermediaries. Ensure that you receive contract notes for all your transactions from your broker within
one working day of execution of the trades. All investments carry risk of some kind .Investors Should always know the risk that they
are taking and invest in a manner that matches their risk tolerance. Do not mislead by market rumors, luring advertisement or hot tips of the day. Take informed decisions by studying the fundamentals of the company. Find out the
business the company is into, its future prospects, quality of management past track records etc. Sources of Knowing about a company are through annual reports, economic magazines, database available with vendors or your financial advisor.
Dos and Donts should an investor bear in mind when investing in these stock markets?
clearly.
you give all your details in the Know Your Client form.
Ensure that the intermediary (Broker/sub-broker) has a valid SEBI registration certificate. Enter into an agreement with your broker/sub broker setting out terms and conditions
Ensure that you read carefully and understand the contents of the Risk Disclosure
Document and then acknowledge it. Insist on a contract note issued by your broker only, for trades done each day. Ensure that you receive the contract note from your broker within 24 hours of the
transaction. Ensure that the contract note contains details such as the brokers name, trade time and
number, transaction price ,brokerage, service tax, securities transaction tax etc. and is signed by the Authorized Signatory of the broker. To cross check genuineness of the transaction, log in to the NSE website
(www.nseindia.com) and go to the trade verification facility extended by NSE at www.nseindia.com/content/equities/eq.trdverify.htm.) Issue account payee cheques / demand drafts in the name of your broker only, as it appears on the contract note/SEBI registration certificate of the broker. If your advisor or broker advises you to invest in a company you have never heard of, be
cautious. Spend some time checking out about the company before investing. Do not attract by announcement of fantastic result/news reports, about a company. Do
your own search before investing in any stock. Dont attract to stock based on what an internet websites promotes, unless u have done
Investing in very low priced or stocks or what are known as penny stocks does not
guarantee high returns. Be cautious about stocks which show a sudden spurt in price or trading activity. While delivering shares to your broker to meet your obligations, ensure that the delivery
instruction are made only to the designated account of your broker only.
specific approval of SEBI for PMS. Hence, do not part your fund to unauthorized persons for portfolio management. In case of sub-broker disputes, inform the main broker in writing about the dispute at the
earlier and in many cases not later than 6 months. If your broker /sub-broker does not resolve your complaints within a reasonable period
(say within 15 days), please bring it to the attention of the Investor Grievances Cell of the NSE. Familiarize yourself with the rules, regulation and circulars issued by stock
RESEARCH METHODOLOGY
Meaning of research:Research is common parlance refers to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific investigation. Dictionary of current English lays down the meaning of research as a careful investigation or inquiry especially through search for new facts in any branch of knowledge. Some people consider research as a movement, a movement from the known to unknown. Types of Research The basic types of research are as follows: 1) Descriptive Vs Analytical: Descriptive research includes survey and fact finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. In analytical research, on the other hand, the researcher has to use facts or information already available, and analyze these to make a critical evaluation of the material. 2) Applied Vs Fundamental: Applied research aims to finding a solution for an immediate problem facing a society or a business organization, whereas Fundamental research is mainly concerned with generalization and formulation of a theory. 3) Quantitative Vs Qualitative: Quantitative research is based on the measurement of
quantity or amount. Qualitative research on other hand, is concerned with qualitative phenomenon, involving quality or kind for instance investigating the reason for human behavior. 4) Conceptual Vs Empirical: Conceptual research is that related to some abstract idea or theory. It is generally used by philosopher and thinker to develop new concepts or to reinterpret existing one. Empirical research relies on experience or observation alone, often without due regard for system and theory. We call it experimental type of research.
RESEARCH DESIGN
---------------
DATA COLLECTION
The data, which is collected in this project, is primary and the report is based more on primary data but secondary data is also used in it.
Primary data is collected for questionnaires. People contacted for questionnaires were mainly dealers, clients of Religare Securities Limited and clients of other brokerage houses like Sharekhan, Reliance Money etc.
look into various sources from where he can obtain the Data like various publications of the central, state and local governments Books, magazines, journals and newspapers through internet public records and Statics, etc.by way of caution. The researcher, before using data must see that they possess following characteristics: Reliability of data
Suitability of data
Adequacy of data
LIMITATIONS
1. The clients and the other concerned people were indulged in the stock market operations
during working hour of the day. Therefore they were hesitant to give time and information.
2.
Due to limitations of time, it was difficult to go into the minute intricacies and details and
grab into information to the greatest level of accuracy from the respondents. At same time it was not possible to understand the mind set and psyche of the people. 3. As the sample size chosen was 100 and that to inform a particular city, it can result in
wrong interpretation, as the sample does not represent the entire population. 4. As a result of the financial constraints, the research could not be carried on an extensive
As people are doing trading from their respective brokers, they are quite comfortable to
trade via phone. 6. Since the area is not known before it takes lot of time in convincing people to start
QUES.1
figure1:-
Interpretation
According to this pie chart there are only the 40% persons know about the stock market & the rest 60% dont know about the stock market.60% people have no knowledge about they share market. They think that it is irrelevant and time wasting process.
QUES.2 HOW PEOPLES ARE AWARE ABOUT THE STOCK MARKET? Particulars Print media T.V Friends Others Total No. of the persons 55 25 8 12 100 figure2:
Interpretation
According to this pie chart there are the 54% persons aware about the stock market through the print media, 29%through thatd, 6% through the Friends & the rest of 11% aware about the stock market through the other mediums.
QUES.3 DO PEOPLES HAVE INTEREST IN STOCK MARKET Particulars Interested Not Interested Total No. of the persons 36 64 100
Interpretation
According to this pie chart there are only the 36% persons interested in stock market & the rest of 64% persons not interested in the stock market.64% people think waste of money investing in share market. Only 36% people prefer this & make profit from this.
QUES.4 DO PERSONS HAVE INVEST IN STOCK MARKET Particulars Yes Used to Not Total No. of the person 56 30 14 100
Interpretation
According to this pie chart there are only the 56% persons invest in stock market, 30% used to invest in stock market the rest of 14% not invest in stock market. It can be seen that large amount of persons invest in share market.
Total
100
Interpretation
According to this pie chart there are the 24% investors age below 30, 28%investors age between 30-40, 22% investors age between 40-50 & the rest of 26% investors age above 50.
QUES.6
Particulars Student
INVESTORS PROFESSION?
No. of the person 5 11 16 28 40 100
Interpretation
According to this pie chart there are the 5 % investors are students,11% investors are government employees ,16 % investors are Pvt.Employees ,28% investors are professionals & the rest of 40% investors are Businessman.
QUES.7
Particulars Below 1,00,000 1,00,000-2,50,000 2,50,000-5,00,000 Above 5,00,000 TOTAL
Interpretation
According to this pie chart there are the 8% investors income below 1 Lac.,16% investors income between 1Lac to 2.5 Lac.,30% investors income between 2.5 Lac. To 5Lac % the rest of 46% Persons income above 5Lac.
Particulars Long-term investment Short- term Investment Day-to Day Investment TOTAL
Interpretation
According to this pie chart there are the 52% Persons believe in long-term investment, 22% persons believe in short term investment & the rest of 26% believe in day to day investment.
QUES.9 REASONS FOR INVESTMENT IN STOCK MARKET? Particulars Like the game of risk and profit Getting the benefit of boom Family members invest Others are investing Advice of Financial advisor TOTAL No. of the persons 26 12 10 16 36 100
Interpretation
According to this pie chart there are the reason behind of invest in stock market because the 26% invest like the game of risk and profit,12%want to getting the benefit of boom,10% invest because their family members invest,16% invest because others are investing & the rest of 36% invest on the advice of Financial advisor.
QUES.10
Particulars Good Advice Brand name Trust Good Service Good Record TOTAL
Interpretation
According to this pie chart there are the 28% investors choose their brokers on the basis of Good Advice,22% on the basis of Brand name,12% on the basis of Trust,20% on the basis of Good services & the rest of 18% on the basis of Good Record.
QUES.11 EXPERIENCE OF INVESTOR ABOUT THE STOCK MARKET? Particulars Good Investment Game of Gambling Most beneficial in long term Short-cut to earn money Security of future TOTAL No. of the persons 35 18 26 12 9 100
Interpretation
According to this pie chart there are the 35% investors says it is Good Invetment,18% says it is a Game of Gambling,26% says it is most beneficial in long term,12% says it is the short cut to earn money & the rest of 9% says it is the Security of Future.
QUES.12 WHAT FACTOR DO YOU CONSIDER FOR INVESTING? Factor Return Safety Risk Liquidity Percentage 50% 25% 15% 10%
Interpretation
50% people were very witty to say return as answer. Risk was considered by 15% people .25% people wants safety and only 10% went for liquidity because now a days every investment option has liquidity.
Interpretation
cash assured movement .25% consider midcap less risky they invest in it and 20% people invest in small cap have less amount to invest. QUES.14WHAT BASIS DO YOU CONSIDER TO INVEST IN SECURITIES? FACTOR INTRADAY DELIVERYBASE PRCENTAGE 30 70
Interpretation Most of the investors do not have enough time to do intraday trading, 70%
persons do delivery base trading .30% persons do intraday trading who have enough time to analyze fluctuations of the share. QUES.15 WHAT ATTRACTS YOU MOST IN BROKERAGE FIRM? FACTOR BROKERAGE RATE BENEFITS INFORMATION BEHAVIOUR OF PERCENTAGE 55 20 15 THE 10
EMPLOYEE
Interpretation
55% persons said they want brokerage rate as less as possible .20% went with the benefits provided by firm.15% Persons said they just want true information about stocks and share market.10% People said they want behavior of the employees good, they want good relationship with them.
FINDINGS
1. Out of 350 there are only the 40% persons know about the stock market and the 60%
persons dont know about the stock market. 2. Out of 140 there are 54% persons aware about the stock market through print media,
29%through T.V, 6% through friends or relatives and the 11% persons aware through any other sources. 3. Out of 140 there are only 63% persons are interested in stock market and the 37%
persons are not interested in stock market. 4. Out of 88 there is 64%invest in stock market currently, 20%used to invest and 16% not
5.
There are 30% investors age is below 30,38% investors age are 30-40,24% investors age
are 40-50 and the 8% investors age are above 50. 6. Out of 74 investors there is 5% investors are student, 11% investors are Govt.employee,
16% investors are Pvt.Employee, 30% investors are professionals and the 38% investors are Businessman. 7. 8% investors income is below 41Lac.,19% investors income are 1 to 2.5 lakh,30%
investors income are 2.5 to 5 lakh and the 43% investors income are above 5 lakh. 8. Out of 74 investors there is 57% investors believe in long term investment, 16%
investors believe in short term investment and the 27% investors believe in day to day investment or jobbing. 9. 27% investors invest in stock market because they like the game of risk and profit,
11%want to get the benefit of boom, and 8% invest because their family members invest, 16% invest after watching the others & the rest of 38% invest on the advice of financial advisor. 10. record. 11. Te experience of investors about the stock market is that ,37% investors says that it is a 24% investors choose their broker on the basis of good advice, 20% on the basis of brand
name, 22% on the basis of trust, 18% on the basis of good service and 16% on the basis of good
good investment,16% says that it is a game of gambling ,24% says that it is a beneficial in long term,14% says that it is a short cut to earn money and 9% says that it is a security of future.
After the final analysis of the data following Conclusion were drawn:-
INDIA INFOLINE in the most trusted brokerage firm, which has 651 offices, spread across 170 cities and it is ever expanding with more and more customer, friendly products in order to meet the ever-changing demand of the customers. Considering the various factors studied under the report the followings are the major findings of the report: INDIA INFOLINE is the second in charging lowest brokerage. The product of INDIA INFOLINE in basically meant common people at large. The Product of INDIA INFOLINE is highly competitive in the market for which they are
meant as compared to the competitors, which provides the value for money to the clients. Company is having 75 sub-broker ships in Meerut which provides a major part of
revenue. INDIA INFOLINE is providing free of cost software for online clients. INDIA INFOLINE has the highest market coverage with respect to channel sales. This is
because Angel has the highest no. of Sub-brokers. There are 140 sub brokers in Meerut.
RECOMMENDATIONS
MAINTENANCE OF BRAND INDIA INFOLINE have enjoyed high profitable equity but with the entry of many other trading firm feeling the heat. To increase its profit its need to take care of following facts: Taking care of customers, employees, shareholders and investors. Utmost care, satisfaction services to be showered to everybody.
CUSTOMER ORIENTED It was found that reason behind INDIA INFOLINE has high profitable image is its among one of the oldest and trustworthy, now since there are new entries in every segment, INDIA INFOLINE should: Segment the market and customer according to their potential. INDIA INFOLINE should advertise its CUSTOMER RELATIONSHIP
SUGGESTIONS
Commitment should be equalized for every person. Provide the facility of free demonstration for all. Improvement in the opening of DE-mat and contract notice procedure is required. There should be a limited no. of clients under the relationship manager, so that he can
handle new as well as old customer properly. Some promotional activities are required for the awareness in customer.
People at young age should be encouraged to invest in the stock market. Give more demonstration to customers so that they can get complete knowledge about
online trading. Give the complete information about products and services offered by the company to the
customers. The no. of branches it has at present should be increased all over the country, which will
attract large no. of customers. Company should educate about the rules and regulations of SEBI to its customer.
REFRENCES
Books
Financial Management(I M Pandey) Security analysis and portfolio management (Punithavathy pandian) Management accounting and Financial analysis (The institute of charted accounts
of india)
Investment analysis and portfolio management (Prasanna chandra) Fundamentals of financial Management (Prasanna Chandra) Marketing Management (Phillip Kotlar) Research Methodolgy(C R Kothari) NCFM
Newspapers
Websites
www.icicidirect.com
QUESTIONNAIRE
QUESTIONNARE
DATE Interviewers Name Respondent no .. Respondent Name Address . Contact no.
1.
2.
3.
1.
How do you aware about the stock market? Print media Friends ( ( ) ) 3. 4. TV channels Others ( ( ) )
2.
3. Private employee ( )
4.
Businessmen
7. What is the income group of investors? 1. . Below 100000 250000( 3. ) ( ) 4. Above ( ) 2. 100000-
250000-500000 )
500000 (
8. Which type of invest you do in stock market? 1. ) 2. Day to day invests ( ) Long terms invest ( ) 3. Short term invests (
9. Why do you invest in share market? 1. Like the play game of risk and profit ( ( ( ( ) ) ) )
2. Getting the benefit of boom 3. Family members invest 4. Others are investing
10. On which basis you have chosen the broker? 1. Good advice 2. Trust 3. Good record ( ( ( ) ) ) 4. Brand name ( ) )
5.Good service (
11. What is your experience about the stock market? 1. Good investment 2. Most beneficial in long term 3. Short cut to earn money 4. Security of future. ( ( ( ( ) ) ) ) 5.Game of gambling ( )
12. Main objective of investment in equity and mutual fund? 1. Risk 2. Return 3. Safety ( ( ( ) ) ) 4. Liquidity ( )
13. In Which type of company do you invest? 1. Blue chip 2. Midcap 3. Small cap ( ( ( ) ) )
15. what attracts you most in brokerage firm? 1.Brokerage rate 2.Benefit 3.Informtion ( ( ( ) ) ) )