You are on page 1of 124

A

Project Report
On
An Analysis of Investors preference towards
Investment Avenues
At
In partial fulfilment of the requirements of Summer Internship Programme in the
Masters in Business Administration programme of Gujarat Technological University
Submitted to:
Prof. Amish Soni
By
Amitkumar Patel: 137350592010
Naineel Desai: 137350592091
Batch: 2013-15
N R INSTITUTE OF BUSINESS MANAGEMENT
N. R. Institute of Business Management (GLS-MBA)
Certificate
This is to certify that Mr. Amitkumar Patel Enrolment No. 137350592010 and Mr.
Naineel Desai Enrolment No. 137350592091 students of N. R. Institute of Business
Management (GLS-MBA) has successfully completed his Summer Project on Investors
Preference towards Investment Avenues at Sharekhan in partial fulfillment of the
requirements of MBA programme of Gujarat Technological University. This is his original
work and has not been submitted elsewhere.
Date: _________________
Place: _________________
_______________
Dr. Hitesh Ruparel
Director
____________________
Prof. Amish Soni
Declaration
We, Amitkumar Patel Enrolment No.137050592010 and Mr. Naineel Desai Enrolment
No. 137350592091 students of N R Institute of Business Management hereby declare that
we have successfully completed this project on Investors Preference towards Investment
Avenues in the academic year 2014-15.
We declare that this submitted work is done by us and to the best of our knowledge; no
such work has been submitted by any other person for the award of degree or diploma. We
also declare that all the information collected from various secondary and primary sources
has been duly acknowledged in this project report.
Amitkumar Patel
137350592010
Naineel Desai
137350592091
VI
Preface
Todays modern world is progressing by leaps and bounds. In this fast changing
world, management of business is very important phase.
The training of a management student plays a vital role in developing him as a
well groomed professional. It allows a student to apply the theoretical concepts
in the actual corporate world. It gives the student an idea of dynamic and
versatile professional world as well as exposure to intricacies and complexities
of corporate world.
We got the opportunity to make summer internship project on Analysis about
Investors Preference towards Investment Avenues. This project report gives
details about common people behaviour towards investment avenues available
in the financial market. It also describes the awareness of investors towards
investment avenues available to them.
VII
Acknowledgement
The success of any person is not only his hard work, but it is also the support
and co-operation one gets for success.
Apart from individual efforts, the success of any project depends largely on
encouragement and guidelines of many others.
We take privilege of thanking our respected director sir Dr. Hitesh Ruparel.
We take this opportunity to express our profound gratitude and deep regards to
our guide prof. Amish Soni for his exemplary guidance, monitoring and
constant encouragement throughout the course of this project. The help and
guidance given by him time to time shall carry us a long way in the journey of
life on which we are about to embark.
We also take this opportunity to express a deep sense of gratitude to Mr. Munaf
Kadri, Area Sales Manager of Sharekhan ltd. for his cordial support, valuable
information and guidance, which helped us in completing this task through
various stages.
We are obliged to staff members of Sharekhan ltd. for the valuable information
provided by them in their respective fields. We are grateful for their cooperation
during the period of our internship.
We express our sincere thanks to all!
VIII
Executive summary
Savings form an important part of the economy of any nation. With the savings
invested in various options available to the people, the money acts as the driver
for growth of the country. Indian financial scene too presents a plethora of
avenues to the investors. Though certainly not the best or deepest of markets in
the world, it has reasonable options for an ordinary man to invest his savings.
The money you earn is partly spent and the rest saved for meeting future
expenses. Instead of keeping the savings idle you may like to use savings in
order to get return on it in the future. This is called Investment.
One needs to invest to and earn return on your idle resources and generate a
specified sum of money for a specific goal in life and 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 service in the future as it does now or did in the past. The
sooner one starts investing the better. By investing early you allow your
investments more time to grow, whereby the concept of compounding increases
your income, by accumulating the principal and the interest or dividend earned
on it, year after year.
IX
TABLE OF CONTENTS
Sr. No. Topics Page no.
Chapter-1 Research Methodology
1
1.1 Problem statement 2
1.2 Need for study 2
1.3 Objectives of study 2
1.4 Scope of study 3
1.5 Research design 5
1.6 Sampling 6
1.7 Data collection and sources 7
1.8 Beneficiaries of study 8
1.9 Limitations of study 9
1.10 Literature review 10
Chapter-2 Industry profile
12
2.1 History of stock market in India 13
2.2 Stock markets in India 15
2.3 Regulatory authority 17
2.4 Online trading industry India 20
2.5 Various stock exchanges in India 20
2.6 Market participants 29
2.7 Relation of the stock market to the modern financial
system
29
2.8 Clearing and settlement agent 30
2.9 Swot analysis of Indian stock market 31
Chapter-3 Company profile
33
3.1 Introduction 34
3.2 Profile of the company 36
3.3 Board of directors 38
3.4 Brand name 38
3.5 Mission 38
3.6 Vision 38
X
3.7 Achievements of sharekhan 39
3.8 Sharekhan ltd. Provide different product as follows 39
3.9 Services provided by sharekhan 40
3.10 Types of account 41
3.11 SWOT analysis of sharekhan 44
3.12 Competitors of sharekhan ltd 44
3.13 Portfolio management services 45
3.14 Charge structure 47
3.15 Requirements for net trading 48
3.16 Procedure for net trading 49
3.17 Trading and settlement at share khan 54
3.18 Trading procedure at share khan stock broking 54
3.19 Problem areas 61
3.20 Swot analysis of sharekhan 63
Chapter-4 Introduction of the topic
64
4.1
Introduction of investment 65
4.2
Different investment alternatives in India 65
4.3
Investment avenues 65
Chapter-5 Data analysis and interpretation
67
Hypothesis analysis( Chi Square test ) 90
Chapter-7 Findings 102
Chapter-8 Suggestion 104
Chapter-9 Conclusion 106
Bibliography 108
Annexure 110
XI
LIST OF TABLES
SR.NO PARTICULARS PG.NO
1 Age of respondent 68
2 Gender of respondent 69
3 Occupation of respondent 70
4 Annual income of respondent 71
5 Marital status 72
6 No. of family members 73
7 No. of earning members 74
8 Respondent invest or not? 75
9 Segment of investment 76
10 Growth rate of investment 77
11 How frequent do you invest? 78
12 What % of annual income do you invest? 79
13 Sources of information 80
14 Factors considered before investing 81
15 Optimum strategy 82
16 Do you have any other investment policy? 84
17 Satisfaction with return generated 85
18 Satisfaction with factors considered 86
19 Awareness regarding various brokers 87
20 What is more important in broking? 88
21 Will you invest in future? 89
SR.NO Hypothesis analysis PG.NO
1 Relation between age and investment plan 90
2 Relation between gender and investment plan. 92
3 Relation between occupation and investment plan. 94
4 Relation between occupation and any percent of annual
income invest in share Market.
96
6 Relation between age and optimum strategys 100
XII
LIST OF CHART
SR.NO PARTICULARS PG.NO
1 Age of respondent 68
2 Gender of respondent 69
3 Occupation of respondent 70
4 Annual income of respondent 71
5 Marital status 72
6 No. of family members 73
7 No. of earning members 74
8 Respondent invest or not? 75
9 Segment of investment 76
10 Growth rate of investment 77
11 How frequent do you invest? 78
12 What % of annual income do you invest? 79
13 Sources of information 80
14 Factors considered before investing 81
15 Optimum strategy 83
16 Do you have any other investment policy? 84
17 Satisfaction with return generated 85
18 Satisfaction with factors considered 86
19 Awareness regarding various brokers 87
20 What is more important in broking? 88
21 Will you invest in future? 89
1
2
RESEARCH METHODOLOGY
1. Problem Statement
In market there are many investment options available for the investors so we tried to find out
how they invest or choose a particular option and what factors they consider while investing.
Also we tried to identify the investors perception and their risk taking ability while investing
in different products of market.
Hence this study entitled Analysis about investors preference towards various investment
Avenues has been taken up.
2. Need for the Study
To study the perception of the people about investment of their saving.
To understand the basic requirement of the common man and their views towards
investment.
3 Objectives of the Study
Primary objectives
1. The main objective of our project is to study investors preferences regarding
investments and to find out the need of the current and future investors.
2. To know the preferred investment avenues and key factors those are considered by
individual investor before investing in Gujarat.
3. To get the knowledge and examine the problem about available avenues for
investment.
Secondary objectives
1. To identify the preferred sources of information influencing investment decisions and
find out the most preferable investment option.
2. To know regarding awareness of various investment modes among an individual.
3. To know the risk tolerance level of the individual investor.
4. To study different kinds of risks involved in investments.
5. To understand investment patterns of investors.
3
4. Scope of the study
Investment has been subjected to speculations and inefficiencies, which are beached to the
rationality of the investor. Traditional finance theory is based on two assumptions. Firstly,
investors make rational decisions; and secondly investors are unbiased in their predictions
about future return of the stock. However financial economists have now realised that the
long held assumptions of traditional finance theory are wrong and found that investors can be
irrational and make predictable errors about the return on investment on their investments.
This analysis on individual investors behaviour is an attempt to know the profile of the
investor and also know the characteristic of the investors so as to know their preference with
respect to their investments. The study also tries to unravel the influence of demographic
factors like age on risk tolerance level of investor.
The purpose of the study is to determine the saving behaviour and investment preferences of
customers. Customer perception will provide a way to accurately measure how the customers
invest in various alternatives.
5. Research design
A research design is purely and simply the framework of plan that guides the collection and
analysis of data. The study is intended to find the investors preference towards various
investment avenues. The study design is Descriptive in nature.
Descriptive research is a fact finding investigation with adequate interpretation. It is the
simplest type of research and is more specific. Mainly designed to gather descriptive
information and provides information for formulating more sophisticated studies.
6. Sampling
Sampling techniques
Convenience sampling technique will be used for collecting the data from different investors.
The investors are selected by the convenience sampling method. The selection of units from
the population based on their easy availability and accessibility to the researcher is known as
convenience sampling.
Sampling size
The population being large the survey is carried among 200 customers. They will be
considered adequate to represent the characteristics of the entire population.
4
Sampling unit
The respondents who will be asked to fill out the questionnaire are the sampling unit. These
comprise of employees of companies, self employed, professionals, govt employees, and
other investors.
Sampling area
The sampling area is Ahmadabad.
Hypothesis
Hypothesis is a hunch, assumption, suspicion, assertion or an idea about a phenomenon,
relationship or situation, the reality or truth of which one do not know. A researcher calls this
assumption a hypothesis and they become the basis of an enquiry.
Null hypothesis: It is denoted by H0
Alternative hypothesis: it is denoted by H1
In this project we have shown five different hypotheses. They are as follows:
1:-Relation between age and investment plan
H0: age is not related to any investment plan.
H1: age is related to any investment plan.
2:-Relation between gender and investment plan.
H0: gender is not related to any investment plan.
H1: gender is related to any investment plan.
3:-Relation between occupation and investment plan.
H0: occupation is not related to any investment plan.
H1: occupation is related to any investment plan.
4:- Relation between occupation and any percent of annual income invest in share
market.
H0: occupation is not related to any percent of annual income invest in share market.
H1: occupation is related to any percent of annual income invest in share market.
5:- Relation between occupation and any percent of annual income invest in share
market.
5
H0: annual income is not related to any percent of annual income invest in share market.
H1: annual income is related to any percent of annual income invest in share market.
6:- Relation between age and optimum strategy.
H0: age is not related to any optimum strategy
H1: age is related to any optimum strategy.
7. Data collection and sources
Market research requires two kinds of data primary data and secondary data.
Primary data
The data, which is collected for the first time, directly from respondents to the base of
knowledge & belief of the research, are called primary data.
A questionnaire schedule is prepared and primary data is collected through survey method.
Secondary data
When data are collected & compiled in a published nature, it is called secondary data.
So far as this research is concerned, books, related information from internet, customer
database & many magazines and the brochures have been referred as secondary data.
Secondary data is any data gathered earlier for some other purpose & available hand in
carrying out project.
8. Beneficiaries of study
1. Student will get knowledge about financial market in India and how it works.
2. Study will get to know which instrument gives maximum returns and what kind of
risk involves in it.
3. From this report company will come to know that what consumer exactly wants from
their investment.
4. We have called many people in tele-calling which is my first time experience.
5. We have also learned about the offer provide for franchisee and what are their terms
and condition for franchisee.
6. We learned about the equity, commodity, mutual fund & life insurance which is
important tools investment.
6
7. We also learned that how equity and commodity market works and which are the
factors affecting to them.
9. Limitations of the study
1. The lack of knowledge of customers about the instruments can be a major limitation.
2. The information can be biased due to use of questionnaire.
3. The researcher can concentrate only on Gujarat investors.
4. There will be different perception of investors in different cities, which will not be
covered due to time and financial limitations.
5. The information provided by the respondents is spontaneous and they may not be
consistent.
10. Literature review
A P Pati and D. Shome in their article Do Households Still Prefer Bank Deposits? An
Analysis of shift in Savings and Savings Determinants Published in The IUP Journal of
Bank Management, Feb-2011 concluded that Financial reforms have, in the recent years,
opened up several avenues for the households for savings. The 8 study suggest that
despite the reform, households are still preferring the safe channels of bank deposit
schemes rather than switching over to high yielding but risky channels of savings.
However, between the two phases (pre- and post-liberalization period) a significant
structural shift of savings in bank deposit is observed. Variables like income and
inflation are found to be statistically significant determinants of savings in bank deposit.
Source:http://econpapers.repec.org/article/icficfjbm/v_3a10_3ay_3a2011_3ai_3a1_3ap_3a46-59.htm
A. Lalitha and M. Surekha in their article Retail Investor in Indian Capital Market :
Profile, Pattern of Investment and Profitability published in The Indian journal of
commerce, July-September 2008 concluded that the retail investor is here to stay and
the capital markets may well emerge as strong contenders for traditional investment
avenues like bank/post office deposits. They also focused on investors education and
investment decision of retail investors.
Alex Wang in his article Younger Generations Investing Behaviours in Mutual
Funds: Does Gender Matter? published in The Journal of Wealth Management, Spring
2011 concluded that knowledge, experience, and income are important factors that
influence younger generations investing behaviours in mutual funds. Moreover, gender
7
emerges as the most important factor that differentiates younger generations investing
behaviours in mutual funds. Wealth advisors are also urged to consider helping their clients
manage their wealth by being aware of gender-predicted differences in client situations.
http://www.iijournals.com/doi/abs/10.3905/jwm.2011.13.4.013
Charlotte B. Beyer in his article Investor Education: Whats Broken and How to Fix It
published in The Journal of Wealth Management, Summer 2010 In this article, the author
argues that the traditional approach to investor education has failed and that radical
reform is needed. After observing how one group of investors learned far more in
experiential settings, the author submits that these investors might be convincing proof
that experiential investor education is superior. Signalling good news for the
investment advisory industry, the hiring, use, and retention of advisors by these same
better-educated investors is stable. This group also expressed positive views of how well
served they are by the industry overall. While the ultra-wealthy arguably might have easier
access to superior advisors, the author believes that overhauling investor education will
benefit all investors, not just the wealthiest.
http://www.iijournals.com/doi/abs/10.3905/JWM.2010.13.1.011
Gupta L.C. & Jain in their article The Changing Investment Preferences of Indian
Households survey 2008, conducted by society for capital market research and
development, new Delhi. Pointed out that too much volatility, too much price
manipulation, unfair practices of brokers and corporate mismanagement and frauds
as the main worries of investors.
http://www.scmrd.org/Published%20Studies.htm
Joseph Anbarasu D, Clifford Paul S and Annette B in their article An Empirical
Study on Some Demographic Characteristics of Investors and its Impact on Pattern of their
Savings and Risk Coverage Through Insurance Schemes published in The IUP Journal of
Risk & Insurance, January 2011 concluded that The saving pattern of the people is crucial to
the government in designing policies to promote savings and investment. Their study reveals
that the people are aware about the importance of saving, but the awareness about
investment opportunities is low. Steps have to be taken by the government and private
companies to increase the awareness by advertising campaigns. Investment companies
need to offer schemes that are affordable by the low income, uneducated, unsalaried
8
and families with children. Investment companies should make the provision and increase
benefits, for their schemes, to allow people to invest in the monthly mode, which is
preferred by most investors. If people invest in long term saving schemes and
infrastructure, the national saving rate will increase, which in turn will lead to a more
prosperous India.
http://connection.ebscohost.com/c/articles/57489808/empirical-study-some-demographic-characteristics-
investors-impact-pattern-their-savings-risk-coverage-through-insurance-schemes
Kar Pratip, Natarajan I and Singh J P in their research paper Survey of Indian
Investors published in SEBI-NCAER June 2000 concluded that the households
investment in shares, debentures and mutual funds was below 10% and the equity investor
households portfolio was of relatively small value and undiversified. Further they found that
one set of households, in spite of their lower income and lower penetration level of
consumer durables, were in the securities market, while another set of household with
higher income and higher penetration level of consumer durables did not have
investment in securities market.
Kar Pratip, Natarajan I and Singh J P (2000) Survey of Indian Investors
published in SEBI-NCAER .
Krishnamoorthi C in his research paper Changing Pattern of Indian Households:
Savings in Financial Assets published in RVS Journal of management, 2009
concluded that irrespective of the developments in the capital market/economic
conditions, investors like to invest regularly and this investment behaviour is highly
related to educational background. Their occupation, reading habit of investment news and
the time taken for investment decision making process.
Krishnamoorthi C (2009) Changing Pattern of Indian Households: Savings in
Financial Assets published in RVS Journal of management, (vol. 2, no. 1, pg
no. 79-90)
Mittal M. and A. Dhade in their research paper Gender Difference In Investment
Risk-Taking: An Empirical Study published in The ICFAI Journal of Behavioural
Finance, 4(2): 32-42. 2007, Observed that risk-taking involves the selection of options
that might result in negative outcomes. While present is certain, future is uncertain.
Hence, all investment involves risk. Decourt (2007) indicated that the process of making
9
investment decisions is based on the behavioural economies theory which uses the
fundamental aspects of the Prospect Theory developed by Kahneman and Tversky (1979)
. Mittal M. and A. Dhade (2007) Gender Difference In Investment Risk-Taking:
An Empirical Study published in The ICFAI Journal of Behavioral Finance, (Vol. 4 No.2 pp. 32-42)
P. K. Das in his Research paper A Review of Tax Planning for Educational
Expenses on Children, published in The Journal of Accounting and Finance, April-14
September 2006 concluded that Proper Tax Planning is very much helpful in
minimising the burden of Income Tax for incurring expenses on children education as well
as having total exemption available. He suggested that the investor should keep a proper
account of all relevant expenses incurred on the education of children, during the same
financial year so that planning can be made, as required, to get Deductions And
Exemptions.
P. K. Das (2006) A Review of Tax Planning for Educational Expenses on
Children, published in The Journal of Accounting and Finance, (Vol. 20, pp
33)
Rajarajan V. in his article Stage in Life Cycle and Investment Pattern published in
Finance India, 1999 studied Chennai investors financial investments and showed that
life-cycle stage of individual investor was an important variable in determining the size
of the investments in financial assets and the percentage of financial assets in risky category.
Rajarajan V. (1999) Stage in Life Cycle and Investment Pattern published in
Finance India, 1999 (Vol.13, No. 2, pp. 477-485)
Ranganathan K. in his article A Study of Fund Selection Behaviour of Individual
Investors towards Mutual Funds: With Reference To Mumbai City published in
ICFAI Journal of Behavioural Finance, 3(2): 63-88. 2006, noted that financial markets are
affected by the financial behaviour of investors. She observed that consumer behaviour
from the marketing world and financial economics had brought together a need to study an
exciting area of behavioural finance. this study was an attempt to examine the related
aspects of the fund selection behaviour of individual investors towards mutual funds in
the city of Mumbai.
Ranganathan K. (2006) A Study of Fund Selection Behavior of Individual
10
Investors towards Mutual Funds: With Reference To Mumbai City published
in ICFAI Journal of Behavioral Finance, (Vol.3No.2 pp 63-88)
S. Saravana Kumar in his article An Analysis of Investor Preference Towards Equity and
Derivatives published in The Indian journal of commerce, July-September 2010 concluded
that the most of the investor are aware of high risk involved in the derivative market.
To reduce the risk in the market, the investors should strictly follow the stop loss
method. The study reveals that most of the investor prefers cash market where the script
can be held for long term and the risk is less and it is transferable to others with
minimal time period. Even though risk is higher, some investors prefer derivative
market where return is also higher. The investors are highly satisfied with equity
shares because of many reasons, i.e., liquidity, low investment, capital appreciation etc.
S. Saravana Kumar (2010) An Analysis of Investor Preference Towards
Equity and Derivatives published in The Indian journal of commerce, (Vol. 63
,No.3, pp 71)
Saptarshi purkayastha in his article Investor Profiling and Investment Planning: An
Empirical Study published in The Icfaian journal of Management Research, Dec 2008
concluded that younger investors and those with high income are willing to take more risk.
According to him people do not take much risk when the question of investment of
their hard-earned money comes.
. Saptarshi purkayastha (2008) Investor Profiling and Investment Planning: An
Empirical Study published in The Icfaian journal of Management Research,
(Vol.7, No. 12, pp 17-40)
Sarita aggrawal and Monika Rani in their article Attitude Towards Insurance Cover
published in The IUP Journal of Risk & Insurance, January 2011 concluded that
people prefer public sector for the insurance than the private sector insurance, the reason
behind this is the trust and faith in LIC. People from every occupation, age, income level
and qualification want to secure their future by taking a policy, besides good return on
investment and rebate on tax.
Sarita aggrawal and Monika Rani (2011) Attitude Towards Insurance Cover
published in The IUP Journal of Risk & Insurance, (Vol. 8, No. 1, pp.62)
Yilmazer T in his article Do Children Affect Household Portfolio Allocation?
11
published in job market paper, evidence from the survey of consumer finances,
November 10, 2001. Concluded that the number of children had a positive and
statistically significant impact on home ownership and negative and statistically
significant impact on the proportion of investments in shares.
Yilmazer T (2001) Do Children Affect Household Portfolio Allocation?
published in job market paper, evidence from the survey of consumer
finances, .
12
13
2.1 HISTORY OF STOCK MARKET IN INDIA
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years
ago. The earliest records of security dealings in India are meager and obscure. The East India
Company was the dominant institution in those days and business in its loan securities used
to be transacted towards the close of the eighteenth century.
By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in
Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers
recognized by banks and merchants during 1840 and 1850.The 1850's witnessed a rapid
development of commercial enterprise and brokerage business attracted many men into the
field and by 1860 the number of brokers increased into 60.
At the end of the American Civil War, the brokers who thrived out of Civil War in 1874,
found a place in a street (now appropriately called as Dalal Street) where they would
conveniently assemble and transact business. In 1887, they formally established in Bombay,
the "Native Share and Stock Brokers Association" (which is alternatively known as The
Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it
was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated
2.1.1 Pre- Independence Scenario
The Second World War broke out in 1939. It gave a sharp boom which was followed by a
slump. But, in 1943, the situation changed radically, when India was fully mobilized as a
supply base.
On account of the restrictive controls on cotton, bullion, seeds and other commodities, those
dealing in them found in the stock market as the only outlet for their activities. They were
anxious to join the trade and their number was swelled by numerous others. Many new
associations were constituted for the purpose and Stock Exchanges in all parts of the country
were floated. The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange
Limited (1940) and Hyderabad Stock Exchange Limited (1944) were incorporated. In Delhi
two stock exchanges - Delhi Stock and Share Brokers' Association Limited and the Delhi
Stocks and Shares Exchange Limited - were floated and amalgamated into the Delhi
Stock Exchange Association Limited.
14
2.1.2 Post-Independence Scenario
Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange
was closed during partition of the country and later migrated to Delhi and merged with Delhi
Stock Exchange. Bangalore Stock Exchange Limited was registered in 1957 and recognized
in 1963.
Most of the other exchanges languished till 1957 when they applied to the Central
Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only
Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and Indore, the well established
exchanges, were recognized under the Act.
Thus, during early sixties there were eight recognized stock exchanges in India (mentioned
above). The number virtually remained unchanged, for nearly two decades. During eighties,
however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar
Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange
Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock
Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh
Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989),
Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange
Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently
established exchanges - Coimbatore and Meerut. Thus, at present, there are more than twenty
four recognized stock exchanges in India excluding the Over the Counter Exchange of India
Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
2.1.3 Trading Pattern of the Indian Stock Market
Trading in Indian stock exchanges is limited to listed securities of public limited companies.
They are broadly divided into two categories, namely, specified securities (forward list) and
non-specified securities (cash list). Equity shares of dividend paying, growth-oriented
companies with a paid-up capital of at least Rs.50 million and a market capitalization of at
least Rs.100 million and having more than 20,000 shareholders are, normally, put in the
specified group and the balance in non-specified group.
15
Two types of transactions can be carried out on the Indian stock exchanges:
(A) Spot Delivery Transactions "for delivery and payment within the time or on the date
stipulated when entering into the contract which shall not be more than 14 days following the
date of the contract".
(B) Forward Transactions "delivery and payment can be extended by further period of 14
days each so that the overall period does not exceed 90 days from the date of the contract".
The latter is permitted only in the case of specified shares. The brokers who carry over the
outstanding pay carry over charges (cantango or backwardation) which are usually
determined by the rates of interest prevailing.
2.2 STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and
semi-govt bodies or other public bodies as also for shares and debentures issued by the joint
stock companies. In the stock market, purchases and sales of shares are affected in conditions
of free competition. Government securities are traded outside the trading ring in the form of
over the counter sales or purchase. The bargains that are struck in the trading ring by the
members of the stock exchanges are at the fairest prices determined by the basic laws of
supply and demand.
2.2.1 Definition of a stock exchange:
Stock exchange means anybody or individuals whether incorporated or not, constituted for
the purpose of assisting, regulating or controlling the business of buying, selling or dealing in
securities. The securities include:
Shares of public company.
Government securities.
Bonds
2.2.2 History of Stock Exchanges:
The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875
and Ahmadabad set up in 1894. These were organized as voluntary nonprofits- marking
associations of brokers to regulate and protect their interests. Before the control on securities
under the constitution in 1950, it was a state subject and the Bombay securities contracts
16
(control) act of 1925 used to regulate trading in securities. Under this act, the Mumbai stock
exchange was recognized in 1927 and Ahmadabad in 1937. During the war boom, a number
of stock exchanges were organized. Soon after it became a central subject, central legislation
was proposed and a committee headed by A.D.Gorwala went into the bill for securities
regulation. On the basis of the committees recommendations and public discussion, the
Securities contract (regulation) act became law in 1956.
2.2.3 Functions of Stock Exchanges:
Stock exchanges provide liquidity to the listed companies. By giving quotations to the listed
companies, they help trading and raise funds from the market. Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their
medium, the central and state government have raised crores of rupees by floating public
loans. Municipal corporations, trust and local bodies have obtained from the public their
financial requirements, and industry, trade and commerce- the backbone of the countrys
economy-have secured capital of crores or rupees through the issue of stocks, shares and
debentures for financing their day-to-day activities, organizing new ventures and completing
projects of expansion, diversification and modernization. By obtaining the listing and trading
Facilities, public investment are increased and companies were able to raise more funds. The
quoted companies with wide public interest have enjoyed some benefits and assets valuation
has become easier for tax and other purposes.
17
2.3 REGULATORY AUTHORITY
2.3.1 SEBI (Securities and Exchange Board of India)
In 1998, the SEBI was established by the Government of India through an executive
resolution, and was subsequently upgraded as a fully autonomous body (a statutory board) in
the year 1992 with the passing of the SEBI act on 30th Jan 1992. In place of Government
control statutory and autonomous regulatory boards with defined responsibilities, to cover
both development and regulation of the market, and independent powers have been set up.
Paradoxically this is a positive outcome of the securities scam of 1990-91.
The basic objectives of the board were identified as:
To promote the interests of investors in securities.
To promote the development of securities market.
To regulate the securities market and
For matters connected there with or incidental there zto.
Since its inception SEBI has been working targeting the securities and is attending to the
fulfillment of its objectives with commendable zeal and dexterity. The improvements in the
securities markets like capitalizations requirements, margining, establishments of clearing
corporation etc. reduced the risk of credit and also reduced the market.
SEBI has introduced the comprehensive regulatory measures prescribed norms, the eligibility
criteria, the code of obligations and the code of conduct for different intermediaries like,
17
2.3 REGULATORY AUTHORITY
2.3.1 SEBI (Securities and Exchange Board of India)
In 1998, the SEBI was established by the Government of India through an executive
resolution, and was subsequently upgraded as a fully autonomous body (a statutory board) in
the year 1992 with the passing of the SEBI act on 30th Jan 1992. In place of Government
control statutory and autonomous regulatory boards with defined responsibilities, to cover
both development and regulation of the market, and independent powers have been set up.
Paradoxically this is a positive outcome of the securities scam of 1990-91.
The basic objectives of the board were identified as:
To promote the interests of investors in securities.
To promote the development of securities market.
To regulate the securities market and
For matters connected there with or incidental there zto.
Since its inception SEBI has been working targeting the securities and is attending to the
fulfillment of its objectives with commendable zeal and dexterity. The improvements in the
securities markets like capitalizations requirements, margining, establishments of clearing
corporation etc. reduced the risk of credit and also reduced the market.
SEBI has introduced the comprehensive regulatory measures prescribed norms, the eligibility
criteria, the code of obligations and the code of conduct for different intermediaries like,
17
2.3 REGULATORY AUTHORITY
2.3.1 SEBI (Securities and Exchange Board of India)
In 1998, the SEBI was established by the Government of India through an executive
resolution, and was subsequently upgraded as a fully autonomous body (a statutory board) in
the year 1992 with the passing of the SEBI act on 30th Jan 1992. In place of Government
control statutory and autonomous regulatory boards with defined responsibilities, to cover
both development and regulation of the market, and independent powers have been set up.
Paradoxically this is a positive outcome of the securities scam of 1990-91.
The basic objectives of the board were identified as:
To promote the interests of investors in securities.
To promote the development of securities market.
To regulate the securities market and
For matters connected there with or incidental there zto.
Since its inception SEBI has been working targeting the securities and is attending to the
fulfillment of its objectives with commendable zeal and dexterity. The improvements in the
securities markets like capitalizations requirements, margining, establishments of clearing
corporation etc. reduced the risk of credit and also reduced the market.
SEBI has introduced the comprehensive regulatory measures prescribed norms, the eligibility
criteria, the code of obligations and the code of conduct for different intermediaries like,
18
bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers,
credit rating agencies, underwriters and others. It has framed by-laws, risk identification and
risk management systems for clearing houses of stock exchanges, surveillance system etc.
which has made dealing in securities both safe And transparent to the end investors.
Another significant event is the approval of trading in stock indices (like S&P CNX Nifty and
Sensex) in 2000. A market index is a convenient and effective product because of the
following reasons:
It acts as a barometer for market behavior.
It is used to benchmark portfolio performance.
It is used in derivative instrument like index futures and index options.
It can be used for passive fund management as in case if index funds.
Two board approaches of SEBI is to integrate the securities market at the national level, and
also to diversify the trading products, so that there is an increase in number of traders
including banks, financial institutions, insurance companies, mutual funds, primary dealers
etc. to transact through the exchanges. In this context the introduction of derivatives trading
through Indian stock exchanges permitted by SEBI in 2000 AD is a real landmark.
SEBI appointed the L.C. Gupta Committee in 1998 to recommend the regulatory frameworks
for derivatives trading and suggest by-laws for regulation and control of trading and
settlement of derivatives contracts. The board of SEBI in its meeting held on May 11, 1198
accepted the recommendations of the committee and approved the phased introduction of
derivatives trading in India beginning with stock index futures. The board also approved the
Suggestive by-laws as recommended by the Dr. L.C. Gupta Committee for regulation and
control of trading and settlement of derivatives contracts.
SEBI then appointed the J. R. Verma Committee to recommend Risk Containment Measures
(RCM) in the Indian stock index futures market. The report was submitted in November
1998.
19
However the Securities Contracts (Regulation) act, 1956 (SCRA) required amendment to
include derivatives in the definitions of securities to enable SEBI to introduce trading in
derivatives. The necessary amendment was then carried out by the Government in 1999. The
Securities law (Amendment) bill, 1999 was introduced. In December 1999 the new
framework was approved.
20
2.4. ONLINE TRADING INDUSTRY INDIA
With an online trading account, you can buy and sell shares in an instant! Anytime you like
and from anywhere you like. You can choose the online trading account that suits your
trading habits and preference.
In online trading the orders are sent to the exchanges, the confirmation is immediately
conveyed through E-mail and the proceeds or shares are credited (or debited) to the bank and
demat accounts. Globally, trade every seconds trade that goes through in the stock market is
an online trade. We in India have a long way to go but we sure are catching up a good speed.
Companies offer a fast online share dealing service using real time quotes, free up to the
minute advice, information and tips. Trades may be both in NSE & BSE. Some online
companies offer investment in mutual funds and IPOs online.
2.3.1 The Indian problem:
Some other structural aspects need to be kept in mind while analyzing the e-broking scenario
in India. The breadth of participation in the stock market in India is significantly lower as
compared to western markets with only 12.1 million equity owning households and three
million depository accounts. Brokerage rates in India are significantly lower than US rates,
with Indian brokers charging commissions of 0.5% to 1.25% per trade. For any player, the
pricing strategy for e-broking for the retail segment is as follows: For the cash segment, the
brokerage charged varies from 0.4% to 0.85% based on the volume of trade done per quarter
while for the margin segment; the brokerage charged varies from 0.05% to 0.15% based on
the volume of trade done per quarter. The above charges are inclusive of depository charges
and all the other statutory charges.
2.5 VARIOUS STOCK EXCHANGES IN INDIA
Bombay Stock Exchange of India (BSE)
National Stock Exchange of India (NSE)
Indian Commodity Exchange (ICEX)
United Stock Exchange of India (USE)
Multi Commodity Exchange (MCX)
Over the Counter Exchange of India (OTCEI)
Inter-connected Stock Exchange of India (ISE)
21
Madras Stock Exchange (MSE)
Coimbatore Stock Exchange (CSX)
Ahmadabad Stock Exchange (ASE)
Bhubaneswar Stock Exchange (BhSE)
Cochin Stock Exchange (CSE)
Hyderabad Stock Exchange (HSE)
Calcutta Stock Exchange (CSE)
Delhi Stock Exchange (DSE)
Bangalore Stock Exchange (BgSE)
Madhya Pradesh Stock Exchange, Indore
Jaipur Stock Exchange (JSE)
Magadh Stock Exchange, Patna
UP Stock Exchange (UPSE)
Vadodara Stock Exchange,Vadodara (VSE)
Guwahati Stock Exchange Ltd
Ludhiana Stock Exchange Association Ltd
Kanara Stock Exchange Ltd
Mangalore Stock Exchange Ltd
Pune Stock Exchange Ltd
Saurashtra Kutch Stock Exchange Ltd
Meerut Stock Exchange Ltd
Intrex Trade Exchange Ltd
United Stock Exchange of India
Mahurat trading
22
Various Stock Exchanges
2.5.1 NSE (NATIONAL STOCK EXCHANGE)
The National Stock Exchange of India Limited has genesis in the report of the High Powered
Study Group on Establishment of New Stock Exchanges, which recommended promotion of
a National Stock Exchange by financial institutions (FIs) to provide access to investors from
all across the country on an equal footing. Based on the recommendations, NSE 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 unlike other stock exchanges in the
country. On its recognition as a stock exchange under the Securities Contracts (Regulation)
Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994.
The Capital Market (Equities) segment commenced operations in November 1994 and
operations in Derivatives segment commenced in June 2000 NSE's mission is setting the
23
agenda for change in the securities markets in India. The NSE was set-up with the main
objectives of:
Establishing a nation-wide trading facility for equities and debt instruments.
Ensuring equal access to investors all over the country through an appropriate
communication network.
Providing a fair, efficient and transparent securities market to investors using
electronic trading systems.
Enabling shorter settlement cycles and book entry settlements systems, and Meeting
the current international standards of securities markets.
The standards set by NSE in terms of market practices and technology, have become industry
benchmarks and are being emulated by other market participants. NSE is more than a mere
market facilitator. It's that force which is guiding the industry towards new horizons and
greater opportunities.
24
2.5.2 BSE (BOMBAY STOCK EXCHANGE)
Bombay stock exchanges limited is the oldest stock exchange in Asia with a rich heritage.
Popularly known as The native share and shareholders association in 1875. It is the first
stock exchange in the country to obtain permanent recognition in 1956 from the government
of India under securities contracts (regulation) act, 1956. The exchanges pivotal and pre-
eminent role in the development of the Indian capital market is widely recognized and its
index, SENSEX, is tracked worldwide. Earlier an Association of persons (AOP), the
exchanges is now a de-mutualized and corporative entity incorporated under the provisions of
the companies act, 1956, pursuant to the BSE (Corporation and Demutualization) scheme,
2005.
Notified by the Securities and Exchange Board of India
With demutualization, the trading rights and ownership rights have been de-linked effectively
addressing concerns regarding perceived and real conflicts of interest. The exchange is
professionally managed under the overall direction of the board of directors.
The board comprises eminent professionals, representatives of trading members and the
Managing directors of the exchange. The board is inclusive and is designed to before from
the participation of market intermediaries.
In terms of organization structure, the board formulates larger policy issues and exercises
overall control. The committees constituted by the board are broad based. The day to day
operations of the exchange are managed by the managing director and a management team of
professionals.
25
The exchange has a nationwide reach with a presence in 417 cities and towns of India. The
systems and processes of the exchange are designed to safeguard market integrity and
enhance transparency in operations. During the year 2004-05, the trading volumes on the
exchange showed robust growth.
The exchange provides an efficient and transparent market for trading in equity, debt
instruments and derivatives. The BSEs Online Trading System (BOLT) is a proprietary
system of the clearing and settlement functions of the exchange are ISO 9001:2000 certified.
26
2.5.3 MULTI COMMODITY EXCHANGE
The Multi Commodity Exchange of India Limited (MCX), Indias first listed exchange, is a
state-of-the-art, commodity futures exchange that facilitates online trading, and clearing and
settlement of commodity futures transactions, thereby providing a platform for risk
management. The Exchange, which started operations in November 2003, operates within the
regulatory framework of the Forward Contracts (Regulation) Act, 1952.
MCX offers trading in varied commodity futures contracts across segments including bullion,
ferrous and non-ferrous metals, energy, agri-based and agricultural commodities. The
Exchange focuses on providing commodity value chain participants with neutral, secure and
transparent trade mechanisms, and formulating quality parameters and trade regulations, in
conformity with the regulatory framework. The Exchange has an extensive national reach,
with over 2100 members, operations through more than 400,000 trading terminals (including
CTCL), spanning over 1900 cities and towns across India. MCX is Indias leading
commodity futures exchange with a market share of about 86 per cent in terms of the value of
commodity futures contracts traded in 9M FY2013-14.
To ease participation, the Exchange offers facilities such as calendar-spread facility, as also
EFP (Exchange of Futures for Physical) transactions which enables participants to swap their
positions in the futures/ physical markets. The Exchanges flagship index, the
MCXCOMDEX, is a real-time composite commodity futures price index which gives
information on market movements in key commodities. Other commodity indices developed
by the exchange include MCXAgri, MCXEnergy, and MCXMetal. MCX has been certified
to three ISO standards including ISO 9001:2008 quality management standard, ISO
27001:2005 information security management standard and ISO 14001:2004 environment
management standard.
27
With an aim to seamlessly integrate with the global commodities ecosystem, MCX has forged
strategic alliances with leading international exchanges such as CME Group, London Metal
Exchange (LME), The Baltic Exchange, Dalian Commodity Exchange (DCE) and Taiwan
Futures Exchange (TAIFEX). The Exchange has also tied-up with various trade bodies,
corporates, educational institutions and R&D centres across the country. These alliances
enable the Exchange in improving trade practices, increasing awareness, and facilitating
overall improvement of commodity futures market.
MCXs ability to use and apply technology efficiently is a key factor in the development of
its business. The exchanges technology framework is designed to provide high availability
for all critical components, which guarantees continuous availability of trading facilities. The
robust technology infrastructure of the exchange, along with its with rapid customisation and
deployment capabilities enables it to operate efficiently with fast order routing, immediate
trade execution, trade reporting, real-time risk management, market surveillance and market
data dissemination.
The Exchange is committed to nurturing communities that are vital for the development of its
business. To achieve our goal of inclusive growth, we collaborate with diversified partners.
Gramin Suvidha Kendra, our social inclusion programme in partnership with India Post,
seeks to enhance farmers value realisation from agricultural activities.
MCX has been continuously raising the bar through effective research and product
development, intelligent use of information and technology, innovation, thought leadership
and ethical business conduct.
National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally
managed on-line multi commodity exchange. The shareholders of NCDEX comprises of
large national level institutions, large public sector bank and companies.
Promoter shareholders: ICICI Bank Limited (ICICI)*, Life Insurance Corporation of India
(LIC), National Bank for Agriculture and Rural Development (NABARD) and National
Stock Exchange of India Limited (NSE).
Other shareholders: Canara Bank, Punjab National Bank (PNB), CRISIL Limited, Indian
Farmers Fertiliser Cooperative Limited (IFFCO), Goldman Sachs, Intercontinental Exchange
(ICE), Shree Renuka Sugars Limited, Jaypee Capital Services Limited and Build India
Capital Advisors LLP, Oman India Joint Invesmtnet Fund, IDFC Private Equity Fund III.
28
2.5.4 NATIONAL COMMODITY &DERIVATIVES EXCHANGE LTD
NCDEX is the only commodity exchange in the country promoted by national level
institutions. This unique parentage enables it to offer a bouquet of benefits, which are
currently in short supply in the commodity markets. The institutional promoters and
shareholders of NCDEX are prominent players in their respective fields and bring with them
institutional building experience, trust, nationwide reach, technology and risk management
skills.
NCDEX is a public limited company incorporated on April 23, 2003 under the Companies
Act, 1956. It obtained its Certificate for Commencement of Business on May 9, 2003. It
commenced its operations on December 15, 2003. Corporate Identity No. is
U51909MH2003PLC140116.
NCDEX is a nation-level, technology driven de-mutualised on-line commodity exchange
with an independent Board of Directors and professional management - both not having any
vested interest in commodity markets. It is committed to provide a world-class commodity
exchange platform for market participants to trade in a wide spectrum of commodity
derivatives driven by best global practices, professionalism and transparency.
NCDEX is regulated by Forward Markets Commission. NCDEX is subjected to various laws
of the land like the Forward Contracts (Regulation) Act, Companies Act, Stamp Act, Contract
Act and various other legislations.
NCDEX headquarters are located in Mumbai and offers facilities to its members from the
centres located throughout India.
29
As on March 30, 2013, the Exchange offered 31 contracts for trading of which: 23
agricultural commodities, 3 precious metals, 2 energy, 1 polymer and 2 other metals. The top
5 commodities, in terms of volume traded at the Exchange, were Soya oil, Soyabean, RM
seed, Chana and Castor Seed.
2.6 MARKET PARTICIPANTS
Market participants include individual retail investors, institutional investors such as mutual
funds, banks, insurance companies and hedge funds, and also publicly traded corporations
trading in their own shares. Some studies have suggested that institutional investors and
corporations trading in their own shares generally receive higher risk-adjusted returns than
retail investors.
A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy
businessmen, usually with long family histories to particular corporations. Over time, markets
have become more "institutionalized"; buyers and sellers are largely institutions (e.g., pension
funds, insurance companies, mutual funds, index funds, exchange-traded funds, hedge funds,
investor groups, banks and various other financial institutions).
The rise of the institutional investor has brought with it some improvements in market
operations. There has been a gradual tendency for "fixed" (and exorbitant) fees being reduced
for all investors, partly from falling administration costs but also assisted by large institutions
challenging brokers' oligopolistic approach to setting standardized fees.
2.7 RELATION OF THE STOCK MARKET TO THE MODERN FINANCIAL
SYSTEM
The financial system in most western countries has undergone a remarkable transformation.
One feature of this development is disintermediation. A portion of the funds involved in
saving and financing, flows directly to the financial markets instead of being routed via the
traditional bank lending and deposit operations. The general public interest in investing in the
Stock market, either directly or through mutual funds, has been an important component of
this process.
Statistics show that in recent decades shares have made up an increasingly large proportion
of households' financial assets in many countries. In the 1970s, in Sweden, deposit accounts
and other very liquid assets with little risk made up almost 60 percent of households'
30
financial wealth, compared to less than 20 percent in the 2000s. The major part of this
adjustment is that financial portfolios have gone directly to shares but a good deal now takes
the form of various kinds of institutional investment for groups of individuals, e.g., pension
funds, mutual funds, hedge funds, insurance investment of premiums, etc.
The trend towards forms of saving with a higher risk has been accentuated by new rules for
most funds and insurance, permitting a higher proportion of shares to bonds. Similar
tendencies are to be found in other industrialized countries. In all developed economic
systems, such as the European Union, the United States, Japan and other developed nations,
the trend has been the same: saving has moved away from traditional (government insured)
bank deposits to more risky securities of one sort or another.
2.8 CLEARING AND SETTLEMENT AGENT
NSDL, the first and largest depository in India, NSDL works to support the investors and
brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness
of Indian marketplaces by developing settlement solutions that increase efficiency, minimise
risk and reduce costs. At NSDL, we play a quiet but central role in developing products and
services that will continue to nurture the growing needs of the financial services industry.
A Depository facilitates holding of securities in the electronic form and enables securities
transactions to be processed by book entry by a Depository Participant (DP), who as an agent
of the depository, offers depository services to investors. According to SEBI guidelines,
financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The
investor who is known as beneficial owner (BO) has to open a demat account through any DP
for dematerialisation of his holdings and transferring securities.
31
CDSL was promoted by BSE Ltd jointly with leading banks such as State Bank of India,
Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India.
2.9 SWOT Analysis of Indian Stock Market
Strength
The first and foremost strength of Indian stock market is its ability to provide high return.
SEBI a regulatory body of Indian stock market who protects the interest of the investors.
Large number of securities which provides medium for investment.
Large number of Brokers who plays a role of facilitator for investment.
Weakness
The weak point of Indian stock market is its volatility i.e. High risk.
It is a kind of gambling where no guarantee of return and some time it depends on luck
also.
Opportunity
Stock market provides an opportunity to money lender and money seeker to Invest and
use money for their plan.
It provides an opportunity to the investor to be the owner of the company and contribute
in the business decision of the company.
Stock market is a kind of indicator of the economic growth of the country where it
provides an opportunity to gain according to the inflation of the country or more than that.
Threats
There are many competitors of stock market such as post office savings, public provident
fund, company fixed deposits, fixed deposits with bank etc. which provides fixed and
assured returns.
32
33
34
COMPANY PROFILE
3.1 INTRODUCTION
Sharekhan is one of the leading retail broking House of SSKI Group which was running
successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI
Group, which has over eight decades of experience in the stock broking business. Sharekhan
offers its customers a wide range of equity related services including trade execution on BSE,
NSE, Derivatives, depository services, online trading, investment advisory, Mutual Fund
Advisory etc.
The firms online trading and investment site - www.sharekhan.com - was launched on Feb 8,
2000. The site gives access to superior content and transaction facility to retail customers
across the country. Known for its jargon-free, investor friendly language and high quality
research, the site has a registered base of over two lakh customers. The number of trading
members currently stands More than 8 Lacs. While online trading currently accounts for just
over 8 per cent of the daily trading in stocks in India, Sharekhan alone accounts for 32 per
cent of the volumes traded online.
The content-rich and research oriented portal has stood out among its contemporaries because
of its steadfast dedication to offering customers best-of-breed technology and superior market
information. The objective has been to let customers make informed decisions and to simplify
the process of investing in stocks.
On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application
that emulates the broker terminals along with host of other information relevant to the Day
Traders. This was for the first time that a net-based trading station of this caliber was offered
to the traders. In the last six months Speed Trade has become a de facto standard for the Day
Trading community over the net.
On October 01, 2007 Sharekhan again launched his another integrated Software based
product Trade Tiger, a net-based executable application that emulates the broker terminals
35
along with host of other information relevant to the Day Traders. It has another quality which
differ it from other that it has the combined terminal for EQUITY and COMMODITIES both.
Share khans ground network includes over 2200centers in 600 cities in India, of which 500
are fully-owned branches. Sharekhan has always believed in investing in technology to build
its business. The company has used some of the best-known names in the IT industry, like
Sun Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette,
Verisign Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading
engine and content. Previously the Morakiya family holds a majority stake in the company
but now a world famous brand CITI GROUP has taken a majority stake in the company.
HSBC, Intel & Carlyle are the other investors.
With a legacy of more than 80 years in the stock markets, the SSKI group ventured into
institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading
players in institutional broking and corporate finance activities. SSKI holds a sizeable portion
of the market in each of these segments. SSKIs institutional broking arm accounts for 7% of
the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional
portfolio investment in the country. It has 60 institutional clients spread over India, Far East,
UK and US. Foreign Institutional Investors generate about 65% of the organizations
revenue, with a daily turnover of over US$ 4
million. The Corporate Finance section has a list of
very prestigious clients and has many firsts to its
credit, in terms of the size of deal, sector tapped etc.
The group has placed over US$ 1 billion in private
equity deals. Some of the clients include BPL
Cellular Holding, Gujarat Pipavav, Essar,
Hutchison, Planetasia, and Shoppers Stop.
36
3.2 PROFILE OF THE COMPANY
Name of the company: Share khan ltd
Year of Establishment: 1925
Headquarter: Share Khan SSKIA-206 Phoenix House Phoenix Mills Compound
Lower Parel Mumbai Maharashtra INDIA-400013
Nature of Business: Service Provider
Services: Depository Services, Online Services and Technical Research
Number of Employees: Over 4000
37
38
3.3. BOARD OF DIRECTORS
Sharekhan Limited INSIDERS ON Board Members
Name
(Connections)
Relationships
Title
Tarun Shah 9 Relationships Chief Executive Officer and Whole-Time Director
Jaideep Arora 9 Relationships Whole-Time Director
Shankar Vailaya 9 Relationships Whole-Time Director
3.4. BRAND NAME
The company as a whole in its offline business has named itself as SSKI Securities Private
Limited Shripal Sevantilal Kantilal Ishwarlal Securities Private Limited. The
company has preferred to name themselves under a blanket family name.
But in its online division started since 1997, the company preferred to name itself as
SHAREKHAN. The Brand name SHAREKHAN itself suggests the business in which
the company is dealing so that the customer could easily identify the product or service
category.
3.5. MISSION:
To educate and empower the individual investor to make better investment decisions through
quality advice and superior service.
3.6. VISION:
To be the best retail brokering Brand in the retail business of stock market.
39
3.7. ACHIEVEMENTS OF SHAREKHAN:
A wired company along with Reliance, Hll, Infosys, etc by Business Today, January
2004 edition.
It was awarded Top Domestic Brokerage House four times by Euro and Asia
money.
It was Winner of Best Financial Website award.
Indias most preferred brokers within 5 years. CNBC Awaaz customers Award
2005.
3.8. SHAREKHAN LTD. PROVIDE DIFFERENT PRODUCT AS
FOLLOWS
1. Equity and Derivative Trading on BSE and NSE.
2. Depository Services.
3. Online Trading.
4. IPO Services.
5. Commodities Trading on MCX and NSDEX.
6. Portfolio Management Services.
40
3.9. SERVICES PROVIDED BY SHAREKHAN
Online Services
Offline Services
Depository Services
Equity and Derivatives Trading
Fundamental Research
Technical Research
Portfolio Management
Commodities Trading
Dial-n-trade
Share shops
41
1. Online Services:
Mutual Funds
Commodity Futures
PMS
Technical PMS
Demat Services
Share shops
2. Offline Services:
Trading with the help of Dealer
Trading without credit
By calling to the Share shops
Credit facility (Only in Delivery-based)
T+2 facility
Special website for Offline Clients: www.mysharekhan.com
Physical contract notes
3.10. TYPES OF ACCOUNT
Classic A/c
Trade tiger
Classic A/c:
Features of Classic A/c:
Online trading account for investing in Equities and Derivatives via
sharekhan.com.
Integration of: Online trading + Bank + Demat account.
Instant cash transfer facility against purchase & sale of shares.
Make IPO bookings.
You get Instant order and trade confirmations by e-mail
Streaming Quotes.
Personalized Market Scan with your own customized stock ticker.
Single screen interface for cash and derivatives
42
Trade tiger
Features of Trade tiger:
A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX,
NCDEX, Mutual Funds, IPOs
Multiple Market Watch available on a Single Screen
Multiple Charts with Tick by Tick Intraday and End of Day Charting powered
with various Studies
Graph Studies include Average, Band-Bollinger, Know SureThing, MACD etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines
User can save his own defined screen as well as graph template that is, saving
the layout for future use.
User-defined alert settings on an input Stock Price trigger
Tools available to guage market such as Tick Query, Ticker, Market
Summary, Action Watch, Option
Premium Calculator, Span Calculator
Shortcut key for FAST access to order placements & reports
Online fund transfer activated with 12 Banks
Dial-n-trade:
Features of Dial-n-trade:
Two dedicated numbers for placing your orders with your cell phone or
landline. Toll free number: 1-800-22-7050. For people with difficulty in
43
accessing the toll-free number, we also have a Reliance number 30307600
which is charged at Rs. 1.50 per minute for STD calls.
Automatic funds transfer with phone banking (for Citibank and HDFC bank
customers).
Simple and Secure Interactive Voice Response based system for
authentication.
No waiting time. Enter your TPIN to be transferred to our telebrokers.
You also get the trusted, professional advice of our teleprocess.
After hours order placement facility between 8.00 am and 9.30 am (timings to
be extended soon.
Share mobile
Sharekhan launches Share Mobile, an exclusive live streaming quotes and trading
facility for its online trading customers
Next time when you are on move, you need not worry about your favorite stocks
price movement. You can carry stock market terminal with you anywhere
anytime.
Special offer- 3 month free trial usage for all Sharekhan trading customers.
Contact Silicon for details.
Prerequisites for Share Mobile are
Java enabled Mobile Handset.
GRPS connection - For getting a GPRS connection, get in touch with your Service
provider.
Now share mobile is also available on android phone and also on IOS ,windows
phone
Share Mobile will not work if
Your Mobile Handset does not support JAVA Applications.
If user has WAP connection of BPL (Also known as BPL WAP connection or
MMS Pack)
For all Reliance Mobile User
44
3.11. SWOT ANALYSIS OF SHAREKHAN
Strengths
1. Big client base
2. In-house research house
3. online as well as offline trading
4. Online IPO/ MF services
5. Share shops
6. Transparent
7. User friendly tie ups with 10 banks
8. Excellent order execution speed and reliability
Weakness
1. Lack of awareness among customer
2. Less focus on customer retention
3. Less Exposure
Opportunities
1. Diversification
2. Product modification
3. Improve Web based trading
4. Provide competitive brokerage
5. Concentrate on PMS
6. Focus on Institutional investors
7. Concentrate on HNIs (high net worth investor)
3.12. COMPETITORS OF SHAREKHAN LTD:
There are currently close to online brokerages in India with ICICI direct, HDFE securities,
Kotak Street, Share Khan, India Bulls and 5paisa,Motilal oswal being some major
competitors of Sharekhan . However, due to limited volumes, no online brokerage is
currently making money and a shakeout is imminent in the near future. The going to be
expected to get tougher with the advent capital account; convertibility, players such as TD
Water house have already entered the Indian market, while others such as Schwab are
45
expected shortly. On an average, Rs. 40 crores per day (Rs. 1300 crores per month) is likely
to be the threshold breakeven for online brokerages.
Competitors
ShareKhan is one of Indias premier trading institutions.
Its main competitors are:
INDIA INFOLINE
ICICI DIRECT
INDIA BULLS
RELIANCE MONEY
KOTAK SECURITIES
MOTILAL OSWAL
ANAND RATHI
RELIGARE ENTERPRISES
HDFC SECURITIES
46
3.13. PORTFOLIO MANAGEMENT SERVICES
Sharekhan is also having Portfolio Management Services for Exclusive clients.
1. PROPRIME - Research & Fundamental Analysis.
Ideal for investors looking at steady and superior returns with low to medium risk appetite.
This portfolio consists of a blend of quality blue-chip and growth stocks ensuring a balanced
portfolio with relatively medium risk profile. The portfolio will mostly have large
capitalization stocks based on sectors & themes that have medium to long term growth
potential.
2. PROTECH - Technical Analysis.
Protech uses the knowledge of technical analysis and the power of derivatives market to
identify trading opportunities in the market. The Protech lines of products are designed
around various risk/reward/ volatility profiles for different kinds of investment needs.
THRIFTY NIFTY: Nifty futures are bought and sold on the basis of an automated
trading system that generates calls to go long/short. The exposure never exceeds value
of portfolio i.e. there is no leveraging; but being short in Nifty allows you to earn even
in falling markets and there by generates linear
BETA PORTFOLIO: Positional trading opportunities are identified in the futures
segment based on technical analysis. Inflection points in the momentum cycles are
identified to go long/short on stock/index futures with 1-2 month time horizon. The
idea is to generate the best possible returns in the medium term irrespective of the
direction of the market without really leveraging beyond the portfolio value. Risk
protection is done based on stop losses on daily closing prices.
STAR NIFTY: Trailing Stops Momentum trading techniques are used to spot short term
momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss method of risk
management or profit protection is used to lower the portfolio volatility and maximize
returns. Trading opportunities are explored both on the long and the short side as the market
demands to get the best of both upwards & downward trends
47
3.14. CHARGE STRUCTURE
1) - PRE PAID OR AMC A/C: -
Advance Amount which will be fully adjsted against your brokerage you paid in One
year.
Following Schemes Are Available: - Brokerage will be chagred -
1) - 750/- Scheme:- 0.05 / 0.50 %
2) - 1000/- Scheme 0.045 / 0.45 %
3) 2,000/- Scheme: - 0.035 / 0.40 %
4) 6,000/- Scheme: - 0.025 / 0.25 %
5) 18,000/- Scheme: - 0.020 / 0.20 %
6) 30,000/- Scheme: - 0.015 / 0.18 %
7) 60,000/- Scheme: - 0.010 / 0.15 %
8) 1,00,000/- Scheme: - 0.0075 / 0.10 %
MinimumMargin of Rs. 25000/- is required for Account Opening.
Annual Maintenance Charges will NIL for 1
st
year and Rs. 400/- from 2
nd
year.
- EXPOSURE: 4 TIMES (ON MARGINE MONEY)
- EXPOSURE: 10 TIMES (ON MAX TRADING)
- ONLINE IPO'S AND MUTUAL FUNDS ADVISORY IS AVAILABLE.
We are having tie-up with Eleven banks for online fund transferring i.e. HDFC, ICICI,
IDBI, CITI, Union Bank of India, Oriental Bank of Commerce, INDUSIND, AXIS,
Centurion Bank of Punjab, Bank of India and Yes Bank.
Company Provide 4-6 E-mail to their customers per day.
Online Trade in Share
Sharekhan customers can online trade through their computers, through internet during the
market timings.
Online Fund Transfer
We have tie up with Eleven Banks for online fund transferring i.e. HDFC, IDBI, CITI, UBI,
OBC, INDSLANDAND and UTI BANK, Yes bank, Bank of India for Online Money
Transfer.
Research based investment advice
48
Investment and trading services
Trading and seminars
Technology based investment tools
Integrated demat facility
CUSTOMER CAN TRADE IN
o Equities
o Derivatives
o Commodities
3.15. REQUIREMENTS FOR NET TRADING
For investors:
1. Installation of a computer with required specification
2. Installation of a mode
3. Telephone connection
4. Registration for on-line trading with broker
5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading
The following should be produce to get a demat account and online trading account:
As identity, proof &address proof produce the following things:
Voter ID card
Driving license
PAN card
Ration card
Bank pass book
Telephone bill
Other requirements, which are necessary
First page of the bank pass book and last 6 months statement.
Bank managers signature along with banks seal, manager registration code on
photograph.
49
For stock brokers:
1. Permission from stock exchange for net trading
2. Net worth of Rs. 50 lac
3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
9. Setting up a website.
The net is used as a medium of trading in internet trading. Orders are communicated to the
stock exchange through website. Internet trading started in India on 1st April 2000 with 79
members seeking permission for online trading. The SEBI committees on internet based
securities trading services has allowed the net to be used as an Order Routing System (ORS)
through registered stock brokers on behalf of their clients for execution of transaction.
Under the Order Routing System the client enters his requirements (security, quantity, price,
and buy/sell) in broker's site. They are checked electronically against the clients account and
routed electronically to the appropriate exchange for execution by the broker. The client
receives a confirmation on execution of the order. The customer's portfolio and ledger
accounts get updated to reflect the transaction. The user should have the user id and password
to enter into the electronic ring. He should also have demat account and bank account. The
system permits only a registered client to log in using user id and password. Order can be
placed using place order window of the website.
3.16. PROCEDURE FOR NET TRADING
Step 1: Those investors, who are interested in doing the trading over internet system i.e.
NEAT-IXS, should approach the brokers and get them self registered with the Stock Broker.
Step 2: After registration, the broker will provide to them a Login name, Password and
personal identification number (PIN).
Step 3: Actual placement of an order. An order can then be placed by using the place order
window as under:
50
(a) First by entering the symbol and series of stock and other parameters like quantity and
price of the scrip on the place order window.
(b) Second, fill in the symbol, series and the default quantity.
Step 4: It is the process of review. Thus, the investor has to review the order placed by
clicking the review option. He may also re-set to clear the values.
Step 5: After the review has been satisfactory, the order has to be sent by clicking on the
send option.
Step 6: the investor will receive an "Order Confirmation" message along with the order
number and the value of the order.
Step 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons
such as invalid price limit, an appropriate message will appear at the bottom of the screen. At
present, a time lag of about 10 seconds is there in executing the trade.
Step 8: It is regarding charging payment, for which there are different mode. Some brokers
will take some advance payment room the investor and will fix their trading limits. When the
trade is executed, the broker will ask the investor for transfer of funds by the investor to his
account.
Internet trading provides total transparency between a broker and an investor in the secondary
market. In the open outcry system, only the broker knew the actually transacted price. Screen
based trading provides more transparency. With online trading investors can see themselves
the price at which the deal take place.
The time gap has narrowed in every stage of operation. Confirmation and execution of trade
reaches the investor within the least possible time, mostly within 30 seconds. Instant
feedback is available about the execution. Some of the websites also offer;
New and research report
BSE and NSE movements
Stock analysis
Freebies
IPO and mutual fund centres and
Movements of interaction stock exchanges.
51
Step by step procedure in online trading:-
Following steps explain the step by step approach to on-line trading:
Log on to the stock broker's website
Register as client/investor
Fill the application form and client broker agreement form on the requisite value
stamp paper
Obtain user ID and pass word
Log on to the broker's site using secure user ID and password
Market watch page will show real time on-line market data
Trade shares directly yourself by entering the symbol or number of the security
Brokers server will check your limit in the on-line accountant demat account for the
number of shares and execute the trade
Order is executed instantly (10-30 seconds) and confirmation can be obtained.
Confirmation is e-mailed to investor by broker
Contract note is printed and mailed in 24 hours
Settlement will take place automatically on the settlement day
Demat account and the bank account will get debited and credited by electronic
means.
Online trading has led to additional features such as:
Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this
leeway facility since one need to hold a price.
Market orders: orders can be filled at unexpected prices, but this type is much more
risky, since you have to buy stock at the given price.
Cash account: where funds have to be available prior to placing the order.
Margin account: where orders can be placed against stocks, to increase Purchasing
power.
Advantages of online trading:
Online trading has made it possible for anyone to have easy and efficient access to
more reports and charts than it was previously possible if one went to any brokers'
office. Thus, we have access to a lot more information online to self teaches our
broker itself.
52
Online trading has let room for smaller organizations to compete with multinational
organizations since is no longer a legit issue. Being online does not identify the size of
any particular organization, therefore, this additional power to the underdogs.
Online trading has allowed companies to locate themselves where they want, as
physical location is not an issue anymore. Companies can establish themselves
according to their gains and losses, for instance where tax (sales and value added
taxes) is best suited to them.
Online trading gives control to individuals and they can exercise it over accounts thus
comprehend what is going on when they trade. It is like going back to school and re-
educating oneself on how to trade online.
Individuals benefit by saving comparatively a lot more when trading online as the
cost per trade is less.
Individuals can invest in a variety of products, unlike earlier when people bought
bonds, mutual funds, and stock for long-term basis and sat on them. Now they can
invest in stocks, stock and index options mutual funds, individual, government, and
even insurance.
Online trading has made it possible for one fid investment options that were not
available on a regular basis like offbeat net stocks eccentric unique things and trading
in global market.
Investors reasons to trade online:
They have control over their accounts can make their own decisions and dont
have to give reasons for their actions. They are independent.
They have a reason to participate in the market and learn about it.
It interesting, cheap, easy, fast, and convenient.
A lot of information is online so they can keep up-to-date with what is happening
in the trading world.
It is the interest of the small investors because rates will be available immediately
across the country execution will be immediately across the country and execution
will be immediate.
It will give investors a greater choice and better realization.
The immediate impact will be competition and benefits will accrue to the
investors.
53
It will lead to brokerage commissions going down and brokers striving to increase
business afloat.
Investors will now go to place, which have better trading conditions and also
members to offer them better facilities.
They have access to numerous tools to invest, and can create their own portfolio.
Here are the possible disadvantages:
When network crashes, there will be problems and delays due to a large influx of
rapid online trading criteria.
Individuals are restricted to first-hand financial guidance. This simply means that the
individual is himself / herself alone to.
A tax (sales tax and value added tax) evaluation becomes an issue, especially when
you are trading internationally.
Chances are that one has no idea who one is dealing with on the other end, so it is
advisable to gather all the possible information about the party one is dealing with. In
short, do the home work and be prepared.
Online trading has left individuals open to too much information. This is harmful
since it leaves brokerages wide open to sensitive data.
According to a study conducted by Mary Rowland, careful investor: is online trading
bad for your portfolio, the more one trades the less returns one gets, meaning that an
addicted trader gets, carried away online and begins to trade for too much which
causes losses for him / her.
The study also shows that smart investment is better than fast investment. Simply put
speed should be considered to be a major factor would lead any online trader to think
they know the market.
Individuals think that they are trading with the market directly and know what they
are doing, but the truth is that even through technology has taken over the basic rules
of trading are the same. It seems that the middleman has been removed, but that is not
so. When the individuals click on the mouse, his trade goes through a broker. The
commissions online pertain to the intermediary.
There is a need for more effective communication links over the Internet and the
ability of the server to deal with a large volume of visitors.
54
3.17. TRADING AND SETTLEMENT AT SHARE KHAN
The NSE first introduced online trading in India. The Online trading system imparted a
greater level of transparency and investors preferred exchanges that offered Online trading
because of the following factors:
The ease of operation from the view of the both members and the investors.
Increase in the confidence of the investors because at higher level of transparency.
Facilities better monitoring of the market by the exchange.
The best price achieved in buying and selling.
All these resulted in ever-increasing volumes on the exchanges offering the online trading.
3.18 TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING
Share Khan deals in buying and selling equity shares and debentures on the National Stock
Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The-Counter Exchange
of India (OTCEI).
Share Khan is provided with a computer and required software from their registered stock
exchanges. These centres are called Broker Work Stations. These computers are connected
to the server at the stock exchanges through cable.
The member or broker sitting in his office can send the quotations, orders, negotiations, deals,
in-house deals, auction orders etc., through the computer.The central trading system (CTS)
will accept these orders and send it for match.
If there is any mistake in the order, CTS will reject the orders and send respective error
message to the member concern. All these operations are in built. The main objective of CTS
is to monitor the Stock Exchanges operations.
Order placed by the broker will be sent for a match and if the match is found suitable, the
transaction will be executed. Otherwise, the order will be deleted automatically after
completion of trading time the carry forward transactions (Good Till cancellation) are
forward to the next day. Even if the match is not found with in the prescribed period, the
order will not cancel.
55
3.18.1 Trading session:
Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period. Monday
to Friday is the trading period in all the stock exchanges. SEBI has stipulated that all the
stock exchanges in India must have same trading period.
3.18.2 Broker work station:
At the broker workstation the best BBOs the last traded price, the day s opening price,
previous days closing price, highest and lowest prices, the weighted average price, the total
trade value and total trade value will be available continuously, as the BBO for each scrip.
Other information will be available on query from the BWS. These include top gainers /losers
of the day. Trader-wise, scrip wise net position, client wise net position, top scrip by the
volume/value, market summary etc.
The BWS as a powerful profiling future which enables each trader to customize his/her
screens layouts as is convenient, profiles may be set at the BWS by the individual users, for
the scrips that he/she is interested in watching columns of information available, etc.
Brokers are also provided with information relating to the companies in the matter of Book
closure, Dividend declarations, resolutions in board meeting, information about liquidated
companies, company report etc.
Broker can visualize his personal details relating to trade done he can have scrip wise details,
sub-broker wise details, and client-wise details and can also take the point of daily volume
reports and adjustment reports.
3.18.3 Orders:
Orders can be done one at a time or in a batch mode. The submitted order will be accepted at
the CTS after validation if found any invalid reason the order is return back to the BWS, with
the appropriate error message. If Accepted at the CTS it will be added to the local pending
order book.
The order will then be taken up for matching if it is a buy order the system tries to find a sell
order, which fits the requirement of the buy order when such match is found a trade, gets
executed. Each trade involves two brokers and respective traders who sent the order. Both
these traders are informed of the trade being executed at their respective BWS.
56
At the BWS the trade is added to the local trade book, land the pending quantity decreased by
the trade quantity in the local pending order book.
Orders sent by the brokers are two types:
Good For the Day (GFD)
Good Till Cancellation(GTC)
Good for the Day:
This also called as market order. For an order if the member selects the deal as good for
day, the order is treated as market order. If a best bid founds match with best order then
the transaction executes. If the match is not found then after trade time the order is cancelled
that day. Next day he has to place a new order.
For example if a member wants to purchase 1000 shares of satyam info @ 400, each through
Good for Day order. If the correct match is not found, order is cancelled automatically and
new quotation has to be placed the next day.
3.18.4 Good till cancellation:
This order is forwarded to the last trading day of that settlement period. This is also called as
carry forward order like GFT; broker has to select the option of GTC for the order. If the
order finds match with in the trading settlement period, the order is executed. If no match is
found, the order is cancelled on the last day of settlement period. This order is not carried
forward to the next settlement period.
For example, if a member places a purchase order of 500 shares of SBI @ 690 per share,
selects the order as GTC, and places an order. If the match is not found on that day it will be
forwarded to the next day until trading settlement period day.
3.18.5 Settlement of transactions:
Clearing of transaction in the form of shares and cash is called settlement, which was held in
clearing house of stock exchange (for example, SHAREKHAN is a clearance house is
member in NSDL (National Securities Depository Limited). Buyers will take the delivery of
shares through the Depository Participants (DPS) like SHARE KHAN and others. Finally,
the settlement is made by means of delivering the share certificates along with the transfer
deeds. The transferor (or the seller) duly signed transfer deed. It bears a stamp of the selling
57
broker. The buyer then fills up the certificates fills up the particulars in the transfer deed.
Settlement can be done in the following way.
Spot settlement: under this method, the delivery of securities and payment for them are
affected on the day of the contract itself.
Rolling settlement: Under this rolling settlement the trading is on T+2,basis i.e. if
Monday is trading day then Wednesday is the paying day . In case on non-delivery, the
securities will go for auction.
3.18.6 Details of procedures:
Delivery in : The members who is in PAY-OUT position delivers share certificates in to
clearing house with in the settlement period along with the delivery Chelan filled in with the
details of share certificates which has folio numbers or distinctive numbers etc.
Delivery out: The buyer of shares who made pay in position will take delivery of shares from
the clearinghouse.
Pay-in: The member who is in paying position shall pay for value of shares within the
trading settlement period (T+2).
Payout: The cheques paid in the clearinghouse will be paid members who are in paying
position.
All disputes arising between members regarding non-deliveries, non-payments, good and bad
deliveries pertaining to the settlement will be here by Share Khan and settled by the
settlement committee of the exchange.
Sharekhan provides offline trading too. For this sharekhan is providing a toll-free number i.e.
1-800-22-7500.
58
The given flow chart clearly explains the process of online trading:
Login
Buy transcation Sell transcation
The system will check buying
limits
The system will check your
dp account quantity
Orders accepted Rejected orders would be
communicated along with reasons
orders accepted
contract note would
be sent to by mail
or hand delivery
flashed on your
screen immediately
on execution
conformationcoul
d be send to your
e-mail and mobile
you may edit your
pending order
you may delete your
pending order
your order is transmitted to exchange for execution
pending sell orders
would be displayed
on your screen
pending buy orders
would be displayed
on your screen
on execution
of your orders
you may edit your
pending order
you may delete
your pending order
59
THE WINDOW WHICH DISPLYAS IS BUYING SHARES ONLINE THROUGH
TRADE TIGER SOFTWARE
60
THE WINDOW WHICH DISPLYAS IS SELLING SHARES ONLINE THROUGH
TRADE TIGER SOFTWARE
61
3.18.7 Surveillance:
Surveillance can be done during the continuous trading session for monitoring the broker
scrip and the market, this is referred to as online may be used for analysis. Analysis and
monitoring reports that can generate. For the continuous trading session the surveillance
workstation user can set up a member of alerts any scrip broker or index the workstation
profile will be automatically reported to the user.
The market event list will be available to the BWS user. During the continuous trading
session details of the scrip broker or index that pass the alert or violate their circuit breakers
are displayed on message window. There are three messages windows i.e., one for each scrip
and index, different colors indicate the importance and BWS user is modified when BWS
user is denied access to the system a number of are available for the SWS user.
3.19 PROBLEM AREAS:
When internet trading was first launched in Feb. 2000, the stock markets were experiencing
an unprecedented boom and it held out a lot of promise. However, two years down the line
we find the system as failed to deliver up to its potential. The main reasons for declining
volume of trading are:
Bearish market:
The poor performance in the on line market segment can be attributed to lack of Bull Run in
the stock market. This is the reason for which the overall trading as come down. Almost ever
since internet trading has started the markets have remained bearish. This relationship
between the mood of the market and the internet in trading indeed gets reflected in the
volumes.
Poor penetration of the internet:
Besides the bearishness in the equity market, another reason for low acceptance of net trading
could be poor penetration of the internet. In India it is a fact that internet has not been able to
spread its tentacles in rural areas and small towns.
The very basis of net trading is based on two factors:
1. An equity market in good shape.
2. Deep penetration of the internet.
62
Poor internet connectivity:
In the Indian context, the quality of internet connections also comes into play for determining
the reasons for the lack in response. Here, we have connectivity problems and there are
instances of clients panicking, as they could not execute their trades. Many times at
particularly at places other than Mumbai, sudden stoppage of electricity results in
disconnection.
Long supply chain:
In case of conventional or offline, trading the chain is small as the clients directly interact
with the brokers. However, in case of internet trading the chain is quite long as it involves a
client, an internet service provider, server, stock exchange, depositor and a broker and a
problem can rise up at any stage of the chain, breaking down the entire system.
A Costly Affair:
Other than the technological hassles, there is an element of cost as well. For active traders,
doing online trading he has to remain connected all the time and the cost of connecting
through dial up can work out to Rs 3500 per month which is over and above the brokerage
and other service charges. This is the reason offering online trading facility
Allows the clients to use the conventional system as well in order to retain them. A part from
a dealing room, most broking houses have a separate room for the clients. Where the stock
exchanges terminals are kept for their use.
Low Investor Confidence:
The global recession has dampened the mood of the stock market. Although, the US economy
is showing signs of recovery, but any tangible outcome is yet to be felt and natural calamities.
63
3.20 SWOT ANALYSIS OF SHAREKHAN
(Our observation)
STRENGTHS
1. Big client base
2. In-house research house
3. online as well as offline trading
4. Online IPO/ MF services
5. Share shops
6. Transparent
7. User friendly tie ups with 10 banks
8. Excellent order execution speed and reliability
WEAKNESS
1. Lack of awareness among customer
2. Less focus on customer retention
3. Less Exposure
OPPORTUNITIES
1. Diversification
2. Product modification
3. Improve Web based trading
4. Provide competitive brokerage
5. Concentrate on PMS
6. Focus on Institutional investors
7. Concentrate on HNIs (high net worth investor)
THREATS
1. Aggressive promotional strategies by close competitor like Religare, Angel Broking and
India bulls.
2. More and more players are venturing into this domain, which can further reduce the
earning of Share Khan.
3. Stock market is very volatile, risk involves is very high.
64
4.1 INTRODUCTION OF INVESTMENT
65
An asset or item is that which is purchased with the hope that it will generate income or
appreciate in future.
In an economic sense, an investment is the purchase of goods that are not consumed today
but are used in future to create wealth.
In finance an investment is a monetary asset purchased with the idea that the asset will
provide income in the future or appreciate and be sold at higher price.
4.1.1 Characteristics of investment:
Tax benefit
Stability of income
Return
Marketability
Liquidity
Safety
Capital growth
Risk
Purchasing power of stability
4.2 INVESTMENT AVENUES
Each investment alternatives has its own strength and weakness. Some options seek to
achieve superior return (like equity), but with corresponding higher risk. Other provide safety
(like PPF), but at the expense of liquidity and growth. Other options such as FDs offers
safety and liquidity, but at a cost of return. Mutual funds seek to combine the advantages of
investing in arch of these alternatives while dispensing with shortcomings.
4.3 DIFFERENT INVESTMENT ALTERNATIVES IN INDIA
1. Equity shares
2. Bonds
3. Mutual funds
4. Life insurance
5. Fixed deposits
Investment alternatives in India
66
1. Equity shares
These are shares of company and can be traded in secondary market. Investors get benefit by
change in price of share and dividend given by companies. Equity shares represent ownership
capital. As an equity shareholder, a person has an ownership stake in the company. This
essentially means that the person has a residual interest in income and wealth of the company.
2. Bonds
Bonds are the instruments that are considered as a relatively safer investment avenues.
3. Mutual Funds
A mutual fund is a trust that pools together the savings of a number of investors who share a
common financial goal. The fund manager invests this pool of money in securities, ranging
from shares, debentures to money market instruments or in a mixture of equity and debt,
depending upon the objective of the schemes.
4. Life insurance
Now-a-days life insurance is also being considered as an investment avenue. Insurance
premiums represent the sacrifice and the assured sum the benefit.
5. Fixed deposits
In deposit terminology, the term Fixed Deposit refers to a savings account or certificate of
deposit that pays a fixed rate of interest until a given maturity date. Funds placed in a Fixed
Deposit usually cannot be withdrawn prior to maturity or they can perhaps only be withdrawn
with advanced notice and/or by having a penalty assessed.
67
AGE
68
Table-1
Age
Frequency Percent Valid Percent Cumulative Percent
Valid 18-25 yrs 26 26.0 26.0 26.0
26-35 yrs 29 29.0 29.0 55.0
36-50 yrs 37 37.0 37.0 92.0
above 50 yrs 8 8.0 8.0 100.0
Total 100 100.0 100.0
Chart-1
Interpretation
From the research, researcher concludes that there are there are 37% respondents between the
age group of 36-50 yrs and least i.e. 8% above 50 yrs.
GENDER
69
Table-2
Gender
Frequency Percent Valid Percent Cumulative Percent
Valid Male 79 79.0 79.0 79.0
Female 21 21.0 21.0 100.0
Total 100 100.0 100.0
Chart-2
Interpretation
From the research, researcher concludes that there are 79% respondents are male and 21%
respondents are female.
OCCUPATION
70
Table-3
Occupation
Frequency Percent Valid Percent Cumulative Percent
Valid Student 6 6.0 6.0 6.0
Professional 14 14.0 14.0 20.0
Service 49 49.0 49.0 69.0
Businessman 16 16.0 16.0 85.0
Housewife 12 12.0 12.0 97.0
Retired 3 3.0 3.0 100.0
Total 100 100.0 100.0
Chart-3
Interpretation
From the research, researcher concludes that majority respondents are from service class and
3% respondents are from retired class.
ANNUAL INCOME
71
Table-4
Annual Income
Frequency Percent Valid Percent Cumulative Percent
Valid Below 150000 32 32.0 32.0 32.0
150000-300000 29 29.0 29.0 61.0
300000-400000 24 24.0 24.0 85.0
Above 400000 15 15.0 15.0 100.0
Total 100 100.0 100.0
Chart-4
Interpretation
From the research, researcher concludes that there are 32% respondents from the income
class of below 150000 and 24% respondents are from the income class of 300000-400000.
MARITAL STATUS
72
Table-5
Marital Status
Frequency Percent Valid Percent Cumulative Percent
Valid Married 71 71.0 71.0 71.0
Unmarried 29 29.0 29.0 100.0
Total 100 100.0 100.0
Chart-5
Interpretation
From the research, researcher concludes that there are 71% respondents married and 29%
respondents are unmarried.
NUMBER OF FAMILY MEMBERS
73
Table-6
No. of Family Members
Frequency Percent Valid Percent Cumulative Percent
Valid 1-3 42 42.0 42.0 42.0
4-6 53 53.0 53.0 95.0
6-8 5 5.0 5.0 100.0
Total 100 100.0 100.0
Chart-6
Interpretation
From the research, it is concluded that 42% respondents have family of 1-3 members, 53%
respondents have family of 4-6 members, and 5%have 6-8 members in family.
NUMBER OF EARNING MEMBERS
74
Table-7
No. of Earning Members
Frequency Percent Valid Percent Cumulative Percent
Valid 1 38 38.0 38.0 38.0
2 53 53.0 53.0 91.0
3 5 5.0 5.0 96.0
4 4 4.0 4.0 100.0
Total 100 100.0 100.0
Chart-7
Interpretation
From the research, it is concluded that 38% respondents have 1 earning member, 53%
respondents have 2 earning members, 5% have 3 and 4 %have 4earning members in family
respectively.
Question-1: Have You Been Into Any Investment Plan?
75
Table-8
Have you been into any Investment Plan?
Frequency Percent Valid Percent Cumulative Percent
Valid yes 84 84.0 84.0 84.0
No 16 16.0 16.0 100.0
Total 100 100.0 100.0
Chart-8
Interpretation
From the research, it is concluded that 84 % have Investment Plan and 16 % have not any
Investment Plan.
Question-2: In Which Segment Have You Invested?
76
Table-9
Particulars Number of
respondents
Particulars Number of
respondents
Equity 70 Insurance 52
Mutual Fund 32 Commodities 17
Bank FD 34 Real Estate 14
Bonds 4 Gold And Silver 21
Debenture 1 Post Office Savings 15
Public Provident Fund 12 Other Govt. Securities 4
Chart-9
Interpretation
From the research, it is concluded that most of the respondents were aware about Equity and
insurance .the graph shows the percentages regarding peoples investment in particular
Investment Avenue.
Question-3: At Which Rates Do You Want Your Investment To Grow?
70
32
34
4
1
12
52
17
14
21
15
4
0
10
20
30
40
50
60
70
80
77
Table-10
At which rates do you want your investment to grow?
Frequency Percent Valid Percent Cumulative Percent
Valid Steadily 28 28.0 33.3 33.3
At an average rate 43 43.0 51.2 84.5
At a fast rate 13 13.0 15.5 100.0
Total 84 84.0 100.0
Missing System 16 16.0
Total 100 100.0
Chart-10
Interpretation
From the research, it is concluded that 51.19% respondent want average growth rate and
33.33% respondent want steady growth rate and 15.48% respondent want fast growth rate for
their investment.
78
Question-4: How Frequently Do You Invest?
Table-11
How frequent do you Invest?
Frequency Percent Valid Percent Cumulative Percent
Valid Daily 16 16.0 19.0 19.0
Weekly 17 17.0 20.2 39.3
Monthly 43 43.0 51.2 90.5
Yearly 8 8.0 9.5 100.0
Total 84 84.0 100.0
Missing System 16 16.0
Total 100 100.0
Chart-11
Interpretation
From the research, it is concluded 16% respondent invests daily, 17% respondent invests
weekly, and 8%respondents invests yearly. Most of the respondents i.e. 43% invest monthly.
79
Question-5: What Percentage Of Your Annual Income Do You Invest In Share
Market?
Table-12
What percentage of your annual income do you invest in share market?
Frequency Percent Valid Percent Cumulative Percent
Valid Up to 10% 29 29.0 34.5 34.5
10-15% 21 21.0 25.0 59.5
15-20% 25 25.0 29.8 89.3
More than 20% 9 9.0 10.7 100.0
Total 84 84.0 100.0
Missing System 16 16.0
Total 100 100.0
Chart-12
Interpretation
From the research, it is concluded 29% invests up to 10%, 21% invest 10-15%, 25% invests
15-20%, and 9% invests more than 20% of their annual income.
80
Question-6: By Which Source Of Information You Came To Know About
Particular Option?
Table-13
particulars Number of respondents
Self 44
Friends And Relatives 26
Service Providers And Consultants 18
Newspapers, Magazines And Advertisements 41
Agents 30
Workshops & Seminars 9
Chart-13
Interpretation
From the research, it is concluded that most of the respondent gets information regarding
Investment Avenue available in the market on their own (self) and least through workshop.
44
26
18
41
30
9
0
5
10
15
20
25
30
35
40
45
50
81
Question-7: Which Factor Do You Consider Before Investing In Share Market
Table14
particulars Number of respondents
Capital Appreciation 37
Maturity Period 27
Safety Of Principal 25
Risk 39
Return On Investment 48
Tax Benefits 13
Liquidity 11
Chart-14
Interpretation
From the research, it is concluded that most of the respondents prefer return on investment
before making any investment and least preferred is liquidity.
37
27
25
39
48
13
11
0
10
20
30
40
50
60
capital
appreciation
maturity
period
safty of
principal
risk return on
investment
tax banifits liquidity
82
Question-8: In Your Opinion, What Would Be The Optimum Strategy If Stock
Market Drops Immediately After You Invest In It?
Table-15
In your opinion, what would be the optimum strategy if you invest in it?
Frequency Percent Valid Percent Cumulative Percent
Valid Cut your losses and transfer funds
into secure markets
24 24.0 28.6 28.6
Wait to see if investment improves
stock market drops immediately
44 44.0 52.4 81.0
Invest more funds to lower your
losses expecting future growth
13 13.0 15.5 96.4
Withdraw your funds and stop
investing
3 3.0 3.6 100.0
84 84.0 100.0
Missing Total 16.0
Total 100 System
83
Chart-15
Interpretation
From the research, it is concluded that maximum respondent Wait to see if investment
improves stock market drops immediately and that are 44%.
84
Question-9: Do You Have Any Other Investment Policy?
Table-16
Do you have any other investment policy?
Frequency Percent Valid Percent Cumulative Percent
Valid Yes 16 16.0 19.0 19.0
No 68 68.0 81.0 100.0
Total 84 84.0 100.0
Missing System 16 16.0
Total 100 100.0
Chart-16
Interpretation
From the research, it is concluded that 16% respondents have other investment policy and
68% respondents have not other in investment policy.
85
Question-10: Rate the Satisfaction with the Return Generated By Your
Investment Option?
Table-17
Shares 325
Mutual Fund 214
Bonds 140
Debentures 139
Derivatives 175
Chart-17
Interpretation
From the research, it is concluded share gives highest return and bonds gives lowest return.
325
214
140 139
175
0
50
100
150
200
250
300
350
share mf bonds debenture derivatives
86
Question-11: Rate the Satisfaction with the Factors That Was Considered
While Investing?
Table-18
Return On Investment 280
Tax Benefits 171
Capital Appreciation 235
Maturity Period 189
Risk 212
Safety Of Principal 197
Liquidity 133
Chart-18
Interpretation
From the research, it is concluded that most of the respondents are satisfied with return on
investment and then capital appreciation then risk then safety then maturity period then tax
benefit then at last liquidity.
280
171
235
189
212
197
133
0
50
100
150
200
250
300
87
Question-12: You Are Aware About Following Brokers?
Table-19
Chart-19
Interpretation
From the research, it is concluded that large share of respondent is aware about sharekhan
then angel broking then kotak securities.
74
62
46
18
14
0
10
20
30
40
50
60
70
80
sharekhan angel broking kotak securities other anand rathi
Share Khan 74
Angel Broking 62
Anand Rathi 46
Kotak Securities 18
Others 46
88
Question-13: In Broking What Is More Important For You?
Table-20
In Broking what is more important for you?
Frequen
cy Percent Valid Percent Cumulative Percent
Valid Cost of broking 55 55.0 65.5 65.5
Brokers Advice 29 29.0 34.5 100.0
Total 84 84.0 100.0
Missing System 16 16.0
Total 100 100.0
Chart-20
Interpretation
From the research, it is concluded that cost of broking is 55% so respondent give more
importance to cost of broking.
89
Question-14: The Basis Of Your Past Decision Will You Further Invest?
Table-21
On the basis of your past decision will you further invest?
Frequency Percent Valid Percent Cumulative Percent
Valid Yes 78 78.0 92.9 92.9
No 6 6.0 7.1 100.0
Total 84 84.0 100.0
Missing System 16 16.0
Total 100 100.0
Chart-21
Interpretation
From the research, it is concluded 78% respondent will invest further and 6% will not.
90
HYPOTHESIS ANALYSIS
1:-Relation between age and investment plan
H0: age is not related to any investment plan.
H1: age is related to any investment plan.
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
Age * Have you been
into any Investment
Plan?
100 100.0% 0 .0% 100 100.0%
Age * Have you been into any Investment Plan?
Cross tabulation
Count
Have you been into any
Investment Plan?
Total yes no
Age 18-25 yrs 23 3 26
26-35 yrs 26 3 29
36-50 yrs 30 7 37
above 50
yrs
5 3 8
Total 84 16 100
91
Chi-Square Tests
Value df
Asymp. Sig.
(2-sided)
Pearson Chi-Square 4.061
a
3 .255
Likelihood Ratio 3.569 3 .312
Linear-by-Linear 2.709 1 .100
Association
N of Valid Cases 100
a. 3 cells (37.5%) have expected count less than 5. The
minimum expected count is 1.28.
Interpretation
x
2
tabulated value > calculated value x
2
tabulated value =7.815
From the above calculation you can see that tabulated value is higher than the calculated
value so H0 is accepted and H1 is rejected. which means there is no relationship between age
and investment plan.
92
2:-Relation between gender and investment plan.
H0: gender is not related to any investment plan.
H1: gender is related to any investment plan.
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
Gender * Have you
been into any
Investment Plan?
100 100.0% 0 .0% 100 100.0%
Gender * Have you been into any Investment Plan?
Cross tabulation
Count
Have you been into any
Investment Plan?
Total yes no
Gender Male 69 10 79
Female 15 6 21
Total 84 16 100
93
Chi-Square Tests
Value df
Asymp. Sig.
(2-sided)
Exact Sig. (2-
sided)
Exact Sig.
(1-sided)
Pearson Chi-Square 3.126
a
1 .077
Continuity Correction
b
2.054 1 .152
Likelihood Ratio 2.792 1 .095
Fisher's Exact Test .097 .081
Linear-by-Linear
Association
3.095 1 .079
N of Valid Cases 100
a. 1 cells (25.0%) have expected count less than 5. The minimum expected count is 3.36.
b. Computed only for a 2x2 table
Interpretation
x
2
tabulated value > calculated value x
2
tabulated value =3.841
From the above calculation you can see that tabulated value is higher than the calculated
value so H0 is accepted and H1 is rejected. which means there is no relationship between
gender and investment plan.
94
3:-Relation between occupation and investment plan.
H0: occupation is not related to any investment plan.
H1: occupation is related to any investment plan.
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
Occupation * Have you
been into any
Investment Plan?
100 100.0% 0 .0% 100 100.0%
Occupation * Have you been into any Investment Plan?
Cross tabulation
Count
Have you been into any
Investment Plan?
Total yes no
Occupation Student 3 3 6
Professional 13 1 14
Service 42 7 49
Businessman 16 0 16
Housewife 9 3 12
Retired 1 2 3
Total 84 16 100
Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 15.586
a
5 .008
Likelihood Ratio 14.905 5 .011
Linear-by-Linear Association .104 1 .747
N of Valid Cases 100
a. 6 cells (50.0%) have expected count less than 5. The minimum expected count is
.48.
95
Interpretation
x
2
tabulated value < calculated value x
2
tabulated value =11.070
From the above calculation you can see that tabulated value is higher than the calculated
value so H0 is rejected and H1 is accepted. This means there is relationship between
occupation and investment plan.
96
4:- Relation between occupation and any percent of annual income invest in share
market.
H0: occupation is not related to any percent of annual income invest in share market.
H1: occupation is related to any percent of annual income invest in share market.
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
Occupation * What
percentage of your
annual income do you
invest in share market?
84 84.0% 16 16.0% 100 100.0%
Occupation * What percentage of your annual income do you invest in share market?
Cross tabulation
Count
What percentage of your annual income do you invest in
share market?
Total Up to 10% 10-15% 15-20%
More than
20%
Occupation Student 1 1 0 1 3
Professional 5 2 3 3 13
Service 14 10 14 4 42
Businessman 5 6 4 1 16
Housewife 4 2 3 0 9
Retired 0 0 1 0 1
Total 29 21 25 9 84
97
Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 10.392
a
15 .794
Likelihood Ratio 11.313 15 .730
Linear-by-Linear Association .565 1 .452
N of Valid Cases 84
a. 20 cells (83.3%) have expected count less than 5. The minimum expected count is
.11.
Interpretation
x
2
tabulated value > calculated value x
2
tabulated value =24.996
From the above calculation you can see that tabulated value is higher than the calculated
value so H0 is accepted and H1 is rejected, which means there is no relationship between
occupation and any percent of annual income invest in share market.
98
5:- Relation between occupation and any percent of annual income invest in share
market.
H0: annual income is not related to any percent of annual income invest in share market.
H1: annual income is related to any percent of annual income invest in share market.
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
Annual Income * What
percentage of your
annual income do you
invest in share market?
84 84.0% 16 16.0% 100 100.0%
Annual Income * What percentage of your annual income do you invest in share market?
Cross tabulation
Count
What percentage of your annual income do you invest in
share market?
Total Up to 10% 10-15% 15-20% More than 20%
Annual
Income
Below 150000 5 7 13 1 26
150000-300000 11 5 5 1 22
300000-400000 10 4 4 3 21
Above 400000 3 5 3 4 15
Total 29 21 25 9 84
99
Chi-Square Tests
Value df
Asymp. Sig.
(2-sided)
Pearson Chi-Square 17.018
a
9 .048
Likelihood Ratio 16.332 9 .060
Linear-by-Linear
Association
.032 1 .858
N of Valid Cases 84
a. 6 cells (37.5%) have expected count less than 5. The
minimum expected count is 1.61.
Interpretation
x
2
tabulated value > calculated value x
2
tabulated value =16.919
From the above calculation you can see that tabulated value is higher than the calculated
value so H0 is accepted and H1 is rejected, which means there is no relationship between
annual income and any percent of annual income invest in share market.
100
6:- Relation between age and optimum strategy.
H0: age is not related to any optimum strategy
H1: age is related to any optimum strategy.
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
Age * In your opinion,
what would be the
optimum strategy if
you invest in it?
84 84.0% 16 16.0% 100 100.0%
Age * In your opinion, what would be the optimum strategy if you invest in it?
Cross tabulation
Count
In your opinion, what would be the optimum strategy if
you invest in it?
Total
Cut your
losses and
transfer
funds into
secure
markets
Wait to see if
investment
improves
stock market
drops
immediately
Invest more
funds to
lower your
losses
expecting
future growth
Withdraw
your funds
and stop
investing
Age 18-25 yrs 4 13 4 2 23
26-35 yrs 3 16 6 1 26
36-50 yrs 15 13 2 0 30
above 50 yrs 2 2 1 0 5
Total 24 44 13 3 84
101
Chi-Square Tests
Value df
Asymp. Sig.
(2-sided)
Pearson Chi-Square 15.345
a
9 .082
Likelihood Ratio 16.427 9 .058
Linear-by-Linear
Association
7.928 1 .005
N of Valid Cases 84
a. 10 cells (62.5%) have expected count less than 5. The
minimum expected count is .18.
Interpretation
x
2
tabulated value > calculated value x
2
tabulated value =16.919
From the above calculation you can see that tabulated value is higher than the calculated
value so H0 is rejected and H1 is accepted. which means there is relationship between age
and optimum strategy.
102
6.1 FINDINGS
103
6.1.1 General Findings
People invest wisely considering return on investment.
Need for understanding regarding capital appreciation and other factors of financial
management and planning.
People do have a clear view over investment opportunities in the market.
Investors perceptions on investment are varying across all age group.
A large majority of service peoples prefer to invest in equity and other.
6.1.2 Specific Findings
There are 37% of respondent in the age group between 26-35 and least i.e. 8% of
respondent above 50.
There are 79% of respondents are male and 21% of respondents are female.
Majority of respondents are of service class and 3% of respondent are retired.
Majority of respondent earns monthly more than below 150000 i.e. 32% and least no.
of respondent earns less than 400000 i.e. 15%.
There are 84 % who have Investment Plan and 16 % have not any Investment Plan.
Most of the respondent gets information regarding financial instrument available in
the market through self analysis and least through workshop.
29% respondents invest in financial instrument below 10% and 9% of respondents
invest more than 20%
Maximum numbers of respondents wants to invest monthly year in any financial
instrument.
Most of the respondents prefer return on investment before making any investment
than interest rates.
29% of respondents are willing to take advice from the brokers than cost of broking
before making investment in any of the financial instrument.
74 0f respondent know about share khan,62 knows about angel broking, 14 knows
about Anand Rathi, 46 knows about Kotak securities,18 knows about other broker
such as ICICI securities ,bonanza ,marvadi, IIFL etc.
104
105
7.1 Better analysis tools should be used to make better predictions.
It is recommended that investors decision should be based on their broker advice.
Risk and return should be evaluated before making an investment decision.
There should be a regular SMS updates to the investors regarding their investment.
Client awareness program has to be conducted by sharekhan on weekly basis instead
of quarterly basis to provide up to date information.
Some people are aware about investment avenues but most of the respondents they
dont have sufficient knowledge regarding bonds and commodities.
Financial institutions should create awareness about available avenues for investment
and have to tell the people what is the meaning of risk and how it could be mitigated.
Government should stress the financial institutions to conduct investor guidance
workshops about available avenues for investment.
There is a need for financial literacy and instilling confidence among investors.
They should also educate the Indian population both on ways of meeting their
financial objectives through financial protection and wealth creation.
To overcome the problem faced by the investors, adequate policy reforms in financial
sector is the need of the hour.
Hence, the study may be considered that the awareness about the avenues for
investment which will lead the investor in the future.
106
107
8.1 CONCLUSIONS
In the current scenario, investing is very important and investing in stock markets is a major
challenge ever for service people. The young people should start investing earlier so that they
can reap the benefits of investing in future. People should keep their eye open and keep
updating themselves about various investment avenues so that they can get safe returns. The
study also draws an important conclusion from the study that the investors are a keen to
invest in long term and less risk products, much interested to earn the good return on their
investments. Investors are aware about the factor affecting their short term as well as long-
term investment plans and they do take advice from different experts, self-analysis by
investors themselves. This intensive study will somehow help investors in deciding the
correct investment for their savings.
108
109
BIBLIOGRAPHY
www.sharekhan.com
www.economictimes.com
www.moneycontrol.com
www.bseindia.com
www.nseindia.com
www.sebi.gov.in
www.investors.com
http://www.ncdex.com/Aboutus/profile.aspx
http://www.mcxindia.com/aboutus/aboutus.htm
https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ve
d=0CB0QFjAA&url=http%3A%2F%2Fwww.sharekhan.com%2Fupload%2Fnewsletter%2Fvalue
guide.pdf&ei=I77LU8W4IsqyuASF1oGQCw&usg=AFQjCNGNmq4U5JH-
UI5qepMr544CZKq5dQ
www.investopedia.com
Previous project reports
News Papers
Sharekhans brochures
Sharekhans value Guide
110
111
QUESTIONNAIRE

Investors Preference towards Investment Avenues
I Am A Student Of MBA At N R Institute Of Business Management, Ahmadabad. I Am Conducting
a Research Study On An Analysis On Investors Preference On Various Investment Avenues. This
rsearch (Project) Is Taken As A Partial Requirement For The Completion Of My MBA. I Seek Your Kind
Assistance In Completing the Questionnatire.
.
Personal Information:
Name :__________________________________________________________________


Age : 18-25 Yrs 26-35 Yrs 36-50 Yrs Above 50 Yrs

Gender : Male Female


Occupation : Student Profess
ional Service Businessman
Housewife Retired

Annual Income : Below 150000 150000-300000
300000-400000 Above 400000
Marital Status : Married
Unmarried

No. Of Family Members :



No. Earning Members :

Questions:
1. Have You Been Into Any Investment Plan?
Yes

No

2. In Which Segment Have You Invested?

Equity Insurance
Mutual Fund Commodities
Bank FD Real Estate
Bonds Gold And Silver
Debenture Post Office Savings
Public Provident Fund Other Govt. Securities

3. At Which Rates Do You Want Your Investment To Grow?
Steadily

At An Average Rate At Fast Rate
4. How Frequently Do You Invest?
Daily

Weekly
Monthly
Yearly

5. What Percentage Of Your Annual Income Do You Invest In Share Market?
Up To 10%

10-15%

15-20%

More Than 20%
1-3 4-6 6-8 More then 8
ON





6. By Which Source Of Information You Came To Know About Particular Option?

Self

Friends And Relatives
Service Providers And Consultants

Agents
Workshops & Seminars
Newspapers, Magazines And Advertisements
1 2 3 4
112
7. Which Factor Do You Consider Before Investing In Share Market?
Capital Appreciation
Maturity Period
Safety Of Principal
Risk

Return On Investment

Tax Benefits
Liquidity

8. In Your Opinion, What Would Be The Optimum Strategy If
Stock Market Drops Immediately
After You Invest In It?
Cut Your Losses And Transfer Funds Into Secure Investments
Wait To See If Investment Improves
Invest More Funds To Lower Your Losses Expecting Future Growth
Withdraw Your Funds And Stop Investing

9. Do You Have Any Other Investment Policy?
Yes

No

10. Rate The Satisfaction With The Return Generated By Your Investment Option?
Highly
Satisfied
Satisfied Neutral Dissatisfied Highly
Dissatisfied
5 4 3 2 1
Shares
Mutual Fund
Bonds
Debentures
Derivatives

11.

Rate The Satisfaction With The Factors That Was Considered While Investing?
Highly
Satisfied
Satisfied Neutral Dissatisfied Highly
Dissatisfied
5 4 3 2 1
Return On Investment
Tax Benefits
Capital Appreciation
Maturity Period
Risk
Safety Of Principal
Liquidity

12. You Are Aware About Following Brokers?
Share Khan
Angel Broking
Anand Rathi Kotak Securities
Others

13. In Broking What Is More Important For You?
Cost Of Broking

Brokers Advice

14. On The Basis Of Your Past Decision Will You Further Invest?
Yes No

You might also like