full and final 4

8/7/2019 FULL AND FINAL 4

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A PROJECT

ON

RISK & VOLATILITY OF EQUITY MARKET

AT

IDBI CAPITAL MARKET SERVICES LTD.

BHUBANESHWAR( Submitted in partial fulfilment of the requirement of

Bachelor of Business Administration programme under Utkal University)

PREPARED BY

SHAGUN AGARWAL

ROLL NO.-66317UT08002

BATCH 2008-11

Under the guidance of

Faculty guide CORPORATE GUIDEMRS.. GAYATRI SINGH MR. MANOJ K SAMAL

Lect. ASBM INSTITUTE OF BBA (BRANCH IN CHARGE,IDBICAPITAL MARKET SERVICES LTD.)


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TO WHOM IT MAY CONCERN

This is to certify that Mr. Shagun Agarwal,Roll No.66317UT08002,a student of 2008-2011

Session, has undergone his Summer Training Programme at IDBI CAPITAL MARKET

SERVICES LTD.,BHUBANESWARunder my guidance. This is for the partial fulfilment of

BBA programme at ASBM INSTITUTE OF BBA and is a work of his own.

I recommend the same may be accepted for the above purpose.

Prof. Gayatri Singh

ASBM INSTITUTE OF BBA BHUBANESHWAR


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IDBI Capital Market

Services Ltd.

TO WHOM IT MAY CONCERN

This is to certify that Mr. Shagun Agarwal, a 5th Semester student ofASBM Institute of Bba ,Bhubaneswar has undergone 1 months summer training in our organization. His Project title is

Risk & Volatility of Equity Market

He has successfully completed the training and during this his conduct was found to be

satisfactory from all side.

I wish him all the success in life.

MR.MANOJ KUMAR SAMAL

BRANCH IN-CHARGE

IDBI CAPITAL MARKET SERVICES LTD.

BBSR


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Declaration

I hereby declare that the project entitled Risk & Volatility of Equity Market

submitted by me in partial fulfillment of BBA from ASBM Institute of ,Bba

Bhubaneshwar & has not been submitted to any institute or published anywhere

before.

This is the work which is done by me under the guidance and supervision of mycompany guide Mr. Manoj Kumar Samal, Branch in-charge, IDBI Capital

Market Services Ltd., Bhubaneswar Branch.

Shagun Agarwal


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Acknowledgement

It is my proud privilege to express my gratitude to the several people who have helped medirectly or indirectly to conduct this project work.

I do hereby take this opportunity to acknowledge with my sincere and deep sense of reverence to

Mr.Manoj kumar Samal, Branch in-charge, IDBI Capital Market Services Ltd.,

Bhubaneswar under whom I completed my training. He spared his valuable time and paid more

due attention to my work.

I am grateful to Prof. Biswaranjan Parida chief Co-ordinator (Summer intership

programme) for giving me an opportunity to train in IDBI Capital Market Services Ltd.,

Bhubaneswar.

I am greatly indebted and will remain ever obliged to my concerned faculty Prof. Gayatri

Singh, for guiding me to complete the project work.

I would also like to extend my sincere thanks to the entire branch of IDBI Capital MarketServices Ltd., for extending necessary help to me when required.

Last but not least I would like to thank my near and dear one who has helped me during my

project.


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Chapter-1

Introduction

1.1 Review of Literature1.2 Meaning of the study1.3 Objectives of the study1.4 Significance of the study1.5 Methodology1.6 Sources of data collection1.7 Limitation of the study

Chapter-2

Company Profile

2.1 Brief history of the company2.2 Vision, Mission and objective of the company2.3 Organization structure & style of work of company

Chapter- 3

Research Methodology

3.1 Sampling Design

3.2 Methods of data collection3.3 Tool or technique used

Chapter-4

Data analysis & interpretation4.1 Data analysis4.2 Data interpretation

Chapter-5

Conclusion

5.1 Findings5.2 Suggestions5.3 Conclusion


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CHAPTER- 1

INTRODUCTION


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1.1 REVIEW OF LITERATURE

WHAT IS TRADING RISK?

The uncertainties associated with risk elements impact the net cash flow of any business or

investment. Under the impact of uncertainties, variations in net cash flow take place. This could

be favorable or un-favorable.

Risk is the probability that the realized return would be different from the anticipated/expected

return on investment. Risk is a measure of likelihood of a bad financial outcome. All other things

being equal risk will be avoided. All other things are however not equal and that a reduction in

risk is accompanied by a reduction in expected return.

The trading book includes all the assets that are held with intention of trading that are

marketable. They are normally held for a short duration and positions are liquidated in the

market. Trading Book assets include investment held under Held for Trading category. They

are subjected to Market Risk and are marked to market.

ALLOCATION OF RISK

Virtually all real assets involve some risk. Financial markets and the diverse financial

instruments traded on markets allow investors with the greatest taste for risk to bear that risk

while other less-risk-tolerant individuals can, to a great extent, stay on sidelines.


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The stockholders bear most of the business risk, but reap potentially higher rewards. Thus the

capital markets allow the risk that is inherent to all investments to be borne by the investors most

willing to bear that risk. This allocation of risk also benefits the firms that need to raise capital to

finance their investments. When investor can self-select into security types with risk-return

characteristics that best suit their preferences, each security can be sold for the best possible

price.

EQUITY

Equity investment generally refers to the buying and holding of shares of stock on a stock market

by individuals and funds in anticipation of income from dividends and capital gain as the value

of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participation

in a private (unlisted) company or a startup (a company being created or newly created). When

the investment is in infant companies, it is referred to as venture capital investing and is

generally understood to be higher risk than investment in listed going-concern situations.

The Indian Equity Market is also the other name for Indian share market or Indian stock market.

The forces of the market depend on monsoons, global fundings flowing into equities in the

market and the performance of various companies. The Indian market of equities is transacted on

the basis of two major stock indices, National Stock Exchange of India Ltd. (NSE) and The

Bombay Stock Exchange (BSE), the trading being carried on in a dematerialized form. The

physical stocks are in liquid form and cannot be sold by the investors in any market. Two typesof funds are there in the Indian Equity Market, Venture Capital Funds and Private Equity Funds.

The equity indexes are correlated beyond the boundaries of different countries with their

exposure to common calamities like monsoon which would affect both India and Bangladesh or

trade integration policies and close connection with the foreign investors. From 1995 onwards,


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both in terms of trade integration and FIIs India has made an advance. All these have established

a close relationship between the stock market indexes of India stock market and those of other

countries. The Stock derivatives adds up all futures and options on all individual stocks. This

stock index derivatives was found to have gone up from 12 % of NSE derivatives turnover in

2002 to 35 % in 2004. the Indian Equity Market also comprise of the Debt Market, dominated by

primary dealers, banks and wholesale investors.

Indian Equity Market at present is a lucrative field for the investors and investing in Indian

stocks are profitable for not only the long and medium-term investors, but also the position

traders, short-term swing traders and also very short term intra-day traders. In terms of market

capitalization, there are over 2500 companies in the BSE chart list with the Reliance Industries

Limited at the top. The SENSEX today has rose from 1000 levels to 8000 levels providing a

profitable business to all those who had been investing in the Indian Equity Market. There are

about 22 stock exchanges in India which regulates the market trends of different stocks.

Generally the bigger companies are listed with the NSE and the BSE, but there is the OTCEI or

the Over the Counter Exchange of India, which lists the medium and small sized companies.

There is the SEBI or the Securities and Exchange Board of India which supervises the

functioning of the stock markets in India.

In the Indian market scenario, the large FMCG companies reached the top line with a double-

digit growth, with their shares being attractive for investing in the Indian stock market. Such

companies like the Tata Tea, Britannia, to name a few, has been providing a bustling business for

the Indian share market. Other leading houses offering equally beneficial stocks for investing in

Indian Equity Market, of the SENSEX chart are the two-wheeler and three-wheeler maker Bajaj

Auto and second largest software exporter Infosys Technologies.

Other than some restricted industries, foreign investment in general enjoys a majority share in

the Indian Equity Market. Foreign Institutional Investors (FII) need to register themselves with

the SEBI and the RBI for operating in Indian stock exchanges. In fact from the Indian stock

market analysis it is known that in some specific industries foreigners can have even 100%

shares. In the last few years with the facility of the Online Stock Market Trading in India, it has

been very convenient for the FIIs to trade in the Indian stock market. From an analysis on the


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Indian Equity Market it can be said that the increase in the foreign investments over the years no

doubt have accentuated the dynamism of the Indian market of equities. Foreign investors are

allowed to buy Indian equity for the purpose of converting the equity into ADR or GDR.

Thus, the growing financial capital markets of India being encouraged by domestic and foreign

investments is becoming a profitable business more with each day. If all the economic

parameters are unchanged Indian Equity Market will be conducive for the growth of private

equities and this will lead to an overall improvement in the Indian economy.

DERIVATIVES

Derivatives are financial contracts, or financial instruments, whose values are derived from the

value of something else (known as the underlying). The underlying value on which a derivative

is based can be an asset (e.g., commodities, equities (stocks), residential mortgages, commercial

real estate, loans, bonds), an index (e.g., interest rates, exchange rates, stock market indices,

consumer price index (CPI) see inflation derivatives), weather conditions, or other items.

Credit derivatives are based on loans, bonds or other forms of credit.

The main types of derivatives are forwards, futures, options, and swaps.

Derivatives can be used to mitigate the risk of economic loss arising from changes in the value of

the underlying. This activity is known as hedging. Alternatively, derivatives can be used by

investors to increase the profit arising if the value of the underlying moves in the direction they

expect. This activity is known as speculation.

Because the value of a derivative is contingent on the value of the underlying, the notional value

of derivatives is recorded off the balance sheet of an institution, although the market value of

derivatives is recorded on the balance sheet.

Types of derivatives


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Broadly speaking there are two distinct groups of derivative contracts, which are distinguished

by the way they are traded in market:

y Over-the-counter (OTC) derivatives are contracts that are traded (and privately

negotiated) directly between two parties, without going through an exchange or otherintermediary. Products such as swaps, forward rate agreements, and exotic options are

almost always traded in this way. The OTC derivative market is the largest market for

derivatives, and is largely unregulated with respect to disclosure of information between

the parties, since the OTC market is made up of banks and other highly sophisticated

parties, such as hedge funds. Reporting of OTC amounts are difficult because trades can

occur in private, without activity being visible on any exchange. According to the Bank

for International Settlements, the total outstanding notional amount is $684 trillion (as ofJune 2008)[2]. Of this total notional amount, 67% are interest rate contracts, 8% are credit

default swaps (CDS), 9% are foreign exchange contracts, 2% are commodity contracts,

1% are equity contracts, and 12% are other. Because OTC derivatives are not traded on

an exchange, there is no central counterparty. Therefore, they are subject to counterparty

risk, like an ordinary contract, since each counterparty relies on the other to perform.

y Exchange-traded derivatives (ETD) are those derivatives products that are traded via

specialized derivatives exchanges or other exchanges. A derivatives exchange acts as anintermediary to all related transactions, and takes Initial margin from both sides of the

trade to act as a guarantee. The world's largest[3] derivatives exchanges (by number of

transactions) are the Korea Exchange (which lists KOSPI Index Futures & Options),

Eurex (which lists a wide range of European products such as interest rate & index

products), and CME Group (made up of the 2007 merger of the Chicago Mercantile

Exchange and the Chicago Board of Trade and the 2008 acquisition of the New York

Mercantile Exchange). According to BIS, the combined turnover in the world's

derivatives exchanges totalled USD 344 trillion during Q4 2005. Some types of

derivative instruments also may trade on traditional exchanges. For instance, hybrid

instruments such as convertible bonds and/or convertible preferred may be listed on stock

or bond exchanges. Also, warrants (or "rights") may be listed on equity exchanges.

Performance Rights, Cash xPRTs and various other instruments that essentially consist of


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a complex set of options bundled into a simple package are routinely listed on equity

exchanges. Like other derivatives, these publicly traded derivatives provide investors

access to risk/reward and volatility characteristics that, while related to an underlying

commodity, nonetheless are distinctive.

Common derivative contract types

There are three major classes of derivatives:

1. Futures/Forwards are contracts to buy or sell an asset on or before a future date at a

price specified today. A futures contract differs from a forward contract in that the futures

contract is a standardized contract written by a clearing house that operates an exchange

where the contract can be bought and sold, while a forward contract is a non-standardized

contract written by the parties themselves.

2. Options are contracts that give the owner the right, but not the obligation, to buy (in the

case of a call option) or sell (in the case of a put option) an asset. The price at which the

sale takes place is known as the strike price, and is specified at the time the parties enter

into the option. The option contract also specifies a maturity date. In the case of a

European option, the owner has the right to require the sale to take place on (but not

before) the maturity date; in the case of an American option, the owner can require the

sale to take place at any time up to the maturity date. If the owner of the contractexercises this right, the counterparty has the obligation to carry out the transaction.

3. Swaps are contracts to exchange cash (flows) on or before a specified future date based

on the underlying value of currencies/exchange rates, bonds/interest rates, commodities,

stocks or other assets.


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FUTURE

In finance, a futures contract is a standardized contract, to buy or sell a specified commodity of

standardized quality at a certain date in the future, at a market determined price (the futures

price). The contracts are traded on a futures exchange. Futures Contracts are not "direct"

securities like stocks, bonds, rights or warrants as outlined by the Uniform Securities Act. They

are still securities however, though they are type of derivative contract.

The price is determined by the instantaneous equilibrium between the forces of supply and

demand among competing buy and sell orders on the exchange at the time of the purchase or sale

of the contract.

A futures contract gives the holder the obligation to make or take delivery under the terms of the

contract, whereas an option grants the buyer the right, but not the obligation, to establish a

position previously held by the seller of the option. In other words, the owner of an options

contract may exercise the contract, but both parties of a "futures contract" must fulfill the

contract on the settlement date. The seller delivers the underlying asset to the buyer, or, if it is a

cash-settled futures contract, then cash is transferred from the futures trader who sustained a loss

to the one who made a profit. To exit the commitment prior to the settlement date, the holder of a

futures position has to offset his/her position by either selling a long position or buying back(covering) a short position, effectively closing out the futures position and its contract

obligations.

OPTIONS

Options trading has been around since 1973 but really didn't take off until the last 10 years or so.

During that period the number of options contracts traded on U.S. exchanges increased by more

than 600 percent. What accounts for this increase in the popularity of options trading?

One major factor is that options are now understood better than they previously were. Because

options have many variations it is quite easy to misunderstand how they work, and as a result

many investors - or their brokers - had bad experiences when they first tried them.


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The influence of the internet has also been a significant factor. Not only has the internet provided

the means for low cost options trading, but it has been a tremendous source of valuable

information.

This has served to demystify the options trading process to a great degree. Prospective options

traders can draw on the experience and advice of countless numbers of people who have

successfully engaged in trading, learned its ins and outs, and developed a sophisticated

understanding of the activity.

One commonly held view about options trading is that it is risky - mostly because it is relatively

difficult to understand and the new investor will usually be uncertain about the best strategy to

employ.

One of the simplest strategies to understand, and one that can actually be used to reduce risk isthe use of a put option as a hedge against dramatic declines in a stock's market value.

The traditional way stock traders protect themselves against such losses is to place a "stop-loss

order" on a particular stock they hold. When it trades at or below the limit specified in the stop-

loss order, the stop-loss order automatically becomes a market order to sell.

This procedure has some serious shortcomings. When a stock starts fluctuating in price a stop-

loss order virtually guarantees that it will be sold for a loss because it will be sold as soon as it

dips to or below the stop order price.

More importantly when a stock worth, say, $50 at closing opens in the morning at $30 it will

automatically be sold at that price. This serves to lock in some pretty significant losses.

Purchasing a put option, on the other hand, lets you purchase the right to sell a specific stock at a

predetermined price (the "strike price") for a specified period of time. So if you suspect a certain

stock is going to decline in value you can purchase a put option for a quantity of that stock. If its

market price goes below the predetermined strike price you have the option of selling it at the

strike price.

The right, but not the obligation, to buy or sell a specified quantity of the underlying asset at a

fixed price (called exercise price), on or before the expiration date. There are two kinds of

options.

1. Call option: the right to buy a specified quality of the underlying asset at a fixed

exercise price on or before the expiry date.


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2. Put option: the right to sell a specified quality of the underlying asset at a fixed

exercise price on or before the expiry date.

An option gives you the right to buy or sell the underlying asset but not any obligation.

A call option gives you right to buy the underlying asset while a put option gives you the right to

sell.

An option contract specifies the strike price, that is, the price at which you can buy or sell the

underlying and the expiry date after which the option is no longer valid. In other words, the

expiry is the last day on which a contract expires or ends. In Indian markets, expiry is the last

Thursday of every month.

In many cases, options are traded on futures, sometimes called simply "futures options". A put isthe option to sell a futures contract, and a call is the option to buy a futures contract. For both,

the option strike price is the specified futures price at which the future is traded if the option is

exercised. See the Black-Scholes model, which is the most popular method for pricing these

option contracts.

1.2 MEANING OF THE STUDY

A project report on stock market is being prepared in attempts to interpret in-depth study of

volatility in Indian stock market. This report helps us to understand various terminologies in

stock market. This report gave me opportunity to have complete idea about volatility in stock

market. This gave me idea about technical and fundamental analysis in stock market and how

trading is being done in stock market.

This project report helps in following aspects,

y Build understanding of central ideas and theories of stock market.

y Develop familiarity with the analysis of stock market.

y Furnish institutional material relevant for understanding the environment in which

trading decisions are taken.


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1.3 OBJECTIVE OF THE STUDY

y To study volatility in Indian stock market while taking SENSEX of Bombay

stock exchange as a source of secondary data which broadly represent

Indian stock market along with NIFTY of National stock exchange.

y To study the factors which are making Indian stock market volatile.

y To furnish institutional material relevant for understanding the

environment in which stock market fluctuation are occurring. Like

y Demand for money

y Level of Government borrowings

y Supply of money

y Inflation rate

y The Reserve Bank of India and the Government policiesy To find out about the trading risk. It includes:

1. Understanding trading risk.Risk is exposure to the uncertain market value of a portfolio.It is the risk that the value of

this portfolio may decline over a given period of time simply because of economic

changes or other events that impact the market.

2.Types of risksRisk can be split into two parts. They are systematic and unsystematic risk. A detailed

description is given below.


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3. Risk minimizationRisk factor cannot be eliminated completely. We have already seen that the unsystematic risk

part of the total risk can be reduced. Here I would like to explain two such methods. They

are:

1. Diversification

2. Hedging

3. Speculations

4. Reading investors mind

5. Generally investors prefer investments with higher rate of return and lower standard

deviations. According to the economic principle of diminishing margin utility, as a person gets

more and more wealth his utility for additional wealth increases at a declining rate.

1.4 SIGNIFICANCE OF THE STUDY

This study can be used by investors ,traders and other professionals as a supplement to their own

research.

Hypothesis

This is the exploratory research which tries to shows the factors which are making stock market

volatile.

y Any fluctuation in foreign market has more effect on Indian stock market than that of domestic

market.

y In the given volatile economic conditions,the market is efficient to any news and information.

1.5 METHODOLOGY


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The most critical step in the survey can be the conversion of the raw data into the required

database. The raw data that is been collected should be converted into the necessary database

required for the study. The data that is collected should be collected for the study is processed for

the final result.

The key parameters for the analysis are:-

1. Relatives Strength index

2. Rate of change of prices

3. Exponential moving average

4. Mutual Fund Cash ratio

5. Short Interest ratio

Statistical tools like moving average, simple average and graphs, charts will be used to process

the data and convert it into useful information that can be used for the study.

To achieve my research objective of this project I have used some formulae of risk management.

I would like to state them here:

FORMULAE:

E(Re) = (P1 * R1e) + (P2 * R2e) + (P3 * R3e)

E(Rt) = (P1 * R1t) + (P2 * R2t) + (P3 * R3t)

E(Rp) = We * E(Re) + Wt * E(Rt)

Ve = P1(R1e E(Re))2 + P2(R2e E(Re))

2 + P3(R3e E(Re))2

Vt = P1(R1t E(Rt))2 + P2(R2t E(Rt))

2 + P3(R3t E(Rt))2

SDe = square root of Ve

SDt = square root of Vt

Covariance (cov) = P1(R1e E(Re)) * (R1t E(Rt)) + P2(R2e E(Re)) * (R2t E(Rt))+

P3(R3e E(Re)) * (R3t E(Rt))

Vp = Ve2 * We

2 + Vt2 * Wt

2 + 2 * We * Wt * cov

Vpvariance for the portfolio

Standard deviation of the portfolio = square root of cov


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E(Re) expected return from educompeq

E(Rt) expected return from tatachemeq

E(Rp) expected return from portfolio

R1return from the security when condition is good

R2return from the security when condition is bad

R3return from the security when condition is normal

P1probability of return when the condition is good

P2probability of return when the condition is bad

P3probability of return when the condition is normal

Weweight of security

Wtweight of securityVevariance

Vt variance

SDestandard deviation

SDt standard deviation

Subscript e EDUCOMPEQ

Subscript t TATACHEMEQ

Subscript p PORTFOLIO

1.6 SOURCES OF DATA COLLECTION

Data used in this study is of secondary in nature. Sensex and Nifty is taken as a source of

information which widely describes Indian stock market. Here monthly prices of both

indexes are taken for the study purpose.


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A. Define the problem and research objective:

The problem is to study the Volatility & Risk of stocks in equity market. The research objectives

are determined and based on them the primary data is collected. The research is carried with this

data.

(I). Defining the problem and research objective:

The first step towards finding a solution or launching a research study focuses on understanding

the nature of a situation. To help researchers identify the specific reasons of any problem through

research.

(II) Developing the research plan:

Once the problem is identified and the research objective clearly stated, the next step is to

prepare a plan for getting the information needed for research. The approach to be taken for

gathering data depends upon the type of hypothesis being investigated

The study is based on the primary data as well as secondary data. The principal sources of

primary data are various branch offices in the form of opinion through interview method. Insome cases group discussion were held with terminal operators, investors.

Information (in numerical term) is also collected from the web site ofwww.nseindia.com. For

interpretation of data some statistical methods & charts are used.

Sources of information:

Books, www.nseindia.comand Publications.


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1.7 LIMITATIONS OF THE STUDY

1. The primary data collected has its own limitation. The same has beenincorporated in the basis after proper scrutiny.

2. The study is confined to a limited number of stocks.

3. The time period allowed for the study is quite insufficient to catch all theaspects.

4. In the study more importance has been given to technical analysis only.

5. Finally the cost factor has also added some limitation to the study.

Confidentiality of information was the biggest limitation that corporate peoplewere not willing to share their information with us.


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CHAPTER- 2

COMPANY PROFILE


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1. IDBI Capital market Services Ltd. (ICMS): It was set up in December 1993 to

offer abroad range of capital market related services, including bond trading, retail

distribution, mutual fund distribution, equity broking, client asset management,

depository services, merchant banking, etc. It is a leading primary dealer of the

country.

2. IDBI Home Finance Ltd.(IHFL): In order to make a foray into retail financing, the

erstwhile IDBI acquired the entire shareholding of Tata Fianance Limited in Tata

Home Finance Ltd. The housing finance company has since been named as IDBI

Home finance Ltd.

3. IDBI Intech Ltd. (Intech): It was setup in March 2000 to undertake information

technology(IT) related activities. However, as IT is not a permissible business for

banking companies under section 19 of the Banking Regulation Act, 1949, IDBI Ltd.Is in the process of winding up the operations of Intech./

IDBI Capital market Services Ltd. (ICMS):

IDBI Capital Market Services Ltd. is a leading Fund Manager in the country for

Provident, Pension and Retirement Benefit Funds. The Company is a SEBI registered

Portfolio Manager and manage its Clients assets under both discretionary and non-

discretionary mandates. These services are provided to various public and private sectorundertakings and their provident, pension, retirement benefit and surplus funds. The

Companys client base includes leading pension and provident funds in the country.

IDBI capital has been advising institutions, banks and corporates for their investment in

Debt, Mutual Funds and Equities over several years. Its services include managing

Client Assets--Pension & Provident Funds, Surplus fund Management, Equity Portfolio

Management and Mutual Fund Advisory. The funds have continuously yielded superior

returns, which are significantly higher than the benchmark.

Regulatory Approval


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IDBI Capital is a registered Portfolio Manager with Securities and Exchange Board of India

(SEBI) since 1998 and is authorized to undertake Funds Management activities (Debt & Equity)

for clients. These activities would be governed by Securities and Exchange Board of India

(Portfolio Managers) Rules and Regulations, 1993. SEBI Registration No. of IDBI Capital is

INP000000209, valid till the year 2010.

Infrastructure

Experienced Fund Management Team: The Fund Management

team comprises of experienced professionals (experience ranges between 2 years to 15

years) in Portfolio Management with requisite exposure in the fixed income and equity

segment and qualifications

Experienced Back-Office: The Clearing and Settlement Operations are

manned by experienced personnel with requisite exposure to capital market and

particularly debt market. The process is standardized as per the regulatory and other

specific norms and mainly technology driven in most areas.

Accounting: Real time accounting of Remittances, Investments, Interest and

Redemption proceeds ensures accurate reconciliation.

Professional Custodian: Member of NSDL for demat services and offers

Constituent SGL Account facility for Government securities through IDBI Gilts Ltd.

Functional Separation of Front and Back Office: Separate

personnel handle the front and back office functions to ensure transparency and complete

regulatory compliance

Internal Controls:

Adequate Risk Management systems in place to ensurecomplete regulatory compliance

Audit Systems: Audit of all transactions and reports by an independent firm o

chartered accountants. The accounts and transactions are also subject to CAG audit and

other regulators


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Belongs to IDBI Group: IDBI is a leading bank, classified under Other

Public Sector Bank. Established in 1964 by Government of India under an Act o

Parliament, IDBI has essayed a significant role in the countrys industrial and economic

progress for over 40 years first as apex Development Financial Institution (DFI) and

now as a full service commercial bank.

FINANCIAL MARKET

The economic development of any country in any country depends upon the existence of a well-

organized financial system. It is the financial system, which supplies the necessary financial

inputs for the production of goods, and services, which in turn promote the well being and

standard of living of the people of a country. Thus, the financial system is a broader term,

which brings under its fold the financial markets and the financial institutions, which support the

system. The responsibility of the financial system is to mobilize the savings in the form o

money and monetary assets and invest them to productive ventures. An efficient functioning of a

financial system facilitates the free flow of funds to more productive activities and thus promotes

investment. Thus, the financial system provides the intermediations between savers and investors

and promotes faster economic development.

Functions of the financial system

Provision of liquidity

The major function of the financial system is the provision of money and monetary assets for the

production of goods and services. There should not be any shortage of money for productive

ventures. In financial language, the money and monetary assets are referred to as liquidity.

Mobilization of savings

Another important activity of the financial system is to mobilize savings and channelize them

into productive activities. The financial system should offer appropriate incentives to attract


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savings and make them available for more productive ventures. Thus the financial system

facilitates the transformation of saving into investment and consumption. The financial

intermediaries have to play a dominant role in this activity.

Financial assets

In any financial transaction there should be creation or transfer of financial asset. Hence the

basic product of any financial system is the financial asset. A financial asset is one, which is

used for production or consumption or for further creation of assets. For instance, A buys equity

shares and these shares are financial assets since they are income in future.

These assets are basically of two types:

y Marketable assets

y Non-marketable assets

Shares of the listed company are marketable assets, which can be easily transferred from one

person to another without many hindrances.Furthermore these are stock assets, which are issued by the business organization for the purpose

of raising fixed capital. There are two types of stocks namely equity and preference. Equity

shareholders are the real owners of the business and they enjoy the fruits of ownership and at the

same time they bear the risk as well. Preference shareholders on the other hand get fixed rate o

dividend and at the same time they retain some characteristics of equity.

IDBI Capital is a financial intermediary, which facilitates financial transactions of individual and

corporate customers. Thus, it refers to all kinds of such financial institutes. They may beorganized or un-organized sectors and are classified into capital and any money market

intermediaries.

Generally speaking there is no specific place or location to indicate the financial market.

Financial markets are pervasive in nature since financial transactions are themselves very


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pervasive throughout the economic system. For instance issue of equity shares deposit of money

into banks, sale of shares and so on.

This financial market is of both organized and unorganized type. In organized market there are

standardized rules and regulations governing their financial dealings. There is also a high degree

of institutionalization and instrumentalization. These markets are subject to strict supervision and

control by the RBI or other regulatory bodies.

These organized markets can be further classified into two. They are:

y Capital market

y Money market

CAPITAL MARKET

The capital market is the market for securities, where companies and governments can raise

long term funds. It is a market in which money is lent for periods longer than a year. The capital

market includes the stock market and the bond market. Financial regulators, such as the U.S.

Securities and Exchange Commission (SEC), oversee the capital markets in their designated

countries to ensure that investors are protected against fraud.

The capital markets consist of the primary market and the secondary market. The primary

markets are where new stock and bonds issues are sold (underwriting) to investors. The

secondary markets are where existing securities are sold and bought from one investor or

speculator to another, usually on an exchange (e.g. the New York Stock Exchange)

INDIAN CAPITAL MARKET

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago.

The earliest records of security dealings in India are meagre and obscure. The East India

Company was the dominant institution in those days and business in its loan securities used to betransacted towards the close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in

Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers


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recognized by banks and merchants during 1840 and 1850.

The 1850's witnessed a rapid development of commercial enterprise and brokerage business

attracted many men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of Europe

was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about

200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began

(for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a

place in a street (now appropriately called as Dalal Street) where they would conveniently

assemble and transact business. In 1887, they formally established in Bombay, the "Native Shareand Stock Brokers' Association" (which is alternatively known as "The Stock Exchange "). In

1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899.

Thus, the Stock Exchange at Bombay was consolidated.

Other leading cities in stock market operations

Ahmedabad gained importance next to Bombay with respect to cotton textile industry. After

1880, many mills originated from Ahmedabad and rapidly forged ahead. As new mills were

floated, the need for a Stock Exchange at Ahmedabad was realized and in 1894 the brokers

formed "The Ahmedabad Share and Stock Brokers' Association".

What the cotton textile industry was to Bombay and Ahmedabad, the jute industry was to

Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta. After

the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares, which was


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followed by a boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and

1908. On June 1908, some leading brokers formed "The Calcutta Stock Exchange Association".

In the beginning of the twentieth century, the industrial revolution was on the way in India with

the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company Limitedin 1907, an important stage in industrial advancement under Indian enterprise was reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies generally

enjoyed phenomenal prosperity, due to the First World War.

In 1920, the then demure city of Madras had the maiden thrill of a stock exchange functioning in

its midst, under the name and style of "The Madras Stock Exchange" with 100 members.

However, when boom faded, the number of members stood reduced from 100 to 3, by 1923, andso it went out of existence.

Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange was

closed during partition of the country and later migrated to Delhi and merged with Delhi Stock

Exchange.

Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963.

Most of the other exchanges languished till 1957 when they applied to the Central Government

for recognition under the Securities Contracts (Regulation) Act, 1956. Only Bombay, Calcutta,

Madras, Ahmedabad, Delhi, Hyderabad and Indore, the well established exchanges, were

recognized under the Act. Some of the members of the other Associations were required to be

admitted by the recognized stock exchanges on a concessional basis, but acting on the principle

of unitary control, all these pseudo stock exchanges were refused recognition by the Government

of India and they thereupon ceased to function.

Thus, during early sixties there were eight recognized stock exchanges in India (mentioned

above). The number virtually remained unchanged, for nearly two decades. During eighties,

however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar Pradesh

Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange Limited


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(1982), Ludhiana Stock Exchange Association Limited (1983), Guwahati Stock Exchange

Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock Exchange

Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock

Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot,

1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently established exchanges -

Coimbatore and Meerut. Thus, at present, there are totally twenty one recognized stock

exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI) and the

National Stock Exchange of India Limited (NSEIL).

Trading Pattern of the Indian Stock Market

Trading in Indian stock exchanges is limited to listed securities of public limited companies.They are broadly divided into two categories, namely, specified securities (forward list) and non-

specified securities (cash list). Equity shares of dividend paying, growth-oriented companies

with a paid-up capital of at least Rs.50 million and a market capitalization of at least Rs.100

million and having more than 20,000 shareholders are, normally, put in the specified group and

the balance in non-specified group.

Two types of transactions can be carried out on the Indian stock exchanges: (a) spot delivery

transactions "for delivery and payment within the time or on the date stipulated when enteringinto the contract which shall not be more than 14 days following the date of the contract": and

(b) forward transactions "delivery and payment can be extended by further period of 14 days

each so that the overall period does not exceed 90 days from the date of the contract". The latter

is permitted only in the case of specified shares. The brokers who carry over the outstanding pay

carry over charges (cantango or backwardation) which are usually determined by the rates of

interest prevailing.

A member broker in an Indian stock exchange can act as an agent, buy and sell securities for his

clients on a commission basis and also can act as a trader or dealer as a principal, buy and sell

securities on his own account and risk, in contrast with the practice prevailing on New York and

London Stock Exchanges, where a member can act as a jobber or a broker only.


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The nature of trading on Indian Stock Exchanges are that of age old conventional style of face-

to-face trading with bids and offers being made by open outcry. However, there is a great amount

of effort to modernize the Indian stock exchanges in the very recent times.

We also know the presence of two kinds of capital market. They are primary market andsecondary market.

PRIMARY MARKET

The primary market is that part of the capital markets that deals with the issuance of new

securities. Companies, governments or public sector institutions can obtain funding through the

sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers.

The process of selling new issues to investors is called underwriting. In the case of a new stock

issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the

price of the security offering, though it can be found in the prospectus.

Features of primary markets are:

y 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).

y In a primary issue, the securities are issued by the company directly to investors.

y The company receives the money and issues new security certificates to the investors.

y Primary issues are used by companies for the purpose of setting up new business or for

expanding or modernizing the existing business.

y The primary market performs the crucial function of facilitating capital formation in the

economy.

y The new issue market does not include certain other sources of new long term external

finance, such as loans from financial institutions. Borrowers in the new issue market may

be raising capital for converting private capital into public capital; this is known as

"going public."

y The financial assets sold can only be redeemed by the original holder.


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Methods of issuing securities in the primary market are:

y Initial public offering;

y Rights issue (for existing companies);

y Preferential issue.

SECONDARY MARKET

The secondary market, also known as the aftermarket, is the financial market where

previously issued securities and financial instruments such as stock, bonds, options, and futures

are bought and sold. The term "secondary market" is also used refer to the market for any used

goods or assets, or an alternative use for an existing product or asset where the customer base is

the second market (for example, corn has been traditionally used primarily for food production

and feedstock, but a second- or third- market has developed for use in ethanol production).

With primary issuances of securities or financial instruments, or the primary market, investors

purchase these securities directly from issuers such as corporations issuing shares in an IPO or

private placement, or directly from the federal government in the case of treasuries. After the

initial issuance, investors can purchase from other investors in the secondary market.

The secondary market for a variety of assets can vary from fragmented to centralized, and from

illiquid to very liquid. The major stock exchanges are the most visible example of liquid

secondary markets - in this case, for stocks of publicly traded companies. Exchanges such as the

New York Stock Exchange, NASDAQ and the American Stock Exchange provide a centralized,

liquid secondary market for the investors who own stocks that trade on those exchanges. Most

bonds and structured products trade over the counter, or by phoning the bond desk of ones

broker-dealer.


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SECURITIES AND EXCHANGE BOARD OF INDIA

SEBI is the Regulator for the Securities Market in India. Originally set up by the Government

of India in 1988, it acquired statutory form in 1992 with SEBI Act 1992 being passed by the

Indian Parliament. Chaired by C B Bhave, SEBI is headquartered in the popular business

district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern and

Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad.

SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and

successively (e.g. the quick movement towards making the markets electronic and paperless

rolling settlement on T+2 bases). SEBI has been active in setting up the regulations as required

under law. It is the regulating body.

The Securities and Exchange Board of India is perhaps the most important regulatory body.

Similar to the Securities Exchange Commission in the US, it is the authority that has to always

be on its toes. More so, when the markets are doing well and there are a spate of IPOs (initial

public offerings) or FPOs (follow-on public offerings) like now.Its main mandate is to protect the interest of investors in the securities markets and to promote

the development of and to regulate the securities markets so as to establish a dynamic and

efficient securities market.

When investors have complaints against listed companies or registered intermediaries, SEBI acts

as the nodal agency for addressing these complaints only if they are not solved directly between

the parties concerned, or if the investor is not happy with the response.

SEBI has listed certain categories of grievances for which investors can file complaints with it.

These include:

y Non-receipt of refund order or allotment advice in case of investment in IPO's, FPO's and

rights issues

y Non-receipt of dividend from listed companies


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y Non-receipt of share certificates after transfer from listed companies

y Non-receipt of debentures after transfer or non-receipt of interest or principal on

redemption and non-receipt of interest on delayed repayment

y Non-receipt of rights offer letter

Functions and Responsibilities

SEBI has to be responsive to the needs of three groups, which constitute the market:

y the issuers of securities

y the investors

y the market intermediaries.

SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-

executive. It drafts regulations in its legislative capacity, it conducts investigation and

enforcement action in its executive function and it passes rulings and orders in its judicial

capacity. Though this makes it very powerful, there is an appeals process to create

accountability. There is a Securities Appellate Tribunal which is a three member tribunal and is

presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second

appeal lies directly to the Supreme Court.

SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and

successively (e.g. the quick movement towards making the markets electronic and paperless

rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as required.

In India trading is done mainly in two exchanges or we can also say that these two exchanges are

the pillar of Indian stock market. They are NSE and BSE.

NSE

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock

market trading system on par with the international standards. On the basis of the

recommendations of high powered Pherwani Committee, the National Stock Exchange was

incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment


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Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations,

selected commercial banks and others.

National Stock Exchange of India (NSE) is India's largest Stock Exchange & World's third

largest Stock Exchange in terms of transactions. Located in Mumbai, NSE was promoted byleading Financial Institutions at the behest of the Government of India, and was incorporated in

November 1992 as a tax-paying company. In April 1993, NSE was recognized as a Stock

exchange under the Securities Contracts (Regulation) Act-1956. NSE commenced operations in

the Wholesale Debt Market (WDM) segment in June 1994. Capital Market (Equities) segment of

the NSE commenced operations in November 1994, while operations in the Derivatives segment

commenced in June 2000. NSE has played a catalytic role in reforming Indian securities market

in terms of microstructure, market practices and trading volumes. NSE has set up its tradingsystem as a nation-wide, fully automated screen based trading system. It has written for itself the

mandate to create World-class Stock Exchange and use it as an instrument of change for the

industry as a whole through competitive pressure. NSE is set up on a demutualised model

wherein the ownership, management and trading rights are in the hands of three different sets of

people. This has completely eliminated any conflict of interest.

NSE was set up with the objectives of:

y Establishing nationwide trading facility for all types of securitiesy Ensuring equal access to investors all over the country through an appropriate

telecommunication network

y Providing fair, efficient & transparent securities market using electronic trading system

y Enabling shorter settlement cycles and book entry settlements

y Meeting International benchmarks and standards

Within a very short span of time, NSE has been able to achieve its objectives for which it was set

up. Indian Capital Markets are a far cry from what they were 12 years back in terms of market

practices, infrastructure, technology, risk management, clearing and settlement and investor

service. To ensure continuity of business, NSE has built a full fledged BCP site operational for

last 7 years.


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Major objectives and the goals of NSE include:

y Real-time position computation and violation detection

y Ability to handle high load of over one million client positions

y Management of information for positions & risk values about each trading membery Information structure based on a tree of security, settlement, trading member

y Handle on-line collateral and securities early pay-in

y Total fault tolerance with minimum downtime

y Achieve 4000 violation checks per second

Experts say that NSE enjoys an edge in derivatives business because of its efficient clearing

system and high liquidity driven by large retail participation. NSE commands almost 99%

market share in the equity derivatives market in India. In March 2009, retail investors constituted

56.47% of the gross traded value in the derivatives segment compared to institutional investors'

share of just 12.66%.

Currently, NSE facilitates trading in eight indices and futures contract are available on 233

stocks. The average daily volumes were on the lower side of around Rs 44,000 crore during

2008-09. But it witnessed a record number of trades in the futures and options segment on

January 7, 2009, which stood at 18.74 lakh traded contracts.

"NSE has delivered a stable and robust trading platform to its members by offering well designed

products backed by strong risk management back-end coupled with efficient operations

processes, thereby allowing the market to scale up significantly in terms of traded volumes. By

constantly taking suggestions and feedback from market participants on product development

and operational enhancements it has been successful in its endeavour to gain a pre-eminent

position," said, Nikhil Johari, vice-president, Edelweiss Securities Ltd.

BSE

The Bombay/Mumbai Stock Exchange Limited (formerly, The StockExchange, Mumbai;

popularly called The Bombay/Mumbai StockExchange, orBSE) has the greatest number of listed


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companies in the world, with 4700 listed as of August 2007.It is located at Dalal Street, Mumbai,

India. On 31 December 2007, the equity market capitalization of the companies listed on the

BSE was US$ 1.79 trillion, making it the largest stock exchange in South Asia and the 12th

largest in the world.

Around 6,000 Indian companies list on the stock exchange, and it has a significant trading

volume. The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is a widely used

market index in India and Asia. Though many other exchanges exist, BSE and the National

Stock Exchange of India account for most of the trading in shares in India.

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning

three centuries in its 133 years of existence. What is now popularly known as BSE was

established as "The Native Share & Stock Brokers' Association" in 1875.

BSE is the first stock exchange in the country which obtained permanent recognition (in 1956)

from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's

pivotal and pre-eminent role in the development of the Indian capital market is widely

recognized. It migrated from the open outcry system to an online screen-based order driven

trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised and

demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant tothe BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and

Exchange Board of India (SEBI). With demutualisation, BSE has two of world's best exchanges,

Deutsche Brse and Singapore Exchange, as its strategic partners.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by

providing it with an efficient access to resources. There is perhaps no major corporate in India

which has not sourced BSE's services in raising resources from the capital market.

Today, BSE is the world's number 1 exchange in terms of the number of listed companies and

the world's 5th in transaction numbers. The market capitalization as on December 31, 2007 stood

at USD 1.79 trillion . An investor can choose from more than 4,700 listed companies, which for

easy reference, are classified into A, B, S, T,TS and Z groups.


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The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature , and is

tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is

constructed on a 'free-float' methodology, and is sensitive to market sentiments and market

realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sectoral indices. BSE has

entered into an index cooperation agreement with Deutsche Brse. This agreement has made

SENSEX and other BSE indices available to investors in Europe and America. Moreover,

Barclays Global Investors (BGI), the global leader in ETFs through its iShares brand, has

created the 'iShares BSE SENSEX India Tracker' which tracks the SENSEX. The ETF

enables investors in Hong Kong to take an exposure to the Indian equity market.

The first Exchange Traded Fund (ETF) on SENSEX, called "SPICE" is listed on BSE. It bringsto the investors a trading tool that can be easily used for the purposes of investment, trading,

hedging and arbitrage. SPICE allows small investors to take a long-term view of the market.

BSE provides an efficient and transparent market for trading in equity, debt instruments and

derivatives. It has a nation-wide reach with a presence in more than 359 cities and towns of

India. BSE has always been at par with the international standards.

Awards

y The World Council of Corporate Governance has awarded the Golden Peacock Global

CSR Award for BSE's initiatives in Corporate Social Responsibility (CSR).

y The Annual Reports and Accounts of BSE for the year ended March 31, 2006 and March

31 2007 have been awarded the ICAI awards for excellence in financial reporting.

y The Human Resource Management at BSE has won the Asia - Pacific HRM awards for

its efforts in employer branding through talent management at work, health management

at work and excellence in HR through technology.

IDBI Capital Market Services, Ltd. provides investment banking and financial services. The

companys services include stock broking, distribution of financial products, investment

banking, merchant banking, corporate advisory, debt arranging and underwriting, managing


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client assets, research, and online investing services. It offers mergers and acquisitions services,

including business valuations, feasibility studies, and partnering and joint venture alliances

services, as well as assists in raising of private equity and venture capital by corporates. The

company serves individual, institutional, and corporate clients. It has a strategic alliance with

Union Bank of India. The company was founded in 1995 and is headquartered in Mumbai, India.

IDBI Capital Market Services, Ltd. operates as a subsidiary of Industrial Development Bank of

India, Ltd.

TIE UPS AND AWARDS

IDBI Capital ties up with Union Bank ofIndia

IDBI Capital Market Services Ltd., a leading provider of financial services in India, and UnionBank of India, a leading nationalised bank in the country, today announced their strategic tie-upto offer IDBIs internet trading services platform to the banks customers.

IDBI Capital ties up with Oriental Bank ofCommerce.

IDBI Capital ties up with Oriental Bank of Commerce to offer world class e-trading servicesthrough www.idbipaisabuilder.in to the privileged customers of Oriental Bank of Commerce.

IDBI Capital ties up with Punjab National Bank

To offer world class e-trading services through www.IDBIpaisabuilder.in to the privileged PNBcustomers.

IDBI Capital ties up with Bank ofRajasthan

To offer world class e-trading services through www.IDBIpaisabuilder.in to the privileged Bank

of Rajasthan customers.

IDBI Capital bags CNBC TV18s prestigious National

Financial Advisor Award

IDBI Capital Market Services Ltd. has been awarded the Best National Financial Advisor-

Institutional' in India at the prestigious CNBC TV18 Financial Advisor Awards 2007. This is

the 2nd consecutive year in which IDBI Capital has walked away with this award.


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IDBI Capital offers retail investors safety net scheme

Usher Agro Ltd, an agri processing company, in its draft prospectus filed with the Securitiesand Exchange Board of India (SEBI) for its proposed public issue of equity shares has offeredretail investors a safety net scheme. The scheme is being offered by the IDBI Capital Market

Services Ltd which is also the sole lead manager to the proposed issue, a company release heretoday said.

2.2 VISION MISSION& OBJECTIVES OF THE COMPANY

VISION

To be the trusted partner in the progress by leveraging quality human capital and setting globalstandards of excellence to build the most valued financial conglomerate

MISSION

1. OUR RELATIONSHIPS ARE WELL ESTABLISHED.

2. We work towards your objectives as our goals.

3. You will get our best advice.

4. We full leverage our execution, distribution, structuring, and regulatory expertise in

your advantage.

5. We standby you towards a continued relationship.

6. A long term player belonging to Idbi group one is the largest financial conglomerates

India.

Objectives

IDBI is vested with the responsibility of co-coordinating the working of institutions engaged in

financing, promoting and developing industries. It has evolved an appropriate mechanism for this

purpose. IDBI also undertakes/supports wide-ranging promotional activities including

entrepreneurship development programmes for new entrepreneurs, provision of consultancy


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services for small and medium enterprises, up gradation of technology and programmes for

economic upliftment of the underprivileged.

IDBI's role as a catalyst

IDBI's role as a catalyst to industrial development encompasses a wide spectrum of activities.

IDBI can finance all types of industrial concerns covered under the provisions of the IDBI Act.

With over three decades of service to the Indian industry, IDBI has grown substantially in terms

of size of operations and portfolio.

Developmental Activities of IDBI

Promotional activities

In fulfillment of its developmental role, the Bank continues to perform a wide range of

promotional activities relating to developmental programmes for new entrepreneurs, consultancy

services for small and medium enterprises and programmes designed for accredited voluntary

agencies for the economic upliftment of the underprivileged. These include entrepreneurship

development, self-employment and wage employment in the industrial sector for the weaker

sections of society through voluntary agencies, support to Science and Technology

Entrepreneurs' Parks, Energy Conservation, Common Quality Testing Centers for small

industries.

Technical Consultancy Organizations

With a view to making available at a reasonable cost, consultancy and advisory services to

entrepreneurs, particularly to new and small entrepreneurs, IDBI, in collaboration with other All-

India Financial Institutions, has set up a network of Technical Consultancy Organizations

(TCOs) covering the entire country. TCOs offer diversified services to small and medium


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enterprises in the selection, formulation and appraisal of projects, their implementation and

review.

2.3 Organisational Structure & Style Of WorkAn integrated 3 in 1 account removes all hassles after placing order. Money/shares get debited/

credited automatically on pay in/pay out days.

Trading is made easy by following steps:

Visit to the website available anytime.

Place orders even after market hours.

Get order status anytime. Even modified or cancelled order anytime even if order lies

unexecuted. Get contract note online.

More about 3 in 1 account:

IDBI integrates clients bank, demat and broking account.

If one purchases/sells shares, the funds are automatically debited/credited from/to clients

account and shares are automatically debited/credited to/from clients demat account respectively

on the settlement date.

This therefore completely eliminates the hassle of writing cheques TIFDs / chasing brokers

etc.

And brings convenience to clients share trading.


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CHART OF PRODUCT CATEGORY


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SWOT ANALYSIS OF IDBI CAPITAL LTD:

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. Broadly speaking,

Strengths and Weaknesses often relate to internal factors dealing with core competences and

resources that are under your control. Opportunities and Threats are often external factors outside

of your immediate control. I have used the SWOT technique as my benchmark in a variety of

areas: making major decisions, recommending a strategy for a client, or even simply

understanding a companys operation. In a business context it can often offer valuable guidance

and insight. Its goal as we addressed each specific quadrant was to openly and honestly address

each of the four areas:

Strengths

(Internal):

-What does the company do well?

- What are its assets?

- What advantages does the company have over its competitors?

The Key strengths ofIDBI capital Market Services in the

areas ofDebt Fund Management are:

1. Fund Management experience of 10 years

2. Expertise in managing large corpus3. Expertise in both Debt & Equity Market

4. IDBI Capital is the only Portfolio Manager in the Country to achieve ISO 9001: 2000

Standard for Quality Management Systems in Fund Management operations, with

certification from TUV NORD an accredited German standards firm


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5. Substantial Returns Over Benchmark

6. IDBI Capital is a SEBI registered Portfolio Manager

7. Minimum Idle Days

8. Our fund management skill covers Portfolio Analysis that includes ALM, Asset

Allocation, Risk Analysis, Maturity Analysis and Yield Analysis

9. Transparency of Operations

10.Strict adherence to Compliance Procedures

11.Highly Rated Debt Research

12.Presence in All Segment/ Asset of the Financial Services: IDBI Capital deals in Equity

and Equity related products and is one of the highly rated Mutual Fund Distributor (won

two consecutive CNBC TV18 Institutional Financial Advisor Award). In Investment

Banking and Debt Capital Market- Rated in Top 15 by Prime Database13.Group Strength in Debt Market: IDBI Capital is one of the leading players in debt market

with presence in primary dealership since July 2007. The current operations of primary

dealership is conducted by a group company, IDBI Gilts.

Weaknesses

(Internal):

- Why is the company for sale?

- What is done badly?

- What is it losing money?

- How might a change in ownership affect the staff?

Weakness in heavyweights weigh on Sensex

y The market was news-driven with buying interest in selective counters. However, weakness

in select stocks brought the benchmark indices down to end the day in the negative territory.

y The BSE Sensitive Index was down 12.26 points at 2980.74 as against the previous close of

2993 while the slightly broad based S&P CNX Nifty recorded a decline of 2.4 points to

949.45.


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y IDBI seeking to convert Rs 2,130 crore bonds IDBI Capital Market Services, dwelling on an

issue that is obviously baffling a lot of people these days.

y What has changed so as to create this negative sentiment on the equity front

The market is in a correction mode. Other factors like rising interest rates in the US and views on

crude oil prices must be mentioned. These affect our market from time to time. The recent

correction of over 200 points has been driven mainly by the weaknesses spotted in foreign

economies (mainly US) and the lower-than-expected results/guidance by the IT bellwether and

certain other technology companies. A bounce-back can be expected once good results start

pouring in.

AFTER nearly a decade of reforms and furious efforts by policy-makers to put in placeinternational best practices, the Indian capital market presents a dismal picture. With a series of

scams over the decade, the stock market is in doldrums, lacking in d epth and transparency.

There is a pervading sense of despair and frustration among investors with the drastic erosion of

shareholder wealth, running into several thousands of crores of rupees. The broking community

has been hit hard with declining volume s. And, with the new issues market is virtually dead.

Also, the Governments plans to shed its equity in public sector enterprises through

disinvestments have suffered a serious setback.

Primary market scandal

Serious initiatives to reform the capital market began after the 1992 securities scam, better

known as the Harshad Mehta scandal. The Securities and Exchange Board of India (SEBI), set

up in 1998, was given statutory powers in 1992, which were reinforced in 1995. Before the

reforms, under the Capital Issues (Control) Act, firms were required to obtain approval from the

Controller of Capital Issues (CCI) for raising capital and fixing the premium on the issue price.This Act was repealed in 1992 and stat utory control on floatation and pricing of issues was

abolished, subject only to certain disclosure requirements. While SEBI enacted certain disclosure

requirements, events have shown that it was not able to enforce them. There have been too many


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cases o f price rigging by companies before public issues, managing often to fix exorbitant

premia and take the investors for a ride.

The abolition of the CCI and the boom conditions in the market in the wake of the entry of

foreign institutional investors (FIIs), saw an unprecedented wave of initial public offerings

(IPOs). The absence of a proper regulatory framework and the failure of SEBI to monitor and

supervise the flood of IPOs, led to a massive scam in the primary market.

Reform measures

The major weaknesses of the secondary market, pre-reform, included lack of transparency,

speculative excesses and scant regard for the interests of small investors. Large volumes of trade

were executed outside the exchanges after the trading hours; broke rs did not distinguish betweenpersonal and client accounts; deals were not time-stamped; brokers contracts did not clearly

separate price, commission and carry-forward charges. There was a significant amount of

insider-trading.

With a view to removing the prevailing weaknesses in the market, reform measures were

initiated at a hectic pace, often without even bothering to create the essential infrastructure and

institutional framework. The National Stock Exchange (NSE) was established with the explicit

aim of moving rapidly to nation-wide screen-based trading. The NSE began operations in 1994

and soon acquired a reputation for transparency. Competition from the NSE induced the BSE

also to adopt screen-based trading. In October 1995, an ordinance was passed providing for the

establishment of one or more depositories to take away the arbitrary power of company

managements to block the transfer of shares.

Opportunities

(External):

- What has the competition missed?

- What are the emerging needs of the customer?

- What should this company be doing better?


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The opportunity looked almost too good to be true. For sale: a stable company with along-

standing reputation and a competent and experienced senior staff

IDBI CAPITAL has so many opportunities in various sectors. They are as following.

y Union Bank tie up with IDBI Capital

y Through this strategic alliance, customers of Union Bank will have the opportunity to

invest in equities, mutual funds and initial public offers using the online trading platform

of IDBI Capital

y Making investing an easy and informed experience through www.idbipaisabuilder.in.

y Mumbai, 13th March 2008: IDBI Capital Market Services Ltd., a leading provider of

financial services in the country and Union Bank of India, a leading nationalised Bank in

the country, have today announced their strategic tie-up to offer IDBI Capitals internet

trading services platform to the Banks customers.

y It already has similar tie ups with Punjab National Bank, IDBI, Oriental Bank of

Commerce, Bank of Rajasthan and Karur Vysya Bank ,Union Bank of India, with its

network, ethos and customer-centric approach plan, is attempting to address the fast-

growing phenomenon of internet trading and seamlessly cater to the convenience and

value-seeking, cash-rich and time-poor new-age consumers.

y The integrated portal IDBIpaisabuilder.in will allow customers of the bank toseamlessly execute their transactions as per their needs and demands.

y Any customer of Union Bank of India at any of its CBS branches can use this online

trading platform from any place having an internet connection. When the customer

indicates an intention to purchase any security, his account is earmarked with the amount.

The amount is debited from his account only when the transaction is put through and his

demat account is credited in due course.

y Similarly when he desires to sell securities, lien is marked on the securities. When the

transaction is concluded his demat account is debited and his account is credited in due

course

y This new alliance is in line with IDBI Capitals strategy of increasing its reach and

penetration across the country.


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y This also facilitates the creation of new business opportunities and seamless customer

centricity by leveraging the core competencies of both the organisations. Both

organisations will work closely and leverage each others strengths to eventually ensure

customer delight

y Commenting on the tie up with IDBI Capital, Mr MV Nair, Chairman & Managing

Director, Union Bank of India, said, This tie up takes Union Bank one step closer towards

its vision of becoming a one stop shop for financial services offering technology

technology based products for its customers

y An advanced online trading portal, IDBIpaisabuilder.in is built with a core objective to

provide easy and informed investing experience to investors.

y This association will provide customers of the bank with a world class online investing

platform with the backing of two very reputed and established financial institutions of the

country.

y This strong alliance will help us to expand our services to the consumers on a larger

platform; IDBIpaisabuilder.in is targeted mainly at the retail investors.

y The site will enable the investors to make an informed decision by minimising risk

involved in equity investment support the investor throughout the entire investment

process including faster trade executions

y IDBIpaisabuilder.in is a portal designed to empower the common investor with theinformation and analytical tools needed to take charge of their investing needs.

y The portal enables online investing in Equities, Mutual Funds and IPOs.

y IDBIpaisabuilder.in helps investors make the right investment decisions by providing

them with pertinent news, information and analysis along with company specific

fundamental analysis. Facilities of investing online in Equity (NSE & BSE), Mutual

Funds (including SIP facility) and IPOs, portfolio tracker, choice of equity trading

platforms and custom stock screener are some of the other unique features, apart from the

comprehensive information and analytical tools that are showcased on

IDBIpaisabuilder.in.

y The portal has been designed keeping a retail investor in mind for easier comprehension

and very easy navigation within the site


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y IDBI Capital Market Services Ltd. is a leading provider of financial services and is a

100% subsidiary of Industrial Development Bank of India (IDBI) with the objective of

catering to specific financial requirements of financial institutions, banks, mutual funds

and corporate houses

y IDBI Capital provides a complete range of financial products and services that includes

Stock Broking for Institutional and Retail clients, Depository Services, distribution of

Financial Products, Investment Banking, Investment Advisory (Mutual Funds / Portfolio

Management services), Corporate Advisory services, Debt arranging and underwriting,

PF/Pension Fund Management, Client Asset Management, and Research Services.

IDBI Capital was recently adjudged the Best National Financial Advisor Institutional at the

CNBC-TV18 Financial Awards 2008, for the second consecutive year

Threats

(External):

- Are the companys competitors getting stronger?

- Will a change in ownership be perceived negatively by vendors and customers?

- Does the company have cash to fund research and development?

- Will it be possible to retain key employees after the sale?

1. IDBI Capital Market Services Ltd. (ICMS) is a leading Fund Manager in the country forProvident, Pension and Retirement Benefit Funds.

2. The Company is a SEBI registered Portfolio Manager and manage its Clients assets

under both discretionary and non-discretionary mandates.

3. These services are provided to various public and private sector undertakings and their

provident, pension, retirement benefit and surplus funds.

4. The Companys client base includes leading pension and provident funds in the country.

5.

IDBI capital has been advising institutions, banks and corporates for their investment inDebt, Mutual Funds and Equities over several years.

Its services include managing Client Assets--Pension & Provident Funds, Surplus fund

Management, Equity Portfolio Management and Mutual Fund Advisory.

The funds have continuously yielded superior returns, which are significantly higher than the

benchmark.


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CHAPTER -3

RESEARCH METHODOLOGY.


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3.1 METHODS OF DATA COLLECTION

Conducting a market survey is collecting primary data required to carryout the study. A survey

on the behaviours of the investors towards technical analysis has conducted in some of the Direct

Business Catalysts (DBC). The sample was randomly picked. The research tool used to conduct

the survey is questionnaire.

Research depends on two kinds of data primary and secondary. Primary data consists ofobserving phenomena and subsequently surveying respondents. The study requires primary data

for learning the investors perception about Technical Analysis. The company supplies the

database required for the study.

Primary data collection involves the following steps:

Meeting the clients as per the information provided by the database, scheduling the appointment

from customers through call convenience and trying to know investors perception towardsTechnical Analysis.

Secondary data marks the beginning of the research process. Information is gathered from both

internal and external sources. Secondary data is required to gain an insight into the Technical

Analysis. Secondary data is gathered through journals, magazines, brochures and websites.

Sources of information:

Books, www.nseindia.comand Publications


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3.2TOOLS OR TECHNIQUE USED

All of the technical analysis tools discussed up to this point were calculated using a securitys

price (e.g., high, low, close, volume, etc). There is another group of technical analysis tools

designed to help you gauge changes in all securities within a specific market. These indicators

are usually referred to as market indicators, because they gauge an entire market, not just an

individual security. Market indicators typically analyze the stock market, although they can be

used for other markets (e.g., futures).

While the data fields available for an individual security are limited to its open, high, low, close

there are numerous data items available for the overall stock market. For example, the number ofstocks that made new highs for the day, the number of stocks that increased in price, etc. Market

indicators cannot be calculated for an individual security because the required data is not

available.

Market indicators add significant depth to technical analysis, because they contain much more

information than price and volume. A typical approach is to use market indicators to determine

where the overall market is headed and then use price/volume indicators to determine when

full and final 4

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