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SUMMER TRAINING PROJECT REPORT ON ANALYSIS OF STOCK MARKET IN INDIA INFOLINE Submitted In The Partial Fulfillment For The

Award Of Postgraduate Degree Masters In Business Administration


(SESSION-2010-2012)

submitted by:
Priya Gupta 1027170022

submitted to:

(271) BIT SCHOOL OF MANAGEMENT PARTAPUR BY PASS ROAD MEERUT (AFFILIATED TO MAHAMAYA TECHNICAL UVIVERSITY,NOIDA)

BHARAT INSTITIUTE OF TECHNOLOGY SCHOOL OF MANAGEMENT

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 .

Submitted under Guidence of Dr.Yasmeen Ansari Dr.D.K Matta Director Mgt.

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.

TABLE OF CONTENTS PART1: Chapter1: Introduction of the company

1.1. COMPANY PROFILE


1.2.1 Objectives of the company 1.2.2 Management of the company 1.2.3 Vision and mission of company 1.2.4 SWOT Analysis of the company

Chapter2:
2.1 objective of study 2.2.2 Scope of the study

Chapter3: Introduction 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.

INDIA INFOLINE: The beginning:


Set up by a group of professionals in October 1995. Began with research assignments for FIIs, corporate and banks. Extended its offering to products in September 1996.

Client list read like whos who of business. A small team of 5-6 ,grew to 15-20 by 1999.

Embracing the web:


Early 1999,we decided to deliver content only through net. Expanded breadth of content considerably. Rapid rounds of funding ( Intel Capital ,CDC, ICICI venture ,TDA) WWW.indiainfoline .com launched on May11,1999

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.

INDIA INFOLINE group company:


Online Trading (5paisa.com) Overwhelming responses to 5paisa Full service discount brokerage,, option to customer.

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:

INDIA INFOLINE Ltd.


Research and online media property (Wholly-owned subsidiary) 1. INDIA INFOLINE Securities Pvt.Ltd. Secondary market securities trading and portfolio management services 2. INDIA INFOLINE.com Distribution company ltd. Mobilization of Mutual funds and other personal investments products. 3. INDIA INFOLINE insurance services ltd. Corporate agent for ICICI Prudential Life Insurance Company 4. INDIA INFOLINE Commodities Pvt. Ltd.

Commodities Trading 5. INDIA INFOLINE Investment Securities Pvt. Ltd. Margin Funding

INDIA INFOLINE media and research services limited


The content service represent a strong support the derives the broking ,commodities, mutual fund and portfolio management services businesses. Revenue generation is through the sale of content to financial and media house, Indian as well as global.

INDIA INFOLINE commodities limited


INDIA INFOLINE Commodities Pvt. Limited is engaged in the business of commodities broking .Our experience in securities broking empowered us with the requisites skills and technologies to allow us offer commodities broking as a contra cyclical alternative to equity broking. We enjoy membership with the MCX and NCDEX two leading indian commodities exchanges.

INDIA INFOLINE marketing and services


INDIA INFOLINE Marketing and Services Limited is the holding company of INDIA INFOLINE insurance services limited and INDIA INFOLINE Insurance Broker limited. (a)INDIA INFOLINE insurance service limited is registered Corporate agent with the insurance Regulatory and Development authority (IRDA).It is the largest Corporate agent for ICICI Prudential life insurance company .INDIA INFOLINE is the first Corporate agent to get licensed by IRDA in early 2001. (b)INDIA INFOLINE Insurance brokers Limited is newly formed subsidiary which will carry out the business of insurance broking. We have applied to IRDA for the insurance broking license and the clearance for the same is awaited. Post the grant of license ,we propose to also commence the general insurance distribution business.

MAIN OBJECTIVES OF THE COMPANY


The main objects to be pursued by the company on its incorporation are: 1. To hold investments in various step-down subsidiaries for investing, acquiring, holding purchasing or procuring equity shares, debentures bonds, mortgages, obligations, securities of any kind issued or guaranteed by our company. 2. To provide financial consultancy services; to provide investment advisory services on the internet or otherwise; provide financial consultancy in the area of personal and corporate finance; publish books and CD ROMs and any other information related to the above. 3. To conduct the business of sale, purchase distribution and transfer of shares, debts instruments and hybrid financial instruments and to perform all related, incidental, ancillary and allied services. 4. To conduct depository participant services; to conduct de-materialization and rematerialization of shares; set up depository participants centers at various regions in India and to perform all related, incidental ,ancillary, and allied services. 5. To receive funds, deposits and investments from the public, Government agencies, financial institutions and corporate bodies; grant advances and loans; conduct advisory services related to banking activities, project financing, funding of mergers, and acquisition activities; fund management and activities related to money market operations.

TOP MANAGEMENT
MANAGEMENT TEAM

Mr. Nirmal Jain (Chairman and Managing Director )

Nirmal Jain is the founder and chairman of INDIA INFOLINE ltd.

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.

R Venkataraman (Executive Director)


R Venkataraman ,co-promoter and Executive director of INDIA INFOLINE Ltd. He holds a B.Tech degree in Electronics and Electrical Communication Engineering from IIT kharagpur and an MBA degree from IIM Bangalore. He has held senior managerial position in ICICI limited, including ICICI securities limited, their investment banking joint venture with J P Morgan of USA and with BZW and Taib Capital Corporation limited. He was also held the position of Assistant vice president with G E capital services India limited in their private equity division.

The Board of Directors

Mr Nilesh Vikamsey (Independent Director)

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.

Mr Kranti Sinha (Independent director)

Mr. Kranti 27,2005.

sinha joined the

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

VISION AND MISSION OF INDIA INFOLINE


VISION At INDIA INFOLINE we are convinced that even as a number of our peer companies are focused on emerging as the biggest and the best in the financial services space in India there is an even more critical opportunity available in emerging as the most respected. To be the largest financial services organizations in Indian retail market and become a one-stop shop for all non-banking financial products and services for the retail consumer. MISSION Rapidly increase the number of our client relationship to clear market leader. Provide our client with a very broad array of product offering.

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

causes a risk for damage organization position.

SWOT ANALYSIS OF INDIA INFOLINE SECURITIES LTD.


Strengths 1. Oldest share broking firm in the stock market. 2. Regularity of the staff members. 3. Branch manager handled the problem himself. 4. Better customer service through CRM system. 5. Strategy of personal attention to every client. 6. Good research an analysis team 7. Transparency in the brokerage rates they charge. Weakness 1. Lack of Professionals. 2. Lack of branches in city. 3. RMs cannot provide the proper time to clients in working hour. 4. Formalities of the DAMAT account are very long. 5. Service is good but not at time. 6. Late in launching new products Opportunities 1. Now days the awareness of people towards the stock market are increasing so the company has the chance to attract them towards INDIA INFOLINE. 2. The person are trying to invest in their money in stock market compare than in any other place, so here is chance for company to divert the thinking of person towards INDIA INFOLINE. Threats 1. There are lot of competitors of INDIA INFOLINE so that the pressure on the company to provide the better service to the client. 2. Market is too sensitive. 3. Its competitors are availing more and more services or facilities, which the company is not availing, which attract the customer towards other competitors.

OBJECTIVES OF THE STUDY


In today globally competitive world, where investments play a vital role both for The investor as well as the economy, the financial market should work to the best of Its capacity. 1. To provide in depth knowledge about stock market 2. To know various products and services offered by INDIA INFOLINE. 3. To get a view of the stock market from the current customers of INDIA INFOLINE securities ltd. 4. To analyze the customer perception towards stock market. 5. To analyze the various strategies followed by INDIA INFOLINE in maintaing the investors (customer) relationship. 6. To view the correlations of INDIA INFOLINE with stock market.

7.

IMPORTANCE AND SCOPE OF THE PROJECT


1. To analyze the role of CRM in INDIA INFOLINE. 2. To carry out the business of portfolio management services, investment advisory services; custodial services; asset management services ;leasing and hire purchase; mutual fund services and to act as brokers of real estate and financial instruments. 3. To carry on the business of financing; provide lease and hire purchase services; to provide consultancy in the area of lease and hire purchase financing. 4. To operate mutual funds; receive funds from investors; equity or debt instrument research activity instrument in debt and/or equity instruments. 5. To identify the main factors before investing in the stocks.

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.

FUNCTIONS OF THE STOCK MARKET


The stock market is a pivotal institution in the financial system. A well-ordered stock market performs several economic functions. It ensures measures of safety and fair dealing. If performs an act of magic by translating short term and medium term investments into

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.

STOCK MARKET IN INDIA


The market for outstanding securities is referred to as the secondary market, or more popularly, the stock market. Presently the stock market in India comprise twenty-three (23) stock exchanges, the most important of them being the National stock exchange and the Bombay stock exchange, operating under the rules, by laws and regulations duly approved by the government. These stock exchange constitute an organized market where securities issued by listed companies and central and state governments are traded. The securities exchange Board of India (SEBI) is the regulatory body, which supervises the operation of stock market in India.

GROWTH OF THE STOCK MARKET IN INDIA


The Origin of the stock market in India goes back to the end of the eighteen centaury when the long term negotiable securities were first issued. However for all practical purposes, the real beginning occurred in the middle of the nineteenth centaury after the enactment of the companies act in 1850, which introduced the features of limited liability and generated investor interest in corporate securities. An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers Association at Bombay in 1857,the precursor of the present day Ahmadabad (1894),Calcutta(1908) and madras(1937).In addition ,a large number of ephemeral exchanges mainly in buoyant periods to recede into oblivion during depressing tomes subsequently. In order to check such aberrations and promote a more orderly development of the stoke market, the central government introduced a legislation called the securities contracts regulation act ,1956.Under this legislation it is mandatory on the part of the stock exchange to seek governmental regulation. As of January 2005 there were 23 stock exchange recognized by the central government. They are located at Ahmadabad, Bangalore, Baroda, Bhubaneswar Calcutta, Chennai (The madras Stock Exchange) Delhi, ay stock exchange) Mumbai (OTC exchange of India), Patna Rajkot, and Pune. While the recognized stock exchange has been accorded a privileged position, they are subject to governmental supervision and control. The rules of a recognized stock exchange relating to the managerial powers of the governing body, admission, suspension, expulsion and

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.

ACTIVITIES IN THE SECONDARY MARKET


ACTIVITIES Trading Buy and selling Settlement and trade Payment Risk in trading and payment Delivery of securities Housekeeping of securities FINANCIAL MARKETS Brokers Buying dealers Clearing members Clearing members Clearing corporation Depository participant Custodial services

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

equity at a fixed conversion price.

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.

DIFFERENCE B/W PRIMARY MARKET & SECONDARY MARKET


In the Primary market, securities are offered to public for subscription for the purpose of raising capital or fund .Secondary market is an equity trading venue in which already existing pre-issued

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.

FUNCTIONS OF STOCK EXCHANGE

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.

NATIONAL STOCK EXCHANGE OF INDIA(NSE)


The national stock exchange commenced its operations in 3rd ,November 1994 in Mumbai as a first step in reforming the securities market through improved technology and introduction of best practices in management.In started with the concept of an independent governing body without any broker representation thus ensuring that the operation interests were not allowed to dominate the governance of the exchange. A part from NSE,it had recommended for the establishment of National Stock Market System also. Before the NSE was set up, trading on the 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 ineffecient.The practice of physical trading imposed limits on trading volumes as well as, the speed with which new information was incorporated into prices. To obviate this, the NSE introduced screen based trading system (SBTS) where a member can punch into the computer the quantities of shares and the prices at which he wants to transacts.The transaction is executed as soon as the quote punched by a trading member finds a matching sale or buys quote from counter party.SBTS electronically matches the buyer and seller in an order driven system or finds the customer the best price available in a quote-driven system, and hence cuts down on time, cost and risk of error as well as on the chances of

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.

The distinctive feature of NSE, as it function currently, are as follows:


1. The NSE is a ring less, national, computerized exchange. 2. The NSE has two segments: the capital market segment and the Wholesale Debt Market Segment. The Capital Market segment covers equities, convertible debentures, and retail trade in non-convertible debentures. The Wholesale Debt Market Segment is a market for high value transactions in government securities,PSU bonds, commercial papers, and other Debt instruments.

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.

BOMBAY STOCK EXCHANGE


Established in 1875,the Bombay Stock Exchange (BSE) is one of the oldest organized exchanged in the world with a long,colourful and chequered history. It was organized under the name of The Native Stock And Share Broker Association as a voluntary and non-profit making association. It was recognized on a permanent basis in 1957.The objectives of the stock exchange are: 1. To safeguard the interest of investing public having dealings on the exchange. 2. To establish and promote honorable and just practices in securities transactions. 3. To promote, develop and maintain well-regulated market for dealing in securities. 4. To promote industrial development in the country through efficient resources mobilization by the way of investment in corporate securities.

Its distinctive features are as follows:


1. The BSE switched from the open outcry system to the screen based system in 1995.It accelerated its computerization programmed in response to the threat from the NSE.

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.

INTER-CONNECTED STOCK EXCHANGE


The inter connected Stock exchange of india started trial runs from august 29,1998.ISE is a diluted version of National Stock Market System (NSMS) recommended by the M. J Pherwani Committee.The main objective of ISE is to inter link the 15 odd regional stock exchanges of the country to ensure liquidity. Because of poor liquidity at the regional exchanges, there has been a lot of shift in business to BSE and NSE. The second objective is to minimize the cost of the regional exchanges as they were incurring huge costs by supporting a very illiquid market.

OVER THE COUNTER EXCHANGE OF INDIA


Over the counter exchange of india was started in 1992 after the role models of NASDAQ (National association of securities of Dealers Automated Quotation) and

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.

HOW THE STOCK MARKET WORKS


If you want to invest in stocks, you also need to have a basic understanding of how the stock market works. The stock market basically consist of two different functions-the primary market and the secondary market. In the primary market, companies raise funds for their operating expenses by selling shares in the company to investors. In the secondary market, investors buy and sell those shares to other investors depending on the current market conditions. A Stock market works like an auction.It is a very organized method of buying and selling, even though watching it on television would give you the impression that it is very disorganized as the people who work at a stock stoke exchange do a lot of shouting and gesturing at one another. How ever, the buying and selling on the stock market starts in many different places. If you decide to purchase stock in a particular company, you would contact a broker who in turn takes your money and contacts a floor broker at the stock exchange. This floor broker is usually an employee of the broker or the company you deal with. At the stock exchange, this floor broker will go to the appropriate section to purchase the stock you want. When the deal is done a message is sent back to your broker and you have now become the owner of the stock in a company. At a later date, you may decide to sell the stock(especially if the price per share has gone up) .Then you will make a profit. For Example if

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.

TRADE WINDOW OF SHARE MARKET

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)


The Securities and Exchange Board of India (SEBI) was constituted on 12 April 1988 as a nonstatutory body through an Administrative Resolution of the Government for dealing with all matters relating to development and regulation of the securities market and investor protection and to advise the government on all these matters. SEBI was given statutory status and powers through an Ordinance Promulgated on January 30, 1992.SEBI was established as a statutory body on 21 February 1992.The Ordinance was replaced by an act of parliament on 4 April 1992.The preamble of the SEBI Act,1992 enshrines the objectives of SEBI-to protect the interest of investors in securities market and to promote the development of and to regulate the securities market. The Statutory powers and functions of SEBI were strengthened through the promulgation of the Securities Laws (Amendment) Ordinance on 25 January 1995,Which was subsequently replaced by an Act of Parliament. SEBIs regulatory reach has been extended to more areas and there is a considerable change in the capital market. SEBIs annual report for 1997-98 has stated that throughout its sixyear existence as a statutory body, it has sought to balance the twin objectives of investor protection and market development. It has formulated new rules and crafted regulations to faster

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

stock exchanges, intermediaries and self-regulatory organizations in the securities market.

INITIAL PUBLIC OFFERINGS


A corporate may raise the capital in the primary market by the way of an initial public offer, right issues and private placements. An initial public offer (IPO) is the selling of securities to the public in the primary market for the first time. It is the largest sources of funds with long or indefinite maturity for the company.

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.

DIFFERENCE B/W BOOK BUILDING AND PUBLIC ISSUE


In book building, Securities are offered at price above or equal to the floor price, where as securities are offered at price incase of a public issue. In case of book building, the demand can

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.

Why should one invest?


One needs to invest to: Earn return on your idle resources. Generate a specified sum of money for a specific goal in life. Make a provision for an uncertain future.

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.

What care should one take while investing?

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

make the investment.

FACTORS DETERMINING INTEREST RATES?


When we talk of interest rates, there are different types of interest rates-rates that banks offer to their depositors, rates that they lend to their borrowers, the rate at which the Government Securities market, rates offered to investors in small saving schemes like NSC,PPF ,rates at which companies issue fixed deposits etc. The factors, Which govern these interest rates are mostly economy related and are commonly, referred to as macroeconomic factors. Some of these factors are: Demand for money Level of Government borrowings Supply of money

Inflation rate The reserve Bank of India and the Government Policies which determine some of the

variables mentioned above.

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.

VARIOUS SHORT TERM FINANCIAL OPTIONS AVAILABLE FOR INVESTMENT?


Broadly speaking, savings bank account, money market/liquid funds and fixed deposits with bank may be considered as short term financial investment option: Savings Bank Account is often the first banking product people use, which offers low interest (4%-5%p.a.) ,making them only marginally better then fixed deposits. Money Market or Liquid funds are a specialized form of mutual funds that invest in extremely short-term fixed income instrument and thereby provide easy liquidity. Unlike most mutual funds, money market funds are primarily oriented towards protecting your capital and then, aim to maximize returns. Money market funds usually yield better returns than saving accounts, but lower than bank fixed deposits. Fixed deposits with Banks are also referred to as term deposits and minimum investment period for bank FDs is 30 days. Fixed deposits with bank are for investors with low risk appetite, and may be considered for 6-12 months investment period as normally interest on less than 6 months bank FDs is likely to be lower than money market fund returns.

VARIOUS LONG TERM FINANCIAL OPTIONS AVAILABLE FOR INVESTMENT?


Post Office Savings Schemes, public Provident Fund, Company Fixed Deposits, Bonds and Debentures, Mutual Funds etc. Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any post office. It provides an interest rate of 8% per annum, which is paid monthly. Minimum amount, which can be invested, is rs.1000/- and additional investment in multiples of 1000/-.Maximum amount is Rs.3, 00,000/- (if single) or Rs.6, 00,000/-(if held jointly) during a year. It has a maturity Period of 6 years. A bonus of 10% is paid at the time of maturity. Premature Withdrawal is permitted if deposits is more than one year old. A deduction of 5% is levied from the principle amount if withdrawn prematurely ;the 10% bonus is also denied. Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per annum compounded annually. A PPF account can be opened through a nationalized bank at anytime during the year and is open all through the year for depositing money. Tax benefits can be availed for the amount invested and interest accrued is tax-free. A withdrawal is permissible every year from the seventh financial year of the date of opening of the account and the amount of withdrawal will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower the amount of loan if any. Company Fixed Deposits: These are short- term (six months) to medium term (three to five years) borrowings by companies at a fixed rate of interest which is payable monthly, quarterly, semi-annually or annually. They can also be cumulative fixed deposits where the

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.

details required to be mentioned on the contract note issued by the stockbroker?


A broker has to issue a contract note to clients for all transactions in the from specified by the stock exchange. The contract note inter-alia should have following: Name, address and SEBI Registration number of the Member broker. Name of partner/proprietor/Authorized Signatory. Dealing Office address /Tel.No./Fax no., Code number of the member given by the

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.

Appropriate stamps have to be affixed on the contract note or it is mentioned the

consolidated stamp duty is paid. Signature of the Stock broker/Authorized Signatory.

maximum brokerage that a broker can charge?


The maximum brokerage that can be charged by a broker from his clients as omission cannot be more than 10% of the value mentioned in the respective purchase or sale note.

How to know that the broker or sub broker is registered?


One can confirm it by verifying the registration certificate issued by SEBI.A brokers registration number begins with the letter INB and that of a sub broker with the letters INS.

precautions one must take before investing in the stock markets?


Here are some useful pointers to bear in mind before you invest in the markets: Make sure your broker is registered with SEBI and the exchanges and do not deal with

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

adequate study of the company.

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.

Portfolio Management Services Could be offered only by intermediaries having

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

exchanges/SEBI before carrying out any transaction.

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

SAMPLING DESIGN SAMPLE SIZE SAMPLE UNIT

---------------

CONVINIENT SAMPLING 100 MEERUT PRIMARY AND SECONDARY EXPLORATRY RESEARCH

------ ------------------ -------

METHOD OF DATA COLLECTION ------TYPE OF RESEARCH ------------

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.

METHODS OF DATA COLLECTION


The task of data collection begins after a research problem has been defined and research plan chalked out. While deciding about the method of data collection to be used for the study, the researcher should keep in mind two types of data via; Primary and secondary. The primary data are those .which are collected afresh and for the first time. And thus happen to be original in character. The secondary Data, on the other hand, are those, which have already been passed through Statistical procedures. In this project data is collected through secondary sources.

COLLECTION OF PRIMARY DATA


We collect primary data during the course of doing experiments in experimental Research but in case we do research of the descriptive type and performs Surveys, whether sample surveys or census surveys, then we can obtain primary data Either through observations or direct communication with the respondents in one Form or another or through personal interviews. This, in other words, mean that There are several methods of collecting primary data, particularly in surveys and Descriptive researches. Important ones are: 1. 2. 3. 4. Observation method Interview method through observation through schedules

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.

COLLECTION OF SECONDARY DATA


Secondary data means that are already available. They refer to the data which give Already be collected and analyzed by someone else. When researcher utilizes Secondary data, then he has

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

scale and scope remains limited.


5.

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

investing in shares primarily in IPOs.

QUES.1

HOW MANY PERSONS KNOWS ABOUT THE STOCK MARKET?

Particulars Known Unknown Total

No. of the persons 40 60 100

% of the persons 40% 60% 100%

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.

QUES.5 Particulars Below 30 30-40 40-50 Above 50

AGE GROUP OF INVESTOR? No. of the persons 24 28 22 26

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

Government employee Private employee Professionals Businessman Total

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

INCOME GROUP OF INVESTORS?


No. of the persons 8 16 30 46 100

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.

QUES.8 IN WHICH TYPE OF INVESTMENT INVESTORS INVEST ON MARKET?

Particulars Long-term investment Short- term Investment Day-to Day Investment TOTAL

No. of the persons 52 22 26 100

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

BASIS OF CHOSSING THE BROKER?

Particulars Good Advice Brand name Trust Good Service Good Record TOTAL

No. of the persons 28 22 12 20 18 100

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.

QUES.13 company Blue-chip Midcap Small cap

IN WHICH TYPE OF SECURITIES DO YOU INVEST? percentage 55 25 20

Interpretation

Because of Fluctuation blue chip shares have, 55% of people invest in it to

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

invest in stock market.

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

MANAGEMENT. INDIA INFOLINE should promote its offering heavily.

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

The Economic Time Business line

Websites

Www.investmartindia.com www.indiabulls.com www.bseindia.com www.nseindia.com www.indiainfoline.com www.google.com www.5paisa.com

www.icicidirect.com

QUESTIONNAIRE

QUESTIONNARE
DATE Interviewers Name Respondent no .. Respondent Name Address . Contact no.

1.
2.

Do you know about share market? 1. Yes ( ) 2. No ( )

3.
1.

How do you aware about the stock market? Print media Friends ( ( ) ) 3. 4. TV channels Others ( ( ) )

2.

3. Do you have interest in stock market? 1. Yes ( ) 2. No ( )

4. Do you have invested in share market? 1. 2. Yes No ( ( ) ) 3. Used to ( )

5. What is the age group of investor? 1. Below 30 3. 40-50 ( ( ) ) 2. 4 30-40 Above 50 ( ( ) )

6. What is the profession of investors? 1. ) Student ( ) 2. Government employee (

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 ( ( ( ) ) )

14. How frequently you invest in securities? 1. Intraday 2. Delivery base ( ( ) )

15. what attracts you most in brokerage firm? 1.Brokerage rate 2.Benefit 3.Informtion ( ( ( ) ) ) )

4.Behaviour of the employees (

15. Any recommendations or suggestions? ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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