Professional Documents
Culture Documents
SSSSSSSS
ONLINE TRADING
SESSION 2007-2010
PREFACE
Indian stock market have been role during the past five years,genrating an annual
return of 28%(on the nifty index).Still general public prefers putting it money in
bank,rather than putting it in stock. Within Indian economy doing so well, return from
stock market have been far higher than return from any other investment.Avenue
rupees 1, 00,000 invested in the nifty in April would have been worth a little over
rupees 3, 00,000 by April, 2008.But the top value creatures have been delivered far
superior returns the same lakh invested in unitech would have been worth rupees
1.52cr if it had been invested in aban aban offshare.
Most of people are reluctant to put their money in shares,because of uncertainty of the
return.At times stock market is so volatile that it becomes very difficult for investors
to decide whether to purchase some more stocks or sell them,whether to enter the
market or book profit. with so much uncertainty prevailing, the case of investing in
stock market is totally different from the case of investing in some other places.
Lack of awareness is also holding people back to a great extent,until and unless one
understands the degree of risk involved in investing in shares,the kind of return one
can get from there and history of such returns and how to go about it,one will not go
ahead.so making aware the public about things happing in stock market is something
that should be done at war level.
TABLE OF CONTENTS
CONTENTS
PAGE NO.
CHAPTER 1 : INTRODUCTION
1.1
1.2
1.3
12
1.4
Competition Information
13
1.5
17
20
20
21
21
2.5 Methodology
23
30
52
63
ANNEXURE
* Questionnaire
BIBLIOGRAPHY
2007
1
4
2
2008
1
4
2
21
1
2
9,443
4,110
27,541
996
158
15
82
152
47
30
45
90
78
40
0
19
1
2
9,487
4,190
44,074
1319
205
15
76
155
50
28
35
106
97
40
0
MARKET SEGMENT
The securities market has two interdependent segments: the primary and the
4
secondary market. The primary market is the channel for creation of new securities.
These securities are issued by public limited companies or by government agencies.
In the primary market the resources are mobilized either through the public issue or
through private placement route. It is a public issue if anybody and everybody
can subscribe for it, whereas if the issue is made available to a selected group
of persons it is termed as private placement. There are two major types of issuers
of securities, the corporate entities who issue mainly debt and equity instruments and
the government (central as well as state) who issue debt securities.
These new securities issued in the primary market are traded in the secondary market.
The secondary market enables participants who hold securities to adjust their holdings
in response to changes in their assessment of risks and returns. The secondary market
operates through two mediums, namely, the over-the-counter (OTC) market
exchanges viz., NSE and Stock Exchange, Mumbai (BSE) provides trading in the
derivatives of securities.
Dependence on Securities Market
Corporate Sector
Government
Households
The above mentioned sectors are dependent on the Capital Market for their
financial needs. The following table shows their percentage share respectively.
19.35
19.17
33.38
53.23
44.99
21.67
22.12
28.16
27.05
33.58
31.39
20.60
(17.98)
N . A.
24.86
22.65
38.78
17.9
20.7
9.2
48.0
35.2
54.9
30.0
36.5
60.9
67.1
61.4
69.4
77.6
64.9
26.73
34.75
52.75
Fiscal Deficit of
State Govt
13.6
17.5
16.8
17.6
14.7
18.7
17.5
16.5
14.1
13.9
13.8
15.2
19.9
32.1
18.69
8.63
23.98
Financial Savings
Number of Households
14.4
22.9
17.2
14.0
12.1
7.7
6.9
4.5
4.2
7.3
4.3
8.0
5.9
N . A.
6.6
7.5
7.8
INTERNATIONAL SCENARIO
Following the implementation of reforms in the securities industry during the last
decade, Indian stock markets have graduated to a better position vis--vis the
6
securities market in developed and emerging markets. As may be seen from Table 1-2,
India has a turnover ratio, which is comparable to the other developed market,
and also one of the highest in the emerging markets. At the end of 2003, Standard
and Poors (S&P) ranked India 17th in terms of market capitalization (19th in 2002),
16th in terms of total value traded in stock exchanges (17th in 2002) and 6th in terms
of turnover ratio (7th in 2002). India has the number one ranking in terms of
listed securities on the Exchanges followed by the USA. These data, though
quite impressive, do not reflect the full Indian market, as S&P (even other
international publications) does not cover the whole market. For example, India has
more than 9000 listed companies at the end of March 2004, while S&P
considers only 5,644 companies.
If whole market were taken into consideration, Indias position vis--vis other
countries would be much better.
USA
UK
Japan
No. of listed Companies
5,295 2,311 China
3,116
Market Capitalisation ($ Bn.) 14,266 2,412 3,041
Market Capitalisation Ratio139.8 159.7 70.3
(%)
Turnover ($ Mn.)
15,547 2,151 2,273
Turnover Ratio (%)
122.8 100.6 88.0
Germany
684
1,079
57.5
1,147
130.0
Singapore
475
145
168.4
88
71.1
HongkongIndia
1,029 1,296 6268
715
681 999
426.4 55.2 109.5
332
477 508
56.3 83.3 162.5
France
Germany
Italy
United Kingdom
United States
India
89.5
83.6
95.5
94.3
93.8
75.0
42.2
44.6
55.9
43.6
16.4
36.5
The stock markets worldwide have grown in size as well as depth over last one
decade. The turnover on all markets taken together has grown from US $ 5.5 trillion
in 1990 to $ 38 trillion in 2002 when it reached a peak. Thereafter, it has witnessed a
decline and stood at US $ 34.6 trillion in 2006. It is significant to note that US alone
accounted for about 47.4% of worldwide turnover in 2006. Despite having a large
number of companies listed on its stock exchanges, India accounted for a meager
2.96% in total world turnover in 2006. The market capitalization of all listed
companies taken together on all markets stood at US $ 34.6 trillion in 2006 ($ 23
trillion in 2005). The share of US in worldwide market capitalization decreased from
47.24% as at end-2005 to 44.66% in end-2006, while Indian listed companies
accounted for 1.87% of total market capitalization in 2006.
2003
2004
25,242,989 20,957,836
374,269
380,969
2,251,814 2,126,075
2,217,324 1,864,134
13,810,42 11,052,403
9
2,556,979 2,439,080
2005
2006
2007
2008
28,290,981 39,676,01 36,098,73 26,743,15
8
1
3
585,475 240,667
294,658
369,845
3,040,66 1,826,230 1,573,279 2,272,989
5
2,412,43
1,871,894 2,721,342 2,150,753
4
14,266,2
29,040,739 25,371,27 15,547,431
66
0
3,656,722 2,404,321 2,499,768 2,896,144
China
523,952
463,080
681,204
448,928
333,369
476,813
India
110,396
131,011
279,093
249,298
197,118
284,802
Indonesia
23,006
29,991
54,659
9,667
13,042
14,774
Korea
220,046
249,639
329,616
711,192
826,620
682,706
Malaysia
120,007
123,872
168,376
20,772
27,623
50,135
Philippines
41,523
39,021
23,565
3,148
3,103
2,635
Taiwan
292,621
261,474
379,023
544,808
631,931
592,012
23,396,91
647.24
31,947,70
344.66
42,080,33 38,598,49
969.01
865.73
29,639,297
US as % of World
27,79
9,968
49.68
India as % of World
0.40
0.56
0.87
0.59
0.96
World Total
0.51
52.46
INTERNATIONAL AND
INDIAN
SCENARIO
IN
ONLINE
BROKING
In US markets, online brokerage has significantly changed the dynamics of the market
place, resulting in one of the biggest shifts in the individual investor's relationship
with their brokers. Investors access a wealth of financial information on the same time
as do market and financial professionals including breaking news, developments and
market data. Online brokerage provides investors the tools to analyse the information
such as research reports.
In the US, 82 per cent of the deals are done on line. The European on line broking
market is expected to be of $8 billions and has risen to about $50 billion today.
Net trading shall initially faced some problems relating to infrastructure and
understanding of the concept. Presently, the legal frame work is right in place and
there are organizations like SEBI, RBI etc. which provide investor guidelines to the
investors for protection of their right. Also, investor grievance handling and redressal
system is fast and efficient. Lack of investor education and resistance from stock
brokers though has always posed some problems.
With Internet trading, investment in the stock market is just a click away, in the
comfort of office or a home. It makes it easy for anyone to access net brokers and
trade in stock. Even the smallest retail investor can access information that was till
now restricted to big traders. Net trading provides investors with seamless, real time
online access to stock markets.
10
1.2
Enabling shorter settlement cycles and book entry settlements systems, and
meeting the current international standards of securities market.
HISTORY OF SMC
SMC acquired membership of the Delhi Stock Exchange in 1990 and later in 1995
became a trading member of NSE. In 2000 the company became a member of BSE
and a depository participant of CDSL India Ltd. In the same year, the company
acquired the Trading & Clearing Membership of NSE Derivatives and the
memberships of leading commodity exchanges i.e. NCDEX and MCX in subsequent
years. In 2006, SMC expanded globally and acquired the Trading & Clearing
Membership of Dubai Gold and Commodity Exchange (DGCX). In the same year, the
company also started its Insurance Broking division, IPO & Mutual Fund Distribution
Division and its Merchant Banking division.
11
Mission
Ensuring equal access to investors all over the country through an appropriate
communication network,
Enabling shorter settlement cycles and book entry settlements systems, and
meeting the current international standards of securities market.
Vision
Clearing Services
Being a clearing member in NSE (derivative) segment we are clearing massive
volumes of trades of our trading members in this segment.
12
Commodity Trading
SMC is a member of two major national level commodity exchanges, i.e National
Commodity and Derivative Exchange and Multi Commodity Exchange and offers you
trading platform of NCDEX and MCX. You can get Real-Time streaming quotes,
place orders and watch the confirmation, all on a single screen. We use technology
using ODIN application to provide you with live Trading Terminals. In this segment,
we have spread our wings globally by acquiring Membership of Dubai Gold and
Commodities Exchange. We provide trading platform to trade in DGCX and also clear
trades of trading members being a clearing member.
MC Depository
They are ISO 9001:2000 certified DP for shares and commodities. We are one of the
leading DP and enjoy the trust of more than 40,000 investors. We offer a quick, secure
and hassle free alternative to holding the securities and commodities in physical form.
13
They are one of the few Depository Participants offering depository facilities for
commodities. We are empanelled with both NCDEX & MCX.
14
15
16
17
INDIA BULLS
India bulls Group is one of the top business houses in the country with business
interests in Real Estate, Infrastructure, Financial Services, Retail, Multiplex and
Power sectors. India bulls Group companies are listed in Indian and overseas markets
and have a market capitalization of over USD 7 billion. The Net worth of the Group
exceeds USD 2.5 billion. India bulls Group companies enjoy highest ratings from
CRISIL, a subsidiary of Standard and Poors. India bulls has been conferred the status
of a Business Super brand by The Brand Council, Super brands India.
India bulls Financial Services is an integrated financial services powerhouse
providing Consumer Finance, Housing Finance, Commercial Loans, Life Insurance,
Asset Management and Advisory services. India bulls Financial Services Ltd is
amongst 68 companies constituting MSCI - Morgan Stanley India Index. India bulls
Financial is also part of CLSAs model portfolio of 30 Best Companies in Asia. India
bulls Financial Services signed a joint venture agreement with Sogecap, the insurance
arm of Societ Generale (SocGen) for its upcoming life insurance venture. India bulls
Financial Services in partnership with MMTC Limited, the largest commodity trading
company in India, is setting up Indias 4th Multi-Commodities Exchange.
ABHIPRA
KOTAK SECURITIES:-
Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking
and distribution arm of the Kotak Mahindra Group. Kotak Mahindra is one of India's
leading financial institutions, offering complete financial solutions that encompass
every sphere of life. From commercial banking, to stock broking, to mutual funds, to
life insurance, to investment banking, the group caters to the financial needs of
individuals and corporate.
Kotak Securities was set up in 1994. Kotak Securities is a corporate member of both
The Bombay Stock Exchange and the National Stock Exchange of India Limited.
The company has four main areas of business:
Institutional Equities,
Depository Services.
19
MOTILAL OSWAL:-
Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with
just two people running the show. It has established itself as the Best Local Brokerage
House in India (Asia Money Brokers Poll 2005). Their Institutional Equity Division
combines the efforts of the Research and Sales & Trading departments to best serve
clients' needs. Consistent delivery of high quality advice on individual stocks, sector
trends and investment strategy has established them as a reliable research unit
amongst leading Indian as well as international investors.
20
The `do-it-yourself' framework of online share trading offers retail investors the
three benefits of transparency, access and efficiency. Paperwork diminishes
significantly, and no more painful trips to your broker to check if everything's in
order. Online trading has made it possible to universalize access to retail investors.
This was earlier very difficult, as the cost of servicing often-outweighed
transaction volumes. Online brokerage ranges between 0.05-0.20 per cent of the
value of transactions for non-delivery-based trades, and between 0.25-0.95 per
cent for delivery-based trades. Once major investments in online infrastructure are
over and done with - and with the economies of scale coming into play - it is
expected that brokerage rates would head further downwards.
Access to online trading and latest financial happenings, apart from quotes and
unbiased investment analyses, all consolidate into a value-added product mix in
tandem with evolving markets that are freer and fairer. The Net result: An
inquisitive, informed and demanding investor. Today's investor is more involved
in managing his or her assets and analyzing a vast array of investment options.
Technology and today's enabled investor have, in turn, driven competition,
resulting in reduced costs of trading, transparency in dealings, and pricing info
that is accurate and real-time. More and more investors now want to know how
their trades are executed, and whether they have received the best possible price.
Critical components of execution quality include the prices at which orders were
executed as well as the speed of execution. The quality of execution, in turn,
hinges on efficient order routing. We owe this to our investor fraternity.
21
Weakness
Every thing in the world has a flip side to it - Transaction velocity is crucial. And
more often than not, connections are lousy. There's also a degree of investor
skepticism about online payment and settlement mechanisms in spite of all the
encryption and fire walling brought into play. Time and technology will soon
assuage these concerns, which hark back to the `physical' days.
The three main technology obstacles which have prevented Internet broking from
taking off are:
Bandwidth infrastructure
Opportunities
You have some money to dabble with. Trading shares on BSE/NSE has
always been your dream. When will you ever find the time? And besides, the
hassle of finding a broker is not easy. This is your main opportunity.
There are 2 types of online trading service: discount brokers and full service
online broker. Discount online brokers allow you to trade via Internet at
reduced rates. Some provide quality research, other dont. Full service online
brokerage is linked to existing brokerages. These brokers allow their clients to
place online orders with the option of talking/ chatting to brokers if advice is
needed. Brokerage rates here are higher. 5Paisa.com, ICICIDirect.com,
IndiaBulls.com,
Sharekhan.com,
Geojit
securities.com,
HDFCsec.com,
And daily trading turnover is estimated in the vicinity of 0.75 per cent of the
combined BSE and NSE daily turnover of about RS 11,000 crore!!! The point
is, there's tremendous scope for growth. Especially when you consider the US,
where trading over the Net accounts for about 55 per cent of the total
volumes. And, I believe, in some Asian markets the figures as high as 70 per
cent.
Threats
And some, not all, offer free investment advice over the Net to lure rookie
investors with misleading information. Prices of scripts can also be influenced to
the advantage of vested interests, courtesy the Net. Unlike in the US, stockbrokers
out here willingly (or under the force of circumstance) assume the role of
`advisors', sans the neutral, non-vested stance.
23
SIGNIFICANCE
This project will accomplish to understand the problem faced by the new client
microscopic level. The study also aims to highlight the possible hurdles that a
prospective client faces who are interested to investing insecurities but is unaware of
the system of online share trading. It also aims at finding out the brand image of the
organization amongst the general investors and give information to the management
about the new developments in the market adopted by the competitors and the areas
where the company needs to improve. The project is to study the effectiveness of the
stock exchange as this is one of the best way of investment.
2.2.
management to take the right strategy suiting the market condition. The study gives
information regarding the market competition, innovative products offered by
competitors, present demand of the product in the marketed.
1.
The study will help the management to understand the customer mind set and
also estimating the present future market demand of the product.
2.
It will help to estimate the level of awareness established in the market and in
deciding the extent of promotion required.
3.
Help in finding the areas in which SMC will concentrate to increase its market
share.
4.
It will help in finding out the customer expectation about the product and also
help to know the customer physiology.
5.
Helps in knowing the class in which max new SMC must concentrate.
This study helps in finding the area in which SMC is strong and the area in which
it lags behind others. Which class of customer mostly approaches SMC policies?
24
2, 3. OBJECTIVES
Before starting any project, we should keep in mind the clear objectives of the project
because in the absence of the objectives one cannot reach the conclusion or end result
of the project.
So, the objective of my project is to:
Since better broadband connectivity across the country and wider awareness of equity
as an asset class will push the online trade volumes to over 50% of total Trade
therefore it is relevant to the future prospects emerging in the stock market.
In order to compete with the online trading market leader like ICICI the company has
to work a lot on Online Trading in order to get the competency with other players.
25
Since the online trading is accepted by major players in the Indian Stock Market, the
importance of Online Trading has increased over the past decade therefore it is very
important to consider the Online Trading as a future of the Indian Stock Market.
This project would also tell us about the working of the Indian Stock Market and the
forces acting in the Online Trading.
SMC a software used by SMC Investment Solutions & SERVICES is an edge for
gaining competitive advantage; therefore it is relevant to know the working of this
software which would be enlightened in our company.
PROBLEM FORMULATION
The research focuses on the future prospects of online trading along with SMC
investment solutions. The research will basically present the current scenario of online
trading in India, the market players involved and the trading strategies followed in the
market.
The research will cover the Indian trading market and try to understand its various
dimensions, so as to know how is the environment in Indian trading market? We will
also analyze the competitive strategies of SMC investment solutions
26
Therefore this research will help in understanding Indian trading market and also try
to find future prospects of online trading with SMC Investment Solutions.
2.5 METHODOLOGY
Marketing Research
Is the systematic design collection, and analysis and reporting of Data
and findings relevant to specific marketing situation facing the company.
Research Design
Types of Research: - Descriptive research
27
4. Analyze the
Information
28
Primary data:
Open Ended: - Allows respondents to answer in their own words & are
difficult to Interpret and Tabulate.
Close Ended: - Pre-specify all the possible answers & are easy to
Interpret and Tabulate.
30
In the Project, sampling done is on basis of area sampling for the Delhi
city.
In which convenient sampling was done.
Contact Methods
Once the sampling plan had been determine, the marketing researcher
must device how the subject should be contacted: Mail, Telephone,
Personal or On-line Interviews.
In my project I went for personal Interviewing, as its necessary to go
meet the individual respondents at their place so I can collect the right
information.
3. Collect The Information
The Data collection phase of marketing research is generally the most
expensive and the most prone to error.
I had visited all the respondents individually in the Delhi city and
collected information via questionnaire.
I used to talk with them and in that talk I asked them the relevant question
of the questionnaire so I could get correct information from them for the
objective purpose. For some questions I have to explain them about
company, like different plans of the company etc.
Generally most of the respondents had filled questionnaire themselves but
some avoid filling up so at that time myself filled according to their
answer.
32
33
CONCEPTUAL DISCUSSION
INVESTOR PERCEPTION
SEBI in association with National Council of Applied Economic Research (NCAER)
conducted a Survey of Indian Investors in 1998-99 and then followed it up in 200001. The survey of 2000-01 was based on a sample of 288,081 geographically
dispersed rural and urban areas. The findings of this survey were released in
September 2003. The survey estimated that a total of 13.1 million or 7.4 per cent of
all Indian households totaling 21 million individuals directly invested in equity
shares or debentures or both during 2000-01. The other findings are as listed below:
1.
2.
3.
4.
It was also observed that the investor population and town size are directly
proportional. The largest city with more than 50 lakh population accounted for
about 17 per cent of investor households and the next higher segment, more
than 31 per cent investor households were in towns with population between
10 and 50 lakh.
34
Primary Market
An aggregate of Rs. 2,676,600 million were raised by the government and corporate
sector during 2005-06 as against Rs. 2,572,201 million during the preceding year.
Government raised about two third of the total resources, with central government
alone raising nearly Rs. 1,476,360 million.
Corporate Securities
The average annual capital mobilization from the primary market has grown manifold
since the last two-three decades. It received a further boost during the first half
of 1990s with the capital raised by non-government public companies rising sharply
from Rs. 43,120 million in 1990-91 to Rs. 264,170 million in 1994-95. Thereafter,
there has been a decline due to conditions prevailing in the secondary market.
However, the year 2005-06 took a turnaround in its performance as compared to the
previous year by mobilizing Rs. 32,100 million. The capital raised, which used to be
less than 1% of gross domestic saving (GDS) in the 1970s increased to about 13% in
1992-93 but thereafter witnessed declines. Though there has been a considerable
increase in the amount mobilized in 2005-06, when seen as a percentage of GDS, it is
1.20% (Table 1-8). Data in Table 1-9 shows that there is a high preference for
raising resources in the primary market through private placement route. Private
placements accounted for 89% of total resources mobilized through domestic issues
by corporate sector during 2005-06.
Indian market is getting integrated with the global market, though in a limited way
through Euro Issues. Since they were permitted access in 1992, Indian companies
have raised about Rs. 30,980 million through American Depository Receipts
(ADRs)/Global Depository Receipts (GDRs).
FIIs have invested heavily in Indian market in 2005-06. They had net cumulative
investments of US$ 38.75 billion as at end of March 2006. There were 745 FIIs
registered with SEBI as of end March 2006.
It appears that more and more people prefer mutual funds (MFs) as their investment
vehicle. This change in investor behavior is induced by the evolution of a regulatory
framework for MFs, tax concessions offered by Government and preference of
35
investors for passive investing. Starting with an asset base of Rs. 250 million in
1964, the total assets under management at the end of March 2006 have risen to Rs.
1,396,160 million. During the last one decade, the resources mobilized by the MFs are
increased from Rs. 112,440 million in 1993-94 to Rs. 476,840 million in 2005-06.
Secondary Market
Corporate Securities
There are 23 exchanges in the country, which offer screen based trading system. The
trading system is connected using the VSAT technology from over 357 cities. There
were 9,368 trading members registered with SEBI as at end March 2006 (Table 1-10).
The market capitalization has grown over the period indicating more companies using
the trading platform of the stock exchange. The all India market capitalization is
estimated at Rs. 13,187,953 million at the end of March 2006. The market
capitalization ratio defined as the value of listed stocks divided by GDP is used
as a measure of stock market size. It is of economic significance since market is
positively correlated with the ability to mobilize capital and diversify risk. It increased
sharply to 52.3% in 2005-06 against 28.5% in the previous year. The trading volumes
on exchanges have been witnessing phenomenal growth over the past decade. The
trading volume which peaked at Rs. 28,809,900 million in 2000-01, fell substantially
to Rs. 9,689,093 million in 2004-05. However, the year 2005-06 saw a turnaround in
the total trading volumes on the exchanges. It registered a volume of Rs. 16,204,977
million. The turnover ratio, which reflects the volume of trading in relation to the size
of the market, has been increasing by leaps and bounds after the advent of screen
based trading system by the NSE. The turnover ratio for the year 2005-06 accounted
at 122.9%.
The relative importance of various stock exchanges in the market has undergone
dramatic change during this decade. The increase in turnover took place mostly at the
big exchanges. The NSE yet again registered as the market leader with more 85% of
total turnover (volumes on all segments) in 2005-06. Top 5 stock exchanges
accounted for 99.88% of turnover, while the rest 18 exchange for less than 0.12%
during 2005-06 (Table 1-11). About ten exchanges reported nil trading volume during
36
the year.
S&P CNX Nifty is the most widely used indicator of the market, .The index
movement have been responding to changes in the governments economic policies
, the increase in FIIs inflows , etc. However, the year 2005-06 witnessed a
favorable movement in the Nifty, wherein it registered its all time high in
January. The movement of the S&P CNX Nifty, the most widely used indicator
of the market, is presented in Chart 1-1. The index movement have been responding
to changes in the governments economic policies , the increase in FIIs inflows ,
etc. However, the year 2005-06 witnessed a favorable movement in the Nifty,
wherein it registered a high in January 2006 of 2014.65. The point-to-point
return of Nifty was 80.14% for 2005-06.
Resources raised by
non-government
% of GDS
companies
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-04
2003-05
2004-06
% of
disbursement
Mobilisation
By MF
by Fis
43,120
61,930
198,030
193,300
264,170
160,750
104,100
31,380
50,130
51,530
49,490
56,924
18,777
32,100
3.32
4.38
12.76
9.98
10.48
5.34
3.28
0.84
1.27
1.11
1.01
1.17
0.74
1.20
33.66
38.08
85.54
74.85
78.69
41.59
24.40
5.85
8.59
7.51
6.89
10.18
18.37
15.08
750,800
112,530
130,210
112,430
112,750
583,30
203,70
40,640
36,110
199,532
111,350
71,370
45,830
476,840
Government Securities
The primary issues of the Central Government have increased manifold during the
decade of 1990s from Rs. 89,890 million in 1990-91 to Rs. 1,476,360 million in 200506 (Table 1-9). The issues by state governments have also increased over this
period from Rs. 25,690 million to Rs. 505,210 million. The Central Government
37
mobilized Rs. 1,215,000 million through issue of dated securities and Rs. 261,360
million through issue of T-bills. After meeting repayment liabilities of Rs. 326,930
million for dated securities, and redemption of T-bills of Rs. 261,260 million, net
market borrowing of Central Government amounted to Rs. 888,160 million for the
year 2005-06. The State Governments collectively raised Rs. 505,210 million during
2005-06 as against Rs. 308,530 million in the preceding year. The net borrowings of
State Governments in 2005-06 amounted to Rs. 463,760 million. The trading in
government securities exceeded the combined trading in equity segments of all the
exchanges in the country during 2005-06. The aggregate trading in central and state
government dated securities, including treasury bills, increased by manifold over a
period of time. During 2005-06 it reached a level of Rs. 26,792,090 million. The share
of WDM segment of NSE in total turnover for government securities decreased
marginally from 52% in 2004-05 to 47.6% in 2005-06. However, the share of WDM
segment of NSE in the total of Non-repo government
securities
increased
Derivative Market
The number of instruments available in derivatives has been expanded. To begin with,
SEBI only approved trading in index futures contracts based on S&P CNX Nifty
Index and BSE-30 (Sensex) Index. This was followed by approval for trading in
options based on these two indices and options on individual securities and also
futures on interest rates derivative instruments (91-day Notional T-Bills and 10-year
Notional 6% coupon bearing as well as zero coupon bonds). Now, there are futures
38
and options based on benchmark index S&P CNX Nifty and CNX IT Index as well as
options and futures on single stocks.
The total exchange traded derivatives witnessed a value of Rs. 21,422,690 million
during 2005-06 as against Rs. 4,423,333 million during the preceding year. While
NSE accounted for about 99.5% of total turnover, BSE accounted for less than 1% in
2005-06. NSE has created a niche for itself in terms of derivatives trading in the
global market.
the society.
40
Motives for investment may vary from person to person, but there are some common
desires. Everybody expects some return out of investment. Investors are also
concerned about the safety of investment. And, in case of an emergency, people want
their money back, quickly. Hence, there are three criterias to evaluate every
investment avenue:
1.
2.
3.
Safety
Liquidity
Returns
COMPANY FINANCIALS
Revenue
Month
Sep 07
Oct 07
Nov 07
Dec 07
Jan08
Feb08
Mar08
(in Lakhs)
29.05
60.27
79.61
107.94
104.37
140.43
128.89
41
The above shown graph depicts the revenue generated by SMC in 6 months starting
from September, 2007 to March2008. This graph shows an upward sloping trend
line. If we look at the numbers, we see a 343% growth in the revenues from 29.05
lakhs in Sept07 to 128.89 lakhs in March08.
Though, there have been a few slips in January and March but over all its presents
financials of a growth company.
42
The investors would be able to track the fluctuations in a particular stock and the
market as a whole, while deciding to execute the order and also while the order is
being executed. The confirmation of the order would also be real time. The order
routing system on which net trading will be done is compatible with screen-based
trading terminals used today.
Internet trading brings in total transparency between a broker and an investor in case
of secondary market operations. When the open outcry system was prevalent, only the
broker knew the actually transacted price. This practice diminished significantly when
it was taken over by screen-based trading. With on-line trading, investors can now see
for themselves the price at which the deal takes place.
It will also reduce transaction costs, increase liquidity in the market and ensure total
transparency. It allows quick and easy access to valuable research and information to
an investor and enables him execute transactions faster and more efficiently on a real
time basis. The volume of trade has also increased and has provided depth to the
market. Thus, in a nut shell, we can summarize the difference between online and
offline trading as follows:
ONLINE
1. In
online
trading
OFFLINE
mechanism
the
account.
market closes.
(AMO).
world
where
Internet
facility
is
available.
8. No documents are required for trading.
process
Internet Trading
At the end of March 2007, 78 trading members on the CM segment provided internet
based trading facility to investors. The members of the exchange in turn had
registered 849,696 clients for web based access as on March 31, 2007. In the CM
segment about 499 lakh trades for Rs. 81,034 crores, constituting 7.11% of total
trading volume, were routed and executed through internet. The following table gives
the growth of internet trading.
Year
Enabled
Members*
Registered
Clients*
2001-02
2002-03
61
123578
2003-04
82
231899
2004-05
80
346420
2005-06
70
463560
2006-07
78
849696
Year
Trading Volume
(Rs. Crore)
% of total
trading
volume
2000-01
2001-02
7287.81
0.54
2002-03
8138.81
1.59
2003-04
15360.76
2.48
2004-05
37945.08
3.45
2005-06
81033.81
7.11
45
(Source:
- www.nseindia.com)
By the end of Dec. 2006 the number of clients doing the online trading has increased
to 13lacs.
Liquidity
The liquidity in the CM segment, as measured by the turnover ratio, has witnessed a
steady increase and reached nearly 10.13% during March 2007. More than 98.02% of
securities available for trading are being traded every month and 95.6% of the
securities were traded for at least 100 days during 2005-06, as indicated below:
Distribution of Turnover
The concentration of trading among top N securities/brokers. It is observed that the
top 5 and 100 securities account for about 25.88% and 84.26% of total turnover in
the CM segment in 2005-06. The details of 50 most active securities during 2005-06,
which accounted for 78.40% of turnover Broker-wise distribution of turnover
increasing diffusion of trades among a large number of trading members over the
years. During 2005-06, top 5 brokers accounted for only 13.52% of turnover, while
top 100 brokers accounted for 65.09% of total turnover. The following shows the
turnover of the trade done through internet.
Trade Date
Settlement No.
No. of Trades
Turnover (Rs.cr)
5-May-2007
2007082
649071
1182.21
4-May-2007
2007081
655428
1234.84
3-May-2007
2007080
680710
1260.11
2-May-2007
2007079
669625
1216.86
29-Apr-2007
2007300
308508
735.79
28-Apr-2007
2007078
652819
1326.26
27-Apr-2007
2007077
677594
1597.00
26-Apr-2007
2007076
565581
1353.48
25-Apr-2007
2007075
613816
1263.89
24-Apr-2007
2007074
614635
1356.16
21-Apr-2007
N2007073
681553
1375.54
20-Apr-2007
N2007072
585334
1143.46
19-Apr-2007
N2007071
607168
1200.28
18-Apr-2007
N2007070
568237
1052.51
17-Apr-2007
N2007069
501438
922.51
13-Apr-2007
N2007068
686576
1315.20
12-Apr-2007
N2007067
681800
1284.18
10-Apr-2007
N2007066
570339
1143.94
7-Apr-2007
N2007065
758906
1655.68
46
5-Apr-2007
N2007064
633591
1306.19
4-Apr-2007
N2007063
635877
1238.40
3-Apr-2007
N2007062
591383
1180.07
MARKET CAPITALIZATION
The total market capitalization of securities available for trading on the CM segment
increased from Rs. 363,350 crore as at end March 1995 to Rs. 1,585,585 crore as at
end March 2007. Top 50 companies account for 69.21% of total market capitalization
as at end March 2007.
SECTORAL DISTRIBUTION
The share of top '50' companies, classified according to different sectors, in terms of
trading volume and market capitalization. A drastic change in the importance of
different sectors is observed since NSE commenced trading. The share of
manufacturing companies in trading volume of top '50' companies, which was more
than 23% in 1998-99, had witnessed a decline in the years 2001-02 and 2002-03, but a
turnaround was noticed in the year 2003-04 (it accounted for 37.66%) which was also
maintained till 2006-07 with the share of manufacturing companies rising to 41.81%.
As compared to this, the share of information technology (IT) companies in trading
volume, which had been quite high in the year 2000-01, witnessed a considerable
decline and stood at only 19.56% in 2005-06. A mixed trend has been noticed in these
sectors in terms of market capitalization. Sectors like manufacturing, which used to
dominate in terms of market capitalization in the year 1999-00 witnessed a dip in
2002-03, however this sector has witnessed a rebound and accounted for 31.13% and
23.35% in 2005-06 and 2006-07 respectively. The IT sector has also shown a
turnaround this year with 22.54% in the top 50-market capitalization in 2006-07.
47
SMC launched online trading in June, 2006 in addition to the traditional offline
mode of trading on NEATXSV4. Since then SMC has managed to a fair
share of client base which is very much visible from the company
financials.
SMC is doing a good job in the offline industry as it has established a good
brand name for itself in a short span of time.
But looking at the competition, the company decided to launch its online
trading portal in June, 2006.
Besides, being up in the line of competition, Online trading also helps the
company to cut recurring costs as it happens in offline trading.
Though, setting up online trading infrastructure requires one time set up cost
like the cost of software, bandwidth charges, skilled manpower etc. which is
quite high. But the benefits are recurring as the online trading is about volumes.
Larger the client base, higher the revenues.
This is screenshot of SMC, which is the online trading software of SMC.
Features of SMC
A browser based trading software that enables clients to access their accounts from
anywhere using internet by a unique ID and password. This facility is available to all
the online clients the moment they get registered with SMC INVESTMENT
48
scrip and Press F1 to Buy and F2 to sell which provides an easy trading facility to the
client. It also provides an Offline order placement facility.
3) Before Buying or Selling, the client can watch the Market Depth, which tells about
Best Buy/Sell rates and Quantities etc of that security & also enables the clients to use
the Stop-loss Feature to minimize their losses.
4) A very useful feature of the product is FIRE THE TRIGGER,
TRIGGER, which lets the
client set an Alert for itself to indicate a certain price of the scrip. The user can set a
different color or an audio alarm.
5) It enables clients to transfer funds online from their bank account
to SMC trading account. SMC has banking integration with PNB, HDFC,AXIS
Bank.
6) It also enables the clients to view the transactions (Buy or Sell) done during the
day. Beside the rate, quantity, type of account etc, the client can also view the order
number, time of transaction & can also get the details of entire fortnight.
7) The client can see the Bids/Offers that are not yet executed by the Exchange and
has the options to Modify and Cancel the Order.
8) Greater exposure for trading on the available margin & DP MARGIN STOCK with
very competitive commission.
9) It also provides Real time updating of exposure and portfolio while trading &
Online Integration of trading a/c with two common depositories to help move clients
shares to and fro with ease.
They also have the authority to square of the positions of the clients who dont pay
their margin money.
IT shares the responsibility of supporting the entire system so that it runs smoothly.
50
Step 5 To Buy
To Sell
51
ORDER BOOK
TRADE BOOK
52
Default Limit and Exposure to the Clients:1. For Liquidated Value greater than or equal to 2 LAC, default limits
will be opened in Intraday ten times and Delivery Three times (Only
on a Cat) on Cash market and one time on FNO market of Net Margin.
2. For Liquidated Value less than 2 LAC, default limits will be opened in
Intraday five times and Delivery Three times (Only on a Cat) on Cash
market and one time on FNO market of Net Margin .
Square Up:
It is a margin status when percentage of coverage is less then 25% when
comparing funding stock (A cat stock) with gross margin. It is a last alert
that the position of client may be squared up at any time if the Percentage
of coverage goes below 25%. It is a last alert that something must be
done either by reducing the position or enhancing the margin .It is a point
where the position of the client is squared up.
NORMAL SQUARE OFF (LESS THEN 25%)
This activity has been done on daily basis with the help of software
driven Batch file (provided by the IT department). Codes which have
53
been not uploaded in the Batch file due to any exceptions are any
commitment from Branch end are done manually if commitment fails.
Sauda of a client BELOW 25% will be compulsory squared off next
morning, in case no proper reply received from the concerned
RM/Branch.
Proper Reply here shall mean:
- Amount is being transferred to top up the margins only through a
transfer Cheque or Demand draft subject to the condition that the
transfer Cheque or Demand draft is reflected in the bank as having
been deposited before 2:00 P.M.
- The reply should Specify what positions shall be squared off before
that 10.30 a.m. , in case the same is not done to the extent of bringing
the clients margin above the required 50% margin levels , the RMS
shall block the client and square off the balance position so as to bring
the client above the required margin levels.
Margin Call square off process:1. Preparation of square off cases report.
2. Preparation of Batch File for Automated Square off.
3. Reconciliation of Batch File after and before it has been executed.
4. Consolidation of square off replies of margins from Branch end
and make it considered.
5. Preparation of Exceptions client List.
6. Making note of commitments from Branch and Regional Heads
against square off codes and make follow up accordingly.
7. Preparation clients Cheque deposit details.
54
Before: - We have to make sure that the batch file has been created
according to square off policy of RMS. All exceptions and necessary
details has been taken into consideration or not.
After: - After execution of the batch file we have to check that every
order of the file is properly executed or not and if there is any rejection
then immediate action to be taken (Rejection to be squared manually)
SQUARE OFF 5TH DAY LEDGER DEBIT CLIENTS (NON LAS):This activity is done on the Manual basis only. The process of square off
5th day ledger debit is same as Normal Square off; only difference is that
it is done manually. To square off we have to prepare NON LAS
LEDGER DEBIT REPORT.
55
DATA ANALYSIS
Q 1. Do you know about investment options available?
KNOWLEDGE
Yes
No
TOTAL
%AGE
80%
20%
100
Interpretation
Only 80% people knows the exact meaning of investment. Because of remaining 20%
take his/her residential property as an investment. According to law purpose this is not
an investment because of it is not create any profit for the owner.
56
Q 2. Most important things you take into your mind while making investments?
FACTOR
%AGE
Risk
Returns
8%
17%
Both
TOTAL
75%
100
Interpretation
75% people are considered the both factors risk as well as returns but, only 25%
considered the risk or returns factor.
57
PERCENTAGE
8%
75%
17%
100
Interpretation
On that basis, we conclude that 17% people know nothing about the securities
investments and 75% people have partial knowledge about it, so, some promotional
activities are required for increasing the awareness about security market.
58
PERCENTAGE
30%
Returns
25%
Capital appreciation
10%
Tax benefits
20%
Risk covering
Others
TOTAL
5%
10%
100
Interpretation
75% people are interested in liquidity, returns and tax benefits. And remaining 25%
are interested in capital appreciations, risk covering, and others.
59
Period Frequency
80
73
47
200
%age
39
37
24
100
Interpretation
Looking at the figures, we can observe that 39 % of people have been investing for
less than 3 years and so on. We know that the capital markets have picked up in past
4-5 years. Also, there are more stringent norms by SEBI and exchanges. That is the
reason why people have started to pose more trust in capital markets now.
60
Yes
No
Total
Frequency
141
59
200
Percentage
70.5
29.5
100
Interpretation
Out of the people surveyed, 70 % people trade online. This shows a good prospect for
online trading in future.
61
Q. 7. COMPLICATED PROCESS
Yes
No
No reply
Total
Frequency
60
46
94
200
Percentage
30
23
47
100
Interpretation
This table shows the consolidated table of number of people voting for different
factors as to why dont they prefer to trade online.
62
No. of People
No
36
20
100
75
60
21
110
75
72
46
Interpretation
We asked the people as to why they dont trade online. Out of the reasons, given, we
observe that maximum people avoid doing online trading as they perceive it to be
more risky. Also, some of them have experienced poor services from their online
brokers. Hence, they avoid doing online trading.
At the same time the companies need to trap those 30% people who are still not aware
of the benefits of online trading and try to shift them towards online trading. The
companies should also try to find and analyze the reasons as to why these customers
are not trading online in spite of so many benefits the online trading offers.
63
IF YES
Name of the company you trade with.
Kotak Securities
ICICI direct
IndiaBulls
Sharekhan
SMC Investments Solutions
Others
TOTAL
Frequency
42
35
60
30
15
18
200
Percentage
21
17.5
30
15
7.5
9
100
Interpretation
India Bulls enjoy maximum market share of 30% followed by Kotak and ICICI direct.
SMC has only 7.5% share at present but is growing
64
Interpretation
Out the factors that attract ant investor to online trading are the low transaction cost
followed by fast processing so that their margin is not lost due to time lag. Also,
another factor that is of importance are the regular updates that the organization
provides to its clients.
65
Frequency
75
65
150
35
150
Interpretation
We also found that besides stock Market, people prefer to invest in Mutual funds.
Thus, it can also serve as a good opportunity to earn revenue for the company.
66
67
68
CONCLUSION
Facts and figure speak in itself that as from the past years analysis of capital market
we could see the bullish trend of the Indian stock market. There has been a
tremendous pressure on the Indian industries to perform well as the expectations of
the investors are rising with bullish market sentiments. The Online trading has grown
tremendously since 2000-01 to 2007 form 7287.18 cr. to 81033.1 cr. respectively. The
client base has also improved form 1,23,578 to 8,49,696. This has raised to 12.70 lacs
till Dec. 2007.
Compared to the Western countries, online trading is still in its infancy in India. With
trading turnover at around Rs. 10 crores per day from online trading compared to a
combined gross turnover of around Rs. 9000-10,000 crores handled by the BSE and
NSE together, online trading has a long way to go. With some ten dotcom players,
such as icicidirect.com, investsmart, 5paisa.com, indiabulls, and a host of brokers,
such as kotaksecurities, sharekhan, motilaloswal, Geojit Securities and duttstock,
entering the online ring promises exciting times ahead.
However, the existing online trading system suffers from a major lacunae.
icicidirect.com currently offers online trading services only to investors who have a
bank or a demat account with ICICI. Or, investors can open an online trading account
with SMC only if they open a demat account with it and have a bank account either
with ICICI, HDFC Bank. If investors do not have these accounts, they have to go
through the entire rigmarole of opening up the bank and demat account again for easy
operation. Apart from the hassles involved, there may also be certain extra charges
involved in this exercise that may have to be built into the overall cost of online
trading.
69
ANNEXURES
70
QUESTIONNAIRE
Q 1. Do you know about investment options available?
KNOWLEDGE
Yes
No
Q 2. Most important things you take into your mind while making investments?
FACTOR
Risk
Returns
Both
Q 3. Awareness related to security markets
KNOWLEDGE
Complete
Partial
Nil
TOTAL
Q 4. What is the basic purpose of your investment?
INVESTMENT PURPOSE
Liquidity
Returns
Capital appreciation
Tax benefits
Risk covering
Others
71
IF YES
Name of the company you trade with.
Kotak Securities
ICICI direct
IndiaBulls
Sharekhan
SMC Investments Solutions
Others
72
73
BIBLIOGRAPHY
BOOKS
SEBI Bulletin
The Mint
2. Websites
www.cmie.com
www.rbi.org.in
www.SMCindia.in
www.nse-india.com
www.wikipedia.com
www.ask.com
www.google.co.in
www.sebi.gov.in
74