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PROJECT REPORT ON
“COMPARATIVE ANALYSIS OF STOCK MARKET”
REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF BACHELOR OF BUSINESS
ADMINISTRATION
SESSION 2011-12SUBMITTED TO: SUMBITTED BY:Mr. Mandeep Kumar Saddam Hussain
VEER KUNWAR DEGREE COLLEGE
BIJNOR
CERTIFICATE
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This is Certify that Mr. Saddam has gone through compulsory Research report as a part of
BBA course programmed. He has worked on project titled “Comparative Analysis of
Stock Market”
Date: (DIRECTOR/ACEDMIC COORDINATOR)
TABLE OF CONTENT
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Declaration
Preface
Acknowledgement
1. Abstract
2. Company profile
3. Introduction to the Study & Review of Literature
4. Objective of study
5. Research methodology
Research problem & hypothesis
Research variables
Research design
Research venue
6. Data analysis and interpretations
7. Findings & result
8. Limitations of study
9. Conclusion
10. Suggestions/recommdation
11. References & bibliography
12. Annexure
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DECLARATION
I Saddam hussan a student of BBA IIIrd Year, “Veer kunwar Degree college Bijnor”
hereby solemnly declare that the project Report titled “COMPARATIVE ANALYSIS OF
STOCK MARKET” . is the outcome of my own project prepared by me and the same has
not been submitted to any university or institute for the award of any degree or diploma.
Date: Saddam Hussan
Place: Bijnor Roll No.
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PREFACE
As a Part of BBA Program, Student has to pursue a project duly approved by the Faculty
of Concerned area. I had the privilege of undertaking the project on “Investment in Share
Market” in India Info line Limited. Main aim of the Project is to study How to, When and
where we can invest our money to gain more profit.
My finding was that the extensive reforms introduced over the last few years
have enhanced the integrity, transparency and efficiency of the operations in the securities
market. There have been appreciable improvements in trading and settlement of securities
in secondary market, and the market has become a safer place as revealed by the interest
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ABSTRACT
Off to work so as to bring this organization among the top. to be dynamic in this industry.
The Present business scenario is totally consumer oriented. Every company faces stiff
competition from its competitors, each provides the best product at competitive rates. As
a result customers have lot of choices to get the best with the least cost. To face this
competition, it is very important to know customer’s behavior, their needs, preference and
also the motivation factors.
India Infoline Securities Limited Provide its Expert service in share market Operations to
institutional Investors. Company is a Member of National Stock Exchange as well as
Bombay Stock Exchange. India Infoline is slowly but steadily gaining market share and
goodwill in the Market. Its strategies for marketing its services as well as developing a
good Relationship with its client has given an edge over the other service providers. India
Infoline is on expansion path and is looking forward to be in the top. India Infoline is a
very flexible organization and it gives equal opportunity to its young and energetic ste
comparative analysis done in this project show how India Infoline has built competitive
edge on some ground
The Project help you understand the strategies of this industry right from De-Mat to
Trading, Margin to analysis and risk to return. I hope this project prove to be beneficial
for the Company and also give the idea about the industry.I learnt a lot through out the
process of undertaking this project report.
To fulfill my task I had to visit the client personally who are dealing in share trading with
this company or some other broking house.
For this project I was assign the target of 10 accounts, for which I first generated the
database and made appointment with them and convert them in as traders of India
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Infoline Securities Limited, for this I have to convince them and explain the concept and
collect the Trading Form and a cheque of Rs. 10000 only.
After going through the exercise I found that IFL is one of the upcoming companies in the
Share Market, as the credibility of other companies are going down in the market and it is
the right time for the IFL to built its reputation in the market. The Main reason for IFL
low market share is because of local brokers in the market which a charging very less
Margin as initial investment for Trading in Stock Market.
But No doubt it is having lots of scope to grow in the financial Market, and I wish it is
having a shining future in the coming years.
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COMPANY PROFILE
COMPANY PROFILE
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“India Info line Securities Pvt. Ltd.”
Knowledge is power and power brings security. Risk is a very relative term and changes
with every individual and situation. Financial management is not just about managing risk
but also managing knowledge and finally deriving answers that generate wealth, security
and trust.”
VISION
Vision is to be the most respected company in the financial services space.To be the
premier provider of investment advisory and financial planning services in India.
PUNCH LINE: “IT’S ALL ABOUT MONEY, HONEY!”
HISTORY IN BRIEF
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India Info line originally incorporated on October 18, 1995 as PROBITY
RESEARCH AND SERVICES PVT LTD. at Mumbai under the
Companies Act, 1956 with Registration No.1193797, became a public
limited company on April 28, 2000.
The name of the Company was changed to India Infoline.com Limited on May 23,
2000 and later to India Info line Limited on March 23, 2001.
The objective was to provide unbiased and independent information to market
intermediaries and investors.
The quality of research was so good that soon it caught the imagination of all
major participants in the financial marketing.
In a very short period they started providing research report to consulting firms
like Mckinsey, companies like HUL, banks like Citibank etc.In 1999, the
company made all the research report free on the web and as a result the number
of user increases from mere a thousand to lacks in a very short period of time.
The company got the financial support from venture capitalists and private equity
investors. They raised US $ 1 million in first round and in March 2000 again US
$5 Million.In 2001, the company faced the worst situation. The dot com suffix,
which was sexiest to them suddenly, became the worst stigma.
The company was planning to set up a TV channel but circumstances forced them
to jettison the plan. IIL decided to narrow its focus on businesses where it could
leverage its core competencies to the maximum. The key business lines that
emerged were mutual funds, life insurance and E-broking.
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The company became heavily dependent on its e-broking businesses for survival.
The odds were against them. There was no money available from the private
equity investor at any valuation. All competitors were backed by institution or had
abundant capital.
The core promoters of the company had little experience of broking. To add to it,
the market was hit by a scam. They also had their share of price to pay and lessons
to learn. It was difficult to retain people. Although devastating for morale but not
surprising, the most market observers had written them off.There was a core group
who never lost hope. They cut all possible costs and worked on a bare bones
structure. They survived against all odds started capturing market share. Not
broking alone but mutual fund life insurance business also grew strongly.
The company rose from strength to become the leading corporate agent in life
insurance and among top retail players in mutual fund and broking space. It is the
first Company in India to foray into the online distribution of Mutual Funds.It is a
one-stop financial services shop, most respected for qualityof its advice,
personalized service and cutting-edge technology.
The No.1Corporate agent for ICICI Prudential Life Insurance Company,
Research acknowledged by Forbes as
“Must Read for investor in South Asia.”
Listed on Bombay and National Stock Exchange with a net worth
of INR 200 Crore and a market cap of over INR 1970 Crore.
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In 2005, IIL came with an IPO and raised Rs. 75 Crores from the market. The
issue price was Rs. 76.The IPO was 7.22 times oversubscribed.
The company after that never looked back and started entire gamut of investments
products from risk free RBI bonds to high-risk, high rewards equities and also
mutual funds and life insurance. They also forayed into portfolio management
services and commodities broking, again leveraging upon their core competencies
in research and technology. In the last ten years, India Info line has faced
numerous ups and downs, but has never compromised on integrity.
They continue to ensure highest standards of corporate governance.
BUSINESS DESCRIPTION
The India Info line group, comprising the holding company, India Info line Limited and
its wholly-owned subsidiaries, straddle the entire financial services space with offerings
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ranging from Equity research, Equities and derivatives trading, Commodities trading,
Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, Gold,
Bonds and other small savings instruments to loan products and Investment banking.
India Info line also owns and manages the websites www.indiainfoline.com and
www.5paisa.com. The company has a network of 976 business locations .
BRANCHES AND SUB-BROKERS
Spread across 365 cities and towns.
It has more than 800,000 customers.
It is registered with NSDL as well as CDSL as a depository participant.
PILLARS OF THE ORGANIZATION
unlike others, India Info line has the concept of an Investment Team.
The brains behind all the investment strategies and decisions regarding Wealth
Management Services are:
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Advisor Executive director
Mr. Nirmal Jain Mr.R Venkataraman
PRODUCT OFFERINGS
Providing in house research based advice on selected stocks
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Advise on portfolio management services
Products that offer our clients unique risk -reward equation that are customized their investment objectives
Research based recommendation on top picks in mutual fund
Life & General insurance advisory
Advise on investment in art through fund structure
Bullion buying and selling
Advising and facilitating financing select IPO based on our in- hours research
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Provide overdraft facility against collateral of shares/ MF units
Provide term loan facility against collateral of shares/ MF units
Background of India Infoline Ltd
India Infoline Securities Limited, axy Promoter Group Company, was founded by late Dr.
Parvinder Singh (CMD Ranbaxy Laboratories Limited), with the vision of providing
integrated financial care driven by the relationship of trust & confidence. To realize its
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vision the India Infoline group provides various financial services which include broking
(stocks & commodities), depository participant services, portfolio management services,
advisory on mutual fund investments and many more. Working on the philosophy of
being “Financial Care Partner”, India Infoline unlike other traditional broking firms not
only executes the trades for the clients but also provides them critical and timely
investment advice. The growing list of financial institutions with which India Infoline is
empanelled as an approved broker is a reflection of the high levels of service standard
maintained by the company. India Infoline is a truly professional financial service
provider managed by a team of highly skilled professionals who have proven track record
in their respective domains. India Infoline has the widest reach through its Regional,
Zonal and Branch Offices spread across the length & breadth of the country.
Now days India Infoline is driven by ethical and dynamic process for wealth creation.
Based on this, the company started its endeavor in the financial market.
- An ISO 9001 : 2000 company
- Member of National Stock Exchange (NSE) since November 1994, first deposit
based
- Member of BSE.
Depository Participant with
- National Securities Depository Limited (NSDL) since July 2000 -
- Central Depository Services (India) Limited (CDS) since February 2003
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- SEBI Approved Portfolio Manager
- Working on the Philosophy of being “Financial Care Partner” In a span of less
than five years of its retail operations, FSL recorded a healthy growth rate both in
business volumes and profitability.
• India Infoline is among the very few stock market intermediaries to having very
sound based capital and healthy net worth..
• India Infoline aims to have its footprint all across the country by the end of year so
that it may add value to the investing community in the country.
India Infoline Limited (A Ranbaxy Promoter Group Company) through India Infoline
Limited, Religare Finevest Limited, India Infoline Commodities Limited and India
Infoline Services Limited provides integrated financial solutions to its corporate, retail
and wealth management clients. Today, we provide various financial services which
include Investment Banking, Corporate Finance, Portfolio Management Services, Equity
& Commodity Broking, Insurance and Mutual Funds. Plus, there’s a lot more to come
your way.
PRESENCE
India Infoline is present in more than 150 branches all over India and the target is to
cross 350 branches very soon. Our branches are fully equipped with high bandwidth
internet lines and high end computers i.e. the latest IT tools. There are efficient branch
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managers and dealers to give you tips of highest quality and accuracy with support from
our analysts. Our branches would make you feel like doing business in Dalal Street
however, in a more sophisticated manner. You get to work with more traders and learn
more and also trade more.
INFRASTRUCTURE
Offices
The company has offices located at prime locations in Mumbai, New Delhi, Kolkatta and
Chennai. The offices are centrally located to cater to the requirements of institutional and
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corporate clients and retails clients, and for ease of operations due to proximity to stock
exchanges and banks. Today, we have a growing network of 150 branches and more than
300 business partners spread across 180 cities in India and a fully operational
international office at London. However, our target is to have 350 branches and 1000
business partners in 300 cities of India and more than 7 International offices by the end of
2006.
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INDUSTRY
PROFILE
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ORIGIN AND DEVELOPMENT OF THE INDUSTRY
The Bombay Stock Exchange (BSE) is known as the oldest exchange in Asia. It traces its
history to the 1850s, when stockbrokers would gather under banyan trees in front of
Mumbai’s Town Hall. The location of these meetings changed many times, as the number
of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and
in 1875 became an official organization known as ‘The Native Share & Stock Brokers
Association’. In 1956, the BSE became the first stock exchange to be recognized by the
Indian Government under the Securities Contracts Regulation Act.
The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a
means to measure overall performance of the exchange. In 2000 the BSE used this index
to open its derivatives market, trading Sensex futures contracts. The development of
Sensex options along with equity derivatives followed in 2001 and 2002, expanding the
BSE’s trading platform.
Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched
to an electronic trading system in 1995. It took the exchange only fifty days to make this
transition. Capital market reforms in India and the launch of the Securities and Exchange
Board of India (SEBI) accelerated the integration of the second Indian stock exchange
called the National Stock Exchange (NSE) in 1992. After a few years of operations, the
NSE has become the largest stock exchange in India.
Three segments of the NSE trading platform were established one after another. The
Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital
Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options
segment began operating in 2000. Today the NSE takes the 14th position in the top 40
futures exchanges in the world.
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In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX
Junior Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified
index of 50 stocks from 25 different economy sectors. The Indices are owned and
managed by India Index Services and Products Ltd (IISL) that has a consulting and
licensing agreement with Standard & Poor’s.
In 1998, the National Stock Exchange of India launched its web-site and was the first
exchange in India that started trading stock on the Internet in 2000. The NSE has also
proved its leadership in the Indian financial market by gaining many awards such as ‘Best
IT Usage Award’ by Computer Society in India (in 1996 and 1997) and CHIP Web
Award by CHIP magazine (1999).
The National Stock Exchange of India was promoted by leading Financial institutions at
the behest of the Government of India, and was incorporated in November 1992 as a tax-
paying company. In April 1993, it 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. The Capital Market (Equities)
segment of the NSE commenced operations in November 1994, while operations in the
Derivatives segment commenced in June 2000.
Since the early 1950s till the early 1990s, Indian policy makers had been nourishing the
goal of Socialist pattern of society. They had been following the development planning
strategy of the former Soviet Russia in a mixed economic framework. From July 1991, in
the face of an unprecedented foreign exchange crisis, Indian economy started
experiencing an IMF-World Bank dictated regime of liberalisation.
One aspect of this is financial liberalisation. There is a move towards privatisation of
nationalised banks – these banks are selling their shares in the stock market.
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Transnational banks are encouraged to operate in the Indian banking sector. Attempts are
made to attract foreign direct investment in different sectors. There is an increasing entry
of foreign portfolio capital due to stock market liberalisation. People are encouraged to
invest in stocks through income tax benefits and abolition of capital gains tax. There is a
move to develop a national pension fund which will be invested in different stocks to get
returns out of which pension will be provided to retired people. It is expected that
boosting up of stock market will accelerate the process of capital accumulation and
growth.
Stock market development has been an important part of financial liberalisation in the
less developed countries (LDCs). In the pro-liberalisation circle, stock market is assigned
to play an important role in the capitalist development of LDCs.
There are many studies supporting the positive link between stock market development
and growth. Let us mention some of the recent studies. One important study was
undertaken by Levine and Zervos (1998). Their cross-country study found that the
Development of banks and stock markets has a positive effect on growth. In another study
Levine (2003) argued that although theory provides ambiguous relationship between
stock market liquidity and economic growth, the cross-country data for 49 countries over
the period 1976-93 suggest a strong and positive relationship (see also Levine, 2001).
Henry (2000) studied a sample of 11 LDCs and observed that stock market liberalisations
lead to private investment boom. Recently, Bekaert et al (2005) analyzed data of a large
number of countries and observed that the stock market liberalization ‘leads to an
approximate 1 % increase in annual real per capita GDP growth’.
There are some economists who are sceptical. Long time back Keynes (1936) compared
the stock market with casino and commented: ‘when the capital development of a country
becomes the by-product of the activities of a casino, the job is likely to be ill-done’.
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Referring to the study of World Bank (1993) Singh (1997) pointed out that stock markets
have played little role in the post-war industrialization of Japan, Korea and Taiwan. He
argued that the recent move towards stock market liberalization is ‘unlikely to help in
achieving quicker industrialization and faster long-term economic growth’ in most of the
LDCs.
In this perspective this study examines the nature of relationship between stock market
and growth through capital accumulation in India.
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Figure 1: India’s Real Share Prices (log-values), 1950-2004
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Figure 2: India’s Annual Growth Rate of Real Industrial Output, 1961-2003
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Figure3 : India’s Annual Growth Rate of Real GDP, 1951-2003
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INTRODUCTION
OF STOCK
MARKET
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In most industrialized countries, a substantial part of financial wealth is not
managed directly by savers, but through a financial intermediary, which implies the
existence of an agency contract between the investor (the principal) and a broker or
portfolio manager (the agent). Therefore, delegated brokerage management is arguably
one of the most important agency relationships intervening in the economy, with a
possible impact on financial market and economic developments at a macro level.
As the per-capita-income of the city is on the higher side, so it is quite obvious
that they want to invest their money in profitable ventures. On the other hand, a number
of brokerage houses make sure the hassle free investment in stocks. Asset management
firms allow investors to estimate both the expected risks and returns, as measured
statistically. There are mainly two types of Portfolio management strategies.
● Passive Portfolio Strategy
● Active Portfolio Strategy
1. Passive Portfolio Strategy: A strategy that involves minimal expectation
input, and instead relies on diversification to match the performance of some
market index. A passive strategy assumes that the marketplace will reflect all
available information in the price paid for securities
2. Active Portfolio Strategy: A strategy that uses available information and
forecasting techniques to seek a better performance than a portfolio that is simply
diversified broadly.
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INTRODUCTION TOWARDS THE TOPIC
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STOCK MARKET IN INDIA
The Indian security market has become one of the most dynamic and efficient security
markets in Asia today. The Indian market now conforms to International Standards in
terms of operating efficiency.During the latter half of 19th century, shares of companies
used to be floated in India Occasionally. There were share brokers in Bombay who
assisted in the floatation of shares of companies. A small group of stock brokers in
Bombay joined together in 1875 to form an association called Native Share &
Stockbrokers Association. The association drew up codes of conduct for brokerage
business and mobilizes private funds for investment in the corporate sector. It was this
association which later became the Bombay Stock Exchange, Mumbai or BSE.Later on in
1894 the brokers of Ahmedabad formed the Ahmedabad Stock Exchange, the second
stock exchange of the country. During the 1900s Kolkata became another major center of
share trading and as a result Kolkata Stock Exchange was form in 1908. Later on Chennai
Stock Exchange was started in 1920. However, by 1923, it ceased to exist.Then the
Madras Stock Exchange was started in 1937. Three more stock exchanges were
established before independence, at Indore in 1930, at Hyderabad in 1943.Thus along
with the increase in number of stock exchanges, the number of listed companies and the
capital of listed companies grown tremendously after 1985 which results into growth and
development of stock market in India.
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Indian Stock Market
Share or stock is a document issued by a company, which entitles its holder to be one of
the owners of the company. A share is issued by a company or can be purchased from the
stock market.
Share market where dealing of securities is done is known as share market. There are
two ways in which investors gets share from market:
Primary market: markets in which new securities are issued are known as primary
market. This is part of the financial market where enterprises issue their new shares and
bonds. It is characterized by being the only moment when the enterprise received money
in exchange for selling its financial assets.
Secondary Market: Market in which existing securities are dealt is known as
secondary market. The market where securities are traded after, they are initially offered
in the primary market. Most trading is done in the secondary market.
The Stock Market is an invisible market that trades in stocks of various companies
belonging to both the public and private sectors. The Indian Stock Market is often
referred to as the Share Market since it deals primarily with shares of various companies.
A Stock Exchange is a place where the stocks are listed and traded. Such exchanges may
be a corporation or mutual organization which specializes in the business of introducing
the sellers with the buyers of stocks and securities.
The Indian Stock Market in India comprises of two stock exchanges:
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● Bombay Stock Exchange (BSE)
● National Stock Exchange (NSE)
BSE
The Bombay Stock Exchange (BSE) was established in 1875.The BSE India Stock
Exchange serves as the most important for companies to raise money. The chief function
of the Stock Market of India is to help raise money as capital for the growth and
expansion of various private and public sector enterprises. Besides, the Stock Market of
India provides able assistance to the individual investors through daily updates on current
position of the stocks of the respective companies that are enlisted in the Stock Index in
which the movement of prices in a section of the market are captured in price indices. The
popular acronym for Stock Index is Sensitive index or sensex. Moreover, the liquidity
provided by the exchange enables the investors to sell securities owned by them easily
and quickly. Hence a person, who is subjected to sudden dearth of funds, can immediately
sell his shares for cash in India Stock Market.
The BSE Sensex, also known as “BSE 30” is a widely used market index not only in
India but across Asia. In terms of volume of transactions, it is ranked among the top five
stock exchanges in the world.
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ABOUT BSE SENSEX
BSE SENSEX or Bombay Stock Exchange Sensitive Index is a value-weighted index
composed of 30 stocks started in 01 of January, 1986. It consists of the 30 largest and
most actively traded stocks, representative of various sectors, on the Bombay Stock
Exchange. These companies account for around one-fifth of the market capitalization of
the BSE. The base value of the SENSEX is 100 on April 1, 1979, and the base year of
BSE-SENSEX is 1978-79. At irregular intervals, the Bombay Stock Exchange (BSE)
authorities review and modify its composition to make sure it reflects current market
conditions. The index is calculated based on a free-float capitalization method; a variation
of the market cap method. Instead of using a company's outstanding shares it uses its
float, or shares that are readily available for trading. The free-float method, therefore,
does not include restricted stocks, such as those held by company insiders.The index has
increased by over ten times from June 1990 to the present. Using information from April
1979 onwards, the long-run rate of return on the BSE SENSEX works out to be 18.6%
per annum, which translates to roughly 9% per annum after compensating for inflation.
There are five major indices in BSE, thirteen sector specific indices and a BSE Dollex
Index for dollar prices and movements.
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NSE
The National Stock Exchange of India Ltd. (NSE), set up in the year 1993, is today the
largest stock exchange in India and a preferred exchange for trading in equity, debt and
derivatives instruments by investors. NSE has set up a sophisticated electronic trading,
clearing and settlement platform and its infrastructure serves as a role model for the
securities industry. The standards set by NSE in terms of market practices; products and
technology have become industry benchmarks and are being replicated by many other
market participants.
NSE provides a screen-based automated trading system with a high degree of
transparency and equal access to investors irrespective of geographical location. The high
level of information dissemination through the on-line system has helped in integrating
retail investors across the nation.
The exchange has a network in more than 350 cities and its trading members are
connected to the central servers of the exchange in Mumbai through a sophisticated
telecommunication network comprising of over 2500 VSATs.
NSE has around 850 trading members and provides trading in equity shares and debt
securities. Besides this, NSE provides trading in various derivative products such as index
futures, index options, stock futures, stock options and interest rate futures.
In addition to these organizations there are other organizations highlighting on the share
trading in the Indian Stock Market are:
● Securities and Exchange Board of India (SEBI)
● NSDL
● CDSL
The Nifty and the Senses are the indicators which are the parameters denoting the prices
of the stocks of the major companies of the NSE and the BSE respectively.
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ABOUT NSE AND NIFTY 50
The National Stock Exchange of India Limited (NSE) is a Mumbai-based stock
exchange. It is the largest stock exchange in India in terms of daily turnover and number
of trades, for both equities and derivative trading. Though a number of other exchanges
exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges
in India and between them are responsible for the vast majority of share transactions.
The NSE's key index is the S&P CNX Nifty, known as the Nifty, an index of fifty major
stocks weighted by market capitalization. NSE is mutually-owned by a set of leading
financial institutions, banks, insurance companies and other financial intermediaries in
India but its ownership and management operate as separate entities. There are at least 2
foreign investors NYSE Euro next and Goldman Sachs who have taken a stake in the
NSE. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities
across India. In October 2007, the equity market capitalization of the companies listed on
the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South
Asia. NSE is the third largest Stock Exchange in the world in terms of the number of
trades in equities. It is the second fastest growing stock exchange in the world with a
recorded growth of 16.6%.
The Standard & Poor's CRISIL NSE Index 50 or S&P CNX Nifty nicknamed Nifty 50
or simply Nifty is the leading index for large companies on the National Stock Exchange
of India. The Nifty is a well diversified 50 stock index accounting for 22 sectors of the
economy. It is used for a variety of purposes such as benchmarking fund portfolios, index
based derivatives and index funds. There are seven major Indices in NSE and fifteen
sector specific Indices. CNX BANK INDEX or BANK NIFTY is the index which has 17
banks listed on it and is a separate index to look upon price movements of bank’s share P.
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Listed companies
As indicated in the above chart, the BSE has the largest number of listed companies
(4,921), followed by the TSX Group (3,841). The number of companies listed on the
NSE increased by 21.6% to 1,406 in 2008 as compared with the 2006 figure.
The London Stock Exchange had the highest number of foreign companies liste on
its exchange (681), which constituted 22% of the total number of companies listed on it;
followed by the NYSE Group with 415 foreign companies, which represented close to
14% of the total listed companies on it. In terms of percentage share, Luxemburg Stock
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Exchange had the highest percentage of foreign companies at 87%, followed by
Singapore Exchange at 41%. The two main exchanges in the US, Nasdaq, and NYSE
Group, had a combined total of 5,963 companies, out of which, 751 were foreign
companies.
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GROWTH AND PRESENT STATUS OF THE INDUSTRY
The ever-growing and fast-maturing 'India Market' is a lucrative business destination for
developed countries. With 7-8% of GDP growth, huge analytical, young and English
speaking work forces the ‘pull’ for opportunities are luring. The bandwidth of 'India
Market' is enviably wide and very deep.
'Markets in India' are well protected by legal guidelines and efficient administrators. With
a liberal and proactive government at the center the road ahead for 'Markets of India' is
very rosy. 'Market India' has witnessed exponential growth over past one and half decade.
Liberal and transparent financial policies have effected free-in-flow of FII and as a result
of which 'India Market' has grown to a colossal monster in the international market.
Foreseeing sure and substantial returns on investments (ROI) companies are pro- actively
listing on the stock market indexes. Government agencies once much hated for red tape
and bribes has shed its image. Professionalism is their new mantra. Public Enterprises like
IOC, ONGC, BHEL, NTPC, SAIL, MTNL, BPCL, HPCL and GAIL, SBI, LIC,
Hindustan Antibiotics Limited, Air India etc. to name a few, are giving Private Indian
companies a good run for their money. Private giants like Reliance Industries Limited,
Infosys, Tata, Birla Corporation, Jet Airways, Ranbaxy, Biocon, Bajaj Auto, ICICI are
breaking their own records every financial years.
'Markets in India' has witnessed meteorite rise of the Indian Software,
Telecommunication and Banking Industry. This has propelled growth of Urban Indian
class which, in turn has increased consumerism. Today, each and every type of industry
of 'Market India' like Infrastructure, Pharmaceutical & Biotechnology, Banking &
Insurance, Electronics, FMCG etc. has tremendous growth potential. Retail Industry
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along with Agriculture & Food industry are yet to contribute their share to the growth
story of 'Market India'.
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.
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.
Indian Stock Market including both NSE-National Stock Exchange and the BSE-Bombay
Stock Exchange have certainly taken a tremendous beating in the past few weeks. We are
sure most of us here knew that the correction in the trading curve was round the corner
which would be healthy, and the markets would bounce back from 18k levels with the
help of mutual fund investments & buying of Indian stocks again. However the
anticipation went wrong, and the US recession story along with global and Indian
commodity prices have added fuel to the global equity market turmoil on a whole.
41
Future of the industry
The stock market is booming in spite of the low agriculture output. The monsoon is good
in an overall sense but still the question remains who takes the credit? The answer is the
karma of the people. I appreciate the Indian politicians and the industrialists who being
pawns of destiny are doing things positive and productive. India, as a country is running a
very good period and the position of planets in the transit are giving wonderful results.
Less than one percent of population own stocks and less than 1000 individuals control the
market, the majority being the FIIS, the promoters of the company. The credit should go
to media for making stock market headlines.
The question many people in the market ask:
Will the Bull Run continue? What heights we can reach?
First of all, mark my words Indian bourses in the future will be one of the best
investments in the world. There will be a time when it can even reach 3000 points in the
nifty. India will begin one of the best dasas of the Sun, which will work in its favor. So
before 2009 Indian bourses should see an all time high.
Now this Bull Run will continue.
• There can be some correction in the BSE sensex in the 7500 points level.
• The market will hover between the 6000- 7000 till mid august.
• There will be huge fluctuations.
Investors and new entrants to the market to cool down a bit and come well below 7000.
In any case if you are long terms players then step-in and buy now and forget for another
10 years. You will make a killing in the Indian markets.
Most of the tech companies and the main index will do well but slightly in the lower side
of expectations.
42
FINANCIAL SECTOR
The financial sector is in a process of rapid transformation. Reforms are continuing as
part of the overall structural reforms aimed at improving the productivity and efficiency
of the economy. The role of an integrated financial infrastructure is to stimulate and
sustain economic growth.
The US$ 28 billion Indian financial sector has grown at around 15 per cent and has
displayed stability for the last several years, even when other markets in the Asian region
were facing a crisis. This stability was ensured through the resilience that has been built
into the system over time. The financial sector has kept pace with the growing needs of
corporate and other borrowers. Banks, capital market participants and insurers have
developed a wide range of products and services to suit varied customer requirements.
The Reserve Bank of India (RBI) has successfully introduced a regime where interest
rates are more in line with market forces.
Financial institutions have combated the reduction in interest rates and pressure on their
margins by constantly innovating and targeting attractive consumer segments. Banks and
trade financiers have also played an important role in promoting foreign trade of the
country.
43
Banks
The Indian banking system has a large geographic and functional coverage. Presently the
total asset size of the Indian banking sector is US$ 270 billion while the total deposits
amount to US$ 220 billion with a branch network exceeding 66,000 branches across the
country. Revenues of the banking sector have grown at 6 per cent CAGR over the past
few years to reach a size of US$ 15 billion. While commercial banks cater to short and
medium term financing requirements, national level and state level financial institutions
meet longer-term requirements. This distinction is getting blurred with commercial banks
extending project finance. The total disbursements of the financial institutions in 2001
were US$ 14 billion.
Banking today has transformed into a technology intensive and customer friendly model
with a focus on convenience. The sector is set to witness the emergence of financial
supermarkets in the form of universal banks providing a suite of services from retail to
corporate banking and industrial lending to investment banking. While corporate banking
is clearly the largest segment, personal financial services is the highest growth segment.
The recent favorable government policies for enhancing limits of foreign investments to
49 per cent among other key initiatives have encouraged such activity. Larger banks will
be able to mobilize sufficient capital to finance asset expansion and fund investments in
technology.
44
Capital Market
The Indian capital markets have witnessed a transformation over the last decade. India is
now placed among the mature markets of the world. Key progressive initiatives in
recent years include:
• The depository and share dematerialization systems that have enhanced the efficiency of
the transaction cycle
• Replacing the flexible, but often exploited, forward trading mechanism with rolling
settlement, to bring about transparency
• The infotech-driven National Stock Exchange (NSE) with a national presence (for the
benefit of investors across locations) and other initiatives to enhance the quality of
financial disclosures.
• Corporatization of stock exchanges.
• The Securities and Exchange Board of India (SEBI) has effectively been functioning as
an independent regulator with statutory powers.
• Indian capital markets have rewarded Foreign Institutional Investors (FIIs) with
attractive valuations and increasing returns.
• The Mumbai Stock Exchange continues to be the premier exchange in the country with
an increase in market capitalization from US$ 40 billion in 1990-1991 to US$ 203 billion
in 1999-2000. The stock exchange has about 6,000 listed companies and an average daily
volume of about a billion dollars
• Many new instruments have been introduced in the markets, including index futures,
index options, derivatives and options and futures in select stocks.
45
Insurance
With the opening of the market, foreign and private Indian players are keen to convert
untapped market potential into opportunities by providing tailor-made products:
• The presence of a host of new players in the sector has resulted in a shift in approach
and the launch of innovative products, services and value-added benefits. Foreign
majors have entered the country and announced joint ventures in both life and non-life
areas. Major foreign players include New York Life, Aviva, Tokio Marine, Allianz,
Standard Life, Lombard General, AIG, AMP and Sun Life among others.
• With competition, the erstwhile state sector companies have become aggressive in terms
of product offerings, marketing and distribution.
• The Insurance Regulatory and Development Authority (IRDA) has played a proactive
role as a regulator and a facilitator in the sector’s development.
• The size of the market presents immense opportunities to new players with only 20 per
cent of the country’s insurable population currently insured.
• The state sector Life Insurance Corporation (LIC), the largest life insurer in 2000, sold
close to 20 million new policies with a turnover of US$ 5 billion.
• The gross premia for the insurance sector was US$ 13 billion for 2001-02.
• There are four public sector and nine private sector insurance companies operating in
general/non-life insurance business with a premium income of over US$ 2.58 billion.
• The market’s potential has been estimated to have a premium income of US$ 80 billion
with a potential size of over 300 million people. The General Insurance Corporation
(GIC) (which covers the non-life sector) had a total premium income of US$ 2 billion in
2001-02. This has the potential to reach US$ 9 billion in the next five years.
46
Venture Capital
Technology and knowledge have been and continue to drive the global economy. Given
the inherent strength by way of its human capital, technical skills, cost competitive
workforce, research and entrepreneurship, India is positioned for rapid economic growth
in a sustainable manner. To realise the potential, there is a need for risk finance and
venture capital (VC) funding to leverage innovation, promote technology and harness
knowledge based ideas.
• The Indian venture capital sector has been active despite facing a challenging external
environment in 2001 and a competitive market scenario.
• There were 34 VCFs and 2 Foreign VCFs registered with SEBI in March 2002.
• According to a survey conducted by Thomson Financial and Prime Database, India
ranked as the third most active venture capital market in Asia Pacific (excluding Japan).
It recorded 115 deals in 2001 with average investment per deal amounting to US$ 7.9
million. 57 VCFs invested US$ 908 million in 101 Indian companies during 2001.
• Disbursements for 2002 are expected to be US$ 2 billion and are estimated to reach
US$ 10 billion by 2007.
• There is an increased interest in India: 70 VC funds operate in India with the total assets
under management worth about US$ 6 billion.
• The amount has grown nearly twenty fold in the past five years. Most VCs believe that
2002-03 will be driven by a relatively stable economy and new initiatives that will boost
the e-commerce sector, particularly on-line trading and e-banking sectors.
47
STOCK BROKING SECTOR IN INDIA
The Indian broking industry is one of the oldest trading industries that has been around
even before the establishment of the BSE in 1875. Despite passing through a number of
changes in the post liberalization period, the industry has found its way towards
sustainable growth. In this section our purpose will be of gaining a deeper understanding
about the role of the Indian stock broking industry in the country’s economy.
What is meant by a Stock Exchange?
The Securities Contract (Regulation) Act, 1956 [SCRA] defines ‘Stock Exchange’ as
anybody of individuals, whether incorporated or not, constituted for the purpose of
assisting, regulating or controlling the business of buying, selling or dealing in securities.
Stock exchange could be a regional stock exchange whose area of operation/jurisdiction
is specified at the time of its recognition or national exchanges, which are permitted to
have nationwide trading since inception. NSE was incorporated as a national stock
exchange.
48
What is an ‘Equity’/Share?
Total equity capital of a company is divided into equal units of small denominations, each
called a share. The holders of such shares are members of the company and have voting
rights.
What is a ‘Debt Instrument’?
Debt instrument represents a contract whereby one party lends money to another on pre-
determined terms with regards to rate and periodicity of interest, repayment of principal
amount by the borrower to the lender. In the Indian securities markets, the term ‘bond’ is
used for debt instruments issued by the Central and State governments and public sector
organizations and the term ‘debenture’ is used for instruments issued by private corporate
sector.
What is a Derivative?
Derivative is a product whose value is derived from the value of one or more basic
variables, called underlying. The underlying asset can be equity, index, foreign exchange
(forex), commodity or any other asset. Derivative products initially emerged as hedging
devices against fluctuations in commodity prices and commodity-linked derivatives
remained the sole form of such products for almost three hundred years. The financial
derivatives came into spotlight in post-1970 period due to growing instability in the
financial markets.
49
What is a Mutual Fund?
A Mutual Fund is a body corporate registered with SEBI (Securities Exchange Board of
India) that pools money from individuals/corporate investors and invests the same in a
variety of different financial instruments or securities such as equity shares,
Government securities, Bonds, debentures etc. Mutual funds can thus be considered as
financial intermediaries in the investment business that collect funds from the public
and invest on behalf of the investors. Mutual funds issue units to the investors. The
appreciation of the portfolio or securities in which the mutual fund has invested the
money leads to an appreciation in the value of the units held by investors. The
investment objectives outlined by a Mutual Fund in its prospectus are binding on the
Mutual Fund scheme. The investment objectives specify the class of securities a Mutual
Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds,
debentures, commercial paper and government securities. The schemes offered by
mutual funds vary from fund to fund. Some are pure equity schemes; others are a mix of
equity and bonds. Investors are also given the option of getting dividends, which are
declared periodically by the mutual fund, or to participate only in the capital
appreciation of the scheme.
What is an Index?
An Index shows how a specified portfolio of share prices is moving in order to give an
indication of market trends. It is a basket of securities and the average price movement
of the basket of securities indicates the index movement, whether upwards or
downwards.
50
What is a Depository?
A depository is like a bank wherein the deposits are securities (viz. shares, debentures,
bonds, government securities, units etc.) in electronic form.
What is Dematerialization?
Dematerialization is the process by which physical certificates of an investor are
converted to an equivalent number of securities in electronic form and credited to the
investor’s account with his Depository Participant (DP)
What is meant by ‘Securities’?
The definition of ‘Securities’ as per the Securities Contracts Regulation Act (SCRA),
1956, includes instruments such as shares, bonds, scrips, stocks or other marketable
securities of similar nature in or of any incorporate company or body corporate,
government securities, derivatives of securities, units of collective investment scheme,
interest and rights in securities, security receipt or any other instruments so declared by
the Central Government.
What is the function of Securities Market?
Securities Markets is a place where buyers and sellers of securities can enter into
transactions to purchase and sell shares, bonds, debentures etc. Further, it performs an
important role of enabling corporate, entrepreneurs to raise resources for their companies
and business ventures through public issues. Transfer of resources from those having idle
resources (investors) to others who have a need for them (corporate) is most efficiently
achieved through the securities market. Stated formally, securities markets provide
51
channels for reallocation of savings to investments and entrepreneurship. Savings are
linked to investments by a variety of intermediaries, through a range of financial
products, called ‘Securities’.
Which are the securities one can invest in?
● Shares
● Government Securities
● Derivative products
● Units of Mutual Funds etc.
Why does Securities Market need Regulators?
The absence of conditions of perfect competition in the securities market makes the role
of the Regulator extremely important. The regulator ensures that the market participants
behave in a desired manner so that securities market continues to be a major source of
finance for corporate and government and the interest of investors are protected.
Who regulates the Securities Market?
The responsibility for regulating the securities market is shared by Department of
Economic Affairs (DEA), Department of Company Affairs (DCA), Reserve Bank of
India (RBI) and Securities and Exchange Board of India (SEBI).
52
What is SEBI and what is its role?
The Securities and Exchange Board of India (SEBI) is the regulatory authority in India
established under Section 3 of SEBI Act, 1992. SEBI Act, 1992 provides for
establishment of Securities and Exchange Board of India (SEBI) with statutory powers
for (a) protecting the interests of investors in securities (b) promoting the development of
the securities market and (c ) regulating the securities market. Its regulatory jurisdiction
extends over corporates in the issuance of capital and transfer of securities, in addition to
all intermediaries and persons associated with securities market. SEBI has been obligated
to perform the aforesaid functions by such measures as it thinks fit. In particular, it has
powers for:
● Regulating the business in stock exchanges and any other securities markets
● Registering and regulating the working of stock brokers, sub–brokers etc.
● Promoting and regulating self-regulatory organizations
● Prohibiting fraudulent and unfair trade practice.
● Calling for information from, undertaking inspection, conducting inquiries and
audits of the stock exchanges, intermediaries, self- regulatory organizations,
mutual funds and other persons associated with the securities market.
53
Broking houses in India
India is a country having a big list of Broking Houses. The Equity Broking Industry in
India has several unique features like it is more than a century old, dynamic, forward
looking, and good service providers, well conversant, highly innovative and even
adaptable. The regulations and reforms been laid down in the Equity Market has resulted
in rapid growth and development. Basically, the growth in the equity market is largely
due to the effective intermediaries.
The Broking Houses not only act as an intermediate link for the Equity Market but also
for the Commodity Market, Foreign Currency Exchange Market, and many more. The
Broking Houses has also made an impact on the Foreign Investors to invest in India to
certain extent.
In the last decade, the Indian brokerage industry has undergone a dramatic
transformation. From being made of close groups, the broking industry today is one of the
most transparent and compliance oriented businesses. Long settlement cycles and large
scale bad deliveries are a thing of the past with the advent of T+2 settlement cycle and
dematerialization. Large and fixed commissions have been replaced by wafer thin
margins, with competition driving down the brokerage fee, in some cases, to a few basis
points.
There have also been major changes in the way business is conducted. Technology has
emerged as the key driver of business and investment advice has become research based.
At the same time, adherence to regulation and compliance has vastly increased. The scope
of services have enhanced from being equity products to a wide range of financial
services. Investor protection has assumed significance,.
54
SOME BASICS OF STOCK AND CAPITAL MARKET
The money you earn is partly spent and the rest saved for meeting future expenses.
Instead of keeping the savings idle you may like to use savings in order to get return on it
in the future. This is called Investment.
Why should one invest?
● Earn return on your idle resources
● Generate a specified sum of money for a specific goal in life
● Make a provision for an uncertain future
One of the important reasons why one needs to invest wisely is to meet the cost of
Inflation. Inflation is the rate at which the cost of living increases. The cost of living is
simply what it costs to buy the goods and services you need to live. Inflation causes
money to lose value because it will not buy the same amount of a good or a service in the
future as it does now or did in the past.
55
What care should one take while investing?
● explaining the Obtain written documents investment
● Read and understand such documents
● Verify the legitimacy of the investment
● Find out the costs and benefits associated with the investment
● Assess the risk-return profile of the investment
● Know the liquidity and safety aspects of the investment
● Ascertain if it is appropriate for your specific goals
● Compare these details with other investment opportunities available
● Examine if it fits in with other investments you are considering
● Deal only through an authorized intermediary
● Seek all clarifications about the intermediary and the investment
● Explore the options available
What is meant by Interest?
When we borrow money, we are expected to pay for using it – this is known as Interest.
Interest is an amount charged to the borrower for the privilege of using the lender’s
money. Interest is usually calculated as a percentage of the principal balance (the
amount of money borrowed). The percentage rate may be fixed for the life of the loan,
or it may be variable, depending on the terms of the loan.
56
What factors determine interest rates?
When we talk of interest rates, there are different types of interest rates - rates that banks
offer to their depositors, rates that they lend to their borrowers, the rate at which the
Government borrows in the Bond/Government Securities market, rates offered to
investors in small savings schemes like NSC, PPF, rates at which companies issue fixed
deposits etc. The factors which govern these interest rates are mostly economy related and
are commonly referred to as macroeconomic factors. Some of these factors are:
● Demand for money
● Level of Government borrowings
● Supply of money
● Inflation rate
● The Reserve Bank of India and the Government policies
What are various options available for investment?
One may invest in:
Physical assets like real estate, gold/jewellery, commodities etc.
Financial assets such as fixed deposits with banks, small saving instruments with
post offices, insurance/provident/pension fund etc. or securities market related
instruments like shares, bonds, debentures etc.
57
What are various Short-term financial options available for investment?
Broadly speaking, savings bank account, money market/liquid funds and fixed deposits
with banks may be considered as short-term financial investment options:
Savings Bank Account is often the first banking product people use, which offers low
interest (4%-5% p.a.), making them only marginally better than fixed deposits.
Money Market or Liquid Funds are a specialized form of mutual funds that invest in
extremely short-term fixed income instruments and thereby provide easy liquidity. Unlike
most mutual funds, money market funds are primarily oriented towards protecting your
capital and then, aim to maximize returns
Fixed Deposits with Banks are also referred to as term deposits and minimum
investment period for bank FDs is 30 days. Fixed Deposits with banks are for investors
with low risk appetite, and may be considered for 6-12 months investment period as
normally
What are various Long-term financial options available for investment?
Post Office Savings Schemes, Public Provident Fund, Company Fixed Deposits, Bonds
and Debentures, Mutual Funds etc.
Post Office Savings: Post Office Monthly Income Scheme is a low risk saving
instrument, which can be availed through any post office.
Public Provident Fund: A long term savings instrument with a maturity of 15 years and
interest payable at 8% per annum compounded annually. A PPF account can be opened
through a nationalized bank at anytime during the year and is open all through the year
for depositing money. Tax benefits can be availed for the amount invested and interest
accrued is tax-free. A withdrawal is permissible every year from the seventh financial
year of the date of opening of the account and the amount of withdrawal will be limited to
58
50% of the balance at credit at the end of the 4th year immediately preceding the year in
which the amount is withdrawn or at the end of the preceding year whichever is lower the
amount of loan if any.
Company Fixed Deposits: These are short-term (six months) to medium-term (three to
five years) borrowings by companies at a fixed rate of interest which is payable monthly,
quarterly, semi10 annually or annually. They can also be cumulative fixed deposits where
the entire principal along with the interest is paid at the end of the loan period.
Bonds: It is a fixed income (debt) instrument issued for a period of more than one year
with the purpose of raising capital. The central or state government, corporations and
similar institutions sell bonds. A bond is generally a promise to repay the principal along
with a fixed rate of interest on a specified date, called the Maturity Date.
Mutual Funds: These are funds operated by an investment company which raises money
from the public and invests in a group of assets (shares, debentures etc.), in accordance
with a stated set of objectives. It is a substitute for those who are unable to invest directly
in equities or debt because of resource, time or knowledge constraints
59
INTERNATIONAL STOCK EXCHANGE AND TRADING
International Online Trading Scenario
. In this chapter we will have a comprehensive look taking the international share-trading
scenario as a whole. We have considered those particular continents, nations; those
usually have major influence in the various economic aspects of India. So, the United
States of America, United Kingdom and the entire European Union, Australia, New
Zealand and African countries as a whole.
UNITED STATES OF AMERICA
Let us start with the United States. A brief set of information consisting of Stock
Exchanges functioning, online share broking firms, and the latest technology they are
offering for hassle free service for their customers etc.
The prominent online share broking firms are The Wall Street Journal, DxDollars, Power
Pointers Page, Xdrive, Saxo Bank etc. These firms are providing online as well as offline
facilities to their customers. The salient features the organizations are offering are as:
1. Online Broker List - This section contains a comprehensive list of brokers that
will allow you to trade online. Make sure to investigate them thoroughly before choosing
an online share-trading firm.
2. Broker Ranking Resources - These sites have their own broker performance
data and rankings, if you're looking for info on a single specific broker, or just want
another opinion.
60
3. After Hours Resources - Use the sites in this section to get information about
how and where to trade stocks after the markets have closed for the day.
4. After hours online trading - This listing contain sites that will allow you to trade
stocks after hours.
5. Exchanges - This section contains a listing of stock exchanges throughout the US
and around the world. The sites can often be used to investigate stocks that are traded on a
given exchange. This can be especially useful for international stocks that may be
difficult to research due to a lack of readily available information.
6. International Online Trading - Thanks to the Internet, it has become much
simpler to analyze and participate in international investment opportunities. Once you
have thoroughly researched global opportunities, use the sites in this section to trade
stocks around the world.
7. ECNs - Electronic Communications Networks (ECNs) represent orders in Nasdaq
stocks, internally matching buy and sell orders or representing the highest bid prices and
lowest ask prices on the open market. The benefits of trading with an ECN include after
hours trading, avoiding market makers (which charge a spread), and anonymity (which is
often important for large trades). This section contains a listing of ECNs that are available
for your trading needs.
61
8. Scripophily - This section contain links to sites that specialize in old stock
certificates and Broking houses in India
India is a country having a big list of Broking Houses. The Equity Broking Industry in
India has several unique features like it is more than a century old, dynamic, forward
looking, and good service providers, well conversant, highly innovative and even
adaptable. The regulations and reforms been laid down in the Equity Market has resulted
in rapid growth and development. Basically, the growth in the equity market is largely
due to the effective intermediaries.
The Broking Houses not only act as an intermediate link for the Equity Market but also
for the Commodity Market, Foreign Currency Exchange Market, and many more. The
Broking Houses has also made an impact on the Foreign Investors to invest in India to
certain extent.
In the last decade, the Indian brokerage industry has undergone a dramatic
transformation. From being made of close groups, the broking industry today is one of the
most transparent and compliance oriented businesses. Long settlement cycles and large
scale bad deliveries are a thing of the past with the advent of T+2 settlement cycle and
dematerialization. Large and fixed commissions have been replaced by wafer thin
margins, with competition driving down the brokerage fee, in some cases, to a few basis
points.
There have also been major changes in the way business is conducted. Technology has
emerged
62
as the key driver of business and investment advice has become research based. At the
same time, adherence to regulation and compliance has vastly increased. The scope of
services have enhanced from being equity products to a wide range of financial services.
Investor protection has assumed significance,.
9. Traders World - Offers articles, software, and newsletters on the financial
markets for subscribers.
10. Domestic Securities ATTAIN System - An order display alternative to the
traditional market making price quote system on the Nasdaq. The ATTAIN ECN allows
its subscribers immediate and direct posting of orders to the ATTN book.
11. Day Trader - Brings insight, ideas, trading techniques, and innovative thinking to
investors looking to trade the financial markets. This is all shown to you via the actual
trading journals, diaries, or so-called "trade blotters" of an experienced Day Trader.
12. Day Traders Online - Fee-based site offering a morning stock market report,
access to their real-time trading room, and access to their news desk. free trial is
available.
13. Daytradingstocks.com - A virtual community for day traders that offer message
boards, book reviews, and brokerage reviews. Free registration is required for some of the
site's features.
Over the last two decades the constant upward translocation in the trends of
online share trading in The USA has been perfectly described below.
63
OBJECTIVE OF
THE STUDY
64
The objective of the project is to identify, understand and analyze the comparison of stock
market. The main focus will be on understanding, analyzing and providing a valid
explanation both theoretically and technically, that how various comparisons in between
the Indian stock market and foreign stock market. By undertaking this study I would like
to keep my step in the field of research.
This project will help me in enhancing my analytical skills and will give me a better
understanding of how things move on and are to be studied. At the same time with this
study I will be providing the organization a list of factors that affect the market, so that
they can keep a watch on the same and use the same for the benefit of clients and
company and also increase their accuracy and profits. This will be my contribution to this
huge company.
65
PURPOSE,
The PURPOSE of the report is to analyze the comparative study of stock market. It is of
great importance to understand, learn and analyze the same. Thus, this report is a move in
path of understanding those factors and analyzing the impact of the same. Journals,
diaries, or so-called "trade blotters" of an experienced Day Trader.
SCOPE OF STUDY
It gave me an opportunity to study the stock market in a detailed manner.
I got knowledge of prevailing Market Scenario.
● It helped me in learning the market dynamics, study the movement of share
prices and to give a proper justification for the same, theoretically and
technically.
It helped me in understanding and learning the corporate culture
And above all, the concerned organization can get some valuable
recommendations, which can definitely improve the performance of the
organization
66
RESEARCH
METHODOLOG
Y
USED.
67
Research methodology is a systematic way, which consists of series of action steps,
necessary to effectively carry out research and the desired sequencing to these steps. The
marketing research is a process of involves a no. of inter-related activities, which overlap
and do rigidly follow a particular sequence. It consists of the following steps:-
Formulating the objective of the study
Designing the methods of data collection
Selecting the sample plan
Collecting the data
Processing and analyzing the data
Reporting the findings
Objective of Study
Research Design
Sample Design
Data Collection
Data Analysis
Report of findings
68
DATA COLLECTION
Primary data collection:- primary data are those which are collected a fresh & for
the first time.
Personal unstructured interview of the employee of the bank.
Distribution of the questionnaires among the bank employee to gather information.
Secondary data collection:- secondary data which has already been collected &
analyzed by some one else.
Documents given by bank.
Internet information & websites.
Book & magazines.
Information given by customers
Registration kit and information broacher
DATA ANALYSIS-{BASED ON INVESTORS OF SHARE MARKET IN VARIOUS
REGION OF Meerut} Representing in the form of table & chart.
69
There are some areas of Ghaziabad region from where I got the investors response which are
already invests their money in share market through India Info line. From where I found some
persons either most satisfied or least satisfied. Analysis is given below:
CIVIL LINE BIJNOR
In this area 11 % investors are dissatisfied, 17 % satisfied, 28 % good, 44 %
excellent.
70
CIVIL LINE BIJNOR
11 % DISSATISFIED
17 % SATISFIED
28 % GOOD
44 % EXCELLENT
44%
28%
17%
11%
EXCELLENT
GOOD
SATISFIED
DISSATISFIED
According to this diagram 11% dissatisfied,28% good17% satisfied and 44%excellent
because some problem are related to the awareness of stock market.
AVAS VIKAS BIJNOR
In this area 17 % investors are dissatisfied, 22 % satisfied, 22 % good, 39 %
excellent.
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AVAS VIKAS
17 % DISSATISFIED
22 % SATISFIED
22 % GOOD
39 % EXCELLENT
39%
22%
22%
17%
EXCELLENT
GOOD
SATISFIED
DISSATISFIED
According to this diagram 17% dissatisfied, 22% good 22% satisfied and 39%excellent
because some problem are related to the awareness of stock market.
CHAKKAR ROAD BIJNORsatisfied, 33 % good, 3%excellent.
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CHAKKAR ROAD
6 % DISSATISFIED
22 % SATISFIED
33 % GOOD
39 % EXCELLENT
39%
33%
22%
6%
EXCELLENT
GOOD
SATISFIED
DISSATISFIED
According to this diagram 22% dissatisfied, 33% good 22% satisfied and 39%excellent because some problem are related to the awareness of stock market.
ADARSH NAGAR
In this area 17 % investors are dissatisfied, 22 % satisfied, 28 % good,
excellent.
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ADARSH NAGAR
17 % DISSATISFIED
22 % SATISFIED
28 % GOOD
43% EXCELLENT
43%
28%
22%
17%
EXCELLENT
GOOD
SATISFIED
DISSATISFIED
According to this diagram 17% dissatisfied ,28% good 22% satisfied and 43%excellent
because some problem are related to the awareness of stock market.
Market Research Analysis
Interpretation: This shows that although the mutual fund market is on rise yet, the most
favored investment continues to be in the Share Market. So, with a more transparent
system, investment in the Stock Market can definitely be increased.
Awareness of online share trading
Interpretation: With the increase in cyber education, the awareness towards online share
trading has increased by leaps and bounds. This awareness is expected to increase further
with the increase in internet education.
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Awareness of India Info line Ltd in as a Brand
63%
37%
Yes -- 63%
No -- 37%
Interpretation: This pie-chart shows that India Infoline Ltd has reasonable amount of
Brand awareness in terms of a premier Retail Stock Broking Company. This brand image
should be further levered by the company to increase its market share over its
competitors.
Awareness of India Info line Ltd Facilities
20%
80%
Yes -- 20%
No -- 80%
Interpretation: although there is sufficiently high brand equity among the target
audience yet, it is to be noted that the customers are not aware of the facilities provided
by the company meaning thereby, that the company should concentrate more towards
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promotional tools and increase its focus on product awareness rather than brand
awareness
DEMAT Account Market
Interpretation: This shows that even with sufficiently high Brand Equity India Info line
Ltd ranks only 3rd amongst the Demat Account providers. This is probably because of two
main reasons.
1. Lack of promotion and unfocussed approach towards Product awareness.
2. Non – transparent marketing policies of the company.
Hence, the company should crystallize its products and should indulge in aggressive
marketing and promotion.
Satisfaction Level among Customers with Current Broker
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Interpretation: This pie-chart accentuates the fact that Strategic Marketing, today, has
gone beyond only meeting sales targets and generating profit volumes. It shows that all
the competitors are striving hard not only to woo the customer but also to make them
Brand loyal by generating customer satisfaction.
92%
8%
Yes -- 92%
No -- 8%
Frequency of Trading
9%
27 %
53 %
11%
Daily-9%
Weekly-27%
Monthly-53%
Yearly-11%
Interpretation: In spite of the huge returns that the share market promises, we see that
there is still a dearth of active trade and investors. This is because of non transparent
structure of the Indian share market and the skepticism of the target audience that is
generated by the volatility of the stock market. It requires efficient bureaucratic
intervention on the part of the Government.
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Percentage of Earning Invested In Share Trading
75%
16%7% 2%
Upto 10%--71%
Upto 25%--19%
Upto 50%--7%
Above 50%--3%
Interpretation: This shows that people invest only up to 10% of their earnings in
the stock market, again reiterating the volatile and non-transparent structure of
the Indian stock market. Hence, effective and efficient steps should be undertaken
to woo the customers to investment more in the lucrative stock market.
Rating of Share Trading Companies
15%
20%
30%
25%
10%
Religare-15%
Sharekhan-20%
ICICI Direct-30%
India Bulls-25%
Others-10%
Interpretation: The survey indicated that people ranked India Infoline Ltd at the 3rd
position as an online stock broking company. Even after relatively low brokerages and
better services being provided in competitors, India Infoline Ltd is not at top spot because
of ineffective marketing and promotion strategies. Hence, the company should indulge in
to aggressive marketing and promotional methods and should approach this problem in a
more structured format.
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\
SWOT ANALYSIS
79
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A SWOT analysis focuses on the internal and external environments, examining
strengths and weaknesses in the internal environment and opportunities and threats in the
external environment.
STRENGTHS
SERVICE
As products of India Infoline Ltd is a extremely innovative product with very
less cost. Services like online trading facility, institutional and domestic broking,
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customized research reports with almost 80% efficiency etc give India Infoline Ltd an
edge over its competitors. India Infoline Ltd provides other support services that make
retail investors more confident and assured with their trading. SMS alerts (allowing
traders and investors to make the most of the available opportunities), Softer, intangible
features like imagery, equity driving preference. Through efficient trading processes
Investors can place their orders directly on the Internet, do all the information seeking and
basically own the investing process
Distribution Network
We have a growing network of 150 branches and more than 300 business partners spread
across 180 cities in India and a fully operational international office at London
OUR target is to have 350 branches and 1000 business partners in 300 cities of India and
more than 7 International offices by the end of 2006.
Unlike a traditional broking firm, India Infoline Ltd group works on the philosophy of
partnering for wealth creation.
Products
Company’s product line is quite flexible in the sense that there is a product for every kind
of investors. Also all the products cover all the loop holes of all the products offered by
the other competitors like low cost, user friendly online trading services etc.
Weakness
Branding
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Though the company has efficient products but large part of investment interested
population does not know the company. The most basic expectation for a trader or
investor when one begins trading is that one must get timely delivery of shares and
proceeds from sale of shares. Also ones cash balances with the broker must be safe and
secure. Though this confidence in the broker comes with time and experience, good and
transparent practices also play a major role in imbibing confidence in traders
Competition from Banks
Most of the banks due to good branding have the faith of the customers of their banking
database. So they enjoy the liberty of huge database and customers find it more reliable to
trade there rather than with a unknown broker. Also banks like HDFC Bank and ICICI
Bank have the advantage of linking the trading accounts of their customers to saving
accounts. This makes trading easier, and at the same time a trader withdraws exactly as
much money from his account as is needed to complete the trade. Similarly sales
proceeds are credited directly to saving account
OPPORTUNITIES
The external environment analysis may reveal certain new opportunities for profit and
growth.
Ever-Increasing Market
After the NSE brought the screen based trading system stock markets are now more
secured which has attracted lot of retail investors and the demand is increasing day by
day. This has resulted in improved liquidity and heavy volumes on transactions. India
Infoline Ltd is one of the early entrants here. As to how much it will roar and how swift it
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can swoop on the market, the future alone can answer such queries. India Infoline Ltd has
been a mega player and is known for being a mover of stocks. It is also known for putting
big deals through and enjoys good networking with the FIIs. It has been dynamic enough
to move with the times and capture the opportunities that the market throws up from time
to time.
Improving Technology
In country like India technology is always improving which gives the company a chance
to keep on improving their product with time whereas for the small players like local
brokers it will be difficult to keep the same pace as the changing technology. Also with
SEBI lying down some strict guidelines small brokers are finding it harder to retain the
customers with no research department and small capital. The traditional business model
is highly dependent on a large network of sub-brokers, and many established players may
not have systems (technology, customer service, etc.) capable of directly servicing so
many retail customers.
Unfulfilled Needs of the Customers
With so many competitors offering their products in the market but no one is able to
completely satisfy the customers. Some have the problem of lack of information or some
were scared of volatility of the stock markets. India Infoline Ltd has the opportunity to tap
this unsatisfied set of customers and to make hold in the market. The Internet serves to
break all barriers to information, as it offers an extremely hassle-free investing platform.
And, India Infoline Ltd hopes to fully utilize and capitalize on this platform. This original
idea by India Infoline Ltd itself was born out of the consumer's need for a more
transparent, easy to understand and convenient option of investing in stocks.
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Education Level
The education level in the country is improving year after year as far as technology goes.
With that the understanding of the stock market is also increasing and a lot of retail
investors are steeping in the markets which are being shown by increasing volumes,
transactions and indices.
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THREATS
New Competitors
A lot of new competitors are trying to enter the market in this bullish run to taste the
flavor of this cherry. This is creating a lot of competition for large players like India
Infoline Ltd and it is creating little confusion in the minds of the customers about the
services provided by the broker. Also many banking firms are entering into the market
with huge investment. Competitors like ICICI, kotuku; HDFC, 5-paisa etc. are posing a
lot of threats to the company.
Technology Based BusinessOnline trading is totally based on the technology which is quite complex. Typically, the
technology solution has to start from the Internet front-end (or the screen that you see
when you begin trading). Then it needs to get into the 'middle tier' of risk management
systems that assess data from banks and depository participants (DP), calculate client risk
at that point in time, and give the 'Go/No go' advice to the trade. So technology is a kind
of threat because unless until it is working properly it is good .s
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FINDINGS AND RESULT
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FINDINGS
During the “Customer Awareness about Share Trading” main points that came into focus
are:
Dematerialization is basic tool of share trading.
Equity fund is not complicated. It is clear and specific fund.
By the increase in demand of equity, company can get more profit.
The current knowledge is very compulsory and all the event occurring in the world
are also mention for better profit.
Market is uncertain and fluctuates by a tiny event.
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The analysis of all the stock market leads us to: Some findings and Result- While I was
doing the project I came across so many investors, I studied their behavior, Their
reactions, I studied various research reports, news articles, and from all that I could Find
out that each and every thing, whether a minute one or a big one, affects the Investors
decision and thus affect the share prices.
I have listed some factors in the report which affect the share prices, also I have
done a Technical analysis for the same, but what comes out at the end is that there are still
so many unnoticed factors which affect the share prices. This list is not exhaustive; still
there is so much which needs to be studied and I tried to cover as much as I could. From
the analysis, I could find out and conclude that, the Share Prices are affected by Each and
every factor in varying degree. The analysis shows that there is a very small impact of
Interest Income, Advances, Deposits, Borrowings and a slightly more impact of Bank
Nifty Index on Share Prices. It is so because there are N numbers of factors and it was not
possible to quantify each one of them and conduct the analysis, there were some technical
difficulties also which turn out to be the limitation of the project. But at the end of the
analysis we can ACCEPT THE HYPOTHESIS, as most of the factors, do affect the Share
Prices in some or other manner.
From the one and half month training at India Info line, I could get that
INVESTORS SENTIMENTS work out most for the market dynamics, this is the most
significant factor which affect Share Prices drastically in either of the direction. A latest
example I can quote is the post election result session on Monday, 18 May, 2009, when
Investors were happy that UPA government was back into power and the market jumped
thousand points up.
Talking about the investors, what I can suggest them from my study is that they
should be very careful while investing in the Stock Market. The market is simply
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UNPREDICTABLE. One should do a proper and detailed analysis before investing in
stocks. Bank’s shares are pretty safe, as I could find from the analysis. The Banking
Sector is ever growing and thus money invested in it would always give you good returns.
But still one should beware of the Market’s unpredictable up’s and down’s.
This report is of great help to the company and investors. They can use the
analysis and draw conclusions. Also they can do their own analysis if they want keeping
this Analysis as a base. They can use the tools and techniques to take decision and play
safe in the market.
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LIMITATIONS OF
THE STUDY
91
Though the resources seem sufficient enough to achieve high standard for this
research, still we foresee the following limitations of study.
The Sector is very vast and it was not possible to cover every nook and corner of
this sector.
The objective which we want to fulfill in this project is really good, but the major
demerit to our study is the availability of time for our search and analysis, but then
also, I have tried my level best to show a glimpse of my Research in tune with the
objectives.
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CONCLUSION
93
On the basis of the study it is found that India infoline is better services provider than the
other stockbrokers because of their timely research and personalized advice on what
stocks to buy and sell. India infoline provides the relationship manager facility for
encouragement and protects the interest of the investors. It also provides the information
through the internet and mobile alerts that what IPO’s are coming in the market and it
also provides its research on the future prospect of the IPO.
Study also concludes that people are not much aware of commodity market and while it’s
going to be biggest market in India. From the above survey and observation it is found
that most of the people who are trading in share market belongs to the employee group,
next comes the business men and other class of income people. As the share market value
goes on increasing day by day the investor who wants to invest in shares also increasing.
But investing in shares is as risky as earning yield.
Trading in online trading firm is easy as it all delivered with internet and within a few
minutes the customer can buy and sell shares which save time as well as reduction of
paper work. Hence trading in share market is increasing day by day and investors are
ready to invest their investment in share market only.
I got the knowledge about the customer’s needs and their references for having a
particular product. The need of customers differs from person to person, area, locality and
occupation. Customer always wants more service by paying less.
They expect all the information such less rates, less brokerages, highly returns and better
service level without delay.
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SUGGESTIONS /
RECOMMENDATIONS
95
● Provide the facility of free demonstrations for all
● Improvement in the opening of De-mat & contract notice procedure is required
● There should be a limited number of clients under the relationship manger. So that he
can handle new as well as old customer properly
● Some promotional activities are required for the awareness of the customer
● People at young age should be encouraged to invest in stock market
● Seminars should be more held for providing information to prospective and present
customers
● In the organization, There must me be co-operation with other department and other
branches
● Company should make more promotional activities by giving advertisements and
publicity.
● Give more demonstration to customers so that they can get complete knowledge about
online trading
● Give the complete information about products and services offered by the company to
the customers.
● The number of branches it has at present should be increased all over the country,
which will attract a large number of customers.
● Company should educate about the rules and regulations of SEBI to its customers.
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REFERENCES AND
BIBLIOGRAPHY
97
Books
(1)Chandra P - Investment Analysis and Portfolio Management (Tata Mc Graw Hill,
2008)
2) Fischer and Jordan - Security Analysis and Portfolio Management (Prentice-Hall,
1996, 6th edition)
3) Ranganatham - Investment Analysis and Portfolio Management (Pearson Education,
1st Ed.)
4) Pandian P - Security Analysis and Portfolio Management (Vikas, 1st Ed.)
5) Bodie, Kane, Marcus & Mohanti - Investment and Indian Perspective (TMH, 6th Ed.).
Websites
● www.usectrade.com
● www.angeltrade.com
● www.indianshareshistory.com
● www.bseindia.com
● www.statebankofindia.com
● www.moneycontrol.com
● News Papers
● Times of India
● Business Standard
● Economic times
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ANNEXURE
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QUESTIONNAIRE
1. Would you like to invest in the stock market?
(a) Yes
(b) No
2. If not why?
(a) Lack of Knowledge
(b) Feel it’s Risky
(c) No time
(d) Don’t have money
3. Do you know about online share trading?
(a) Yes
(b) No
4. Does u have Demat & Trading A/C?
(a) Yes
(b) No
5. In which Brokerage house you have your Demat A/C?
(a) Kotak
(b) Indiabulls
(c) ICICI
(d) Sharekhan
6. What are the a/c opening charges you expect from your Broker?
(a) 500
(b) 900
(c) 750
(d) 800
7. What the brokerage should be charged by your broker on Delivery trading?
(a) 0.2-0.5
(b) 0.5-0.7
(c) 0.7-1.0
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8. Would you like to have the facility of exposure on Cash?
(a) Yes
(b) No
9. Would you like to have the facility of exposure on Security?
(a) Yes
(b) No
10. What are the Annual maintenance charges you expect from your Broker?
(a) NIL
(b) 100-200
(c) 200-300
11. Would you like to have a facility to trade with other Demat A/C?
(a) Yes
(b) No
12. Would you like to have a facility of net Banking?
(a) Yes
(b) No
13. Would you like to have a facility of Relationship Manager?
(a) Yes
(b) No
14. Are you satisfied with your Broker?
(a) Yes
(b) No
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