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STUDY ON CAPITAL MARKET OF INDIA AND COMPARISON BETWEEN ONLINE TRADING V/S OFFLINE TRADING
AT
BY
AJAY KUMAR
TABLE OF CONTENT
CHAPTER :1
DECLARATION CERTICATE FROM THE ORGANIZATION ACKNOWLEDGEMENT EXECUTIVE SUMMARY OBJECTIVE OF THE STUDY SCOPE OF THE STUDY SIGNIFICANCE OF THE STUDY LIMITATIONS NEED OF THE STUDY COMPANY PROFILE
CHAPTER:2
INTRODUCTION CAPITAL MARKET IN INDIA ADVANTAGES DISADVANTAGES PARAMETERS TO JUDGE IPO FREQUENTLY ASKED QUESTIONS
CHAPTER:3
CAPITAL MARKET IN INDIA : IMPACT AND FACTORS IMPACTS OF CAPITAL MARKET IN INDIA
FACTORS AFFECTING CAPITAL MARKET IN INDIA ONLINE TRADING AND OFFLINE TRADING
CHAPTER:4
DATA ANALYSIS AND INTERPRETATION
CHAPTER:5
FINDINGS SUGGESTIONS APPENDIX
CHAPTER:6
CONCLUSION BIBLIOGRAPHY
DECLARATION
I hereby declare that the project on STUDY ON CAPITAL MARKET IN INDIA AND COMPARISON BETWEEN ONLINE TRADING V/S OFFLINE TRADING is completely my work. It has been submitted to ICBMSCHOOL OF BUSINESS EXCELLENCE for partial fulfillment of the educational session and allotment of marks.
This is to certify that the project entitled, STUDY ON CAPITAL MARKET OF INDIA AND COMPARISON BETWEEN ONLINE TRADING V/S OFFLINE TRADING is a bonafide record of Interim report carried out by AJAY KUMAR, Roll No.09/03 at ICBM-SCHOOL OF BUSINESS EXCELLENCE, HYDERABAD, has successfully completed her summer training project for a period of 8 weeks from 17th May 2010.He has worked sincerely in this duration and has completed the project successfully.
ACKNOWLEDGEMENT
I sincerely thank Mr. AATISH GUPTA, vice president, INDIABULLS for giving me this opportunity to work in his esteemed organization and helping me for completing the project in a successful manner. I am also thankful to Professor S Zaraar,principal and director of ICBM- School of Business Excellence for guiding me during the project work and giving me some valuable tips about the market condition of mutual fund . I am thankful to Professor S Nayar, Head of department of strategic research who is always ready to help me. I am very thankful to ICBM-SCHOOL OF BUSINESS EXCELLENCE, HYDERABAD, for helping me in resolving every issue. My regards to my faculty guide Prof. ANNIE KAVITA for guiding me and clarifying the doubts in area of my project work. Last but not least, I am very thankful to ICBM-SCHOOL OF BUSINESS EXCELLENCE (staff) for helping me in resolving all the issues.
EXECUTIVE SUMMARY
As per the title suggest the project report has been prepared regarding the study on capital market and comparison between online trading v/s offline trading. Online trading was initiated by NSE in india and soon after the other exchanges also followed it. There was a major boom in year 2000 when lots of online trading companies came with a bang but only few were survived because of lack of computer knowledge and low internet penetration. There are two types of online trading companies one is the banking online trading companies and the other is non-banking trading. Today online trading contributes are about 8-10%. It is continuosly growing and has a huge market potential. Major findings indicates that out of a survey of 100 respondents it was seen that most of the investors prefer online trading because of few major factors such as time saving , convenience etc. although during my research project I have seen that most of the respondents feel online trading , a secure way of investing into stock market still a few of them feel it unsafe and a bit complicated but they posses information about online trading. Today the online trading companies having cut throat competition in our offering whose brokerage discounts lower margin money and zero balance accounts.
Due to rising education awareness and use of internet there is a huge potential for online trading in future and companies must come pu with innovative offerings in capture the untapped market.
The main objective of this study is doing an in depth study of capital market and online V/s offline trading by taking sample of investors view . To know that which trading is good for investors : online or offline trading .
Since the year 2000 a big boom has been witnessed in the Indian Stock Market when the market showed the coming up of Online Trading System. Many online stock trading companies came but initially due to lack of online trading some companies vanished and some survived. The companies which survived are getting the handsome returns also attracting the foreign Investment Companies. Now a days this sector is facing cut-throat competition and also provides huge growth prospects. The study then goes to evaluate and analyze the findings so as to present a clear picture of the trends in the online trading sector.
The 100 people have been interviewed through various sources and their responses have been analyzed. This data can be explorated to take in the trends all Indian online and offline stock trading industry. The significance for the industry lies in studying the growth trends that emerge from the study. It is one of the fastest growing and evolving sectors.
LIMITATIONS
The various limitations of the study are : There is a lack of awareness among people about investing in stock market . so the people who are aware of such things were found in specific areas for survey purposes.
Most people are comfortable with traditional system in small towns and like to trade from their respective brokers , hence not providing a true opinion of theirs.
Some of the respondents who did not do online trading were able to respond to only some questions.
The survey was done in Hyderabad and may not truly express the opinion of whole country.
During my studies I knew something about the company, but now I have specialized in a particular department for gaining industrial knowledge about financial department for further continuation of my studies. Because all departments will not give overall up to date knowledge about industry, if we went for particular department overall functioning of department will come to know. This company is one of the leading and professionally managed stock broking firm involved in quality services and research.
COMPANY PROFILE
Indiabulls Group is one of Indias top business houses with businesses spread over Real Estate, Infrastructure, Financial Services, Securities, Retail, Multiplex and Power sectors. The group companies are listed on important Indian and Overseas markets. Indiabulls has been conferred the status of a Business Super brand by The Brand Council, Super brands India.
To be the largest and most profitable financial services organization in Indian retail market and become one stop shop for all non banking financial products and services for the retail customers. Rapidly increase the number of client relationships by providing a broad array of product offering to emerge as a clear market leader.
Indiabulls Group has five separately listed companies with subsidiaries which contributed in enhancing scope and profile of the business.
Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbis Infotech Private Limited at New Delhi under the Companies Act, 1956. The name of company was changed to M/s. Indiabulls Financial Services Private Limited on March 16, 2001. In the year 2004, Indiabulls came up with it own public issue & became a public limited company on February 27, 2004. The name of company was changed to M/s. Indiabulls Financial Services Limited. The company was promoted by three engineers from IIT Delhi, and has attracted more than Rs.700 million as investments from venture capital, private equity and institutional investors and has developed significant relationships with large commercial banks such as Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN Amro Bank, Standard Chartered Bank and IL&FS.
Mr. Rajiv Rattan Mr. Sameer Gelhaut Mr. Saurabh K Mittal Co-Founder & Chairman Director Vice Chairman (Indiabulls Group) (Indiabulls Group) (Indiabulls Group) The company headquarters are co-located in Mumbai and Delhi, allowing it to access the two most important regions for Indian financial markets, The marketing and sales efforts are headquartered out of Mumbai, with a regional headquarter in Delhi. Back office, risk management, internal finances etc. are headquartered out of Delhi/NCR allowing the company to scale these processes efficiently for the nationwide network. Company is listed on:
Market capitalization:
Net worth
Highest Ratings from CRISIL CRISIL is India's leading ratings, research, risk and policy advisory company
Broad array of product offering 1. 2. 3. 4. 5. 6. Consumer Finance Housing Finance Commercial Loans Life Insurance Asset Management Advisory Services
Indiabulls Financial Services Limited (IBFSL) completed the de-merger of its real estate business into a separate publicly traded company, (IBREL) unlocked over Rs. 10000 crore of shareholder wealth.
De-merger: De-merger of Indiabulls Securities Limited from Indiabulls Financial Services Limited. Each shareholder of Indiabulls Financial Services Limited received a share of Indiabulls Securities Limited. SARFAESI Act Notification: Indiabulls Housing Finance Limited, a wholly owned subsidiary of Indiabulls Financial Services Limited has been notified as a Financial Institution for the purpose of SARFAESI Act, 2002. This notification is being effectively used by the company to yield positive results in speedy recoveries of delinquent mortgage loans.
Life Insurance Venture: Indiabulls Financial Services Limited (IBFSL) has entered into an MOU with Sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance joint venture. Sogecap will invest Rs 150 crore to subscribe to 26% of the paid up capital in the joint venture. Commodities Exchange (ICEX) : a screen based on-line derivatives exchange for commodities and has established a reliable, time tested, and a transparent trading platform. It is also in the process of putting in place robust assaying and warehousing facilities in order to facilitate deliveries. ICEX is promoted by Indiabulls Financial Services and MMTC. Asset Management Business: Indiabulls Financial Services Limited proposes to set up an asset management company to manage mutual funds and has applied to SEBI for its approval and the same is awaited.
Indiabulls stepped into the real estate market as Indiabulls Real Estate Limited (IREL) in 2005. A joint venture between Indiabulls and a US based investment major Farallon Capital Management LLC resulted in bringing FDI (Foreign Direct Investment) for the first time in the Indian real estate market. Another joint venture amongst Indiabulls and DLF, Kenneth Builders and Developers (KBD), has brought up projects for development of residential apartments. Our Projects:
Indiabulls is currently evaluating many large-scale projects worth several hundred million dollars. 1. One Indiabulls Centre 2. Indiabulls Central Park 3. Central Park Madurai 4. Central Park Hyderabad 5. Castlewood 6. Indiabulls Finance Center 7. HighStreet Vadodara 8. Central Park Vadodara 9. Indiabulls Greens 10.Centrum Park 11.Indiabulls Riverside 12.Gurgoan Housing 13.Sonepat Township 14.Chennai Township 15.Indiabulls Greens Panvel 16.Mumbai Township 17.Nashik SEZ 18.Raigarh SEZ 19.Goa Luxury Resort
Indiabulls Power Limited was established in 2007 to capitalize on emerging opportunities in the Indian power sector. It develops and intends to operate and maintain power projects in India. Indiabulls is currently developing five thermal power projects with an aggregate capacity of approximately 6600 MW. These projects include:
- Amravati Phase-I (1320 MW) - Amravati Phase-II (1320 MW) - Nasik (1335 MW) in Maharashtra - Bhaiyathan Thermal Power Project (1320 MW) - Chhattisgarh Power Project (1320 MW) In addition to the above Indiabulls is also developing four medium size Hydro Power Projects in Arunachal Pradesh aggregating to 167 MW.
Indiabulls Securities Limited Indiabulls Securities Limited is the jewel in the crown of Indiabulls group. Indiabulls Securities Limited is Indias leading capital markets company with AllIndia presence and an extensive client base. Indiabulls Securities is the first and only brokerage house in India to be assigned the highest rating BQ 1 by CRISIL. Indiabulls Securities Limited is listed on NSE, BSE & Luxembourg stock exchange. Indiabulls also provide commodity brokerage services under Indiabulls Commodities Limited (ICL). It deals in research work and formation of reports on agri-commodites and metals. ICL has one of the largest retail branch networks in the country.
Offers purchase and sale of securities (stock, bonds, debentures etc.) Broker assisted trade execution Automated online investing Access to all IPO's
Equity Analysis
Helps to build ideal portfolio Satisfies need by rating stocks based on facts-based measures Free of cost for all securities clients
Depository Services
Depository participant with NSDL and CDSL Helps in trading and settlement of dematerialized shares Performs clearing services for all securities transactions Offers platform to execute trade and settle transactions
Top Sales Team Structure Sales force in Indiabulls Securities Limited is divided into two groups. i.e. Online & Offline Mentioned below are the names of EVP's managing respective regions
Vijay Babbar
Amiteshwar Chaudhay
Managing Mahrashtra Managing NCR and UP, and Goa, Kerala, Punjab,Haryana,Uttranchal, Karnataka, Andhra Rajasthan and Gujarat Pradesh and Tamil Nadu
EVP's Name Hemanshu Anirban Manoj Nirdosh Gaur (Offline) Kamdar Bhattacharya Srivastava Managing NCR Managing Bengal, Managing and Haryana Andhra Pradesh Managing Mumbai, Rajasthan, , Punjab, Uttar ,Tamil Nadu, Region Pune and other part of Pradesh and Karnataka and part surrounding regions Gujarat Madhya of Mumbai and and Mumbai Pradesh Gujarat Top Customer Care Department Providing solution to the queries of customers as well as branches from a centralized location based out of gurgaon Clients Client Helpline Number 0124 - 4572444 39407777 (Local dialing from 25 cities) Securities client can E-mail at helpdesk@indiabulls.com
Available from 25 cities: Ahmedabad, Bangalore, Bhopal, Chandigarh, Chennai, Coimbatore, Delhi, Ernakulam, Hyderabad, Jaipur, Jalandhar, Kolkata, Kozhikode, Ludhiana, Lucknow, Mumbai, Mangalore, Nashik,Pune, Salem, Surat, Vadodra, Vadodra - Alkapuri, Vishakhapatnam. Branch Branch Helpline Number Queries Funds related 0124-3989444 E-mail at funds@indiabulls.com
Milestones Achieved
Developed one of the first internet trading platforms in India Amongst the first to develop in-house real-time CTCL (computer to computer link) with NSE Introduction of integrated accounts with automatic gateways to client bank accounts Development of products such as Power Indiabulls for high volume traders Indiabulls Signature Account for self-directed investors Indiabulls Group Professional Network for information and trading service
INTRODUCTION
Equity market in India:Stock is the type of equity security with which most people are familiar. When investors (savers) buy stock, they become owners of a "share" of a company's assets and earnings. If a company is successful, the price that investors are willing to pay for its stock will often rise and shareholders who bought stock at a lower price then stand to make a capital profit. If a company does not do well, however, its stock may decrease in value and shareholders can lose money. Stock prices are also subject to both general economic and industry-specific market factors. The equity market is classified as :-
(a) Primary market:The primary market provides the channel for creation of new securities through the issuance of financial instruments by public companies as well as government companies , bodies and agencies. Features of primary markets are: This is the market for new long term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the New Issue Market (NIM). In a primary issue, the securities are issued by the company directly to investors. The company receives the money and issues new security certificates to the investors. Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business. The primary market performs the crucial function of facilitating capital formation in the economy. The primary market issuance is done either through public issue or private placement . A public issue does not limit any entity in investing while in private placement , the issuance is done to select people. In terms of Indian Companies Act , 1956 as issue becomes public if it results in allotment to more than 50 persons. This means an issue resulting in allotment to less than 50 persons is private placement . An IPO is the first sale of stock by a company to the public. In this market company can raise money by issuing equity. If the company has never issued equity to the public, it's known as an IPO. Mostly public companies go for IPO. But large privately-owned companies may also go for an IPO to become publicly traded. In an IPO the company offloads a certain percentage of its total shares to the public at a certain` price In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of
security to issue (common or preferred), best offering price and time to bring it to market.. Most IPOS these days do not have a fixed offer price. Instead they follow a method called BOOK BUILDIN PROCESS, where the offer price is placed in a band or a range with the highest and the lowest value (refer to the newspaper clipping on the page). The public can bid for the shares at any price in the band specified. Once the bids come in, the company evaluates all the bids and decides on an offer price in that range. After the offer price is fixed, the company allots its shares to the people who had applied for its shares or returns them their money in case of non allotment of shares.
If a large portion of the company's shares are sold to the public, the company may become a target for a takeover, causing insiders to lose control. A takeover bid may be the result of shareholders being upset with management or corporate raiders looking for an opportunity. Defending a hostile bid can be both expensive and time consuming.
The offer documents will list our specific risk factors such as the companys liabilities, court cases or other litigations. Examine how these factors will affect the operations of the company. Key Names Every IPO will have lead managers and merchant bankers. You can figure out the track record of the merchant banker through the SEBI website. Pricing Compare the companys PER with that of similar companies. With this you can find out the P/E Growth ratio and examine whether its earning projections seem viable. Listing You should have access to the brokers of the stock exchanges where the company will be listing itself.
Secondary market:-
Secondary market is the market for buying and selling securities of the existing companies. Under this, securities are traded after being initially offered to the public in the primary market and/or listed on the stock exchange. The stock exchanges are the exclusive centres for trading of securities. It is a sensitive barometer and reflects the trends in the economy through fluctuations in the prices of various securities. It been defined as, "a body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating and controlling the business of buying, selling and dealing in securities". There are 23 stock exchanges in India. Listing on stock exchanges enables the shareholders to monitor the movement of the share prices in an effective manner. This assist them to take prudent decisions on whether to retain their holdings or sell off or even accumulate further. However, to list the securities on a stock exchange, the issuing company has to go through set norms and procedures.
Various aspects of secondary/ stock market in India :(a) Corporate Securities: The stock exchanges are the exclusive centres for trading of securities. Though the area of operation/jurisdiction of an exchange is specified at the time of its recognition, they have been allowed recently to set up trading terminals anywhere in the country. The three newly set up exchanges (OTCEI, NSE and ICSE) were permitted since their inception to have nation wide trading. The trading platforms of a few exchanges are now accessible from many locations. Further, with extensive use of information technology, the trading platforms of a few exchanges are also accessible from anywhere through the Internet and mobile devices. This made a huge difference in a geographically vast country like India. (b) Exchange Management: Most of the stock exchanges in the country are organised as Mutuals which was considered beneficial in terms of tax benefits and matters of compliance. The trading members, who provide brokering services, also own,control and manage the exchanges. This is not an effective model for self -regulatory organisations as the regulatory and public interest of
the exchange conflicts with private interests. Efforts are on to demutualise the exchanges whereby ownership, management and trading membership would be segregated from one another. Two exchanges viz. OTCEI and NSE are demutualised from inception, where ownership, management and trading are in the hands of three different sets of people. This model eliminates conflict of interest and helps the exchange to pursue market efficiency and investor interest aggressively. (c) Membership: The trading platform of an exchange is accessible only to brokers. The broker enters into trades in exchanges either on his own account or on behalf of clients. No stock broker or sub-broker is allowed to buy, sell or deal in securities, unless he or she holds a certificate of registration granted by SEBI. A broker/sub-broker complies with the code of conduct prescribed by SEBI. Over time, a number of brokers - proprietor firms and partnership firms have converted themselves into corporates. The standards for admission of members stress on factors, such as corporate structure, capital adequacy, track record, education, experience, etc. and reflect a conscious endeavour to ensure quality broking services. (d) Listing: A company seeking listing satisfies the exchange that at least 10% of the securities, subject to a minimum of 20 lakh securities, were offered to public for subscription, and the size of the net offer to the public (i.e. the offer price multiplied by the number of securities offered to the public, excluding reservations, firm allotment and promoters' contribution) was not less than Rs. 100 crore, and the issue is made only through book building method with allocation of 60% of the issue size to the qualified institutional buyers. In the alternative, it is required to offer at least 25% of the securities to public. The company is also required to maintain the minimum level of non promoter holding on a continuous basis. In order to provide an opportunity to investors to invest/trade in the securities of local companies, it is mandatory for the companies, wishing to list their securities, to list on the regional stock exchange nearest to their registered office. If they so wish, they can seek listing on other exchanges as well. Monopoly of the exchanges within their allocated area, regional aspirations of the people and mandatory listing on the regional stock exchange resulted in multiplicity of exchanges. The basic norms for listing of securities on the stock
exchanges are uniform for all the exchanges. These norms are specified in the listing agreement entered into between the company and the concerned exchange. The listing agreement prescribes a number of requirements to be continuously complied with by the issuers for continued listing and such compliance is monitored by the exchanges. It also stipulates the disclosures to be made by the companies and the corporate governance practices to be followed by them. SEBI has been issuing guidelines/circulars prescribing certain norms to be included in the listing agreement and to be complied with by the companies. A listed security is available for trading on the exchange. The stock exchanges levy listing fees - initial fees and annual fees - from the listed companies. It is a major source of income for many exchanges. A security listed on other exchanges is also permitted for trading. A listed company can voluntary delist its securities from non-regional stock exchanges after providing an exit opportunity to holders of securities in the region where the concerned exchange is located. An exchange can, however, delist the securities compulsorily following a very stringent procedure.
(e) Trading Mechanism: The exchanges provide an on-line fully-automated Screen Based Trading System (SBTS) where a member can punch into the computer quantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching order from a counter party. SBTS electronically matches orders on a strict price/time priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It allows faster incorporation of price sensitive information into prevailing prices, thus increasing the informational efficiency of markets. It enables market participants to see the full market on real-time, making the market transparent. It allows a large number of participants, irrespective of their geographical locations, to trade with one another simultaneously, improving the depth and liquidity of the market. It provides full anonymity by accepting orders, big or small, from members without revealing their identity, thus providing equal access to everybody. It also provides a perfect audit trail, which helps to resolve disputes by logging in the trade execution process in entirety.
(f)
Trading Rules:
Regulations have been framed to prevent insider trading as well as unfair trade practices. The acquisitions and takeovers are permitted in a well- defined and orderly manner. The companies are permitted to buy back their securities to improve liquidity and enhance the shareholders' wealth. (g) Price Bands: Stock market volatility is generally a cause of concern for both policy makers as well as investors. To curb excessive volatility, SEBI has prescribed a system of price bands. The price bands or circuit breakers bring about a coordinated trading halt in all equity and equity derivatives markets nation-wide. An index-based market-wide circuit breaker system at three stages of the index movement either way at 10%, 15% and 20% has been prescribed. The movement of either S&P CNX Nifty or Sensex, whichever is breached earlier, triggers the breakers. As an additional measure of safety, individual scrip-wise price bands of 20% either way have been imposed for all securities except those available for stock options. (h) Demat Trading: The Depositories Act, 1996 was passed to proved for the establishment of depositories in securities with the objective of ensuring free transferability of securities with speed, accuracy and security by :(i) making securities subject to certain exceptions; (ii) dematerialising the securities in the depository mode; and (iii) providing for maintenance of ownership records in a book entry form. In order to streamline both the stages of settlement process, the Act envisages transfer of ownership of securities electronically by book entry without making the securities move from person to person. Two depositories, viz. NSDL and CDSL, have come up to provide instantaneous electronic transfer of securities. At the end of March 2002, 4,172 and 4,284 companies were connected to NSDL and CDSL respectively. The of public limited companies freely transferable
number of dematerialised securities increased to 56.5 billion at the end of March 2002. As on the same date, the value of dematerialsied securities was Rs. 4,669 billion and the number of investor accounts was 4,605,588. All actively traded scrips are held, traded and settled in demat form. Demat settlement accounts for over 99% of turnover settled by delivery. This has almost eliminated the bad deliveries and associated problems. To prevent physical certificates from sneaking into circulation, it has been mandatory for all new IPOs to be compulsorily traded in dematerialised form. The admission to a depository for dematerialisation of securities has been made a prerequisite for making a public or rights issue or an offer for sale. It has also been made compulsory for public listed companies making IPO of any security for Rs. 10 crore or more to do the same only in dematerialised form. (i) Charges:
A stock broker is required to pay a registration fee of Rs.5, 000 every financial year, if his annual turnover does not exceed Rs. 1 crore. If the turnover exceeds Rs. 1 crore during any financial year, he has to pay Rs. 5,000 plus one-hundredth of 1% of the turnover in excess of Rs.1 crore. After the expiry of five years from the date of initial registration as a broker, he has to pay Rs. 5,000 for a block of five financial years. Besides, the exchanges collect transaction charges from its trading members. NSE levies Rs. 4 per lakh of turnover. The maximum brokerage a trading member can levy in respect of securities transactions is 2.5% of the contract price, exclusive of statutory levies like SEBI turnover fee, service tax and stamp duty. However, brokerage charges as low as 0.15% are also observed in the market. (j) Trading Cycle:
Rolling settlement on T+3 basis gave way to T+2 from April 2003. The market has moved close to spot/cash market. (k) Risk Management:
To pre-empt market failures and protect investors, the regulator/exchanges have developed a comprehensive risk management system, which is constantly monitored and upgraded. It encompasses capital adequacy of members, adequate margin requirements, limits on exposure and turnover, indemnity insurance, on-line position monitoring and automatic disablement, etc. They also administer an efficient market
surveillance system to curb excessive volatility, detect and prevent price manipulations. A clearing corporation assures the counterparty risk of each member and guarantees financial settlement in respect of trades executed on NSE.
Thus in a nutshell the following diagram explains what all is discussed above
Debt Market in India:For a developing economy like India, debt markets are crucial sources of capital funds. The debt market in India is amongst the largest in Asia. It includes government securities, public sector undertakings, other government bodies, financial institutions, banks and companies. The debt markets in India is divided into three segments, viz., Government Securities, Public Sector Units (PSU) bonds, and corporate securities.
Government Securities
PSU Bonds
Corporate Bonds
The market for Government Securities comprises the Centre, State and Statesponsored securities. Government securities (G-secs) or gilts are sovereign securities, which are issued by the Reserve Bank of India (RBI) on behalf of the Government of India (GOI). The GOI uses these funds to meet its expenditure commitments. The PSU bonds are generally treated as surrogates of sovereign paper, sometimes due to explicit guarantee and often due to the comfort of public ownership. Some of the PSU bonds are tax free, while most bonds including government securities are not tax-free. The RBI also issues tax-free bonds, called the 6.5% RBI relief bonds, which is a popular category of tax-free bonds in the market. Corporate bond markets comprise of commercial paper and bonds. These bonds typically are structured to suit the requirements of investors and the issuing corporate, and include a variety of tailor- made features with respect to interest payments and redemption.
1. Central Government:Central government budgetary raises money through bond issuances, to fund
deficits and other short and long term funding requirements. 2. Reserve Bank of India:Reserve Bank Of India (RBI), the central bank of the country, acts as investment banker to the government, raises funds for the government through bond and T-bill issues, and also participates in the market through open- market operations, in the course of conduct of monetary policy. 3. Primary dealers:Primary dealers are market intermediaries appointed by the Reserve Bank of India who underwrite and make market in government securities
4. State Governments, municipalities and local bodies :State governments , municipalities and local bodies issue securities in the debt markets to fund their developmental projects, as well as to finance their budgetary deficits. 5. Public sector units (PSU):Public Sector Units are large issuers of debt securities, for raising funds to meet the long term and working capital needs. 6. Corporate treasuries:Corporate treasuries issue short and long term paper to meet the financial requirements of the corporate sector. 7. Banks:Commercial banks are the largest investors in the debt markets, particularly the treasury bill and G-sec markets. They have a statutory requirement to hold a certain percentage of their deposits (currently the mandatory requirement is 24% of deposits) in approved securities (all government bonds qualify) to satisfy the statutory liquidity requirements. 8. Mutual funds :Mutual Funds have emerged as another important player in the debt markets, owing primarily to the growing number of bond funds that have mobilised significant amounts from the investors. 9. Foreign Institutional Investors:Foreign Institutional Investors are permitted to invest in Dated Government Securities and Treasury Bills within certain specified limits. 10. Provident funds:Provident funds are large investors in the bond markets, as the prudential regulations governing the deployment of the funds they mobilise, mandate investments pre-dominantly in treasury and PSU bonds.
As in the case of equity primary market , this is the market in which debt instruments government securities, PSU Bonds & corporate bonds are issued for the first time . Government Securities:In case of government securities , it is the RBI which issues securities on behalf of the government (both state as well as central government). Thus RBI periodically conducts auction of GOI/SDL under Central/State borrowing Treasury program as per the auction calendar and also under MSS for GOI Securities.
Yield-based auction
Price-based auction.
In this, successful bids are decided In this, successful bids are filled up by filling up the notified amount in terms of prices that are bid by from the lowest bid upwards. participants from the highest price downward. This auction creates a new This auction facilitates the re-issue security, every time an auction is of an existing security completed & the name of the security is the cut-off yield
For example, the G-sec 10.3% 2010 derives its name from the cut-off yield at the auction, which in this case was 10.3%, which also becomes the coupon payable on the bond.
For example, in March 2001, RBI auctioned the 11.43% 2015 security. This was a G-sec, which had been earlier issued and trading in the market. The auction was for an additional issue of this existing security. The coupon rate and the dates of payment of coupons and redemption are already known. The additional issue increases the gross cash flows only on these dates.
The two choices in treasury auctions, which are widely known and used, are:
Discriminatory Price Auctions (French Auction) Uniform Price Auctions (Dutch Auction) In both these kinds of auctions, the winning bids are those that exhaust the amount on offer, beginning at the highest quoted price (or lowest quoted yield). In the Indian markets, discriminatory price auction as well as uniform price auction is used for all bond issuances. Whether an auction will be Dutch or French is announced in the notification of the auction. If all the successful bidders have to pay the cut-off price of Rs. 111.2, the auction is called a Dutch auction, or a uniform price auction. If the successful bidders have to pay the prices they have actually bid, the auction fills up the notified amounts, in various prices at which each of the successful bidders bid. This is called a French auction, or a discriminatory price auction. Each successful bidder pays the actual price bid by him.
BID TYPE 1. Competitive Bid: Participants having SGL a/c & current a/c 2. Non-Competitive Bid: Participants not having SGL a/c & current a/c
Front office takes a view about Bank's participation in the auction, taking into consideration the market factors, Bank's liquidity and the existing portfolio. Accordingly, proposal is placed before the Investment Committee
Investment committee consists of GM, AGM of different departments & CMD. Proposal for investment is placed before the Investment Committee. Decision is taken. NO
Y e s Bids are submitted through NDS_OM platform giving details of the quantum and
expected price/yield of securities. Report is generated.
End
Result of the auction is declared by RBI on the same day evening on NDS. If bid is accepted either partially or fully, the same is entered and authorized in bank system.
Back-Office Operation:Duly authorized Deal Slip is verified by the back office. On the day of allotment/settlement back office will settle the deal in the system & categorising Non-Competitive Bidding in Government Securities securities in HTM, AFS & HFT.
To enable medium and small investors to participate in the auction process without taking the price risk in auctions, the Reserve Bank of India has introduced a facility of non-competitive bidding in dated government securities auctions for select set of investors. Non-competitive bidding means that a person would be able to participate in the auctions of dated government securities without having to quote the yield or price in the bid. Thus, he will not have to worry about whether his bid will be on or off-the-mark; as long as he bids in accordance with the scheme, he will be allotted securities fully or partially.
Participation in the Scheme of non-competitive bidding is open to any person including firms, companies, corporate bodies, institutions, provident funds, trusts and any other entity as prescribed by RBI. As the focus is on the small investors lacking market expertise, the Scheme will be open to those who do not have current account (CA) or Subsidiary General Ledger (SGL) account with the Reserve Bank of India. As an exception, Regional Rural Banks (RRBs) and Urban Cooperative Banks (UCBs) can also apply under this Scheme in view of their statutory obligations.
Corporate Bonds :The corporate bond market has been in existence in India for a long time. However, despite a long history, the size of the public issue segment of the corporate bond market in India has remained quite insignificant.
Secondary Market :Like in the case of equity secondary market, the secondary debt market involves buying and selling of debt instruments which are already issued in the primary market or listed on the exchanges. Government bonds are deemed to be listed as soon as they are issued. Markets for government securities are pre-dominantly wholesale markets, with
trades done on telephonic negotiation. NSE WDM provides a trading platform for Government bonds, and reports over 65% of all secondary market trades in government securities. Currently, transactions in government securities are required to be settled on the trade date or next working day unless the transaction is through a broker of a permitted stock exchange in which case settlement can be on T+2 basis. In NDS, all trades between members of NDS have to be reported immediately. The settlement is routed through CCIL for all NDS members. The lack of market infrastructure and comprehensive regulatory framework coupled with low issuance leading to low liquidity in the secondary market, narrow investor base, inadequate credit assessment skills, high cost of issuance and lack of transparency in trades are some of the major factors that hindered the growth of the private corporate debt market.
The correlation between Indian 10 yr G-sec has held reasonably well in the recent past. Although, the correlation might not hold on a day to day basis, but over a slightly longer period, the direction of the movement of the Indian 10 yr bond is quite similar to that of the US 10 yr bond. The yields of the bonds have increased as the green shoots of recovery in the global economy has led to an increase in risk taking behaviour among the investors who are selling bonds to enter other asset classes which are relatively more risky and offers higher yields. The S&Ps decision to lower ratings outlook on US sovereign debt to negative from stable led to sell off in the US treasuries. Similarly in India, the rally in equity markets since the election results on 18th May might have led to some sell off in the bond markets which have pushed the Indian 10 yr bond yields to 6.70% levels from 6.22% in Mid May, in line with the sharp rise in the US 10 yr bonds .
Inflation arises as the purchasing power of people increases, the value of Rupee increases. To control the inflation and to suck excess liquidity from the system the bonds are issued t higher yield.
Political stability / sovereign rating outlook : The sense of political stability following election results has reduced the risk of an outright sovereign rating downgrade by international credit rating agencies in the near future . Although , the fiscal deficit concerns remain, the continuity of the political regime will abate the risk of runaway fiscal deficits. The reduced risk of sovereign rating downgrade due to a stable government and a likely controllable fiscal deficit scenario will therefore provide support to the bond market sentiments.
RBI policy stance / liquidity outlook:The bond interest rate is also affected by the RBI policy stance. If the RBI goes for an expansionary monetary policy , then the bond coupon rate will come down , as there will be ample liquidity in the system which easily would meet the demand for the same. It is a reverse situation when the RBI goes for a contractionary monetary policy. This is because then the money supply in the economy would be less as compared to the demand for the same and the consequence would be hardening of the bond coupon rate.
the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down. Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE.
2. Which are the top 30 companies of BSE & top 50 companies of NSE, which are used to calculate sensex & nifty ?
ANS:- The following is the list of top 30 companies of BSE :The sensex 30 includes the following companies (As on 24th July 2009) S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Name of company Reliance Industies Infosys Technologies L &T ICICI Bank HDFC ITC Reliance Communication Bharti Airtel HDFC Bank SBI ONGC BHEL Hindustan Unilever Tata Consultancy the S. No 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Name of the company Grasim Industries Maruti Suzuki NTPC Sterlite Industries Tata Power Reliance Infrastructure Mahindra & Mahindra Jai Prakash Associates Hero Honda DLF Wipro Hindalco Tata Motors Sun Pharma
15
Tata Steel
30
ACC
The 30 companies that make up the Sensex are selected and reviewed from time to time by an index committee. This index committee is made up of academicians, mutual fund managers, finance journalists, independent governing board members and other participants in the financial markets. The Nifty 50 Companies as on 24th July 2009 are as follows :S.N o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Name of the company No. Reliance Industies Infosys Technologies L &T ICICI Bank HDFC ITC Bharti Airtel HDFC Bank SBI ONGC BHEL Hindustan Unilever Tata Consultancy Tata Steel Grasim Industries Reliance Communication Jindal Steel 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Hero Honda DLF Wipro Cipla Idea Celluar Unitech Cairn Hindalco Reliance capital Tata Motors SAIL Punjab National Bank Sun Pharma ACC Ambuja Cement ABB Siemens S. Name of the company
18 19 20 21 22 23 24 25
Axis Bank Maruti Suzuki NTPC Sterlite Industries Tata Power Reliance Infrastructure Mahindra & Mahindra GAIL(I)
43 44 45 46 47 48 49 50
Power Grid Reliance Power Suzlon Energy BPCL HCL Technologies Ranbaxy Laboratories Tata Communication National Aluminium
Depending on the value of the market cap, the company will either be a midcap or large-cap or small-cap company
According the BSE, any shares that DO NOT fall under the following criteria, can be considered to be open market shares: Holdings by founders/directors/ acquirers which has control element Holdings by persons/ bodies with "controlling interest" Government holding as promoter/acquirer Holdings through the FDI Route Strategic stakes by private corporate bodies/ individuals Equity held by associate/group companies (cross-holdings) Equity held by employee welfare trusts Locked-in shares and shares which would not be sold in the open market in normal course. A company has to submit a complete report about who has how many of the companys shares to the BSE. On the basis of this, the BSE will decide the free-float factor of the company. The free-float factor is a very valuable number. If you multiply the "free-float factor" with the market cap of that company, you will get the free-float market cap ,which is the value of the shares of the company in the open market
5.What is the criteria for selecting top 30 and 50 stocks in case of BSE & NSE respectively ?
ANS:- The following are the criteria for selecting the top 30 and 50 Stocks for BSE & NSE respectively:(a)Market capitalization: -The company should have a market capitalization in the Top 100 market capitalizations of the BSE. Also the market capitalization of each company should be more than 0.5% of the total market capitalization of the Index.
(b)Trading frequency: -The company to be included should have been traded on each and every trading day for the last one year. Exceptions can be made for extreme reasons like share suspension etc. (c) Number of trades: -The scrip should be among the top 150 companies listed by average number of trades per day for the last one year. (d)Industry representation: -The companies should be leaders in their industry group. (e)Listed history:- The companies should have a listing history of at least one year on BSE. (f)Track record:- In the opinion of the index committee, the company should have an acceptable track record.
Example:-Suppose, the free float market cap of all the 30 companies was Rs. 100,000,000 at the end of one trading day and the value of sensex is 12500. The market cap at the end of next trading day becomes Rs.120,000,000, then the sensex value at the end of that day is Sensex value = 120,000,000 x12500 100,000,000 = 15000
Thus the sensex value at the end of next trading day is 15000. Please note that every time one of the 30 companies has a stock split or a "bonus" etc. appropriate changes are made in the market cap calculations.
As a rule of thumb, companies in mature industries / markets having stable growth have a Price Earnings ratio = Market price per share low to
moderate PE ratio. Companies in high-growth industries / markets having rapid growth have a moderate to high PE ratio.
(g) Private Equity (h) High Net worth Individuals (HNIs) (i)Financial Institutions (j)Insurance companies (k) Pension funds , etc.
make loans (this category includes banks, credit companies, and mortgage loan companies); 2) Insurance companies and pension funds; and 3) Brokers, underwriters and investment funds.
unions, trust
10. What is the difference between FDI and FII? Which Form of Investment is good for the economy ?
ANS:- Foreign Direct Investment (FDI ) is the investment made by the foreign companies / investors in a company with a strategic perspective. The investment is not only made to gain return but also made to have a say in the management of the affairs of the company. On the other hand, Foreign Institutional Investments (FIIs) , also called as portfolio investments are made by foreign investors primarily to get a healthy return on their investment. FDI is preferred over FII investments since it is considered to be the most beneficial form of foreign investment for the economy as a whole. Direct investment targets a specific enterprise, with the aim of increasing its capacity/productivity or changing its management control. Direct investment to create or augment capacity ensures that the capital inflow translates into additional production. In the case of FII investment that flows into the secondary market, the effect is to increase capital availability in general, rather than availability of capital to a particular enterprise. Translating an FII inflow into additional production depends on production decisions by someone other than the foreign investor some local investor has to draw upon the additional capital made available via FII inflows to augment production. In the case of FDI that flows in for the purpose of acquiring an existing asset, no addition to production capacity takes place as a direct result of the FDI inflow. Just like in the case of FII inflows, in this case too, addition to production capacity does not result from the action of the foreign investor the domestic seller has to invest the proceeds of the sale in a manner that augments capacity or productivity for the foreign capital inflow to boost domestic production. There is a widespread notion that FII inflows are hot money that it comes and goes, creating volatility in the stock market and exchange rates. While this might be true of individual funds, cumulatively, FII inflows have only provided net inflows of capital. FDI tends to be much more stable than FII inflows. Moreover, FDI brings not just capital but also better management and governance practices and, often, technology transfer. The know-how thus transferred along with FDI is often more crucial than the capital per se. No such benefit accrues in the case of FII inflows, although the search by FIIs for credible investment options has tended to improve accounting and governance practices among listed Indian
companies.
The following graph shows the FDI & FII inflows in India during the last 5 years
1. Long term finance for corporate and government :The capital market is the market for securities, where companies and governments can raise long term funds. Selling stock and selling bonds are two ways to generate capital and long term funds. It provides a new avenue to corporate and government to raise funds for long term. At present the central government has a large fiscal deficit of 6.8% of GDP, which comes to around Rs. 4,00,000 cr. To finance this large deficit the government would look to capital market . Corporates at the moment are also looking at raising funds through capital market.
2. Helps to bridge investment savings gap:It is seen mostly in case of developing countries that they suffer from investment savings gap . This gap means that funds available fall far short of the amount needed to stimulate economic development.Thus this gap hinders the economic growth of a developing country like India.In such a situation capital market plays an important role . Capital market expand the investment options available in the country , which attracts portfolio investments from abroad. Domestic savings are also facilitated by the availability of additional investment options. This enables to bridge the gap between investment and savings and paves the way for economic development . Indias improving macroeconomic fundamentals, a sizeable skilled labour force and greater integration with the world economy have increased Indias global competitiveness, placing the country on the radar screens of investors the world over. The global ratings agencies Moodys and Fitch have awarded India investment grade ratings, indicating comparatively low sovereign risks. These positive dynamics have led to a sustained surge in Indias equity markets since 2003 ,attracting sizeable capital from foreign investors. The net cumulative portfolio flows from 2003-2006 ( bonds & equities) amounted to $35 billion. In current year (from Jan to July) the Foreign Institutional Investors have pumped in over $6 billion or around Rs . 29,940 cr.
3. Cost effective mode of raising finance :Capital market in any country provides the corporate and government to raise long term finance at a low cost as compared to other modes of raising finance .Therefore capital market is important, more so for India as it embarks on the path of becoming a developed country. 4. Provides an avenue for investors to park their surplus funds :Capital market provides the investors both domestic as well as foreign ,various instruments to invest their surplus funds. Not only it provides an avenue to park surplus funds but it also helps the investors to reap decent rewards on their investment. This realisation has resulted in increased investments in capital market both from domestic as well as foreign investors in Indian capital market. Also there is an opportunity for investors to diversify their investment portfolio, as wide range of instruments for investment are available in capital market. 5. Conducive to implementation of Monetary Policy:Through open Market Operation (OMO), the Reserve Bank of India controls the cost and availability of money supply in the Indian economy.Thus when RBI follows expansionary monetary policy it purchases government securities from the Bond market and when it intends to contract the money supply in the economy it sells the securities from the secondary bond market . Because of these operation there is also an impact on the interest rates , which in turn impacts the cost of the funds in the economy. Thus capital market helps the RBI to check the cost and availability of funds in the economy. 6.Indicates the state of the economy:Capital market also indicate the state of the economy. It is said to be the face of the economy. This is so because when capital market is stable , investments flow into capital market from within as well as outside the country , which indicates that the future prospects of the economy are good.
Factors affecting capital market in India :The capital market is affected by a range of factors . Some of the factors which influence capital market are as follows:-
a)Performance of domestic companies:The performance of the companies or rather corporate earnings is one of the factors which has direct impact or effect on capital market in a country. Weak corporate earnings indicate that the demand for goods and services in the economy is less due to slow growth in per capita income of people . Because of slow growth in demand there is slow growth in employment which means slow growth in demand in the near future. Thus weak corporate earnings indicate average or not so good prospects for the economy as a whole in the near term. In such a scenario the investors ( both domestic as well as foreign ) would be wary to invest in the capital market and thus there is bear market like situation. The opposite case of it would be robust corporate earnings and its positive impact on the capital market. The corporate earnings for the April June quarter for the current fiscal has been good. The companies like TCS, Infosys,Maruti Suzuki, Bharti Airtel, ACC, ITC, Wipro,HDFC,Binani cement, IDEA, Marico Canara Bank, Piramal Health, India cements , Ultra Tech, L&T, Coca- Cola, Yes Bank, Dr. Reddys Laboratories, Oriental Bank of Commerce, Ranbaxy, Fortis, Shree Cement ,etc have registered growth in net profit compared to the corresponding quarter a year ago. Thus we see companies from Infrastructure sector, Financial Services, Pharmaceutical sector, IT Sector, Automobile sector, etc. doing well . This across the sector growth indicates that the Indian economy is on the path of recovery which has been positively reflected in the stock market( rise in sensex & nifty) in the last two weeks. (July 13-July 24). b)Environmental Factors :Environmental Factor in Indias context primarily means- Monsoon . In India around 60 % of agricultural production is dependent on monsoon. Thus there is heavy dependence on monsoon. The major chunk of agricultural production comes from the states of Punjab , Haryana & Uttar Pradesh. Thus deficient or delayed monsoon in this part of the country would directly affect the agricultural output in the country. Apart from monsoon other natural
calamities like Floods, tsunami, drought, earthquake, etc. also have an impact on the capital market of a country. The Indian Met Department (IMD) on 24th June stated that India would receive only 93 % rainfall of Long Period Average (LPA). This piece of news directly had an impact on Indian capital market with BSE Sensex falling by 0.5 % on the 25th June . The major losers were automakers and consumer goods firms since the below normal monsoon forecast triggered concerns that demand in the crucial rural heartland would take a hit. This is because a deficient monsoon could seriously squeeze rural incomes, reduce the demand for everything from motorbikes to soaps and worsen a slowing economy.
c)Macro Economic Numbers :The macro economic numbers also influence the capital market. It includes Index of Industrial Production (IIP) which is released every month, annual Inflation number indicated by Wholesale Price Index (WPI) which is released every week, Export Import numbers which are declared every month, Core Industries growth rate ( It includes Six Core infrastructure industries Coal, Crude oil, refining, power, cement and finished steel) which comes out every month, etc. This macro economic indicators indicate the state of the economy and the direction in which the economy is headed and therefore impacts the capital market in India. A case in the point was declaration of core industries growth figure. The six Core Infrastructure Industries Coal, Crude oil, refining, finished steel, power & cement grew 6.5% in June , the figure came on the 23 rd of July and had a positive impact on the capital market with the sensex and nifty rising by 388 points & 125 points respectively. d)Global Cues :In this world of globalisation various economies are interdependent and interconnected. An event in one part of the world is bound to affect other parts of the world , however the magnitude and intensity of impact would vary. Thus capital market in India is also affected by developments in other parts of the world i.e. U.S. , Europe, Japan , etc. Global cues includes corporate earnings of MNCs, consumer confidence index in developed countries, jobless claims in developed countries, global growth
outlook given by various agencies like IMF, economic growth of major economies, price of crude oil, credit rating of various economies given by Moodys, S & P, etc. An obvious example at this point in time would be that of subprime crisis & recession . Recession started in U.S. and some parts of the Europe in early 2008 .Since then it has impacted all the countries of the world- developed, developing , less- developed and even emerging economies. e)Political stability and government policies:For any economy to achieve and sustain growth it has to have political stability and pro- growth government policies. This is because when there is political stability there is stability and consistency in governments attitude which is communicated through various government policies. The vice- versa is the case when there is no political stability .So capital market also reacts to the nature of government , attitude of government, and various policies of the government. The above statement can be substantiated by the fact the when the mandate came in UPA governments favour ( Without the baggage of left party) on May 16 2009, the stock markets on Monday , 18th May had a bullish rally with sensex closing 800 point higher over the previous days close. The reason was political stability. Also without the baggage of left party government can go ahead with reforms. f)Growth prospectus of an economy:When the national income of the country increases and per capita income of people increases it is said that the economy is growing . Higher income also means higher expenditure and higher savings.This augurs well for the economy as higher expenditure means higher demand and higher savings means higher investment. Thus when an economy is growing at a good pace capital market of the country attracts more money from investors, both from within and outside the country and vice -versa. So we can say that growth prospects of an economy does have an impact on capital markets. g)Investor Sentiment and risk appetite :Another factor which influences capital market is investor sentiment and their risk appetite .Even if the investors have the money to invest but if they are not confident about the returns from their investment , they may stay away from investment for some time.At the same time if the investors have low
risk appetite , which they were having in global and Indian capital market some four to five months back due to global financial meltdown and recessionary situation in U.S. & some parts of Europe , they may stay away from investment and wait for the right time to come.
Now a days banking sectors also involved in offline trading. They involved selling and buying gold from customers.
Chart:1
PERCENTAGE 90 10 100
INFERENCE:The above table shows that 90 % of the respondents says yes that they have knowledge about stock market and only 10% respondents says that no about stock market , they dont have knowledge .
CHART:2
TABLE :3
CLASSIFICATION OF THE RESPONDENTS BASED ON MARKET /INVESTMENT AVENUES
INVESTMENT AVENUES Financial market Banks Post office Insurance Total INFERENCE:-
The above table shows that most of the investors invest in financial market and banks and few people invest in post office and in insurance sector.
CHART:3
TABLE :4 CLASSIFICATION OF THE RESPONDENTS BASED ON WHETHER THEY ARE INVESTOR OR TRADER
INVESTOR 90 INFERENCE:-
TRADER 1O
TOTAL 100
Above table shows that out of 100 sample size 90 are investors and 10 are trader, they want to trade in money market.
CHART:4
YES 40 INFERENCE:-
NO 60
TOTAL 100
Above table shows that 60 % of the sample size says no that they dont have Demat account and rest of them says yes that they have Demat account for trading purpose.
CHART:5
TABLE :6 CLASSIFICATION OF THE RESPONDENTS BASED ON THOSE SAMPLE SIZE WHICH HAVE DEMAT ACCOUNT
12 2 5 3 8 2 68 100 CHART:6
TABLE :7 CLASSIFICATION OF THE RESPONDENTS BASED ON THE BASIS OF THOSE SAMPLE SIZE WHO WANTS TO OPEN THEIR DEMAT ACCOUNT YES 36 INFERENCE:The above table shows that 36 sample size want to open a demat account ane 48 says no to demat account because they can invest money offline and rest of them cant say anything about demat account. CHART:7 NO 48 DINT SAY 16 TOTAL 100
TABLE :8 CLASSIFICATION OF THE RESPONDENTS BASED ON THEIR IDEAS REGARDING ONLINE /OFFLINE TRADING
ONLINE 22 INFERENCE:-
OFFLINE 15
BOTH 63
TOTAL 100
The above table shows that most of the sample size knows about the online and offline trading and few respondents dont have the knowledge about online / offline trading . CHART:8
TABLE :9 CLASSIFICATION OF THE RESPONDENTS BASED ON MODE THEY WANT TO INVEST THEIR MONEY
OFFLINE TRADING 20
TOTAL 100
The above table shows that most of the respondents go through online trading and rest of them with offline trading. CHART:9
8 50 24 18 100
The above table shows that most of the respondents (50) wants time saving and after that 24 respondents wants clarity of accounts .
CHART:10
TABLE :11 CLASSIFICATION OF THE RESPONDENTS BASED ON SEGMENT WHERE THEY INVEST MORE
40 22 38 100
The above table shows that most of the respondents wants to invest in future and cash and few are invest in options.
CHART:11
56 18 26 100
Above table shows that most of the respondents uses online trading and rest of them uses offline and through brokers office.
CHART:12
BELOW 10,000 10,000 TO 30,000 K 30,000 TO 50,000 K ABOVE 50,000 K TOTAL INFERENCE:-
40 38 10 12 100
The above table shows that most of the investors and the traders want to invest below or equal to 30,000 Rs and only few respondents want to invest above 50,000 Rs. CHART:13
Those investors who have their demat account they want to open their account in KARVY but still 68% of the respondents doesnt have their demat accounts.
While taking respondents view, we know that most of the respondents knows about online and offline trading.
Still few respondents invest their money through offline trading , just because of their preferences.
SUGGESTIONS
Even though, online trading is better than offline trading. Still it is difficult for the traders to trade. Many of our farmers lack in educational , therefore lack of knowledge of market and exchanges. So there is a need to educate them in order to participating in these markets to take the advantages of hedging again their agricultural products.
Online trading do away from the more of intermediaries which is farmer and must benefit to farmers. Online trading links farmers to consumers therefore resultors in better realizations. Offline trading exeses customers to risk of credit defaults delay in payments, and also delay of commodity dermises.
APPENDIX
INDIABULLS
Q- DO YOU HAVE KNOWLEDGE ABOUT STOCK MARKET? YES NO Q- IN WHICH MARKET/INVESTMENT AVENUES YOU LIKE TO INVEST MORE? FINANCIAL MARKET BANKS POST OFFICE INSURANCE Q- ARE YOU AN INVESTOR OR TRADER? INVESTOR TRADER Q- DO YOU HAVE A DEMAT ACCOUNT? YES NO
Q- IF YES, WITH WHICH COMPANY YOU ARE HAVING DEMAT AND TRADING ACCOUNT?
Q- IF NO, WOULD YOU LIKE TO OPEN DEMAT ACCOUNT? YES NO Q- DO YOU HAVE IDEA ABOUT ONLINE/OFFLINE TRADING? ONLINE OFFLINE BOTH Q- THROUGH WHICH MODE YOU WANT TO INVEST YOUR MONEY? ONLINE TRADING OFFLINE TRADING Q- WHY YOU CHOOSE ONLINE/OFFLINE TRADING? CONVENIENCE TIME SAVING CLARITY OF ACCOUNTS RISK FACTOR Q- IN WHICH SEGMENT YOU INVEST MORE? FUTURE
OPTIONS CASH Q- WHICH SERVICE YOU LIKE MOST FOR TRADING? ONLINE OFFLINE IN BROKERS OFFICE Q- HOW MUCH WOULD YOU LIKE TO INVEST? BELOW 10,000 RS 10,000 TO 30,000 RS 30,000 TO 50,000 RS ABOVE 50,000
CONCLUSION
To my understanding the best of my knowledge with the help of my study at Indiabulls , there by conclude my study saying that online trading is better in many terms than offline trading and will flourish in the future.
BIBLIOGRAPHY