SUMMER TRAINING REPORT

On

RELIGARE ENTERPRISES LIMITED

COMPARATIVE ANALYSIS OF DIFFERENT BROKING HOUSES WITH
RELIGARE SECURITIES LIMITED ALONG WITH CORPORATE AND
FUNCTIONAL STRATEGIES

Submitted in partial fulfillment of the requirements of

Post Graduate Diploma in Business Management Programme

BY

KUSH BEHL

Indian Institute of Planning & Management

B-27, Qutab Institutional Area
New Delhi-110016

CERTIFICATE

1
This is to certify that the project entitled “COMPARATIVE ANALYSIS OF
DIFFERENT BROKING HOUSES WITH RELIGARE SECURITIES LIMITED
ALONG WITH CORPORATE AND FUNCTIONAL STRATEGIES”
is a bonafide work done by Mr. Kush Behl and has been carried out under my direct
supervision. This Summer Project Report has the requisite standard and to the best of our
knowledge no part of it has been reproduced from any other summer project, monograph,
report or book.

Name: - Mr. Indranil Ghosh

Designation: - Equities Manager
Address: - 10185,1st Floor,Main Arya Samaj Road
Karol Bagh
New Delhi -110005

--------------------------------------------
-
(Signature of the project guide)

Place: - New Delhi

Date: - 15-09-2007

ACKNOWLEDGEMENT

I would like to thank almighty who blessed me everything of my life and carrier. I
express my sincere gratitude and indebt-ness to Mr. Ashu Madan Regional head of
Religare securities ltd. I give special thanks to Mr. Indranil Ghosh and other employees
for their valuable comments and encouragement and co-operation through out my
training at Religare securities ltd.
I would like to make special thanks to Mr. Anurag Sharma who is my mentor and
aspirational guru who provides me valuable inputs and advices to achieve my targets. I
would also like to give my gratitude to Mr. Abhimanyu Singh, Mr. Mahesh Kumar
Meena for their invaluable support during my training in Religare Securities Limited. The
training session provided by my mentors was extremely helpful in understanding the
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stock market and different financial terms. Under Religare Securities Ltd. I have learnt
about the company, structure, operations, and its online & offline products and services it
offered to its customers.
I feel extremely delighted to work with Religare Securities Ltd. It provides me a platform
to have a look of corporate culture and the experience of working in office. The
experience that I have gained over two months training is impeccable. It definitely helps
me in future to take any sort of business assignment. The knowledge and skills that I have
learnt in Religare Securities Ltd. have improved my outlook towards business
environment and developed my personality as a whole.I am extremely thankful to my
friends, parents, employees & staff of Religare Securities Ltd who have helped me in
successful completion of my project.

KUSH BEHL

DECLARATION

I do hereby declare that the report which is being expressed by me project titled
“COMPARATIVE ANALYSIS OF DIFFERENT BROKING HOUSES WITH
RELIGARE SECURITIES LIMITED ALONG CORPORATE AND FUNCTIONAL
STRATEGIES” in the partial fulfilment of the requirement project is an authentic work
of my own.
The matter provided in this project has been submitted by me or not by any body.

3
KUSH BEHL

TABLE OF CONTENTS
ABSTRACT 7

THE INDIAN STOCK MARKET 8

SEBI 20
BOMBAY STOCK EXCHANGE 21
NATIONAL STOCK EXCHANGE 22

RELIGARE ENTERPRISES LIMITED 24

PHILOSOPHY 25

VISION
MISSION
BRAND ESSENCE

BOARD OF DIRECTORS 26

GROUP COMPANIES
RELIGARE SECURITIES LIMITED 27
RELIGARE COMMODITIES LIMITED 28
RELIGARE FINVEST LIMITED 29
RELIGARE INSURANCE BROKING LIMITED 29

CORPORATE OBJECTIVES 30

RELIGARE PRODUCTS AND SERVICES 31

RACE 33
RALLY 36

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RESEARCH METHDOLOGY 39

PRIMARY OBJECTIVE
SECONDARY OBJECTIVE
RESEARCH DESIGN
SCOPE OF STUDY
TYPES OF STOCK 40
TRADING 41
ARBITRAGE TRADING 42
BUYING 42
SELLING 42
STOCK PRICE FLUCTUATION 43
CATEGORIES OF SHARES 44

PORTER’S FIVE FORCES MODEL FOR COMPETITORS ANALYSIS 46

PORTER’S MODEL 48
THREAT FROM NEW ENTRANTS 49
THREAT FROM SUBSTITUTES 49
COMPETITIVE RIVALRY 50
BUYING POWER OF SUPPLIERS 50
BUYING POWER OF BUYERS 50

DIFFERENT COMPETITORS 51
INDIA BULLS 52
ICICI DIRECT.COM 53
HDFC SECURITIES 54

DIAGRAMATIC COMPARISON OF DIFFERENT BROKING HOUSES 55

DOCUMENTS REQUIRED TO OPEN DE-MAT A/C 56
CONTRACT LEWIS 57

INTERNAL SCANNING AND ORGANISATIONAL ANALYSIS 58

SWOT ANALYSIS 59
COMPETITIVE ADVANTAGES 60
TOWS MATRIX 61

CORPORATE STRATEGIES 62

FUCTIONAL STRATEGIES
MARKETING STRATEGY 63
FINANCE STRATEGY 64
IT STRATEGY 65
HUMAN RESOURCE STRATEGY 66

KEY FINDINGS AND ANALYSIS 67

RECOMMENDATIONS AND SUGGESTIONS 70

SOME COMMONLY USED TERMS 73

CONCLUSION 85
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QUESTIONNAIRE 87

BIBLIOGRAPHY 90+

ABSTRACT

This project aims at finding out the effectiveness of marketing strategies in Indian
securities market in India. As securities market in India is booming up and playing major
role in bridging the gap between saving and investments in Indian economy. The
importance of the market can be easily analyzed by the turnover of market on daily,
monthly basis. The market plays major role in the financial system to act in favor of both
investors and corporate. So my project is mainly concerned about marketing strategies for
share market and sales promotion of Religare Securities Limited and charting future of
market.
After going through this report the reader will come to know about the major changes
takes place in the securities market since Intervention of SEBI in India. Many of the
securities company emerged and proved their ability to sustain in the competitive
environment.

The performance history of the securities is a very important factor that needs to be
considered when analyzing any company. The history indicates the strategies adopted by
the securities company and, its success or failures and whether it is a laggard or a leader.
The financial performance of the company indicates the effects of the decisions it has
taken in the past. It also indicates the financial health of the company. The history of the
company should also be analyzed well enough to understand the position of the company
in the sector as a whole.
Competition plays a key role in any sector. Competition is intense in the securities sector,
which in the Indian context is highly fragmented. Competition in the securities sector
determines the spreads that individual company earn over their lending portfolios. When
one analyses competition in case of this sector, the emphasis has to be on a thorough
analysis of the company relative standing in the sector. One needs to analyze whether the
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securities company is a follower or a leader (as far as strategies are concerned) in the
sector.

THE INDIAN STOCK MARKET

The financial markets facilitate the reallocation of savings from savers to entrepreneurs.
Savings are linked to investments by a variety of intermediaries through a range of
complex financial products called “securities” which is defined in the Securities
Contracts (Regulation) Act, 1956 to include shares, bonds, scrips, stocks or other
marketable securities of like nature in or of any incorporate company or body corporate,
government securities, derivatives of securities, units of collective investment scheme,
interest and rights in securities, security receipt or any other instruments so declared by
the central government. The financial market in India have undergone significant changes
keeping pace with the ever changing needs of the market participants. This has been
possible with the measures like opening up the economy for investment and trade,
decontrol of interest rate and exchange rate, setting up of sound regulatory institutions
etc. This article makes a modest attempt to give an overview of the Indian Securities
Market in India, focusing on the different market segments, players in the market, the
market design and the regulatory framework.

Participants
The securities market has essentially three categories of participants, viz., the issuers of
securities, investors in securities and the intermediaries. The products in the market
include equities, bonds and derivatives.

Market Segments
The securities market has two interdependent and inseparable segments, namely the
primary market and the secondary market. The primary market is the channel for creation
of new securities through financial instruments by public limited companies as well as
government agencies whereas secondary market deals in securities already issued. The
resources in the primary market are mobilized either through the public issues or through
private placement.

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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 who issue securities. The corporate entities who issue mainly
debt and equity instruments and the government (central as well as state) who issues debt
securities.

The secondary market enables participants who hold securities to

adjust their holdings in
response to the changes in the assessment of risk and return. Securities can also be sold
for cash to meet the liquidity needs. The secondary market has further two components,
namely, the over-the-counter (OTC) market and the exchange traded market. OTC
markets are informal markets where trades are negotiated. Most of the trades in the
government securities are in the OTC market. All the spot trades where securities are
traded for immediate delivery and payment take place in the OTC market. The exchanges
do not provide facility for spot trades in a strict sense. Closest to spot market is the cash
market here settlement takes place after some time. Trades taking place over a trading
cycle day=T) are settled together after certain time (T+2 day). All the 23 stock exchanges
in the ountry provide facilities for trading of equities. Trades executed on National Stock
Exchange (NSE) are cleared and settled by a clearing corporation which provides
novation and settlemen guarantee. Nearly 100% of the trades in the capital market
segment are settled through demat delivery.

Investor Population
The Society for Capital Market Research and Development (SCMRD) carries out
periodical surveys of household investors to estimate the number of estimates. The latest
survey estimates the number of shareowners at around 20 million at the end of 1997
which has remained stagnant or is in the declining trend thereafter. The main reason
attributed to this stagnancy was the investor’s bad experience with many unscrupulous
company promoters and management.
According to a recent study released by SEBI-NCAER titled “Survey of Indian Investors
2000-2001, an estimated 13.1 million or 7.4 per cent of all India households totaling 19.5
million individuals directly invested in equity shares or debentures or both during the
financial year 2000-01. An estimated 11.8 million investor households invested in units
of mutual funds, many of these could be direct investor households. The present survey
estimates the number of unit holders in 2000-01 at 19 million as against 23 million in
1998-99, a fall of 4 million investors in units of mutual funds (MFs).

Primary Market
Corporate Securities: The average annual capital mobilizations from the primary market,
which used to be about Rs. 700 million in 1960 and about Rs. 900 million in the 1970,
increased manifold during the 1980s, with the amount raised in 1990-91 being Rs. 43,120
million. It received a further boost during the 1990s with the capital raised by non-
government public companies rising sharply to Rs. 264,170 million in 1994-95. The trend
observed in the resource mobilization by non-government companies in the post 1994-95
periods shows a striking decline. The resources raised declined from Rs. 160,7510
million in 1994-95 to Rs. 51,530 million in 1999-00 and further down to Rs. 18,777
million in 2002-03. It is noticed that there is a high preference for raising resources in the
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primary market through private placement route. Private placements accounted for about
93% of total resources mobilized through domestic issues by the corporate sector during
2002-03. Rapid dismantling of shackles on institutional investments and deregulation of
the economy are driving growth of this segment.
The market is also getting institutionalised as people are preferring mutual funds as an
investment vehicle, thanks to evolution of a regulatory framework for mutual funds, tax
concessions offered by government and preference of investors for passive investing. The
net collections by MFs picked up during this decade and increased to Rs. 199,530 million
during 1999-00 but declined to Rs. 111,350 million during 2000-01 mainly because of
the increase in rate of tax on income distributed by debt oriented mutual funds and
lackluster secondary market. The total collection of mutual funds for 2002-03 has been
Rs. 45,800 million. It is seen that the number of households owning units of MFs exceeds
the number of households owning equity and debentures. At the end of financial year
March 2003, according to a SEBI press release 23 million unit holders had invested in
units of MFs, while 16 million individual investors invested in equity and or debentures.
ADR/GDR issues have also substantially contributed to Indian market. In 2002-03,
Indian companies have raised Rs. 34,264 million through ADRs/GDRs route. FIIs also
have invested heavily in Indian market. By the end of March 2003, 502 FIIs were
registered with SEBI. They had net cumulative investments over of US$ 15.8 billion by
the end of March 2003. Their operations influence the market as they do delivery-based
business and their knowledge of market is considered superior. Table 1 gives details of
the resource mobilization from the primary market.

Government Securities: The primary issues of the Central government have increased
many-fold during the decade, increasing from Rs. 89,890 million in 1990-91 to Rs.
1,338,010 million in 2001-02 to further Rs. 1,511,260 million in 2002-03, a growth of
12.9% (Table 1). The issues by state governments increased by about twelve times from
Rs. 25,690 million to Rs. 308,530 million during the same period.

Secondary Market
Corporate Securities: The number of stock exchanges in India have increased from 11 in
1990 to 23 now. All the exchanges are fully computerised and offer 100% on-line
trading. 9,413 companies were available for trading on stock exchanges at the end of
March 2003. The trading platform of the stock exchanges was accessible to 9,519
members and 13,291 subbrokers from over 358 cities on the same date.
The market capitalization have grown ten fold in the last decade. All India market
capitalization is estimated at Rs. 6,319,212 million at the end of March 2003. The market
capitalization ratio, which indicates the size of the market increased sharply to 57.4% in
1991-92 following spurt in share prices. The ratio further increased to 85% by March
2000. It, however, declined to 55% at the end of March 2001 and to 29% by end March
2003. The trading volumes on exchanges have also been witnessing phenomenal growth
during the 1990s. The average daily turnover has grown manifold. However, the trading
volume which had reached its peak with Rs. 28,809,900 million in 2000-01 have
substantially depleted to Rs. 9,689,098 million in 2002-03. 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 adventof screen based trading system by the NSE. The
turnover ratio for the year 2000-01 was 375% but fell substantially due to bad market
conditions to 119% during 2001-02 regaining its position, accounted 153% in 2002-03.
The relative importance of various stock exchanges in the market has undergone dramatic

9
change during this decade. NSE emerged as the market leader with more than 85% of
total turnover in 2002-03. It is seen that trades concentrates not only on a few exchanges
and among particular sector (s) but also on a few securities/members. The share of top ‘5’
and ‘100’ members in the trading volume in NSE accounted for 10.3% and 59.2%
respectively.

Changes in the Indian Securities Market

The Indian securities market is in transition. There have been
revolutionary changes over a period of time. As everyone sitting here is aware
of them, I do not wish to bore you with details. In fact, on almost all the
operational and systemic risk management parameters, settlement system,
disclosures, accounting standards, the Indian Securities Market is at par with
the global standards. Indeed, on a few paradigms, it is ahead of the global
benchmarks. Some of those initiatives are:
__ T+2 settlement cycle.
__ On line monitoring of positions and margins and automatic
disablement of terminals.
__ Corporate governance index as a measure of wealth creation,
management and distribution.
__ Establishment of CLA.
__ Central counterparty.
__ Commencement of Straight Through Processing

The list is large, but, better leave that here and focus on “what next”.
“What next” - these two words and eight characters arouse extreme interest.
The Road Ahead :
As mentioned earlier, the “Road Ahead” is all about imagination. Let
me share what I visualize of the future structure of the Global Securities
Markets in general and of the Indian Securities Market, in particular. I would
also touch upon the possible repositioning of the various segments and their
participants. Interestingly, I am conscious that even this imagination may
undergo whole scale reorientation. A clear and candid disclaimer – this is the
imagination of a prose writer (I have never been a poet) and not that of the
Chairman, SEBI who is a statutorily christened pontiff authorized to develop
and regulate the securities market of India.
I would like to divide the talk into the following sections and would
address them one by one.

__ Future structure of the trading platforms

__ Future structure of the Clearing and Settlement mechanism
__ Future structure of the Intermediaries in the market
__ Future structure of the Financial Products
__ Role of organizations like Credit Rating Agencies
__ Tomorrow’s investors
__ Tomorrow’s issuers
__ Tomorrow’s professionals
__ Future structure of the Regulatory Regime

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Future structure of the trading platforms
The focus of a lot of work in the financial Markets is on making them
more transparent, competitive, efficient, efficacious and cost effective. My
sense is that a lot of that can be infused in the Market by the simple act of
bringing more and more financial products to the electronic trading platforms
provided by the Securities Markets. Discussions on competitive advantages
and disadvantages of over the Counter (OTC) trading and the exchange
driven environment have by and large settled down. Global Markets agree,
undisputedly, that though both the markets complement each other and serve
specific set of market participants, an exchange driven environment offers
better values in terms of price discovery, transparency and competitiveness.
With this thinking crystallizing, more and more products are joining the trading
platforms. Evidences from across the globe are live. Who would have thought
a couple of years ago about power, weather, catastrophe, hailstorm,
temperature, electricity, credit risk being traded on the exchanges but, that is
all a reality today…… I see enormous potential in many more products
coming to the trading platforms of the exchanges. Therefore, I see the
expansion of the exchange traded products an everlasting phenomenon…
because ethos will be of providing solutions to even unimagined and
unanticipated problems.
I see one more dramatic development taking shape on the exchanges
and that is the capability of directly mapping the ultimate investors. It
essentially means disintermediation i.e. investors bypassing the brokers.
Tomorrow’s investors may be able to log on and execute their trades
themselves and systems would be potent enough to check the availability of
funds or securities in their bank or DP account before execution of orders.
And, that may be possible through mobile phones, internet, ATM machines
and what not…
The system would lock in funds or the securities before the trade
actually goes through. I would also imagine that a reverse transaction would
unlock the said funds or securities and create room for further trading by the
investors. This would be a paradigm shift in the market structure, which would
spark off radical changes in the market place, especially for the broking
community. I would come back to this point when I talk about the future shape
of the Intermediaries in the market.
As the exchanges are in the business of providing liquidity to the
market place through a transparent and efficient mechanism called the trading
platform, like any other business their success or failure would be determined
by the competencies they possess and strategies they adopt to position
themselves in the future. I see the integration / amalgamation / mergers of the
entities (exchanges) and businesses into liquidity business on the lines of
other opportunity zones. Indeed, this has already begun if you incisively
survey around. Creation of the Euronext (merger of Amsterdam Stock
Exchange, Paris Stock Exchange and Brussels Stock Exchange), Singapore
Exchange Ltd. (merger of Stock Exchange Singapore and Singapore
Mercantile Exchange (SIMEX)) and OneChicago (alliance of Chicago
Mercantile Exchange (CME), Chicago Board of trade (CBOT) and Chicago
Board Options Exchange (CBOE)) are live examples to substantiate the
underlying thinking. Further, London International Financial Futures and

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Options Exchange (LIFFE) has also joined hands with Euronext to create
Euronext.liffe. Let me hasten to add, as of now I am of the view India needs
at least 2-3 exchanges to serve the continental structure of the market and
fight the challenges of building a competitive edge. However, eventually there
would not be more than say 5-6 stock exchanges across the globe, in the time
to come. Which five-six, I don’t know! That would depend on the strategic
global moves that existing exchanges across the globe take as they all are
competing for the future opportunity share in a very competitive environment.
Further, my feeling is that these exchanges would simply be exchanges and
not securities exchanges as they would trade commodities, securities,
currencies, bullion, weather, credit risk or anything else you can imagine and
beyond. Therefore, what I am saying is that fragmentation of the liquidity in an
asset through its trading at different exchanges or different exchanges for
different underlying assets would become an obsolete phenomenon, across
the globe. It is logical because creation of a trading platform is an onerous job
and demands huge monetary stakes. Further, if both the commitment of the
large amount of fresh resources or the incremental cost on the augmentation
of the capabilities of the existing trading platforms is going to create similar
values, augmentation will definitely be a better choice. It would be like
expansion of a shop in terms of more product lines and more brands of the
existing product lines.This phenomenon is also envisaged from the perspective of the
enormously better values to the investors, the clients on this shop (exchange),
in terms of the economies of scale (trade discounts), convenience (ease),
economic use of the risk capital (facility of cross margining across the
positions) etc. It would be like shopping from a big mall, which serve
customers with A to Z of their requirements. This is, undisputedly, a significant
competitive advantage from the market’s perspective.
Further, with corporatization and demutalization of the exchanges
across the globe there is a clear difference in the way these exchanges are
looked at. You would not be surprised if tomorrow BSE gets listed on the BSE
and / or at some other exchanges across the globe. For your information,
Australian Stock Exchange, London Stock Exchange, Hong Kong Stock
Exchange, Singapore and Stockholm are listed on themselves. Segregation of
the ownership and trading rights on exchanges is a major move from the
perspective of bringing in professionalism and credibility to the market place
(exchanges). My feeling is that this phenomenon would continue to strengthen
in the future…

Bagchi’s cautious attitude runs at the heart of ICICI Direct’s philosophy - from the types
of customers he targets to the products he offers. There is another unique feature about
his firm. While all the other Indian Internet brokerages swear by the hybrid model,
offering both online and offline presence, ICICI Direct is the only one that executes all its
trades online. With an annual volume growth of 100 per cent over the last five years,
Bagchi’s strategy seems to be working.

Like ICICI Direct, Indiabulls has logged 100 per cent annual growth in recent years and
has cornered about 30 per cent of India’s online trading volumes. But its chosen model is
the hybrid one. And Gagan Banga, director of Indiabulls, is equally confident of his
model.

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It’s a replica of Charles Schwab, the legendary US brokerage house that revolutionised
the industry by leading it into the Internet era. One can understand where Banga’s
confidence stems from. The company’s spectacular performance has made it the darling
of the Indian markets and its market capitalisation has zoomed 900 per cent since listing
in September 2004.

While its online revenues are growing faster than its offline revenues (online revenues
increased from 40 per cent to 60 per cent of the total last year), Banga justifies having a
3,000-strong army of relationship managers (RMs) all over the country. “Clients
investing large sums want to see something beyond a website - they want to see an office
and want to interact with people. Also, with India’s unreliable Internet infrastructure,
clients won’t have the guts to trade online without a backup,” he says.

Bagchi and Banga represent two sharply divergent viewpoints on where the future of the
broking industry lies. It shows in their businesses. ICICI Direct has 7.5 lakh registered
users online, more than five times what Indiabulls has. While Indiabulls has consciously
pursued day traders, ICICI Direct has gone after the masses. Banga explains the
Indiabulls viewpoint: “It is true that mass investors bring stability, but it is the day trader
who takes a brokerage house to the next level.” Bagchi agrees that the leveraged trades
that brokers like Indiabulls offer lead to higher trading volumes. Yet, he has reservations
about extending his platform
to day traders.

Internet broking has, till now,

shadowed the performance of
the stockmarkets. Explains
Bagchi: “We see traction
when initial public offers
(IPOs) are announced. People
find the online platform a very
convenient way to enter the
market.” In 2004-05, Rs
25,526 crore was raised in the
markets, almost 450 per cent
more than the amount raised
in 2002-03. For instance, in the month that the Maruti IPO was announced, 300,000
demat accounts were opened. In an average month, the figure is about 100,000. Since
2002, the number of demat accounts has doubled to 7.1 million, many of them belonging
to new investors applying for IPOs.

The Internet: A Disruptive Influence

Broking is one of the first industries in India where the Internet is showing its disruptive
tendencies. Nothing as revolutionary as, say, what a Skype is doing to the telecom
industry, but certainly enough to force traditional brokers to scramble online, cut through
sub-broking intermediaries, push into inaccessible regions, bring down transaction costs,
enforce risk management norms, bring in transparency and, consequently, empower the
investor.

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In five years of its existence in India, online broking has grown to account for a tenth of
the total trading volumes. If the numbers are considered for only the retail segments, the
growth is starker. Almost half of the Rs 5,000 crore-6,000 crore daily market volume on
the NSE is accounted for by non-retail entities such as foreign institutional investors,
domestic institutions, mutual funds and arbitrage traders. Institutions aren’t online
customers anyway. Of the rest of the retail segment, current estimates suggest that online
broking’s reach is close to 30 per cent. As of September this year, there were 11.7 lakh
Internet trading accounts registered with the NSE, of which roughly 9.5 lakh are unique
users. It’s still a small proportion of the estimated 3 crore Internet users in the country. As
more surfers take to trading online, analysts expect their number to keep doubling every
year until 30-40 per cent of India’s overall trades are done online, as is the case in some
mature Internet markets like South Korea’s.

What makes the rise of the online investor in India even more significant is that unlike in
the US, it isn’t a price war that has fuelled the boom. Players like Charles Schwab and
E*Trade attracted US investors to investing online in the late 1990s by offering
throwaway brokerage rates. The traditional brokers just couldn’t compete because of their
high employee costs. In India, the economics don’t allow it to be a cost game. Says
Bagchi: “Brokerage costs are already so low (0.1-0.5 per cent for delivery) that the online
medium doesn’t really offer any significant price advantages.”

The Internet’s effect here has more to do with the bandwidth it has created for both
brokers and clients. Banga offers an example. “Traders from Ajmer use our online
platform. It would otherwise have been prohibitively loss-making to open a branch
there.” Thanks to the new channel, volumes are growing faster in the non-metros, where
transparency is low in offline trading. “These customers were made to pay higher charges
by small brokers, since they weren’t aware of the market rates,” says Prasanth
Prabhakaran, head of Kotaksecurities.com. That is one of the reasons why more than 60
per cent of Kotak’s daily online trading turnover comes from non-metros.

Such high channel migration has changed the broking landscape from what it was in the
late 1990s. The bigger trend in the industry is consolidation, just like it happened in the
US and South Korea, where 90 per cent of online trades are with the top 10 players. Says
Banga: “As the industry grows, people prefer going to solid brands that have strong
balance sheets. The big guys can invest in infrastructure, technology and risk
management systems.” As a result, several sub-brokers have been pushed by client
demand to take up franchises of the bigger brokers.

Traditional brokers are now scrambling to scale up their online operations. Meanwhile,
ICICI Direct & Indiabulls have raced ahead of the others. The other online players that
make up the top six - Sharekhan (owned by SSKI), Kotak Securities, HDFC Securities
and 5paisa (owned by Indiainfoline) - all have hybrid models. Collectively, these players
have 75-80 per cent of the market. The remaining 130 players, who were given licenses
to open online trading platforms by the NSE, can be divided into three categories - those
that are active businesses but have less than 5 per cent of the online market (Motilal
Oswal among them); those that invested in the technology but weren’t able to get their
projects off the ground (the Lalbhai Group’s Anagram Securities), and those that simply
bid for the licence but didn’t pursue business. Most players fall in the last category.

14
Even the foreign players are seeing opportunities in the Indian markets. US-based
E*Trade took a 34 per cent stake in IL&FS Investsmart (along with Softbank) in March
2004. Market sources say that Anil Ambani’s Reliance Capital is also interested in
launching its Internet trading platform.

As scale increases, the benefits of trading online become apparent. Says Jaideep Arora,
director, Sharekhan: “Since the Rs 14 crore-15 crore we invested in our technology
platform is a fixed cost, the variable upgrade costs when volumes increase to say, four
times, won’t be much. Alternatively, for an offline platform, the RMs will have to be
proportionately increased for offline traffic; so margins stay fixed.”

Robustness: The Bear Run Test

But is the growth in online stock trading merely the result of the stock market boom?
What if the market fell and the flow of IPOs stopped? Which of the two models is more
likely to continue doing well in a bear market? To understand this better, consider the US
experience during the crash of 2000.

Brokerage was one of the first businesses in the US to adapt to the Internet. Web-based
brokers had grabbed 45 per cent of the Nasdaq and New York Stock Exchange volumes
by 2000. By 2002, the market’s downturn slashed the share of online brokers to 22 per
cent. But brokerages that followed the hybrid model were less affected. A study by
Jupiter Research found that pure-play Internet brokers such as E*Trade lost 30 per cent of
their traffic after the crash. However, those following the hybrid model, such as Charles
Schwab, lost only 18 per cent. That’s when E*Trade also decided to develop a hybrid
model.

Indian Stocks market is showing strength from strength and is making steady gains over
last few years. SENSEX and NIFTY are less than 5% below the all time highs.

Making money from Indian stock market was never so easy. But although markets are in
the upswing we find more and more people exiting citing losses in stocks. A close
analysis shows non understanding of financial markets as the main reason for this.

Stock price movement is just more than a simple graph. Fundamental analysis helps you
to identify potential winners which can be multibaggers. Technical analysis helps you
time the markets. If you are a long term investor, Fundamentals play a more important
tool. If you are a short term trader, Technical analysis, news, rumors play a more
important role.

Indian corporate earnings are showing strong growth in last 4-5 years which is well
reflected in Indian stock market.

Stock market trading without proper research is bound to make you loose all your
finance. We recommend studying charts, avoid keeping a close eye on quotes / prices,
day trading, penny stocks. Finding a good stockbroker, Stock Market Guide , stock
exchange like New York stock exchange, Toronto exchange, NSE etc. Stock picks should
be purely based on research on fundamentals and technical analysis. Consider future

15
trading and options. Mumbaibull.com presents a set of stocks to buy based on these
principles. Emphasising more on fundamental and a bit on technicals

Bolstered by the continuing rally of the rupee against the US dollar (reflected in the
accumulation of over US$ 200 billion foreign exchange reserves), India joins the elite
club of 12 countries which have a trillion dollar economy.
The continuing appetite and growing strength of the rupee could lead to a new, lower
sovereign benchmark. This in turn will not only help the exchequer raise cheap funds, but
also help Indian companies raise debt at lower interest rates.
Also, with an increase in India’s sovereign credit rating to investment grade (BBB-) from
speculative grade (BB+), by global rating agency Standard & Poor’s in January 2007, the
country has become attractive to a range of global investors. This is likely to enable the
government to raise debt at highly competitive rates.
Reflecting India’s emergence as a popular investment destination, the World Bank’s
Global Development Finance (GDF) 2007 reports India cornering a major portion of US$
40.1 billion net capital inflows to South Asia in 2006. India also became the world’s
eighth largest market for mergers and acquisitions in the first quarter of 2007.
Thanks to the current rupee appreciation, many Indian companies, whose external loans
have matured in the last three months, would be a happier lot today. Back of the envelope
calculations indicate that these companies would have saved almost US $ 9.77 million on
account of the rising rupee which has reduced their payout liability. Some of the
companies that will get to ride the rupee hike bonanza include Convergys, Cargill India,
Nicholas Piramal and Watson Wyatt among others.

Stock Markets
While the value of total business conducted at the Bombay Stock Exchange has crossed
the US$ 200 billion milestone, the National Stock Exchange is set to record an annual
turnover of well above US$ 400 billion for the first time in its history in FY07.
The current financial year (2006-07) saw a record amount (US$ 5.80 billion) mobilised
by initial public offerings (IPOs) which was more than double the IPOs in 2005-06.
Refinery, construction, engineering and media & entertainment are among the major
sectors that led the way into the primary market.
With the government approving the purchase of 6 per cent stake in the National Stock
Exchange by Morgan Stanley, Citigroup and private equity firm Actis, US-based
Depository Trust & Clearing Corporation (DTCC) is planning to pick up 5 per cent stake
in the Bombay Stock Exchange.
Foreign institutional investors (FIIs) continue to be bullish on India. They have pumped
in a hefty US$ 6 billion in equities to date in calendar 2007.
Also, reflecting confidence in the stock market, many leading domestic financial
institutions, led by LIC, UTI, SBI and the Bank of India (BoI), are buying a major chunk
of the broker shareholders’ combined stake of 41 per cent being offered by the Bombay
Stock Exchange (BSE) as part of its demutualisation process.
The general market buoyancy and the rupee appreciation have resulted in taking the
number of US$ 1 billion m-cap stocks to 149, which account for 81 per cent of m-cap of
BSE. Also, the number of companies with over US$ 20 billion m-cap rose to 8.

16
The value of participatory notes in the stock market grew 70 per cent in just one year
between January 2006 and January 2007, accounting for over one-third of total foreign
portfolio investments in the Indian stock markets, according to government estimates

India’s tradition in trading of securities goes back to the 18th century, when loan securities
of the East India Company were traded. Corporate shares came into existence in 1830s.
With development of telegraph and communication systems brokerage business increased
and there were as many as 60 brokers in 1860. The Bombay Stock Exchange, the oldest
in Asia, was set up in 1887 as the “Native Share and Stock Brokers Association”. After
the Second World War with business coming back into stream, many more stock
exchanges were established.

In 1956 the Government brought a legislation to govern the stock exchanges—Securities

Contract Regulation Act (SCRA), 1956. Today the Indian stock exchanges are regulated
by Ministry of Finance, Security and Exchange Board of India (SEBI) and Governing
Boards within the legal framework provided by the SCRA, 1956 and SEBI Act 1992.

The market in India during the period upto 1990 was dominated by the scrips that came
in from the New Issue Market. Another feature of the market during this period was the
large number of new companies coming up with public issues. The Government owned
institutions insisted that wherever they lent money to projects, the shares of that company
had to be listed. Hence listing became a necessary evil rather than a privilege which it
should be.

As we moved into the 90’s we had a market which was growing at a fast pace but was
very domestic in nature and not subject to free market dynamics.

The reforms in the Indian economy ushered during 1991 affected the Indian stock
markets as they did many other aspects of economic activities. Until the beginning of this
decade, foreign portfolio investment was not permitted into the stock market. This
resulted in India being ignored in the huge global flows of money. Realising the role such
investments could play in the growth of the markets and the economy, the government
has now permitted Foreign Institutional Investors (FIIs) to invest directly into the stock
market. As the regulations stand today, FIIs can invest upto 30 per cent in the stocks of
Indian companies. The FIIs have begun to acquire a crucial role in the Indian stock
markets today—in the last 18 months, they’ve been the dominant players.

While foreign portfolio investment has come into the market, Indian shares were also
permitted to be traded abroad. The GDR mechanism has been used to list and trade top
Indian companies on London and other bourses. This again globalised the Indian stock
market on account of arbitrage.

Another significant aspect of globalisation is the entry of foreign brokers. In a dramatic

move the foreign broker firms have been allowed to set up branches in India. These firms
are now extremely active both in research and trading. They have brought in considerable
expertise into the stock markets. However their entry has created issues for the domestic
brokers who are now reeling under the competition.

Another significant new development has been the abolition the Controller of Capital
Issues (CCI). Prior to 1992, CCI—a part of the Ministry of Finance—set the pricing of
17
issues. This was much lower than the market price. All this meant that the secondary
market became a haven for quick profit taking. This is also meant that top class
companies hardly ever approached the market as they did not want their shares to be
given away cheap. However free pricing changed all this. On one side we have seen
Indian investors waking up to the reality of making losses in the secondary market. On
the positive side many large companies have come forward and issued their shares to the
Indian investors.

Prior to the Reforms the Indian companies were characterised by a very large number of
shareholders holding small quantities of shares. The institutionalisation was not much and
even where it existed, the term lending institutions like IDBI, IFCI and ICICI were the
shareholders and these istitutions never traded their stocks. However the Reforms brought
it not only FIIs—whose role has been discussed earlier—but also allowed the entry of
Private Sector into the Mutual Fund industry. This has seen a large increase in the
number of institutions in the secondary market. It will not be an exaggeration to say that
in less than a decade we have seen a major change from retail ownership of stocks to its
institutionalisation. Before National Stock Exchange (NSE) came into existence the BSE
catered to more than two-thirds of the trading activities, but today the main stock
exchange is the NSE. With the fear of competition from the NSE, BSE also started
implementing the idea of computerisation.

In 1992, NSE was incorporated with an equity of Rs 25 crores. The intention was to have
computerised systems, hooked nation-wide via satellite to increase the scope and depth of
the market. This dream finally came true towards the end of 1994. This stock exchange
has adopted the principle of being a order driven market.

Anywhere in India the broker on connecting his terminal with the main terminal through
a VSAT, can enter buy-and-sell orders. The computer will scan the transactions within 30
seconds and transaction is executed and unmatched orders stored in the memory. This
eliminated the role of the jobbers.

As we complete 50 years of a free India and move towards a truly global India of the 21st
century, the agenda for the stock market is one of consolidation. There are still some
issues that need to be ironed out. We need a modern system of trading and holding
shares. The creation of the Natioanl Securities Depository Limited (NSDL) is a major
move which would lead the market quickly towards paperless trading.

We need to have a good Debt Market. Though a lot of debt scrips are in the market, there
is hardly any trading. The opening up of debt to foreign investors, the creation of money
market funds and possible introduction of derivatives would give the Debt Market its due
place in the financial system. India has has a very old stock market. There is enough
reason for us to believe that the “Old is now turning to Gold”.

Market – Economy Link

Two renowned economists, Levine and Zervos investigated the empirical link between
stock market behaviour and long-run economic growth. Their findings suggest that stock
market development is positively associated with economic growth and that instrumental
variable procedures indicate a strong connection between predetermined components of

18
the stock market and economic growth in the long run. They studied whether measures of
stock market liquidity including size, volatility and integration with world capital markets
are correlated with current and future rates of economic growth, capital accumulation,
productivity improvements and saving rates. They found evidence to show that stock
market liquidity, as measured by the value if stock trading relative to the market size and
size of the economy, is positively and significantly correlated with current and future
rates of economic growth, capital accumulation and productivity growth. In
fact, there are theoretical and empirical studies that have established casual robust
(statistically significant) two-way relationship between developments in the securities
market and economic growth.
In 2005, three themes emerged strongly, which we believe offer significant growth
opportunities of our economy. These include consumption growth, infrastructure
spending and India arbitrage advantage in terms of human intelligence.

Confidence build-up
These reforms have boosted the confidence of investors (domestic and international) in
the Indian securities market. There are three parameters to ascertain the level of investor
confidence – investments by FIIs, growth of mutual fund subscriptions to IPOs and
increase in the number of accounts with the depositories. After US$ 6.6 billion and US$
8.52 billion net inflow in 2003 and 2004 respectively, FIIs invested US$ 10.7 billion in
the Indian equity market in 2005. In 2004-05, the mutual fund mobilized resources of
about Rs. 8,397 billion as against Rs. 5,902 billion representing an increase of 42%. The
assets at their disposal increased from Rs. 1,396 billion in March 2004 to Rs. 1,496
billion in March 2005. In the year 2004-05, the Indian companies raised about 210
billion through overseas capital market offerings. The volume of issuance in the primary
market increased from Rs. 57.32 billion in 2002-03 to Rs. 221.45 billion and Rs. 255.26
billion in 2003-04 and 2004-05 respectively.

Sharp rise in market indicators

The benchmark indices, namely the Sensex and the S&P CNX Nifty generated
astounding returns of 40.58% and 34.08% respectively in 2005. The market capitalization
of BSE grew from Rs. 15,396 billion at the end of Novermber, 2004 to Rs. 23,230 billion
at the end of Novermber, 2005 registering growth of over 50%. The market capitalization
of NSE in cash segment grew from Rs. 11,210 billion for 2003-2004 to Rs. 15,856 billion
for 2004-05 registering growth of 41% and Rs. 21,668 billion at the end of Novermber,
2004.

SECURITIES AND EXCHANGE BOARD OF INDIA

19
THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992.
An Act to provide for the establishment of a Board to protect the interests of the
investors in securities and to promote the development of, and to regulate, the
securities market and for matters connected therewith or incidental thereto.

BOMBAY STOCK EXCHANGE

Background: The BSE Sensitive Index (1978-79=100) has, to a considerable extent,

been serving the purpose of quantifying the price movements as also reflecting the
sensitivity of the market in an effective manner.
The number of companies listed on the Bombay Stock Exchange has registered a
phenomenal increase from 992 in the year 1980 to about 4800 companies by the end of
July 2005 and their combined market capitalization rose from Rs. 5,421 crores to around
Rs. 18, 00,000crores at end of July 2005.
These factors necessitated compilation of a new broad-based index series reflecting the
present market trends in a more effective manner and providing a better representation of
the increased equity stocks, market capitalization as also the newly emerged industry
groups. Towards this end, the Exchange constructed and launched on 27th May 1994, two
index series viz. the BSE-200 and the DOLLEX.
Coverage: The equity shares of 200 selected companies from the specified and non-
specified lists of this Exchange have been considered for inclusion in the sample for
‘BSE-200’. The selection of companies has primarily been done on the basis of current
market capitalization of the listed scrips on the exchange. Besides market capitalization,

20
the market activity of the companies as reflected by the volumes of turnover and certain
fundamental factors were considered for the final selection of the 200 companies.
Choice of Base Year: The financial year 1989-90 has been chosen as the base year for
the price stability exhibited during that year and due to its proximity to the current period.

NATIONAL STOCK EXCHANGE

The 13-year-old National Stock Exchange (NSE) has outshined the 130 years old
Bombay Stock Exchange (BSE) in terms of turnover and volumes. The BSE has lost its
market share in these segments from 36 per cent to 31 percent in last three years. The
turnover in BSE stood at around Rs 2,950 crore as on August 17, 2005 while the turnover
in NSE was Rs 3,926 crore. The volumes (numbers of shares traded) of NSE at 2.94 crore
was also much higher than the volumes of BSE. The NSE has rewritten a number of rules
and upset many traditions. As the derivatives segment has immense effect on the cash
market, the movement in this segment mostly determines the trend in the market.
Against nearly 1,400 companies listed on the NSE, the BSE has nearly 4,800 listed
companies. Despite such a huge number of listed companies, the total market
capitalization of BSE is around Rs 20 lakh crore while on the other hand NSE has a total
market capitalization of Rs 19.7 lakh crore.
The most tracked index on NSE, CNX Nifty also has more number of stocks than the
BSE Sensex. Nifty represents 50 stocks while the Sensex represents only 30 stocks. The
presence of more stocks on Nifty gives a better valuation than Sensex.
• The National Stock Exchange of India Limited has genesis in the report of the
High Powered Study Group on Establishment of New Stock Exchanges.
• NSE was promoted by leading Financial Institutions at the behest of the
Government of India and was incorporated in November 1992.
• It is a tax-paying company unlike other stock exchanges in the country.

21
 • 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 Group

1. NSCCL, The Organization

2. NSE.IT Ltd.
3. India Index Services & Products Ltd. (IISL)
4. Dot Ex International Limited
5. National Securities Depository Ltd. (NSDL)
1. NSCCL, The Organization

The National Securities Clearing Corporation Ltd. (NSCCL), a wholly owned

subsidiary of NSE, was incorporated in August 1995. It was set up with the following
objectives:

• to bring and sustain confidence in clearing and settlement of securities;

• to promote and maintain, short and consistent settlement cycles;
• to provide counter-party risk guarantee, and
• to operate a tight risk containment system.
2. NSE.IT Ltd

NSE.IT, a 100% subsidiary of National Stock Exchange of India Limited (NSE), is

the information technology arm of the largest stock exchange of the country.
NSE.IT possesses the wealth of expertise acquired in the last six years by running
the trading and clearing infrastructure of largest stock exchange of the country.

NSE.IT is an Export Oriented Unit with STP and plans to go global for various
IT services in due course. In the near future the company plans to release new
products for Broker Back-office Operations and enhance NeatXS / Neat iXS to
support Straight Through Processing on the net.

National Securities Depository Ltd. (NSDL) :

• In order to solve the myriad problems associated with trading in physical
securities, NSE joined hands with the Industrial Development Bank of
India (IDBI) and the Unit Trust of India (UTI) to promote
dematerialization of securities.
• Together they set up National Securities Depository Limited (NSDL), the
first depository in India.

• NSDL commenced operations in November 1996 and has since

established a national infrastructure of international standard to handle
trading and settlement in dematerialized form and thus completely
eliminated the risks to investors associated with fake/bad/stolen paper.

22
RELIGARE ENTERPRISES LIMITED
Religare, a Ranbaxy promoter group company, is one of India’s largest and fastest
growing integrated financial services institutions. The company offers a large and diverse
bouquet of services ranging from equities, commodities, insurance broking, to wealth
advisory, portfolio management services, personal finance services, Investment banking
and institutional broking services. The services are broadly clubbed across three key
business verticals- Retail, Wealth management and the Institutional spectrum. Religare
Enterprises Limited is the holding company for all its businesses, structured and being
operated through various subsidiaries.
Religare’s retail network spreads across the length and breadth of the country with its
presence through more than 900 locations across more than 300 cities and towns. Having
spread itself fairly well across the country and with the promise of not resting on its
laurels, it has also aggressively started eyeing global geographies
Religare is lead by a highly regarded management team that has invested crores of rupees
into a world class Infrastructure that provides there clients with real-time service & 24/7
access to all information and products. There flagship Religare Professional Network
offers real-time prices, detailed data and news, intelligent analytics, and electronic trading
capabilities, right at your finger-tips. This powerful technology is complemented by there
knowledgeable and customer focused Relationship Manager.

We are creating a World of Smart Investor

Religare offers a full range of financial services and products ranging from Equities to
Mutual Funds to enhance your wealth and hence, achieve your financial goals. Religare’s
Client Relationship Managers are available to you to help with your financial planning
and investment needs. To provide the highest possible quality of service, Religare
provides full access to all our products and services through multi-channels.

GROUP STRUCTURE

23
PHILOSOPHY

The Religare’s Philosophy – You Come First

We have created a unique organization that is designed for you – the Smart Investor –.
We passionately believe in the Smart Investor who wants to make his own educated
investment choices and demands world class access to a full range of services and
products ranging from Equities to Mutual Funds, combined with the highest level of
integrity, service and professionalism.

Religare is a full service investment firm offering clients access to a tremendous range of
financial services from 150 locations across 180 cities. We have a strong team of over
750 Client Relationship Managers focused on serving your unique needs. Our world class
infrastructure, built with tens of crores of investment, provides our clients with real-time
service, multi-channel & 24/7 access to all information and products. As we’ve expanded
and developed to serve the needs of all kinds of investors, we’ve been guided by one
underlying philosophy: You come first.

We are proud to introduce to you Religare Professional Network that offers real-time
prices, equity analysis, detailed data and news, intelligent analytics, and electronic
trading capabilities, right at your finger-tips. This powerful technology is complemented
by our knowledgeable and customer focussed Relationship Managers who are available
to help with your financial planning and investment needs.

VISION
To build Religare as a globally trusted brand in the financial services domain and present
it as the ‘Investment Gateway of India’

MISSION
Providing financial care driven by the core values of diligence and transparency.

BRAND ESSENCE
24
Religare is driven by ethical and dynamic processes for wealth creation.

BOARD OF DIRECTORS

Mr. Malvinder Mohan Singh - Chairman (Non Executive)

Mr. Sunil Godhwani - CEO & Managing Director, Religare Enterprises Limited
Mr. Sunil Godhwani, CEO & MD of Religare Enterprises Limited is also a Director in
subsidiary businesses including Religare Securities Ltd., Religare Commodities Ltd.,
Religare Finvest Ltd. and Religare Insurance Broking Ltd

Mr. Shachindra Nath - Group Chief Operating Officer, Religare Enterprises Limited
Mr. Anil Saxena - Group Chief Financial Officer, Religare Enterprises Limited
Mr. Shivinder Mohan Singh - Non Executive Director
Mr. Harpal Singh - Non Executive Director
Mr.Deepak Ramchand Sabnani - Independent Director
Mr.Padam Bahl - Independent Director
Mr.J.W. Balani - Independent Director
Mr. R. K. Shetty - Alternate to Mr. J. W. Balani
Capt.G.P.S.Bhalla - Alternate to Mr. Deepak Sabnani

25
RELIGARE SECURITIES LIMITED
Religare Securities Limited was incorporated on July 1992 as Fortis Securities Limited at
New Delhi under the Companies Act, 1956 with Registration No. IN – 301774. The name
of the Company was changed to Religare Securities Limited in the year 2006 due to
change in the main objects of the Company from Hospital Services to Investment &
Financial Services business. Company was promoted by Ranbaxy Promoters Group
Companies headquarters are co-located in Mumbai and Delhi, allowing it to access the
two most important regions for Indian financial markets, the Western region including
Mumbai, rest of Maharashtra and Gujarat; and the Northern region, including the
National Capital Territory of Delhi, nearby cities, parts of Haryana, Uttar Pradesh and
Punjab; and access the highly skilled and educated workforce in these cities. The
Marketing and Sales efforts are headquartered out of Mumbai; with a regional
headquarter in Delhi; and its back office, risk management, internal finances etc. are
headquartered out of Delhi, allowing our Company to scale these processes efficiently for
the nationwide network.
Religare Securities Limited (RSL) is a leading equity and securities firm in India. The
company currently handles almost 4-5% of the total volumes traded on NSE and in the
realm of online trading and investments it currently holds a share of close to 8% of the
market, as per some recent published reports.The major activities and offerings of the
company today are Equity broking, Depository participant services, Portfolio
Management Services, Institutional Brokerage & Research, Investment Banking and
Corporate Finance. To broaden the gamut of services offered to its investors, the
company has also recently unveiled a new avatar of it’s online investment portal armed
with a host of revolutionary features
RSL is a member of the National Stock Exchange of India, Bombay Stock Exchange of
India, Depository Participant with National Securities Depository Limited and Central
Depository Services (I) Limited, and SEBI approved Portfolio Manager
• Religare has been constantly innovating in terms of product and services and to
offer such incisive services to specific user segments it has also started the NRI,
FII, HNI and Corporate Servicing groups. These groups take all the portfolio
investment decisions depending upon a client’s risk / return parameter.

26
 • Religare has a very credible research and analysis division, which not only caters
to the need of our institutional clientele but also gives their valuable inputs to
investment dealers.
• Religare is also giving in house depository services to its clientele and is one of
the leading depository service providers in the country.
• In a span of less than five years of its retail operations, RSL has recorded a
healthy growth rate both in business volumes and profitability which is clearly
significant from the growth of its foot prints across India.

Member: NSE: SEBI Regn. No: INB 230653732 & INF 230653732 TM Co: 06537
Clearing Member (F&O) No. M50235
BSE:SEBI Regn. No: INB 010653732 | Clearing No: 3004 |NSDL: DP ID: IN
301774 | SEBI Regn. No: IN-DP-NSDL-150-2000 |
CDSL DP ID: 30200 SEBI Regn. No: IN-DP-CDSL-202-2003 |PMS Registration no:
INP 000000738 MAPIN No: 100001834 |
SEBI Merchant Banking Regn. No: MB/INM000011062

RELIGARE COMMODITIES LIMITED

Religare Commodities Limited (RCL) was initiated to spearhead Exchange based
Commodity Trading. As a member of NCDEX, MCX and NMCE, RCL is a trade
facilitator providing the platform to trade in commodities. Grounded in the Religare
philosophy, highly skilled and dedicated professionals strive to offer the client tailor-
made investment solutions across the country.

The Operating Fabric-Commodities Business

In terms of the business structure, RCL caters to retail clients; the HNI base through the
PCG desk; the farmers and commodity traders in the rural areas through it’s Mandi
locations across the country and the Corporate / Institutional business through one of the
“best in class” Corporate Desks.
Our business philosophy is to treat each client situation as unique, requiring customized
solutions. Our list of corporate clients reads like a Who’s Who of the Indian Industry and
we have been successful in providing them with practical customized solutions for their
requirements. We are propelled by our group vision and desire to strive tirelessly and aim
to be the best within this category.
RCL is creating immense strength into various research & analysis of various
commodities which would help the traders to sell, buy, hedge & invest. RCL appoints
commodity specific advisors, who constantly advise & educate clients and enhances
Religare Philosophy of “Financial Care Partner”. RCL team stands committed for a
transparent trade through the leading commodity exchanges of the country, which are
NCDEX and MCX. RCL is creating trading centers at local mandis that would enable the
market participants to have better understanding of the markets.

Products and Services

The Depository system in India links issuers, depository participants, depositories
(NSDL & CDSL) and clearing house / clearing corporation of commodity exchanges,
which facilitates holding of commodities in dematerialized form and transactions are
processed by means of account transfers.
27
 Religare Securities Limited also provides Commodity Depository Services to
investors as a Depository Participant with National Securities Depository Limited
(NSDL) and Central Depository Services (India) Limited (CDSL).
The investors can utilize the services of commodities depository by way of
receiving & giving deliveries of commodities at the designated warehouses/
commodity exchanges. MCX & NCDEX allows demat deliveries in commodities.

RELIGARE FINVEST LIMITED

Religare Finvest Limited (RFL), a Non Banking Finance Company (NBFC), promoted
by the promoter’s of Ranbaxy Group is aggressively making a name in the financial
services arena in India. In a fast paced, constantly changing dynamic business
environment, RFL has developed a change resilient vertically integrated value chain for
delivering the most competitive products and services.

RFL is primarily engaged in the business of providing finance against securities in

secondary market. It also provides finance for application in Initial Public Offers to non-
retail clients in the primary market.

RFL is also in to personal loan portfolio as fund based activity and mutual fund
distribution as fee based activities.

Along with this, the company also undertakes non-fund based advisory operations in the
field of Corporate Financing in the nature of Credit Syndication which includes inter alia,
bills discounting, inter corporate deposit, working capital loan syndication, placement of
private equity and other structured products.

Products and Services

Loan against shares
Corporate Finance
IPO Finance
Personal Finance
Corporate Advisory Group

RELIGARE INSURANCE BROKING LIMITED

Religare as an Insurance Broker

Religare Insurance Broking, a Religare Enterprises Limited venture is one of India’s
leading insurance broking firms, with one of the largest retail networks in the country.
The company holds a composite broker’s license operating in the life, Non-life and
reinsurance domains.
The company not only services but also provides customized solutions to individual retail
households / Clients but also to some leading corporate houses and institutions across the
country.

28
True to the spirit of its existence the company proactively represents and champions the
interests of its clients tirelessly to principal insurance Companies.
Within a short span it has Inked MOU’s with all the leading insurance companies in the
country and is backed by passionate professionals, a robust IT infrastructure and strong
risk analysis teams adept at identifying and analyzing your risks and providing you with
tailor made solutions.
The team across the country is driven by the core philosophy of creating and delivering
value to its customer

CORPORATE OBJECTIVES
1. To hold investments in various step-down subsidiaries for investing, acquiring,
holding, purchasing or procuring equity shares, debentures, bonds, mortgages,
obligations, securities of any kind issued or guaranteed by our Company.
2. To provide financial consultancy services; to provide investment advisory services on
the internet or otherwise; provide financial consultancy in the area of personal and
corporate finance; publish books and CD ROMs and any other information related to
the above.
3. To conduct the business of sale, purchases, distribution and transfer of shares, debts,
instruments and hybrid financial instruments and to perform all related, incidental,
ancillary and allied services.
4. To conduct depository participant services; to conduct de-materialization and re-
materialization of shares; set up depository participant centers at various regions in
India and to perform all related, incidental, ancillary and allied services.
5. To receive funds, deposits and investments from the public, Government agencies,
financial institutions and Corporate bodies; grant advances and loans; conduct
advisory services related to banking activities, project financing, funding of mergers
and acquisition activities; fund management and activities related to money market
operations.
6. To carry on the business of portfolio management services, investment advisory
services; custodial services; asset management services; leasing and hire purchase;
mutual fund services and to act as brokers of real estate and financial instruments.
7. To carry on the business of financing; provide lease and hire purchase services; to
provide consultancy in the area of lease and hire purchase financing.
8. To operate mutual funds; receive funds from investors; equity or debt instrument
research activity instrument in debt and/or equity instruments.

29
RELIGARE PRODUCTS AND SERVICES

A) Equity brokerage services

We are member of NSE and BSE and offer secondary market broking services to our
various retail customers. As on date, we have a registered client base of 36,311 nos. We
offer equity and derivatives broking services through dedicated dealers and managers. All
our centres are connected via VSAT, VPN and CTCL. Brokerage services are provided to
active trades, retail investors and high networth investors with advisory assistance by our
dedicated dealers and managers located at our centres based on technical, fundamental
and market research carried out by our research team. The retail customer acquisition has
seen accelerated growth owing to wide spread branch and franchisee network of the
Company.

B) Depository Services
We are having NSDL and CDSL Depository segments to attract our clients to open their
DEMAT accounts at one stop. We are ready with the trade anywhere to integrate our DP
server with the Online Back-Office platform to serve more transparently. At present, we
have strong base of 46,712 registered depository participants’ clients and continue to
increase the number of registered DPclients services due to increase in no. of centres,
internet trading and quality service.

C) Commodities Brokerage Services

We are having accessibility to trade in two different exchanges being member of Multi
Commodity Exchange (MCX) and National Commodity & Derivative Exchange
(NCDEX). We also offer commodities broking through our subsidiary company i.e. Steel
City Commodities Private Limited. SCCPL offer this service to its client as integrated
broking services using its infrastructure for equity broking. It has an advantage of using
its existing infrastructure and other support and back-up office for effective and efficient
execution of these activities.

D) Margin Trade Finance

We being engaged in the equity broking services and one of the key elements for
enhancing the volume is availability of margin amount. At present, the Company is
marginally extending this facility due to limited resources. We are permitted for margin
trade finance as per SEBI guidelines, which inter alia permits brokers with a minimum
networth of Rs. 30 million to offer margin-trade financing facility to its customers after
seeking prior approval from the stock exchange. The Company has networth of Rs.
153.28 million as on March 31, 2005 and is in a position to offer this facility to its
customers and for the same, it has already put in place all the necessary systems and
procedures. This would enable it to increase its trade volumes, number of clients
and at the same time additional earning from this specific activity.

E) Distribution of Financial Products

We are also in the activities of distribution of mutual funds, IPO marketing and now plan
to use our strength of network, customers specially high networth individuals and
corporates with high liquidity for distribution of financial products including fixed
30
income products such as bonds, corporate debentures, corporate fixed deposits etc. The
Company uses its relationship with its clients for marketing IPOs where it acts as broker
and also uses its centres for mobilizing retail subscription.
The retail segment is set to grow for number of reasons such as significant portion of
their saving comprising of financial assets, parked in bank fixed deposits, postal schemes
etc, which would now require an assets reallocations as these instruments no longer yield
attractive returns. Reforms in financial sector have opened up new avenues for
investments. Investors generally lack a perspective on planning for the future and need to
allocate their saving and earning in the right proportion to address their current and future
needs. Currently, there are very few and nominal investors who invest in the equity
market and it is expected that number will increase in due course. With a robust capital
market, remaining investors in the population class will look for a shift to equity related
instruments. Over the years, investors parked their surplus investments in high yielding
debt instruments with the steep reduction in interest rate, leading to a reduction in the
yield on fixed deposits and bank deposits. Investors need to look at alternate options,
which provide greater returns.

F) Distribution of Insurance products

We are also in the distribution of life insurance products through our group concern
Religare Insurance Broking Limited. We have decided to expand this activity and
propose to make it a wholly owned subsidiary. We propose to act as insurance broker
and for which necessary approvals would be obtained in due course.

Internet Trading – new initiative

We are gearing up with the trade anywhere on the Globe to expand our clientele network
This entity is to capture NRI clients as well as remote clients. We are already on the
testing pad to evaluate the security, reliability and accessibility.
Connectivity: All end user have their own internet account with the local ISP (Internet
Service Provider) to access Internet Trading Server installed at New Delhi.
Accessibility: Each User can trade in different Exchanges as per the request. RSL
provides two types of licensed software: Browser based and Application based. This
Front-end can support Multiple Market watch screens with Bank Interface. Client can
place orders between 9.50am to 3.30pm daily in Capital Market, Futures & Options and
Commodities segments. Since Commodity Market has dependency on International
Bullion Markets, the Live Market-Watch is available up to 11.50pm daily. On functional
side all four software’s are user-friendly to handle the client order requests. Client can
also cancel or modify their order requests as per their will and market conditions. All four
exchanges are working from Monday to Friday and no Trading activity is done on
Saturdays and Sundays. In case of Commodity segment, the exchange is open for trading
from Monday to Friday and on Saturday till 2.00pm.
Maintenance: Zero maintenance for end user and better to have multiple Internet
Accounts with two different Internet Service Providers.

31
RACE BASIC

 A/c activation charges Rs.299/-(adjustable against brokerage)

 Upfront cash or stock margin required of Rs5000/-.
 No software,easily accessible on browser.
 NSE cash segment,NSE F&O & BSE on single platform.
 Trade online or over phone.
 Access your ledger balances .
 Integrated DP back –office & trading a/c.
 Online transfer of funds through multiple banks.
 Lifetime free DP a/c (no amc)
 Earn interest on cash margin deposited with us.
 24*7 customer support centre.

RACE LITE

 A/c activation charges Rs 499/-.

 Min cash or stock margin of Rs 5000/-.
 No software, browser based.
 NSE cash segment, NSE BSE F&O on single platform.
 Real time streaming quotes.
 Alerts
 Hot key functions.
 Trade online or over phone.
 Access your ledger balances & a/c info over internet, SMS or over phone.
 Integrated DP, back office & trading a/c.
 Lifetime free DP a/c (no AMC)
 Earn interest on cash margin deposited with us
 24*7 customer support center.
 Online transfer of funds through multiple of banks.

RACE PRO

 A/c activation charges Rs 999/-(adjustable against brokerage ).

 Min cash margin Rs 10000/- required.
 Traders terminal on your desktop .
 NSE cash segment NSE BSE F&O on single platform.
 Real time streaming quotes.
 Advanced alerts.
32
  Technical charting.
 Multiple watch list.
 Advanced hot key functions.
 F&O calander.
 Access your ledger balances & a/c info over internet SMS & phone.
 Integrated DP back office & trading a/c.
 Online transfer of funds through multiple banks.
 Lifetime free DP a/c (NOAMC)
 Earn interest on cash margin deposited with us .
 24* 7 customer support center.

BROKERAGE

FOR RACE BASIC, LITE & PRO

INTRADAY

 Below 1 crore .05%.

 Between 1 crore to 5 crore .04%.
 More than 5 crore is .03%.

DELIVERY

 Below 1 crore .50%.

 Between 1 crore to 5 crore.40%.
 More than 5 crore .30%.

RACE FREEDOM

 MONTHLY SUBSCRIPTION : Rs 500/-

 QUARTERLY SUBSCRIPTION : Rs 1400/-
 HALF YEARLY SUBSCRIPTION :Rs 2500/-
 YEARLY SUBSCRIPTION :Rs 4000/-

The client gets Rs 300000/- free intraday /derivatives volumes & Rs 40000/-free delivery
volumes everyday @ 0% brokerage.

CALCULATION OF FREE VOLUMES

33
Segment NSE cash NSE NSE T2T BSE BSET2T Total
futures
Free 100000/- 100000/- N.A. 100000/- N.A. 300000/-
intraday
/derivative
volumes
Free 10000/- N.A. 10000/- 10000/- 10000/- 40000/-
delivery
volumes

BROKERAGE

INTRADAY DELIVERY

VOLUME BROKERAGE VOLUME BROKERAGE

RATE RATE
UPTO 1 LAKH NIL UPTO 1000/- NIL
1 LAKH-10 LAKH .03% 10000-1 ALKH .30%
10 LAKH- 1 .02% 1 LAKH-10 ALKH .20%
CRORE
1 CRORE -3 .015% 10 LAKH-30 .15%
CRORE LAKH
ABOVE 3 CRORE .01% ABOVE 30 LAKH .10%

OTHER FEATURES

 No Minimum brokerage requirement per contract note.

 No minimum brokerage requirement per tarde.
 Minimum brokerage per scrip is 2 p(for extra trades above free volumes)
 Charges on delayed payment @ 16 % P.A.
 Lifetime free AMC in depository A/C.
 Interest on cash margin lying with us @ 3% PA.
 Other statutory charges ,taxes & duties to be charged extra as applicable.
34
RALLY BASIC

 Dedicated dealers for facilitating trading 7 post trade needs.

 Dedicated RMs for assisting multiple investment needs.
 Regular news & market updates.
 Research services over SMS to keep you abreast.
 Daily & weekly technical reports.
 A complete information report on results & performance of indidual companies.
Complete reports on various economic sectors &their performance along with
analysis of few major companies in that sector.
 Trading calls in F&O.
 Daily capsule of market indices & index movement.
 Access to all you’re A/C through your customer relationship no.
 Access your ledger balances & A/C info over internet branch & call centre.

RALLY LITE

 Browser based platform ,easily accessible over internet explorer from any where .
 Minimum margin to be maintained Rs 5000/-.
 No software.
 NSE cash segment ,NSE F&O & BSE on single platform.
 Real time streaming quotes.
 Multiple watch list.
 Hot key functions.
 Online transfer of funds through multiple banks.
 Trade online or over phone @branch .

RALLY PRO

 Application based programme .

35
  A/C actvation charges Rs 1800/- (adjustable against brokerage)
 Traders teminal on your desktop.
 NSE cash segment ,NSE F&O,&BSE on single platform .
 Real time streaming quotes.
 Multiple watch list.
 Hot key functions.
 Online transfer of funds through multiple banks.
 Trade online or over phone @branch.

BROKERAGE

.05 % FOR INTRADAY EXPOSURE 10 TO 15 TIMES.

.30 % FOR DELIVERY EXPOSURE 4 TO 6 TIMES.

Relationship Manager and advisory support.

A/c opening charges is Rs. 500 only.

INTRODUCTION
In today’s scenario we have seen that everybody is investing the money what he/she has
saved from his/her income to face & fulfil the future difficulties & needs respectively.
because all of us know very well that future is uncertain & what will happen in future we
don’t know & in this materialistic world only money matters ,in plain language if you
have money so you will be known otherwise nobody will entertain you. That is why you
should have money but now question arises that where should we invest so that we can
earn much more return in comparison investing in other financial instruments as bank
,real estate, mutual fund ,post office deposits etc.
In share market uncertainty is much more so only formula works here that is “THE
MORE YOU RISK, THE MORE YOU GAIN”
So if you want to earn much more so you have to invest in share market it is more
volatile but now it has again touched 14000 mark.
What is a SHARE? It’s not complicated. A dictionary definition of a share might go
something like this: a part in company’s management where through buying shares at
36
giving prices we get some proportion in that manner in the particular company. It is very
tough to know about the share market; in layman language we can say that if we invest
our money in other resources so what return we get is given so through this analysis we
can easily understand that where should we invest money so that we can earn good
return. Here I m presenting some facts that why should a person should invest in equity
market because it gives better return than any other investment.

Facts are following…………….

SI NO. TYPE OF RATE OF RISK

INVESTMENT INTEREST PERCENTAGE
1 BANK’S SAVING 4.5% 0%
A/C
2 FIXED DEPOSIT 6% 0%
3 INSURANCE 6% 0%
4 MUTUAL FUND UNLIMITED 100%
5 SHARES UNLIMITED 100%
6 COMMODITIES UNLIMITED 100%
7 REAL ESTATE UNLIMITED 100%
8 DEBT 4% TO 5% 0%
9 BONDS 6% 0%

All these things incite up a person to invest in the share market because in today’s
scenario a person only watches the best return on their money, best after sale services
nothing else. On the whole we learn that investing in share market gives good returns this
is not confirm that you will get a fixed amount of return.

RESEARCH METHODOLOGY

PRIMARY OBJECTIVE
The primary objective of report is:
 To get the knowledge of share market.
 To know different types of shares (categories).
 How to invest in shares.
 What is the requirement to open DE-MAT A/C.

SECONDARY OBJECTIVE
The secondary objective is to understand the Religare Securities Online products &
services and to create awareness among consumers regarding Religare brand.

RESEARCH DESIGN
The research consists of two jobs. First to acquire prospective clients who are interested
in equities market through telecalling.Then fix an appointment to meet the client and
37
explain him/her regarding the products & services of Religare Securities Ltd. and other
necessary details about stock market. Next, facilitate clients in opening and activation of
De-mat A/c which includes (filling up of Race or Rally forms, documents collection etc.).
Lastly to provide post purchase service to the customer to improve customer relationship
and help him in sorting out his problems.
The second job is to compare Religare Securities with different broking houses
(Sharekhan, 5Paisa.com, ICICI Direct.com, India bulls, Hdfc, Kotak Securities) to clinch
deal and increase Religare’s client base.

SCOPE OF THE STUDY

In order to be a smart investor, it is important to understand what are share & share
market and its types. Its technical & fundamental analysis. Also how shares with different
philosophies gives different returns. There are a few reasons why this is significant, but
most importantly, it helps investors to invest in the right share. Having this knowledge
will allow investors to effectively diversify and manage their portfolios.

In financial markets, stock is the capital raised by a corporation or joint-stock company

through the issuance and distribution of shares. A person or organization which holds at
least a partial share of stocks is called a shareholder. The aggregate value of a
corporation’s issued shares is its market capitalization.

In the United Kingdom, South Africa and Australia, the term share is used the same way,
but stocks there refer to either a completely different financial instrument, the bond, or
more widely to all kinds of marketable securities.

TYPES OF STOCK

1 Common stock

Common stock, also referred to as common or ordinary shares, are, as the name
implies, the most usual and commonly held form of stock in a corporation. The other type
of shares that the public can hold in a corporation is known as preferred stock. Common
stock that has been re-purchased by the corporation is known as treasury stock and is
available for a variety of corporate uses.

Common stock typically has voting rights in corporate decision matters, though perhaps
different rights from preferred stock. In order of priority in a liquidation of a corporation,
the owners of common stock are near the last. Dividends paid to the stockholders must be
paid to preferred shares before being paid to common stock shareholders

2 Preferred stock

38
Preferred stock, sometimes called preferred shares, have priority over common stock in
the distribution of dividends and assets. Most preferred shares provide no voting rights in
corporate decision matters. However, some preferred shares have special voting rights to
approve certain extraordinary events (such as the issuance of new shares, or the approval
of the acquisition of the company), or to elect

3 Dual class stock

Dual class stock is shares issued for a single company with varying classes indicating
different rights on voting and dividend payments. Each kind of shares has its own class of
shareholders entitling different rights.

4 Treasury stock

Treasury stocks are shares that have been bought back from the public. Treasury Stock is
considered issued, but not outstanding.

5 Stock Derivatives

A stock derivative is any financial claim which has a value that is dependent on the price
of the underlying stock. Futures and options are the main types of derivatives on stocks.
The underlying security may be a stock index or an individual firm’s stock, e.g. single-
stock futures.Stock futures are contracts where the buyer, or long, takes on the obligation
to buy on the contract maturity date, and the seller, or short takes on the obligation to sell.
Stock index futures are generally not delivered in the usual manner, but by cash
settlement.A stock option is a class of option. Specifically, a call option is the right (not
obligation) to buy stock in the future at a fixed price and a put option is the right (not
obligation) to sell stock in the future at a fixed price. Thus, the value of a stock option
changes in reaction to the underlying stock of which it is a derivative. The most popular
method of valuing stock options is the Black Scholes model [1].

Apart from call options granted to employees, most stock options are transferable.

TRADING

A stock exchange is an organization that provides a marketplace for either physical or

virtual trading shares, bonds and warrants and other financial products where investors
(represented by stock brokers) may buy and sell shares of a wide range of companies. A
company will usually list its shares by meeting and maintaining the listing requirements

39
of a particular stock exchange and the different. In the United States, through the inter-
market quotation system, stocks listed on one exchange can also be bought or sold on
several other exchanges, including relatively new so-called ECNs (Electronic
Communication Networks like Archipelago or Instinet).Stocks used to be broadly
grouped into NYSE-listed and NASDAQ-listed stocks. Until a few years ago there was a
law in the USA that NYSE listed stocks were not allowed to be listed on the NASDAQ or
vice versa.

Many large foreign companies choose to list on a U.S. exchange as well as an exchange
in their home country in order to broaden their investor base. These companies have then
to ship a certain amount of shares to a bank to the US (a certain percentage of their
principal) and put it in the safe of the bank. Then the bank where they deposited the
shares can issue a certain amount of so-called American Depositary Shares, short ADS
(singular). If someone buys now a certain amount of ADSs the bank where the shares are
deposited issues an ADR American Depository Receipt (ADR) for the buyer of the
ADSs.

Likewise, many large U.S. companies list themselves at foreign exchanges to raise capital
abroad.

ARBITRAGE TRADING

Although it makes sense for some companies to raise capital by offering stock on more
than one exchange, in today’s era of electronic trading, there is limited opportunity for
private investors to make profit on pricing discrepancies between one stock exchange and
another. As such, arbitrage opportunities disappear quickly due to the efficient nature of
the market.

BUYING

There are various methods of buying and financing stocks. The most common means is
through a stock broker. Whether they are a full service or discount broker, they arrange
the transfer of stock from a seller to a buyer. Most trades are actually done through
brokers listed with a stock exchange, such as the New York Stock Exchange.

There are many different stock brokers from which to choose, such as full service brokers
or discount brokers. The full service brokers usually charge more per trade, but give
investment advice or more personal service; the discount brokers offer little or no
investment advice but charge less for trades. Another type of broker would be a bank or
credit union that may have a deal set up with either a full service or discount broker.
There are other ways of buying stock besides through a broker. One way is directly from
the company itself. If at least one share is owned, most companies will allow the
purchase of shares directly from the company through their investor relations
departments. However, the initial share of stock in the company will have to be obtained
through a regular stock broker. Another way to buy stock in companies is through Direct
Public Offerings which are usually sold by the company itself. A direct public offering is
an initial public offering in which the stock is purchased directly from the company,
usually without the aid of brokers.When it comes to financing a purchase of stocks there
40
are two ways: purchasing stock with money that is currently in the buyers ownership, or
by buying stock on margin. Buying stock on margin means buying stock with money
borrowed against the stocks in the same account. These stocks, or collateral, guarantee
that the buyer can repay the loan; otherwise, the stockbroker has the right to sell the stock
(collateral) to repay the borrowed money. He can sell if the share price drops below the
margin requirement, at least 50% of the value of the stocks in the account. Buying on
margin works the same way as borrowing money to buy a car or a house, using the car or
house as collateral. Moreover, borrowing is not free; the broker usually charges 8-10%
interest.

SELLING

Selling stock is procedurally similar to buying stock. Generally, the investor wants to buy
low and sell high, if not in that order (short selling); although a number of reasons may
induce an investor to sell at a loss, e.g., to avoid further loss. As with buying a stock,
there is a transaction fee for the broker’s efforts in arranging the transfer of stock from a
seller to a buyer. This fee can be high or low depending on which type of brokerage,
discount or full service, handles the transaction.

After the transaction has been made, the seller is then entitled to all of the money. An
important part of selling is keeping track of the earnings. Importantly, on selling the
stock, in jurisdictions that have them, capital gains taxes will have to be paid on the
additional proceeds, if any, that are in excess of the cost basis.

STOCK PRICE FLUCTUATION

The price of a stock fluctuates fundamentally due to the theory of supply and demand.
Like all commodities in the market, the price of a stock is directly proportional to the
demand. However, there are many factors on basis of which the demand for a particular
stock may increase or decrease. These factors are studied using methods of fundamental
analysis and technical analysis to predict the changes in the stock price. Stock price is
also changed based on the forecast for the company and whether their profits are
expected to increase or decrease. In finance, short selling or “shorting” is a way to
profit from the decline in price of a security, such as stock or a bond.

Some investors “go long” on an investment, hoping that price will rise. To profit from the
stock price going down, short sellers can borrow a security and sell it, expecting that it
will decrease in value so that they can buy it back at a lower price and keep the
difference. The short seller owes his broker, who usually in turn has borrowed the shares
from some other investor who is holding his shares long; the broker itself seldom actually
purchases the shares to lend to the short seller.[1]

For example, assume that shares in XYZ Company currently sell for $10 per share. A
short seller would borrow 100 shares of XYZ Company, and then immediately sell those
shares for a total of $1000. If the price of XYZ shares later falls to $8 per share, the short
seller would then buy 100 shares back for $800, return the shares to their original owner,
and make a $200 profit. This practice has the potential for an unlimited loss. For

41
example, if the shares of XYZ that one borrowed and sold in fact went up to $25, the
short seller would have to buy back all the shares at $2500, losing $1500.

However, the term “short selling” or “being short” is often used as a blanket term for all
those strategies which allow an investor to gain from the decline in price of a security.
Those strategies include buying options known as puts. A put option consists of the right
to sell an asset at a given price; thus the owner of the option benefits when the market
price of the asset falls. Similarly, a short position in a futures contract, or to be short a
futures contract, means the holder of the position has the obligation to sell the underlying
asset at a later date.

In fact, what is many times labeled short selling is options or futures activity, since this
activity greatly magnifies the gain that results from a securities price loss. For example, if
the next earnings release of XYZ company is going to show that its profits declined
somewhat in some of its divisions, its stock might decline only 5 percent when that
information is released. Someone within the company who wants to trade in inside
information however would probably not be satisfied with only a 5 percent gain on his
short sell and instead would buy put options or other derivatives or futures to gain
possibly 20 or more percent on the decline in the stock price of XYZ.

CATEGORIES OF SHARES

1. EVERGREEN

These stocks are steady compounders, churning out steady growth rates year on year.
They are typically significant players in their markets, with sound strategies that will
help them achieve and sustain market dominance in the long run. They have strong
brands, management credentials and a consistent track record of achieving super
normal shareholder returns. We expect stocks in this category to compound at
between 18-20% per annum for the next five to ten years.
Also called ownership stocks, Evergreen stocks are the brightest jewels in any
portfolio.

2. APPLE GREEN

These are stocks that have the potential to be steady compounders and are attempting
to move upwards, to turn Evergreen. They rank a shade below the Evergreen
companies, only because their potential in the five to ten years’ time is still not very
clear, although they might grow at rates faster than that of the Evergreen stocks in the
next year or two. They could grow at 25-30% per annum over the next two to three
years.

3. EMERGING STAR

These are typically young companies, often in niche businesses, that have the
potential to grow and dominate their niches. Even better, they might turn out to be
real giants, if their niches explode into full-blown markets in their own rights. These
stocks are potential ten-baggers but you need to be patient.

4. UGLY DUCKLING
42
 These are companies that are trading below their fair value or at values which are at a
significant discount to that of their peer group, due to a combination of
circumstances. But things are now starting to happen in these companies or in their
markets that are likely to cause a re-evaluation of their prospects. These stocks could
double in two to three years’ time.
Buy into an Ugly Duckling now and you’d have a beautiful white swan on your hands
two to three years down the line.

5. VULTURE’S PICK

These are companies with valuable assets or brands that have been trashed to
ridiculously low prices. Buy a Vulture’s Pick and wait for a predator who finds its
assets undervalued to come along. This could be a long wait but the returns could be
startlingly high.The key is to be patient. The vulture after all is a patient bird.

6. CANNONBALL

These are companies with valuable assets or brands that have been trashed to
ridiculously low prices. Buy a Vulture’s Pick and wait for a predator who finds its
assets undervalued to come along. This could be a long wait but the returns could be
startlingly high.The key is to be patient. The vulture after all is a patient bird.

43
PORTER’S FIVE FORCES MODEL FOR COMPETITORS ANALYSIS

An important part of the Strategic Analysis and Planning concerns

Porter’s Competitive
Forces Model and it is interesting to see how this well-defined part can be modeled so
that the knowledge that it contains can be used in an expert system.
Knowledge in the field of strategic analysis is either uncertain or incomplete. An expert
in the field generally will not have all data at his disposal. In particular, many data
concerning the environment of the enterprise, such as data of competitors and suppliers,
will sometimes be missing or is difficult to uncover and thus cannot be taken into
account. But also data from within the own enterprise is not always readily available.
Whatever the reason for this lack of data may be, the expert is expected to generate an
analysis the best he can based on data that is available. Naturally, the more relevant data
he can use, the better the quality of the analysis will be. In other words, if the input data is
not sufficiently available, conclusions drawn will be correspondingly less certain. This is
one of the most striking characteristics of an expert. He is able to come to conclusions
based on a limited number of data that in addition may also be uncertain. For this purpose
he will use his experience. It must also be observed, however, that sometimes an analysis
report must be generated in a very limited period of time and then, whether available or
not, the number of data used must inevitably be limited. It is obvious that an expert
system must also be able to deal with this type of heuristic knowledge and come to
conclusions that consequently will also be uncertain.
Our goal here is to address the most important dimensions of each of the five forces, for
they will be incorporated in the knowledge base (e.g. in the form of business rules) of the
proposed expert system. A number of important economic and technical characteristics
are critical to the strength of each competitive force. We will discuss them briefly.

Barriers to entry
These are the important structural components with an industry to limit or prohibit the
entrance of new competitors. The major components are scale economies (advantage of
experience, learning and volume), differentiation (brand image and loyalty), capital
requirements (new entrants will face a risk premium), switching cost involved by the
customer, access to distribution channels and cost disadvantages (patents, location,
subsidies).

44
Rivalry among existing competitors
In most industries, especially when there are only a few major competitors, competition
will very closely match the offering of others. Aggressiveness will depend mainly on
factors like number of competitors, industry growth, high fixed costs, lack of
differentiation, capacity augmented in large increments, diversity in type of competitors
and strategic importance of the business unit.

Substitutes
These are products or solutions that basically perform the same function but are often
based on a different technology. Depending on the level of abstraction nearly everything
can be a substitution. In general the only factor that really matters is a shift in technology.

Power of buyers
Through their bargaining power buyers can force the competitors to lower their prices or
force higher quality or better service. The major factors which determine the bargaining
power are volume (relative to seller sales), does the product represent a major fraction of
the buyer’s costs or purchases, differentiation or standard product, switching costs, buyer
profitability (hence their price sensitivity), threat of backward integration, importance to
the quality of the final product, and level of knowledge and information of the buyer of
industry demand, actual market prices and supplier cost.

Power of suppliers
Suppliers can exert their bargaining power over participants by threatening to raise prices
or reduce the quality. A supplier group is powerful if they are more concentrated than the
industry they sell to, or if the customer group is not important for the suppliers, if the
product is an important input to the buyer’s business, or they have built up switching
costs, or the supplier group poses a threat of forward integration.

Through addressing these dimensions which make up the Five Forces

we have outlined
factors which will be taken into account in our expert system. It will still be the expert’s
insight who will assert the value of impact of each individual variable. Another aspect is
the relative weight of each of the factors in the overall assessment.

45
 PORTER’S FIVE FORCES OF COMPETITIVE POSITION

Threat from new Market

Entrants

• entry ease/barriers
• geographical factors
• incumbents resistance
• new entrant strategy
• rou

Bargaining power of Bargaining power of buyers

Supplier
• brand reputation
• geographical coverage
• product/service level
quality
• relationships with
customers
• bidding
processes/capabilities
Competitive Rivalry
• number and size of firms
• industry size and trends
• fixed v variable cost bases
• product/service ranges
• differentiation, strategy
• buyer choice
• buyers size/number
• change cost/frequency
• product/service
importance
• volumes, JIT scheduling

Threats from substitutes

• alternatives price/quality
• market distribution changes
• fashion and trends 46
• legislative effects
1. Entry barrier
Past low entry-barrier: Since the early ‘80s Indian policy makers and politicians have
placed tremendous faith in the public equity market. Partly as a result of lack of state
resources, partly because of pressure from various segments to ‘develop’ the Indian
capital markets, businessmen have been encouraged to tap the public savings directly by
issuing equity. The encouragement primarily came in the form of low entry barrier. As
long as you could hire a good merchant banker and as long as the equity market was
buoyant, even small companies could get listed. The result has been a huge surge of listed
companies.
Current Entry-barrier: In 1995-96 the entry barrier was effectively raised to Rs 10 crore
of post issue-listing. At one stroke this eliminated a lot of companies from accessing the
public market. How many have a Rs 10 crore capital - among those who have not already
gone public during the free-for-all till 1995? Not many. As the security industry is highly
depends on capital market, so entry barrier of the industry is also decreasing.
Threat of Entry:
Factors that determine the threat of entry include capital requirements, economies of
scale, switching costs, and brand value and uncertainty about future.Brand identity is
important in the share broking sector, and benefits larger firms. Major broking firms
allocate considerable resources to marketing efforts. Frequent introductions of new
schemes and services and other incentives have been successful in enticing investors or
clients to trade with certain firms. These factors can often be strong enough to cause a
customer to choose one firm over another—even when the other firm offers a lower
brokerage charge.

2. Threat from Substitutes

The third factor affecting industry competition is the availability of substitutes. The
relative price of substitutes and the buyer propensity to substitute have effects on the
industry. Likely substitutes for investment in stock market are bank deposit, post office
deposits and investment through personal lending. Although there is a high return in the

47
capital market but there is high risk also. So if people are not interested in capital market
then the share broking firm are of no use.The threat of substitutes has to do with time,
money, personal preference, and convenience in the share broking industry.

3. Competitive Rivalry

The final factor is competitive rivalry. Intensely competitive industries generally earn low
returns because the cost of competition is high or buyers are receiving the benefits of
lower prices. Factors that affect competitive rivalry include industry growth, fixed costs,
brand identity, and barriers to exit. The security industry is growing day by day. So the
rivalry levels of different competitors in the industry are rapidly growing.

4. Bargaining power of supplier

The MEMBER may insist the CLIENT to deposit interest-free margin money as a
percentage of the price of securities proposed to be purchased, unless the CLIENT
already has an equivalent credit with the MEMBER.

The MEMBER may insist the CLIENT to deposit interest-free margin money as a
percentage on the price of securities proposed to be sold, unless the MEMBER has
received from the CLIENT the securities in its pool account prior to such sale or has
received the securities with valid transfer documents to the Member’s satisfaction prior to
such sale.The MEMBER is authorized to raise contract notes, debit notes etc. on the
CLIENT and recover any amount due from the CLIENT in connection with the regular
business. The contract notes issued by the MEMBER in the electronic form with digital
signature is fully valid under the SEBI /Exchange rules and is binding on the CLIENT
and is valid mode of delivery of the same.The MEMBER shall send the contract note in
physical form or digital form to the CLIENT within 24 hours of the execution of the
Client’s transaction or at such interval as may be required by the Exchange from time to
time, via mail, email , fax, courier, Registered A.D, oral communication or otherwise at
the postal address, telephone/fax numbers or e-mail addresses intimated by the CLIENT
to the MEMBER. The CLIENT understands that it is his/her/its responsibility to review
the trade confirmation upon its first receipt. Any objection should be informed in writing
within twenty-four hours of such confirmation. In all cases, the MEMBER reserves the
right to determine the validity of the Client’s objection to the transaction. The CLIENT
agrees that the MEMBER will not be responsible for the non-receipt of the trade
confirmation due to any change in the correspondence address/ telephone number or
email address of the CLIENT, the CLIENT not having intimated to the MEMBER. The
MEMBER shall also send the Order/Trade confirmation slip through e-mail to the
CLIENT at his/her request, within (time period as specified by the CLIENT) from the
time of execution of order/ trade on the NEAT/CTCL system, as the case may be. The
CLIENT agrees that the information sent by MEMBER by E-mail is deemed to be a valid
delivery of such information by the MEMBER.

The MEMBER may at its sole discretion prescribe the payment of margin in the form of
cash instead of securities. The CLIENT accepts to comply with the Member’s
requirement of payment of Margin, failing which the MEMBER may sell, dispose,
transfer or deal in any other manner the securities already placed with it as Margin or
square off all or some of the positions of the CLIENT as it deems fit in its discretion
without further reference to the CLIENT and any resultant or associated losses that may
48
occur due to such square off/sale shall be borne by the CLIENT, and the MEMBER is
hereby fully indemnified and held harmless by the CLIENT in this behalf.

5. Bargaining power of buyer

The CLIENT authorizes the MEMBER to set off a part or whole of the Margin i.e. by
way of appropriation of the relevant amount of cash or by sale or transfer or pledge of all
or some of the securities which form part of the margin, against any dues of the CLIENT
or of a member of the “Family” (hereinafter mean all the individuals, group companies,
firms, entities and other persons as specified by the CLIENT) in the event of the failure
of the CLIENT or a member of the Family of the CLIENT to meet any of their respective
obligations under these terms.

DIFFERENT COMPETETIORS
The major players in online trading are:

 ShareKhan.com
 5paisa.com
 Kotak Securities
 IndiaBulls.com
 ICICIDirect.com
 HDFC

Company Background
IndiaBulls is a retail financial services company present in 70 locations covering 62
cities. It offers a full range of financial services and products ranging from Equities to
Insurance. 450 + Relationship Managers who act as personal financial advisors.

Online Account Type

Signature Account : Plain Vanilla Account with focus on Equity Analysis. The equity
analysis is a paid service even for A/c holders
Power Indiabulls: Account with sophisticated trading tools, low commissions and
priority access to R.M

49
Pricing of IB Accounts

Signature Account
 Account Opening : Rs 250
 Demat: Rs 200 if POA is signed, No AMC for this DP
 Initial Margin : NIL
 Brokerage : Negotiable

Power IndiaBulls
 Account Opening : Rs 750
 Demat: Rs 200 if POA is signed, No AMC for this DP
 Initial Margin : NIL
 Brokerage : Negotiable


PAID Research
SCHEME FACILITY
WebBased-1-Month-500: View & Print on website
WebBased-1-Year-6000 View & Print on website
PrintReport-1-Month-750: View & Print on website + 10 Reports
Delivered
PrintReport-1-Year-9000: View & Print on website + 10 Reports
Delivered

Deal Clinchers v/s India Bulls

POA for Clients DMAT

All shares held by client trading with IB are moved to IB Pool Account and the same is
shown as a reflection in client DP account. Charges are levied to move shares from IB
pool Account to client DP account

Paid Research Services

Access to an research even for an IB trading account holder is charged a min of Rs 500
a month

Margin Funding hoax

The interest on funding starts on leveraged delivery trades from T+1 day itself @21%
p.a, on a daily basis

The role of Relationship Manager

Each RM is looked upon as a revenue generator and he gets a % on business generated
from client. This can lead to over leveraged (Interest) & high frequency(Brokerage)
trading, which may not be in the best interest of the client

50
Company Background
ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an
Affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank
Limited

Account Types
 ICICI Direct e-invest Account : Plain Vanilla Account with focus on 3 in 1
advantage. Differentiated in services within the account
1.Cash on spot
2.MarginPlus
Premium Trading interface of ICICIDirect Link is given to DBC partners
And HNI’s.
 Account Opening : Rs 750
 Schemes : For short periods Rs 750 is refundable against brokerage generated in
a qtr. These schemes are introduced 3-4 times a year.
 Demat: NIL, 1st year charges included in Account Opening Plus a facility to open
additional 4 DP’s without 1st yr AMC
 Initial Margin : Nil
 Brokerage : All brokerage is inclusive of stamp duty and exclusive of other
taxes.

Delivery Vol per qtr Brokerage * Square Vol off p m Brokerage **

< 10 lakhs 0.75%
10 lakhs - 25 lakhs 0.70%
25 lakhs -50 lakh 0.55%
50 lakhs – 1 Cr 0.45%
1 Cr – 2 Cr 0.35%
2 Cr – 5 Cr 0.30%
• 5 Cr 0.25%

Deal Clinchers v/s ICICIDirect

• Poor online Interface

51
 Slow website interface with no real-time quotes creates a dissatisfaction among high
frequency traders
• Margin trading restriction
The margin trading system is available up to 2:45 p.m, with outstanding net positions
under margin segment automatically squared off at any time between 2:45 – 3:30 p.m.
Thus no control of square off price.
• Morning Trades Issue
Being one of the websites with largest no of after hour orders which are pushed 1st
thing in the morning, creates a choking of orders to the exchange, causes delay of
confirmations for new order placed during the early morning trades
• Restriction of BTST
The sale of shares purchased is restricted to T+1 day and is not permitted on T+2 Day.

• No leverage for Delivery trades

Delivery is restricted to the total money allocated into the trading account.
• No flexibility on leverage on Intra-day trades
The leverage of 4 times is available for intra- day trades.
• Restriction of Bank Account
The choice of bank is restricted to ICICI Bank.
• Higher Brokerage rates with slabs
The delivery brokerage is pegged at 0.75% and trading at 0.10% each side, this makes
is very unviable for customers dealing in large volumes. Although progressively the
delivery and trading brokerage reduce as volumes go up.

Hdfcsecurities.com
What you need, when you need it

Company Background
HDFC Securities Ltd, is promoted by the HDFC Bank, HDFC and Chase Capital Partners
and their associates. Pioneers in setting up Dial-a-share services with the largest team of
Tele-brokers.

Online Account Type

HDFC Online Trading A/c : Plain Vanilla Account with focus on 3 in 1 advantage

Pricing of HDFC Account

 Account Opening : Rs 750

52
  Demat: NIL, 1st year charges included in Account Opening
 Initial Margin : Rs 5000/- for non HDFC Bank customers ( AQB)
 Brokerage :
Trading 0.15%* each side + ST
Delivery 0.50%** each side + ST

• Rs 25 Min Brokerage per transaction

** Rs 8 Min Brokerage per transaction

Deal Clinchers v/s HDFC Securities

• Poor online Interface
Apart from having no product to cater to Day-Traders, the hdfcsec.com website is
plagued with downtime. The same is currently being revamped.
• Lack of focus on Broking
The core business of HDFC is Housing Finance and that of HDFC Bank is Banking.
Broking as a business is a small part of the portfolio of financial services and hence the
commitment to resources is limited.
• No Leverage
No leverage is available to clients even for Intra-Day trades, effectively all clients are on
cash and carry system.
• No flexibility in commercial terms
The delivery brokerage is pegged at 0.5% and trading at 0.15% each side, this makes it
unviable for customers dealing in large volumes.

53
DIAGRAMATIC COMPARISION OF DIFFERENT BROKING HOUSES

54
55
REQUIREMENT FOR OPENING DEMAT ACCOUNT IN RELIGARE
SECURITIES LIMITED
Tie up with four banks i.e. HDFC IDBI CITI UTI bank for online money transfer.
DOCUMENTS:
(A) For Identification Proof-
VOTER ID CARD OR DRIVING LICENCE OR PASSPORT OR PAN CARD (ANY
ONE)
(B)FOR RESIDENCE PROOF-
LATEST BANK STATEMENT OR VOTER ID CARD OR DRIVING LICENCE OR
PASSPORT OR TELEPHONE BILL STATEMENT(Latest bill) OR ELECTRICITY
BILL STATEMENT(Latest bill) (ANY ONE)
(C) THREE PHOTOGRAPHS

CONTRACT LEWIS
SERVICE TAX & EDUCATION CESS

NSE/ BSE EQUITY & DERIVATIVES

SERVICE TAX 12%

EDUCATION CESS .36%

56
TRANSACTION CHARGES

NSE EQUITY .0036% BSE EQUITY .0041%

DERIVATIVES .0041%

STAMP DUTY

NSE/BSE EQUITY DEL BASED .001%

SQ/OFF .002%

DERIVATIVES FUTURES .002%

OPTIONS .002% OF PREMIUM IF NOT EXERCISE

SECURITY TRANSACTION TAX

NSE/BSE EQUITY DEL BASED .125% OF TURNOVER

SQ/OFF .025% OF TURNOVER

DERIVATIVES .017% OF TURNOVER (STRIKE+PREMIUM)

INTERNAL SCANNING & ORGANISATION ANALYSIS

Religare Securities Limited has been granted ‘PR1+’ rating for its unsecured short term
borrowing program of Rs. 200 million. Vide letter dated May 5, 2004 the rating agency
has increased the unsecured short term borrowing limit to Rs. 320 million maintaining the
‘PR1+’ rating. ISL also enjoys ‘A+’ rating for medium to long term unsecured borrowing
program of Rs. 200 million. The Rating to the company has been assigned by Credit
Analysis Research Limited. As for the present issue of equity shares of our Company,
credit rating is not required.

SWOT ANALYSIS

STRENGTHS
1. Diverse Branch Network
Since Company inception in FY 1992 Company and its subsidiaries have grown from a
single location to a nationwide network spread over 900 offices in 320 cities. They have a
pan India distribution networks for the purpose of distribution of financial products and
services. Such a diverse and integrated network provides a centralized platform to there
clients.

57
2. Bouquet of financial products and services
Company and its subsidiaries offer various financial services and products ranging from
equity, F & O and wholesale debt, mutual fund an distribution, equity research analysis,
depository services to cater to the specific needs of the retail and institutional investors
thus providing all these services in single platform.
3. Advanced Technology team that delivers market leading product innovation
There ongoing investment in technology is a key element in expanding there product and
service offerings, enhancing there delivery systems, providing fast and consistent client
service, reducing processing costs, and facilitating there ability to handle significant
increases in client activity without a corresponding rise in risk and staff. Company and its
subsidiaries have an in-house technology team of 27 people comprising of several
engineers. The in-house technology team has been responsible for developing the
technology products for operating at a large scale with efficient back office systems. The
application of technology allows Company and its subsidiaries.
To build scaleable product and service offerings. The in-house technology team
developed one of the first Internet trading platforms in India, one of the first in-house
real-time CTCL link with NSE. Company and its subsidiaries introduced integrated
accounts with automated gateways with client bank accounts so that they can transfer
funds to and from their bank account to their brokerage account with the Company. This
has enhanced customer ability to access their funds for market related activities. The in-
house technology team has good expertise to create mission critical applications and in
the maintenance and upkeep of high transaction processing of there web-site.
4. Strong Sales and Marketing Teams with continuous reinvestment and training
Company’s relationship manager channel (through a team of 1050 Relationship
Managers as on April 30, 2004) offers a single point contact to retail customers whereby
their high net worth clients have separate relationship managers catering to them. These
managers offer personalized services to the customers helping build strong and
continuing relationships with them. Also, our marketing associate channel helps
Company and its subsidiaries in client acquisitions at minimal costs with client loyalty.
The marketing associate’s channel also helps Company and its subsidiaries in increasing
their penetration in smaller town and cities.

WEAKNESSES
 Insignificant presence in institutional segment.
 Awareness about our e-broking portal is yet to be created among masses
 Customer Satisfaction

As far as customer satisfaction goes Religare has to tighten their socks. Many
broking houses catering to heavy investors or small segment of the market can afford
to and does provide relationship managers for their customers, who can understand
the trading needs of individual customers, and advise accordingly. However, a
broking house like Religare that caters to the mass segment will find difficult to
provide relationship managers for individual customers.
 Branding

Yet to obtain approval of Trademark for developing into brand though the company
has a efficient products but large part of investment interested population does not
58
 know the company. The most basic expectation for a trader or investor when one
begins trading is that one must get timely delivery of shares and proceeds from sale of
shares. Also ones cash balances with the broker must be safe and secure. Though this
confidence in the broker comes with time and experience, good and transparent
practices also play a major role in imbibing confidence in traders.

Competition from banks

Most of the banks due to good branding have the faith of the customers of their
banking database. So they enjoy the liberty of huge database and customers find
it more reliable to trade there rather than with a unknown broker. Also banks
like HDFC Bank and ICICI Bank have the advantage of linking the trading
accounts of their customers to saving accounts. This makes trading easier, and
at the same time a trader withdraws exactly as much money from his account as
is needed to complete the trade. Similarly sales proceeds are credited directly to
saving account.

OPPORTUNITIES
 Additional centers will increase the clientele base and in-turn will increase
revenue
 Retail sector is expected to grow due to reduction in interest rate and opting for
new opportunities in equity and related instruments
 Rapid penetration of Internet and computers will be instrumental in increasing e-
broking business
 Ever-increasing market

After the NSE brought the screen based trading system stock markets are now
more secured which has attracted lot of retail investors and the demand is
increasing day by day. This has resulted in improved liquidity and heavy
volumes on transactions. Religare is one of the early entrants here. As to how
much it will roar and how swift it can swoop on the market, the future alone can
answer such queries. Religare has been a mega player and is known for being a
mover of stocks. It is also known for putting big deals through and enjoys good
networking with the FIIs. It has been dynamic enough to move with the times
and capture the opportunities that the market throws up from time to time.

 Improving Technology

In country like India technology is always improving which gives the company a
chance to keep on improving their product with time whereas for the small players
like local brokers it will be difficult to keep the same pace as the changing
technology. Also with SEBI lying down some strict guidelines small brokers are
finding it harder to retain the customers with no research department and small

59
 capital. The traditional business model is highly dependent on a large network of sub-
brokers, and many established players may not have systems (technology, customer
service, etc.) capable of directly servicing so many retail customers.
 Unfulfilled needs of the customers

With so many competitors offering their products in the market but no one is able
to completely satisfy the customers. Some have the problem of lack of information or
some were scared of volatility of the stock markets. Sharekhan has the opportunity to
tap this unsatisfied set of customers and to make hold in the market. The Internet
serves to break all barriers to information, as it offers an extremely hassle-free
investing platform. And, Sharekhan hopes to fully utilize and capitalize on this
platform. This original idea by Sharekhan itself was born out of the consumer’s need
for a more transparent, easy to understand and convenient option of investing in
stocks.

 Education Level

The education level in the country is improving year after year as far as technology
goes. With that the understanding of the stock market is also increasing and a lot of
retail investors are steeping in the markets which are being shown by increasing
volumes, transactions and indices.

THREATS
 Downturn or volatility of securities and commodities market.
 Slowdown of Indian and global economy
 Change in government and economic policies including personal taxation may
affect our volume and fund mobilization.
 New Competitors

A lot of new competitors are trying to enter the market in this bullish run to taste the
flavor of this cherry. This is creating a lot of competition for large players like
Religare and it is creating little confusion in the minds of the customers about
the services provided by the broker. Also many banking firms are entering into
the market with huge investment. Competitors like icici, kotak, hdfc, 5-paisa
etc. are posing a lot of threats to the company.

 Technology based business

60
 Online trading is totally based on the technology which is quite complex.
Typically, the technology solution has to start from the Internet front-end (or
the screen that you see when you begin trading). Then it needs to get into the
‘middle tier’ of risk management systems that assess data from banks and
depository participants (DP), calculate client risk at that point in time, and give
the ‘Go/No go’ advice to the trade. So technology is a kind of threat because
unless until it is working properly it is good but internet is not that safe. Though
a lot of cyber laws are being made but not yet executed.

OUR COMPETITIVE ADVANTAGES

In summary, we are presently engaged in the shares and commodities broking besides
offering dematerialization services and distribution of financial products. The main
features or competitive advantages can be enumerated as under:
• We have membership of NSE, BSE in both cash and F&O segment and our subsidiary i.e. RCL having
membership of NCDEX and MCX.
• We have presence in urban, semi-urban, towns and villages by building-up network of 900 centres and
plans to add more such centres to increase our client base and tap the vast potential prevailing at these
areas in India.
• We have as on date strong client base of 36,311 for shares and commodities brokerage services, who
are major contributory to the growth of company’s operations.
• We have, as on date, built-up a prestigious base of 46,712 registered DP clients for NSDL and CDSL
being depository participant of NSDL & CDSL.
• We also distribute various financial products in addition to above brokerage services to leverage on our
existing centres and relationship with our high networth individuals and corporate clients for brokerage
services.
• We have our own VPN (Virtual Private Network) for trading facilities, which provide for trading in
NSE, BSE, Commodity Futures at most economical cost/operation/controls.
• We also have our own in-house developed software package viz.”LIDHA DIHDA” for complete Back
Office centralized operations at Headquarters for all segments. Our own system team undertakes
maintenance and day-to-day changes.
• Own communication network across all branches/centres to transmit data. Complete on-line
process/operation of all sections. The company is having 113 VSATs and 48 CTCL connections
installed at 900 Centres throughout India.. There are over 500 Computer Trading Terminals put
together connected to these VSATs at the Centres.
• Internet trading facility for any client anywhere transactions with following main features is expected
to launch in short period:
_ Support for Cash Market, Derivatives and Commodities
_ Common Integrated Risk Management for both segments
_ A feature rich browser based terminal
61
_ Desktop based installable terminal for the highly active trader
_ Electronic Payment Interface to participating Retail Bank
_ Equity Research and Analysis
_ Support for Non-Resident Indian Customers
_ Multiple Tick by Tick Charts and Technical Analysis
_ Streamlining Quotes
_ Multiple and fully customizable market watches and multiple order books.

 Committed manpower of 1500 and constant training of new manpower.

 The digital contracts notes are being sent to clients through e-mail to save time.
 We propose to further strengthen “Training Centre” on Capital/Commodity Markets and create
strength & manpower for the future expansion purpose.
 The digital contracts notes are being sent to clients through e-mail to save time.
 We propose to further strengthen “Training Centre” on Capital/Commodity Markets and create
strength & manpower for the future expansion purpose.

62
 GENERATING ALTERNATIVE STRATEGIES USING A
TOWS MATRIX
Internal Factors
External Factors
Opportunities(O)
 Additional centres will
increase the clientele base and
in-turn will increase revenue.
 Retail sector is expected to
grow due to reduction in
interest rate and opting for
new opportunities in equity
and related instruments.
 Rapid penetration of Internet
and computers will be
instrumental in increasing e-
broking business.
 Ever-increasing market
 Unfulfilled needs of the
customers
 Education Level
Threat(T)
 Competition from existing and
new entrants.
 Downturn or volatility of
securities and commodities
market.
 Slowdown of Indian and
global economy.
Strength(S)
 Diverse Branch Network
 Bouquet of financial products and
services
 Advanced Technology team that
delivers market leading product
innovation.
 Strong Sales and Marketing Teams
with continuous reinvestment and
training.
SO strategy
 Company and its subsidiaries have
strong cross product selling
opportunities thus providing a
multi-channel delivery systems to
there diverse client base.
 Rapid penetration of internet and
the online trading could be the real
jinx of securities market.
 The relationship managers are
trained and incentives to work with
their client base and enhance
ability to cross sell and leverage
the large client base.
 Web enabled tools such as
technical analysis, information,
news, interactive web based
programs and tools and back office
solutions for clients and marketing
associates.
ST strategy
 Strong Sales and Marketing teams
would definitely play a major role
in counter attacking new
competitors.
 Pool of different financial products
and services would open new
horizons for Religare Company as
Weakness(W)
 Insignificant presence in
institutional segment.
 Awareness about our e-
broking portal is yet to be
created among masses.
 Customer Satisfaction
 Branding
 Competition from banks
WO strategy
 More concentration should be
given to FIIs as it could
generate more profits for the
company.
 Branding & customer
satisfaction is the key to
success for any company.
Visibility and creating
awareness regarding stock
market must generated by
conducting training sessions
and imparting knowledge to
clients.
 Since, we are in service
industry so quality should not
be compromised. Banks still
have edge over stock broking
houses.
WT strategy
 Effective workforce and
dedicated RM could create a
faith and reliability among
customers.
 Regarding slowdown of
securities and commodities
market focus on cross product
63
 Change in government and a whole. selling like mutual funds,
economic policies including  Advance technology team would insurance policies and other
personal taxation may affect match the latest trends in Biz. financial products.
our volume and fund  Liberalized economic policies by
mobilization. Govt. encourage investing foreign
 Technology based business players.

CORPORATE STRATEGIES

KEY BUSINESS STRATEGIES

Their focus on the client has allowed Company and its subsidiaries to offer a range of
services that have changed the investing landscape and created a new model of financial
services that melds people and technology to provide an integrated human assisted
technology interface service for investors who range from self-directed full-time active
investor to those who prefer to deal with through a marketing associate in smaller towns
and cities.
1 Defend and maintain their differentiation as the firm that delivers ethical and useful
services.

2 Uncomplicated and not driven by commission.

3 Give clients’ new levels of choice tailored to their desire for help, tools for investing
their assets, their willingness
4 To pay for additional services and the level of business they can do with the
company.
Provide clients with tools, relationship managers and choices that support their desired
investment outcomes. Religare has developed a client specific approach as a core
element of its business strategy and are constantly focusing on acquiring new clients
and expanding their customer base. They believe that the strong secular growth of the
Indian financial Markets, due to increased household penetration of financial assets;
increasing liquidity and market capitalization of Indian Markets, led by the listing of
many public sector entities; and the increasing affluence of Indian households and
savers provides an impetus to the growth perspective.

They believe that this diversification and growth strategy will continue to produce results
and allow Company and its subsidiaries to grow business at a rapid pace irrespective of
market conditions. In addition, management believes that the growth of the Indian
financial markets, due to increased household penetration of financial assets; increasing
liquidity and market capitalization of Indian markets, led by the listing of many
Public/Private sector entities; and the increasing affluence of Indian households and
savers, favors our long term growth outlook.

64
The table below encapsulates the financial metrics on an annual basis, and compares that
with the Market trading volume.
(NSE Yearly Trading Volume is taken as representative of Market activity).

Tapping business potential at Towns/Village

Business strategy of the Company is its own innovation and a pioneer in the country. This
is the first Stock Broking unit started full services to big & small retail clients going to
their doorstep in Towns, Semi-urban Towns who utilized the financial market services
fully welcoming the ONLINE services at their own place. The Opportunities are infinite
across the villages, towns, cities, metros, and states of the Country, which enjoys the
agriculture as its backbone flourishing everywhere not limited to some pocket(s)/groups.
In such scenario, every office/shop/factory/house everywhere anywhere is a potential
point for installation of ONLINE services of all the financial products.

Greater emphasis on broking & services

The Company visualized this at its inception and pursued the same and is now following
that philosophy with more conviction due to the success in 10 years. The Company’s
policy is not to do any own business/trading but to concentrate only on providing
financial market services ONLINE to the clients. Thus, the Company provided
undeterred best services, reliable & dependable, all the time and attracted large clients
everywhere whenever it installed ONLINE services of the market.

Training – an imperative factor

The Company rightly understood another prime factor, that of manpower when since
1996 onwards VSATs, ONLINE installations were spreading from metros to other cities,
towns but the trained manpower was not available for growth of this new trend of
facilities of the market. The Company has taken a policy decision to train young fresh
graduates for the trading terminals operation, Back office, in all sections for manning
their installations. This endeavor trained numerous persons who helped the growth
possible in a most economical way.
Realizing importance of trained and well behaved manpower with greater understanding
of financial market, the Company has trained and motivated the manpower in order to
meet the future challenges entering every segment/sector/product that the market offers
utilizing every opportunity and will put-up in front its best performance. It has been
providing periodical training for existing and for new employee. All the divisions or
operations are headed by individuals holding Certificate of NSE Certification in Financial
Market (NCFM).

Increase the number of Client Relationships

We are focused on increasing the number of client relationships through a wide network
of offices throughout India and having more number of relationship managers to service
these relationships. We 78 plan to grow our business by growing the number of client
relationships. During a downturn of the markets we believe that increased number of
client relationships will add stability to our earnings.

65
Economic model of operations
Since the beginning the Company pursued the most economical model in every aspect of
machinery, manpower & installations, so that it can compete with any one anywhere
without any compromise on quality of the services. The same culture will be adhered to
in future also to reap in best rewards. This cost effective model/operation will be a ‘Life-
Saver’ even if the markets go downwards or business drops. The Company most
successfully faced the dark days of the market and gained invaluable exposure,
experience, capabilities to meet future growth with full confidence.
We have utilized the technologies available and have constantly invested in products and
innovations to provide an enhanced experience to our customers. The benefits of such
infrastructure include integrated customer trading account with depositary services;
electronic gateway for instant funds transfer to and from the bank to the brokerage
account; and comprehensive client systems that track all activity in various segments. We
believe that technology and systems are one of our key competitive edges in terms of
lowering our operating costs; managing the business; reducing risk and providing an
enhanced experience to the clients with superior service standards.
Multiple Channels – Enhance Customer Experience and Opportunities to Interact
with us
Our clients can access our products and services through 310 centres spread across cities;
through operator assisted call centres; or through our website www.religare.in or through
their respective relationship managers or through marketing associates. These multiple
channels provide flexibility to the clients and allow them to utilize their existing business
relationship with us through any channel from any part of India. Our strategy is to
provide the most convenient, efficient and value added channel to the client at the lowest
possible cost, and allow the clients with choice and varied access points. We believe that
our multiple channel strategy has been particularly effective in the affluent
segment where many sophisticated clients like to have a close-by office they can access
and yet have the flexibility of Internet account management, transactions and electronic
funds transfer and settlement.
Relationship Manager driven sales model, provide high quality service and exploit
cross-sell opportunities
Our clients benefit from the personal attention and advice of the trained and motivated
relationship managers. All our relationship managers are qualified and educated
professionals, who have been extensively trained in-house to provide the products and
services to the clients. These relationship managers are encouraged to develop long-term
relationships with the clients and can access a variety of resources within our Company,
such as insurance specialists, research services and others to add value to our clients.
Most of our clients are provided services through Relationship Managers irrespective of
the channel they use.

Brokerage, Products and Service Offerings

66
Our retail equity business primarily covers secondary market equity broking. It caters to
the needs of individual Indian and corporate investors. We offer broker assisted trade
execution and automated online investing and trading facilities to our customers.
Automated online investing and trading includes automated order placement and
execution of market and limit equity orders; and advanced trading platforms for active
traders. All investors have full access to real-time quotes, personalized portfolio
tracking, charting and quote applications, real-time market commentary, real-time quotes
and news.

Online Automated Channel

Our Clients will be able to obtain financial information and execute trades on an
automated basis through our online channel using products offerings like broking,
distribution of mutual funds, life insurance products and other fixed deposits etc. This
channel is designed to provide added convenience for clients and minimize our costs of
responding to and processing routine client transactions. Additionally, our online trading
system is designed for the high volume trade and provides enhanced trade information
and order execution integrated software-based trading platforms. While most client
transactions are completed through the online channel, we continue to stress the
importance of blending the power of the Internet with personal service to create a full-
service client interface. We will offer an online portal where the clients can execute
securities purchase and sales transactions through the Internet. This covers the Equity,
Debt & Derivatives segment in the Indian Securities market. With an objective of
assisting our customers taking investment decisions, the portal also provides
financial information on various listed companies. For executing a transaction, clients can
directly log onto our website www.religare.in without requiring any assistance from
offline intermediaries.

Thrust on Retail Sector

The retail segment is set to grow for number of reasons such as significant portion of
their saving comprising of financial assets is parked in bank fixed deposits, postal
schemes etc, which would now require assets reallocation as these instruments no longer
yield attractive returns. Reforms in financial sector have opened up new avenues for
investments. Investors generally lack a perspective on planning for the future and need to
allocate their saving and earning in the right proportion to address their current and future
needs. Currently, there are very few and nominal investors who invest in the equity
market and it is expected that number will increase in due course. With a robust capital
market, remaining investors in the population class will look for a shift to equity related
instruments. Over the years, investors parked their surplus investments in high yielding
debt instruments with the steep reduction in interest rate, leading to a reduction in the
yield on fixed deposits and bank deposits. Investors need to look at alternate options,
which provide greater returns.

Immediate Future Plans

After having already established business operations of over the past 10 years in retail
broking and other ancillary services, major contributory to the growth of company, we
have planned for further expansion in terms of the following:
 100 additional centres to be opened in India and specially at the locations where
the potential exists
67
  Leveraging on high networth individual and other brokerage clients for
distribution of financial products in order to make this activity also as one of
sizeable revenue earning activity to support the overall growth
 Adding general insurance products distribution in addition to present life
insurance products.
 Tapping scope in Commodity Futures market through all the centres situated
across India as many of the present centres are not offering commodities
brokerage services
 Launching internet online trading to provide access and reach to all the locations
in India and abroad and having interface with company depository services
and to enroll with almost prominent Institutions to provide institution broking
services.

Our Company offers to our clients a wide range of financial services and products
allowing the clients to leverage their relationship with us and get products suiting their
varied needs. This strategy allows us to gain “Share of Wallet” of the clients’
consumption of financial services. We offer the client a comprehensive
product offering and are able to increase our revenues per client by selling different
products to the same client. We offer equity, debt and derivatives brokerage, IPO
distribution, mutual funds and insurance products. Our strategy is to increase the number
of client relationships and then leverage those client relationships into offering in a whole
suite of financial products.

68
FUNCTIONAL STRATEGIES

MARKETING STRATEGY
Increase the number of Client Relationships
They are focused on increasing the number of client relationships through a Wide
network of offices throughout India and having more number of relationship managers to
service these relationships. They plan to grow their Business by growing the number of
client relationships. During a downturn of the markets they believe that increased number
of client relationships will add stability to their earnings.
Multiple Channels – Enhance Customer Experience and Opportunities to interact
with us
Company’s clients can access their products and services through 900 offices spread
across 320 cities; through operator assisted call Centers; or through their website
www.religare.in ; or through their respective relationship managers or through marketing
Associates. These multiple channels provide flexibility to the clients and allow them to
utilize their existing business Relationship with them through any channel from any part
of India. Company’s strategy is to provide the most convenient, efficient and value added
channel to the client at the lowest possible cost, and allow the clients with choice and
varied access points. Religare believe that their multiple channel strategy has been
particularly effective in the affluent segment where many sophisticated clients like to
have a close-by office they can access and yet have the flexibility of Internet account
management, transactions and electronic funds transfer and settlement.
Relationship Manager driven sales model, provide high quality service and exploit
cross-sell opportunities
Company’s clients benefit from the personal attention and advice of the trained and
motivated relationship managers. All its relationship managers are qualified and educated
professionals, who have been extensively trained in-house to provide the products and
services to the clients. These relationship managers are encouraged to develop long-term
relationships with the clients and can access a variety of resources within the Company,
such as investment specialists, research services and others to add value to their clients.
Most of the clients have dedicated relationship managers irrespective of the channel they
use.

Marketing Strategy and Consumer behaviour

The study of consumers helps firms and organizations improve their marketing strategies
by understanding issues such as how consumers think, feel, reason, and select between
different alternatives (e.g., brands, products).
1. The psychology of how the consumer is influenced by his or her environment
(e.g., culture, family, signs, media).
2. The behavior of consumers while shopping or making other marketing decisions.
3. Limitations in consumer knowledge or information processing abilities influence
decisions and marketing outcome.
4. How consumer motivation and decision strategies differ between products that
differ in their level of importance or interest that they entail for the consumer; and
5. How marketers can adapt and improve their marketing campaigns and marketing
strategies to more effectively reach the consumer.

69
Understanding these issues helps us adapt our strategies by taking the consumer into
consideration. For example, by understanding that a number of different messages
compete for our potential customers’ attention, we learn that to be effective,
advertisements must usually be repeated extensively. We also learn that consumers will
sometimes be persuaded more by logical arguments, but at other times will be persuaded
more by emotional or symbolic appeals. By understanding the consumer, we will be able
to make a more informed decision as to which strategy to employ.

Low cost and highly scalable business

Religare has utilized the technologies available and have constantly invested in products
and innovations to provide an enhanced experience to its customers. The benefits of such
infrastructure include integrated customer trading account with depositary services;
electronic gateway for instant funds transfer to and from the bank to the brokerage
account; and comprehensive client systems that track all activity in various segments.
They believe that technology and systems are one of the key competitive edges in terms
of lowering their operating costs; managing the business; reducing risk and providing an
enhanced experience to the clients with superior service standards.
Brokerage Offering
Company’s retail equity business primarily covers secondary market equity broking. It
caters to the needs of individual Indian and Non-resident Indian (NRI) investors. They
offer broker assisted trade execution and automated

Online investing and trading facilities to their customers. Automated online investing and
trading includes automated order placement and execution of market and limit equity
orders; and advanced trading platforms for active traders. All investors have full access to
real - time quotes, personalized portfolio tracking, charting and quote applications

FINANCE STRATEGY

The slowdown in the Indian Economy, during mid-nineties, had an adverse impact on the
industrial climate, giving rise to increased delinquencies in the financial sector coupled
with stiff competition posed by multinationals and Financial Institutions having access to
low cost funds. This had a significant impact on the performance of the Company in the
past.
In the recent years, the Company has been focusing on non-fund based activities which
have yielded positive results. The Company also unlocked significant value of its
investments in its Wholly-owned Subsidiaries during the Financial Year 2005-06, thereby
reducing its Accumulated Losses and debts and achieving positive Net Worth.

INFORMATION TECHNOLOGY STRATEGY

a) Exchange Network

We are having accessibility to trade in four different exchanges namely National Stock
Exchange (NSE), Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange
(MCX) and National Commodity & Derivative Exchange (NCDEX). Presently two major
service providers are existing in the country, one is HCL Comnet Ltd. and other is Huges
Escorts Ltd (HECL). HCL has got wide range of expandability and reliability

70
with rugged Technology as per the Indian Climate Conditions. HECL has also got high
spread of Network throughout the country. The present VSAT Network throughout the
country is being operated by Extended-C Band and KU-Band Technology. These two
technologies are most ideal for Stock Broking.
Connectivity: The Exchanges have installed VSAT with the support of HCL Comnet and
HUGES at most of our centres. All end users are being connected via Indian satellite to
access NSE/BSE/MCX/NCDEX Trading Servers installed at Mumbai.
Accessibility: In each VSAT location, we have 5 to 7 Terminals to trade in different
Exchanges as per client request. All four exchanges have provided free software like
NEAT (National Exchange for Automated Trading), BOLT (Bombay Online Trading),
MCX (Trader Workstation) and NCDEX (National Commodity and Derivative
Exchange). These Frontend Trading screens are called as Market watch, through which
Client can place orders between 9.50am to 3.30pm daily in Capital Market, Futures &
Options and Commodities segments. Since Commodity Market has dependency on
International Bullion Markets, the Live Market-Watch is available up to 11.50pm daily.
On functional side all four softwares are user-friendly to handle the client order requests.
Client can also cancel or modify their order requests as per their will and market
conditions. All four exchanges are working from Monday to Friday and no Trading
activity is done on Saturdays and Sundays. In case of Commodity segment, the exchange
is open for trading from Monday to Friday and on Saturday till 2.00pm.
Maintenance: VSAT downtime has been maintained by the HCL Comnet and HUGES.
They have region wise support to attend the downtime immediately within 4 to 6 hours.
Inventory of spares is also maintained at the region level.

b) Virtual Private Network (VPN)

We have facilities for our clients to trade in all three segments (Cash, F&O and
Commodity) in a single VSAT connectivity through CTCL (Computer to Computer
Link) software. This Network is basically for better surveillance and more functional
features comparing to the Exchange provided software. Since Exchanges do not provide
any CTCL software, we have approached CTCL Software Vendors empanelled by the
Exchanges. There are many CTCL Software Vendors available in the Market today. This
Network is maintained by the HCL Comnet from NOIDA (UP). HCL Comnet has their
own HUB at NOIDA to provide Interactive and Broadcast Bandwidth to connect between
Central and Remote sites.
Connectivity: We have our Branches and Franchisee locations in entire Andhra Pradesh,
Karnataka and Orissa. In these locations we have installed VSAT with the support of
HCL Comnet. All end users are being connected via Indian Satellite to access CTCL
Trading Server installed at New Delhi.
Accessibility: In each VSAT location we have 3 Terminals to trade in different
Exchanges as per client request. RCL has bought licensed CTCL software ODIN (Open
Dealer Integrated Network) from Financial Technologies Limited, Mumbai. This Front–
end can support Multiple Market watch screens, through which client can place orders
between 9.50am to 3.30pm daily in Capital Market, Futures & Options and Commodities
segments. Since Commodity Market has dependency on International Bullion Markets,
the Live Market- Watch is available up to 11.50pm daily. On functional side all four
software are user-friendly to handle the client order requests. Client can also cancel or
71
modify their order requests as per their will and market conditions. All four exchanges
are working from Monday to Friday and no Trading activity is done on Saturdays and
Sundays. In case of Commodity segment, the exchange is open for trading from Monday
to Friday and on Saturday till 2.00pm.
Maintenance: VSAT downtime is maintained by the HCL Comnet. They have region
wise support to attend the downtime immediately within 4 to 6 hours. Inventory of spares
is also maintained at the region level.

c) Remote Access Service (RAS)

This is a low-cost solution to encourage our clients to connect to Trading Server via
DIAL-UP (Through local Telephone or Broad Band Lines). This Network is well
supported for the clients within the 20 to 40 km radius. Order confirmation speed is
marginally slow in comparison with VSAT Connectivity.
Connectivity: We have RAS users at many centres. In these locations we have installed
RASROUTERS. All end users are being connected via telephone or Broad Band Lines to
access CTCL Trading Server installed at all our Branches and Franchisee locations.
Accessibility: In each RAS location we have Terminal to trade in different Exchanges as
per client request, RCL has bought licensed CTCL software ODIN (Open Dealer
Integrated Network) from Financial Technologies Limited, Mumbai. This Front–end can
support Multiple Market watch screens, through which client can place orders between
9.50am to 3.30pm daily in Capital Market, Futures & Options and Commodities
segments. Since Commodity Market has dependency on International Bullion Markets,
the Live Market- Watch is available up to 11.50pm daily. On functional side all four
software are userfriendly to handle the client order requests. Client can also cancel or
modify their order requests as per their will and market conditions. All four exchanges
are working from Monday to Friday and no Trading activity is done on Saturdays and
Sundays. In case of Commodity segment, the exchange is open for trading from Monday
to Friday and on Saturday till 2.00pm.
Maintenance: RAS downtime is maintained by the SCSL. We have sufficient Technical
support to attend the downtime immediately.

e) Back- office
We have In-house Back-Office Software maintained by our Software Team. We have
24/7 basis support to all our clients wherever they are. All post trading reports can be
downloaded through Internet.

HUMAN RESOURCE STRATEGY

HR department play a crucial role to run this broking house because it keeps running it
in a rhythm by applying hard rule & regulations but making lenient to the employees.

Attendance

• Mark Your Attendance Regularly in the Attendance Register which shall be Monitored by HR
• Office Timings: Monday to Friday - 9.00 A.M. to 6.00 P.M.
An individual would be required to come on Saturdays depending on the exigencies
of the work.

72
• Holiday: As announced by the National Stock Exchange at the beginning of the calendar
year.
• All are expected to be at the WORKING PLACE well on time.
• Late comings - Employees will be allowed to come late by 15 minutes occasionally. However,
frequent late arrival will be monitored and dealt with severely by the concerned branch/deptt head and the
HR.

DRESS CODE

1. DRESSING GUIDELINES FOR MEN

1.1. FOR SUMMERS

Formal Shirt & Trousers with matching Socks and Shoes.

1.2 FOR WINTERS

 Suits, V neck Blazers, V-neck Sweater, Formal Shirt & Trousers with matching
Socks & Shoes
 Hair should always be kept neat, and should not extend below your shirt collar.

All Male employees are required to wear Neck Ties

 Use of any type of Jewellery other than a Ring and a Bracelet worn for religious
purpose are discouraged.
 Only Formal Shoes should be worn and they should be neat and polished always.
 Nails should always be cut and Clean.
 For Summers Light Pastel Colour Shirts are recommended

2. DRESSING GUIDELINES FOR WOMEN

2.1 FOR SUMMERS

Saree & Blouse / Salwar Kameez with Chunni/ Formal Shirt and Trousers

2.2. FOR WINTERS

 S aree & Blouse / Salwar Kameez with Chunni /Business Suit/ Sweater.
 C  olors and patterns of Saree & Salwar Kameez should not be too bold or striking
 C  onservative Shoes or Sandals to be worn with high heels not more than two
Inches.
 Nails should always be filed and clean.
 Light Makeup should only be used.

73
  Hair should be kept tidy at all times. Hair that falls below the shoulder length
must be made into a bun or tied neatly.
 Hairstyles where hair falls on the forehead should be avoided.

3. FOLLOW THE GUIDELINES GIVEN BELOW

 Too flashy or heavy Jewellery should be avoided.

 No dangling earring to be worn, only one ear stud in each ear. Number of Ring in
each hand to be Restricted.
 A single string of pearls, a gold chain or mangalsutra around the neck are
acceptable.
 Proper body Hygiene is to be maintained always.
 Jeans on Workdays is not allowed.
 If people are coming to work other than on regular working days they can dress in
smart casuals.
 Clothes should be well Ironed and clean.
 Use of Deodorant and Anti Prespirant is recommended.
 Use of Digital Sports Watch to work is discouraged.

EMPLOYEE CODE OF CONDUCT

The reputation and integrity of Religare are valuable assets that are vital to the
Company’s success. Each employee is responsible for conducting the business in a
manner that demonstrates a commitment our values.
The purpose of this Employee Code of Conduct is to provide guidance to help
Employees recognize and deal with ethical issues and foster among employees a culture

74
Of honesty and accountability. No code of conduct can replace the thoughtful behaviour
of an ethical employee. Accordingly, dishonest or unethical conduct or conduct that is
illegal will constitute a violation of this Code, regardless of whether the Code specifically
addresses such conduct.
1. The company expects its employees to maintain high standards of integrity,
promptitude and fairness in the conduct of business.
2. Co-workers must be treated fairly and courteously without regard to race, color, caste,
creed, age, religion, gender or national origin.
3. No employee shall engage in any business, relationship or activity, which might
detrimentally conflict with the interest of the company or the Group to which the
company belongs.
4. The employees shall not disclose to anyone, directly or indirectly, except when the
duties may require, during or subsequent to the term of employment, any trade secret
or confidential information regarding Company’s business. Trade Secrets and
Confidential information for this purpose shall include, but not be limited to, product
information, process information, customer lists, employee details, company policies
and procedures and financial information (including results, budgets and other
financial plans and systems).
5. All persons of the organization shall abide by the provisions of various Statutes and
Acts, as applicable and the rules, regulations issued by Government, Regulatory
Bodies and the Exchanges etc. Without limiting the generality and scope of the
foregoing, the various Codes of Conduct as mentioned herein below shall be deemed
to be part and parcel of this code and the employees shall abide and adhere to these
codes which being Public Documents are not being reproduced herein for sake of
brevity. All employees shall carefully peruse such of these codes as may be
applicable to them, depending upon the work allocation / responsibilities, and ensure
compliance thereto.

5.1 Code of Conduct under SEBI (Prohibition of Insider Trading), Regulations,

1992
5.2 Code of Conduct for Stock Brokers and Sub-Brokers under relevant SEBI
Regulations
5.3 Code of Conduct for Portfolio Manager as specified there under by SEBI
Regulations
5.4 Code of Conduct for Participants as specified there under by SEBI,
[Depositories and Participants Regulations, 1996]
5.5 Code of Conduct for Merchant Bankers specified there under relevant
SEBI Regulations.
5.6 Prevention of Money Laundering Guidelines
5.7 Employee Trading Policies
6. All employees to immediately inform Compliance Department if they suspect any
activity which is even prima-facie in contravention / conflict with any of the Laws of
the Land and / or any of the Codes stated herein above.
7. Employees shall neither receive nor offer or make, directly or indirectly, any illegal
payments, remuneration, gifts, donations or comparable benefits which are
intended to or perceived to obtain business or uncompetitive favors for the
75
 conduct of its business.
8. Without the prior approval of the Managing Director of the Company, no employee
shall accept employment or a position of responsibility (such as a consultant or a
director) with any other company, nor provide ‘freelance’ services to anyone. In the
case of a whole-time Director or the Managing Director such prior approval must be
obtained from the Board of Directors of the Company.
9. No person shall make a recommendation to any client who might be expected
to rely thereon unless he has reasonable grounds for believing that the
recommendation is suitable for such a client upon the basis of the facts, if
disclosed by such a client as to his own holdings, financial situation and
objectives of such investment.
10. No person shall render, directly or indirectly, any investment advice in the publicly
accessible media, whether real - time or non real-time, unless a disclosure of his
interest including the interest of his dependent family members and the employer
including their long or short position has been made, while rendering such advice.
No person shall under take actions / trading which may be construed as Insider
Trading &/or which may be violate to Insider Trading Regulations.
11. Use of any kind of electronic media (computers/phones, etc) to send or forward
messages that contain intimidating, harassing or offensive material i.e. threatening,
disruptive, obscene or profane language or images that may offend on the basis of
race, ancestry, place of origin, ethnic origin, marital status, sexual orientation, family
status or handicap, is strictly prohibited.
12. All appointments in the organization are based on the facts, established by the
employees on account of never having been charged with any criminal offence under
the Indian Penal Code or any other Law in force. In case an Employee is so charged
during the period of employment with the Company, or if any past record of having
been so charged comes to knowledge of the Company, action may be taken against
such employee including suspension / termination of employment forthwith.
13. All employees shall ensure that the senior management, particularly decision makers
have access to all relevant information about the business on a timely basis.
14. Any change in personal particulars w.r.t marriage, change in address, etc) shall be
communicated on timely basis to the Human Resources Department. All
communication sent in the normal course at the address given by the employee shall
be deemed to have been received by the employee.
15. The telephone ringtones to any of the phones (landline or mobile) shall not be those
of embarrassing music. Rather, instrumental tones which do not go against the
corporate image of the organization are acceptable.
16. In case the information provided by any employee regarding his/her personal details,
work experience are found to be false or on finding that employee has disclosed the
confidential information related to the company’s business, action may be taken
against such employee including suspension / termination of employment forthwith.
17. In case of cessation of employment, the respective employee shall not solicit any
business from the existing clientele of the company nor engage in canvassing for any
such purpose till the period of one year after leaving/ dismissal / termination
from the services under the company. The company may take up the matter as per law, if
any person is found violating this undertaking of the same.

76
KEY FINDINGS AND ANALYSIS

77
 Preference of Investment

7% 2%
16% Only shares
Mutual funds
Bonds
Derivatives
75%

Interpretation: This shows that although the mutual funds market is on the rise yet, the
most favored investment continues to be in the Share Market. So, with a more transparent
system, investment in the Stock Market can definitely be increased.

Awareness Of Online Share Trading

No
9%

Yes
91%

Interpretation: With the increase in cyber education, the awareness towards online share
trading has increased by leaps and bounds. This awareness is expected to increase further
with the increase in Internet education.

78
 AWARENESS OF RELIGARE AS ABRAND

43%
YES
NO
57%

Interpretation: This pie chart shows that Religare has a reasonable amount of Brand
awareness in terms of a premier Retail stock broking company. The company to increase
its market share over its competitors should further leverage this brand image.

Awareness of Religare's facilities

17%

Yes
No

83%

Interpretation: Although there is sufficiently low brand equity among the target
audience yet, it is to be noted that the customers are not aware of the facilities provided
by the company meaning thereby, that, the company should concentrate more towards
promotional tools and increase its focus on product awareness rather than brand
awareness.

79
 Demat Account Market

12%
26% Religare
ICICI Direct
Kotak Securities
31% IndiaBulls
24% Others
7%

Interpretation: This shows that even with sufficiently high Brand Equity, Religare ranks
only 3rd amongst the Demat account providers. This is probably because of two main
reasons:
1. Lack of promotion and unfocussed approach towards Product awareness
2. Non – transparent marketing policies of the company

Hence, the company should crystallize its products and should indulge in aggressive
marketing and promotion.

Satisfactionlevel amongCustom erswith

currentbroker

Yes - 92% No- 8%

Interpretation: This pie chart accentuates the fact that Strategic marketing, today, has
gone beyond only meeting Sales targets and generating profit volumes. It shows that all
the competitors are striving hard not only to woo the customers but also to make them
Brand loyal by generating customer satisfaction.

80
 Frequency of Trading

Daily- 9%
W eekly- 27%
Monthly-53%
Yearly-11%

Interpretation: In spite of the huge returns that the share market promises, we see that
there is still a dearth of active traders and investors. This is because of the non –
transparent structure of the Indian share market and the skepticism of the target audience
that is generated by the volatility of the stock market. It requires efficient bureaucratic
intervention on the part of the Government.

Percentageof earnings invested in

Share trading

Upto 10%--71%
Upto 25%--19%
Upto 50%-- 7%
Above 50%--3%

Interpretation: This shows that people invest only upto 10% of their earnings in the
stock market, again reiterating the volatile and non-transparent structure of the Indian
stock market. Hence, effective and efficient steps should be undertaken to woo the
customers to invest more in the lucrative stock market.

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RECOMMENDATIONS

We suggest following measures which Religare could take so as to take on heavy

competition from India bulls , 5 Paisa.com , Kotak Securities, Share khan and ICICI
Direct.com etc.
1. To identify regions where promotions are required. Religare lacks visibility in
northern region where as it is a well known name in western region. Even
then, its promotional campaign focuses on western region where as northern
region is still waiting for promotional campaigns.
2. Try to reduce cost, so that benefits can be passed on to customers. Senior
managers at Religare keep on telling that it is difficult to reduce cost, because
of services we provide. But the fact is, India being a price sensitive market;
people at times go for monetary benefits rather than for long-term non-
monetary benefits.
3. If charges can’t be reduced because of costs involved, make the services
customized, so that services are provided to only those customers who are
willing to pay the price for services they are getting and let the other
customers enjoy costs benefits without getting services.
4. Religare should contact with their clients regularly for knowing the problems
faced by them. This will help Religare in providing best services to customers.
This will result in additional customer base by getting further references from
satisfied clients.
In context of marketing we cannot continue with present scenario. We have to focus more
on advertising and promotions. Since we are not visible in the security industry as like
other stock broking house. Our area of concern is to make the Religare brand strong
enough and provide customers a platform for a complete financial solution. We are here
to serve both retail and institutional investors. Since a large portion of our clients are
retail investors, so our job is to make our investors knowledgeable enough to invest in
stock market. It is a great opportunity for us to gain market faith and edge over our
competitors. On 6 July 2007, Sensex had crossed the all time high of 15000 points. This
is only due to foreign and local investors. The figure itself shows that there is an
significant interest of investors to invest in stock market. Majority of the population
doesn’t have a clear idea regarding stock market. We can create a platform for our retail
investors to have an experience of equities market.
We can conduct educational programs/trading sessions for online trading in different
locations of the city. This would definitely attract investors and increase faith on our
company. Till now no broking house has initiated this effort, so we will get the advantage
of first mover. Our dedicated Relationship Managers could make a presentation in front
of the investors and there could be Q&A’s in the later part of the session to clarify the
doubts inherited in the mind of clients. The risk associated with the equities market can
be reduced in the mind of the customer only when you can manage the money of the
investors in the right way. The ROI (return on investment) in equities market is huge and
could play a vital point for deal clincher. Many people who are not conversant with
online trading have many apprehensions regarding security and other matters.
Authentication, reliability and integrity of the stock broking house must be maintained.
Suggestions we would like to give:

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 At our hoarding board in different bus stands, through which we are marketing
doesn’t have any toll free number.
 Make some flexible norms regarding brokerage structure. RM must be provided
with sustainable authority so that they can negotiate at any level.
 Process of filling the rally form should be easy because there are so many
signatures that sometimes irritate the customers.
 IPO form filling up should be online (in rally).

 Software charges should be one time & that should be adjustable against
brokerage.
 Its name might be start by name of Ranbaxy as ICICI direct & SBI life cashing
the name of their brand name.
 D-mat a/c opening charges can be reduced to increase the client base.
 Problem in downloading the diet Odin software on different windows.
 Small investors should also be dealt properly because if they will not invest much
more, at least they can work as viral marketer.
 As others we are also lagging behind in the after sale service.
 Interest should be paid on idle money that is lying in Rally a/c.
 We have to make aggressive marketing through print media so that we can reach
to the smallest place of the county.
 We should give more focus to FIIs & INSTITUTIONAL INVESMENT.
 Arbitraging plays a big role in stock market so we should provide a platform for
arbitrage.

SOME COMMONLY USED TERMS

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Assets and Other Definitions
1-: Assets/Securities: An asset is a claim on a stream of income or profit. A security is a
piece of paper that proves ownership of stocks, bonds and other investments. 2-: Stocks:
Ownership of a corporation which is represented by shares which represent a piece of the
corporation’s assets and earnings.
3-: Bonds: A bond is a debt instrument requiring the issuer (also called the debtor or
borrower) to repay to the lender/investor the amount borrowed plus interest (coupons)
over a specified period of time.
4-: Derivatives: Derivatives are financial instruments, which include forwards, futures,
options and swaps, whose value is based on (or derived from) an underlying asset, index
or reference rate.
5-:Forward Contract: A contract that obligates you to buy (if you buy the contract) or sell
(if you sell the contract) a given commodity at a given price (the forward price) at a given
time.
6-: Futures: Similar to the forward contract, except that futures contract are traded on
organized exchanges, and the futures prices is amended from period to period so as to
keep the current market value of the contract at zero.
7-: Options: A contract that, in exchange for the option price, gives the option buyer the
right, but not the obligation, to buy (or sell) a financial asset at the exercise price from
(or to) the option seller within a specified time period, or on a specified date (expiration
date).
8-:Call Option: An option contract that gives its holder the right (but not the
obligation) to purchase a specified number of shares of the underlying stock at
the given strike price, on or before the expiration date of the contract.
9-:Put Option: This security gives investors the right to sell (or put) fixed number
of shares at a fixed price within a given time frame. An investor, for example,
might wish to have the right to sell shares of a stock at a certain price by a certain
time in order to protect, or hedge, an existing investment.

Markets
Here are some examples of different types of markets that exist:-
10-:Money Market: Money markets are for borrowing and lending money for three years
or
less. The securities in a money market can be U.S. government bonds, treasury bills and
commercial paper from banks and companies.
11-:Capital Market: The market for trading long-term debt instruments (those that mature
in
more than one year).
12-:Stock/Equity Market: The market for trading equities.

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13-:Over-the-counter (OTC) Market: A decentralized market (as opposed to an exchange
market) where geographically dispersed dealers are linked together by telephones and
computer screens. The market is for securities not listed on a stock or bond exchange.
The NASDAQ market is an OTC market for U.S. stocks.

Spot/Cash Market:- These are markets that involve the immediate

delivery of a security
or instrument.
14-:Foreign Exchange Market: Market for exchange of foreign currency.
15-:Black Market: An illegal market!

Characterizations of Market Sentiments

Here are some terms that sometimes characterize market sentiments, and different
positions
within the markets:
16-:Bullish: Word used to describe an optimistic investor attitude. General market
condition
characterized by optimism, rising prices in stocks, and a belief that near-term future will
see higher market prices for stocks.
17-:Bearish: Word used to describe a pessimistic investor attitude. An extended period of
general price decline in an individual security, an asset, or a market.

Positions
18-:Position: A market commitment; the number of contracts bought or sold for which no
offsetting transaction has been entered into. The buyer of a commodity is said to have a
long position and the seller of a commodity is said to have a short position 19-:Long
Position: An options position where a person has executed one or more option trades
where the net result is that they are an “owner” or holder of options (i. e. the number of
contracts bought exceeds the number of contracts sold). Occurs when an individual owns
securities. An owner of 1,000 shares of stock is said to be “Long the stock.” Occurs when
a person is expecting the stock price to rise.
20-:Short Position: Occurs when a person sells stocks he or she does not yet own. Shares
must be borrowed, before the sale, to make “good delivery” to the buyer. Eventually, the
shares must be bought to close out the transaction. This technique is used when an
investor believes the stock price will go down.
For example: Selling Short. If an investor thinks the price of a stock is going
down, the investor could borrow the stock from a broker and sell it. Eventually,
the investor must buy the stock back on the open market. For instance, you
borrow 1000 shares of British Petroleum on July 1 and sell it for £8 per share.
Then, on Aug 1, you purchase 1000 shares of BP at £7 per share. You’ve made

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£1000 (less commission and other fees) by selling short.
21-:Hedging: A strategy involving an offsetting or risk-reducing position.

It is important to note that buying shares and then selling them (called “going long”) has
a very different risk profile from selling short. In the former case, losses are limited (the
price can only go down to zero) but gains are unlimited (there is no limit on how high the
price can go). In short selling, this is reversed, meaning the possible gains are limited (the
stock can only go down to a price of zero), and the seller can lose more than the original
value of the share, with no upper limit. For this reason, short selling is usually used as
part of a hedge rather than as an investment in its own right.Many short sellers place a
“stop loss order” with their stockbroker after selling a stock short. This is an order to the
brokerage to cover the position if the price of the stock should rise to a certain level, in
order to limit the loss and avoid the problem of unlimited liability described above. In
some cases, if the stock’s price skyrockets, the stockbroker may decide to cover the short
seller’s position immediately and without his consent, in order to guarantee that the short
seller will be able to make good on his debt of shares.

The risk of large potential losses through short selling inspired financier Daniel Drew to
warn:

“He who sells what isn’t his’n, must buy it back or go to pris’n”

Short selling is sometimes referred to as a “negative income investment strategy” because

there is no potential for dividend income or interest income. One’s return is strictly from
capital gains.Short sellers must be aware of the potential for a short squeeze. This is a
sharp uptick in the price of a stock, caused by large numbers of short sellers covering
their positions on that stock. This can occur if the price has risen to a point where these
people simply decide to cut their losses and get out. (This may occur in an automated
way if the short sellers had previously placed stop-loss orders with their brokers to
prepare for this eventuality.) Since covering their positions involves buying shares, the
short squeeze causes an ever further rise in the stock’s price, which in turn may trigger
additional covering. Because of this, most short sellers restrict their activities to heavily
traded stocks, and they keep an eye on the “short interest” levels of their short
investments. Short interest is defined as the total number of shares that have been sold
short, but not yet covered.

On occasion, a short squeeze is deliberately induced. This can happen when a large
investor (a company or a wealthy individual) notices significant short positions, and buys
many shares, with the intent of selling the position at a profit to the short sellers who will
be panicked by the initial up tick. Short sellers have to deliver the securities to their
broker eventually. At that point they will need money to buy them, so there is a credit
risk for the broker. To reduce this, the short seller has to keep a margin with the broker.
Finally, short sellers must remember that they are betting against the overall upward
direction of the market. This, combined with interest costs, can make it unattractive to
keep a short position open for a long duration.

ADB Asian Development Bank

AGM Annual General Meeting
AMFI Association of Mutual Funds of
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 India
ARFMA AMFI Registered Mutual Fund Advisor
The Bombay Stock Exchange Limited,
BSE Mumbai
CAGR Compounded Annual Growth Rate
CAMS Computer Age Management Services Private Limited
Central Board of Customs and
CBCE Excise
CDSL Central Depository Services (India) Limited
CTCL Computer to Computer Link
D/E Debt Equity Ratio
DP Depository Participant
EBITDA Earnings Before Interest, Tax, Depreciation and Amortization
ECS Electronic Clearing Services
EGM Extra-ordinary General Meeting
EPS Earnings Per Equity Share
FCNR Account Foreign Currency Non Resident Account
Fls Financial Institutions
FIIs Foreign Institutional Investors as defined under SEBI India.
FIPB Foreign Investment Promotion Board, Ministry of Finance, Govt. of India
FVCI Foreign Venture Capital Investor registered with SEBI under the SEBI
FY Financial Year
F&O Futures & Options
GIR Number General Index Registry Number
Gol Government of India
HUF Hindu Undivided Family
INR Indian National Rupee
IPO Initial Public Offering
IT Information Technology
LAN Local Area Network
MCX Multi Commodity Exchange
MF Mutual Funds
NAV Net Asset Value
NBFC Non-Banking Finance Companies
NCDEX National Commodities Derivative Exchange
NEFT National Electronic Funds Transfer
NRE Account Non Resident External Account
NRO Account Non Resident Ordinary Account
National Securities Depository
NSDL Ltd.
National Stock Exchange of India
NSE Ltd.
ODIN Open Dealer Integrated Network
P/E Ratio Price/Earnings Ratio
PAN Permanent Account Number
PAT Profit After Tax
PBT Profit Before Tax
PBIDT Profit Before Interest, Depreciation and Tax
PPP Purchasing Power Parity
RBI Reserve Bank of India
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 ROC Registrar of Companies
RONW Return on Net Worth
RTGS Real Time Gross Settlement
VCF Venture Capital Fund registered with SEBI under the SEBI (Venture Capital)
VPN Virtual Private Network
VSAT Very Small Aperture Terminal
TWS Trading Work Station

CONCLUSION
In spite of these optimistic numbers, online trading in India is at a very nascent stage
(about 5-8 percent of total traded volumes) compared to countries like South Korea (60
percent), US (40 percent) and UK (20 percent). Online trading in the year 2000-2001
accounted for only Rs 50,170 crore out of total traded volume of Rs 25,08,445 crore.
There are currently close to 50 online brokerages in India with ICICIDirect, KotakStreet,
Religare, MotilalOswal, IndiaBulls and 5Paisa being some major players. However, due
to limited volumes, no online brokerage is currently making money and a shakeout is
imminent in the near future. The going is expected to get tougher with the advent of
capital account convertibility. On an average, Rs 40 crore per day (Rs 1,000 crore per
month) is likely to be the threshold breakeven for online brokerages. There is scope for
multiple players as the entire segment is in a growth stage.
While there are many factors that need to be understood to justify this assertion, one
simple fact is worthy of note. The average age of the Indian Internet user as cited by a
recent IDC survey is 27 years. The average age of the head (and financial decision taker)
of the Indian equity-investor household, as revealed by the SEBI-NCAER study of Indian
investors in 2000 is 45 years. The older, experienced equity investor is not online today
and the fact that older, mature investors are not ‘tech-positive’ and hence unlikely to
move to online trading is a major barrier to the growth of e-broking in India.
Here, the numbers of banks with a strong online presence are very few - again, dominated
by new private banks and foreign banks. Both have lesser reach owing to a smaller
network in the country. The relative inability of large public-sector banks to offer-
facilities for Internet banking is a barrier in this regard. Besides, Internet penetration in
India is still very low and concerns about security also tend to predominate. In markets
like the US, online brokerages are advertised very heavily. Online trading in India has so
far not seen similar levels of aggressive advertising, with the exception of ICICI Direct
and India bulls. Besides, only scripts that have been compulsorily dematerialized can be
traded on the net here.
Brand building, assurances of security, developing multiple delivery channels with
anytime telephonic grievance redressed options is some directions, which may be of use
for the immediate future. Online trading firms can also market themselves aggressively to
students who are entering the professional arena, ensuring that their entry into equity

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happens online. One of the major issues governing trading is the prevailing uncertainty in
the market.
Hence, not withstanding the current sentiment in the market, potential for online trading
is still immense in India. With a more transparent system, increased awareness, and a
sustained bullish market we would surely be heading to become the largest online stock
trading country by the turn of the next decade.

Appendices

QUESTIONNAIRE

Q1. In which of these Financial Instruments do you invest into?

Shares Mutual Funds Bonds Derivatives

Q2. Are you aware of online Share trading?

Yes No

Q3. Heard about Religare?

Yes No

Q4. Do you know about the facilities provided by Religare?

Yes No

Q5. With which company do you have your DEMAT account?

Religare ICICI Direct Kotak Mahindra India Bulls

Others (please specify) __________

Q6. Are you currently satisfied with your Share trading company?
Yes No

Q7. How often do you trade?

Daily Weekly Monthly Yearly

Q8. What percentage of your earnings do you invest in share trading?

Up to 10% Up to 25% Up to 50% Above 50%
Q9. What more facilities do you think you require with your DEMAT account?

Additional Information (optional)

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Name:

Age:
Sex: Male Female

Phone No:

Occupation:

THANK YOU

BIBLIOGRAPHY

Books and Newspapers

1 The Economic Times, Business Standard, Business line
2 Securities Market (Basic) Module:--NCFM
3 Training Kit Provided by the Religare.
4 Indian financial system by M.Y KHAN
5 NSDL Depository operations Module:--NCFM

URLs
1. www.religare.in
2. www.indiainfoline.com
3. www.economics times.com
4. http://www.investopedia.com/articles/
5. www. nseindia.com
6. www.bseindia.com
7. www.moneycontrol.com
8. www.indiastat.com
9. www.sharekhan.com
10. www.equitymaster.com
11. www.google.com

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 12. www.wikipedia.com
13. www.mouthshut.com
1

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