A GRAND PROJECT ON

SATISFACTION LEVEL OF INVESTORS WITH THEIR BROKING FIRM

In partial fulfillment of the requirement of the MBA programme

Submitted To: Dr. Parag Sanghani(Guide) Prof. Bijal Mehta(C0-Guide)) Submitted By: Kunal Vaghela(55) Yogita Patel(38)
2006Batch: 2006-08

AES Post Graduation Institute of Business Management Gujarat University Ahmedabad.

I

CERTIFICATE

This is to certify that Mr. Kunal Vaghela & Ms. Yogita Patel have successfully completed their Grand Project titled Satisfaction Level of Investors with their Broking Firm under the guidance of Dr. Parag Sanghani & Co-guide Prof. Bijal Mehta, for the partial fulfillment of the M.B.A. program (batch 2006-2008) from AES Post Graduate Institute of Business Management, Gujarat University. We wish them all the best for future endeavors.

----------------------------

----------------------------

Executive Director Dr. A. H. Kalro

Project guides Dr. Parag Sanghani Prof. Bijal Mehta

Date: Place: Ahmedabad

II

PREFACE
MBA is a professional course wherein for a student to posses only theoretical knowledge alone is not enough but also to improve practical skill which is helpful to them in every field of life in their future. Students needs to have a practical implementation in the current scenario.

As a part of final semester syllabus of MBA we visited Stock Broking Companies for practical training and also studied on the working of its different services and prepare report on particular topic. This training has expanded our horizon of knowledge in practical as well as theoretical which are vital for any student in management level studies. After completion of this Project we came to know that when we study theory but practice it is very difficult to understand. Therefore to serve dual purpose of practical training has been made compulsory for the student of MBA.

Such training promotes a student to boost his potentials and the inner qualities, and thereby students come to know about their reality that how the theoretical knowledge works in actual sense in any unit. This has indeed proved to be very useful to us.

III

ACKNOWLEDGEMENT
It gives us a great pleasure and personal satisfaction in presenting this report as a part of our Grand Project on Satisfaction level of Investors with their broking firm which has helped us to understand the preferences of investors for choosing any stock broking firm. We are indebted to many individuals who have either directly or indirectly made an important contribution in the preparation of this report. We are also grateful to Dr.A.H.Kalro, (Director, AES PGIBM), for giving us an opportunity to experience the corporate world, and for his valuable inputs on the project. With immense sense of gratitude, I hereby take this opportunity to thank my project guide and mentor, Dr. Parag Sanghani for his Expert guidance and contribution in the project. We are also thankful to our co guide Prof Bijal Mehta for her valuable guidance and support. We would like to thank the entire staff of AESPGIBM library, computer lab especially Hitanshu sir and Anvesha madam for their immense support. We would also like to thank all the respondents, without whom the report would not have been completed. Last but not the least We would like to place special thanks to our parents and friends for their help and support.

IV

EXECUTIVE SUMMARY
Stock exchange to some extent plays an important role as indicators, reflecting the performance of the countrys economic state of health. Stock market is a place where securities are bought & sold. To serve this purpose various firms are providing service. We have conducted this research project to find out consumers preference for choosing broking firm. We have used convenience sampling method for selecting the respondents we have elicited the response from 125 respondents.

We have taken response of various respondents through questionnaire & analyzed it through pi-chart & hypothesis for large proportion of a population.

INDEX

Ch. No.
Chapter-1 Chapter-2 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 2.12 2.13 2.14 Chapter-3 3.01 3.02 3.03 3.04 3.05 Chapter-4 Chapter-5 Chapter-6

Contents
Introduction to Stock Market Industry Overview History of stock Broking Industry Development BSE( Bombay Stock Exchange) NSE(National Stock Exchange) NCDEX(National Commodity & Derivative exchange) MCX (Multi Commodity Exchange) Transaction Cycle Introducton to equity market Indian capital market classification Capital market intermediaries Capital market processes Equity market Major Players in Stock Broking Highlight of major Stock Broking Firms Project Work Research Design Research Methods Data Collection Methods Sampling Design Process Field Work Data Analysis Findings Recommendations Webography Questionnaire

Page No.
01 05 07 09 11 13 15

18 19 21 23 27 30 33 40 41 49 50 52 52 53 54 55 69 71 73 74

VI

CHAPTER-1
(Introduction to stock Market)

-1-

INTRODUCTION TO STOCK MARKET

WHY INVEST?

If you were to open a book on economics and look up the word investing, chances are that you would find the following definition: Investing is building up to meet future consumption demands with the intention of making surpluses or profits, as they are popularly known.

And after reading it, the last trace of your eagerness to invest is likely to evaporate.

But investing is essential. Here is why

While the life expectancy of the average human being has increased, we are productive only between the ages of 30 and 60 years. Hence the short time span that we are able to earn money needs to provide for our future when we may not be capable of earning.

Everything being the same, we could keep away a part of our earnings every year (save) that will come in handy when we will not be able to earn. However inflation destroys the value of what we save. A sum of Rs10,000 saved this year will not
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have the same purchasing power ten years down the line. Hence we need to preserve the purchasing power of what we save. The only way to hedge inflation is to invest in shares, debentures, bonds, gold or real estate, to earn returns from these assets that compensate for the decline in our purchasing power.

-3-

WHAT IS A SHARE? Share or Equity represents part of an ownership of a business. So as a shareholder you own a piece of the action that happens in that business. Why would you want a piece of the action? For the rewards of course. As a shareholder you have a right over the profits generated by your business. Your company might pay out the profits generated every year as dividends or it may retain the profits to further grow them.

Theres another way you as a shareholder can make money. If your company does well, then its shares listed on the stock market become more valuable and the stock price appreciates. On the other hand, the company might perform badly. Then not only do you not get dividends but the stock price also declines. Hence investing in shares is a risky proposition.

When you invest in shares, you can expect certain returns based on the fundamentals of a business. However you have no control over it. What you have control over is managing risks associated with it.

-4-

CHAPTER-2
(Industry Overview)

-5-

INDUSTRY OVERVIEW INTRODUCTION Stock exchanges to some extent play an important role as indicators, reflecting the performance of the countrys economic state of health. Stock market is a place where securities are bought and sold.

It is exposed to a high degree of volatility; prices fluctuate within minutes and are determined by the demand and supply of stocks at a given time. Stock brokers are the ones who buy and sell securities on behalf of individuals and institutions for some commission. The Securities and Exchange Board of India (SEBI) is the authorized body, which regulates the operations of stock exchanges, banks and other financial institutions. The past performances in the capital markets especially the securities scam by Hasrshad Mehta has led to tightening of the operations by SEBI. In addition the international trading and investment exposure has made it imperative to better operational efficiency. With the view to improve, discipline and bring greater transparency in this sector, constant efforts are being made and to a certain extent improvements have been made.

-6-

HISTORY OF THE STOCK BROKING INDUSTRY

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial

enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business.

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In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as "The Stock Exchange"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. Thus in the same way, gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges.

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DEVELOPMENT

An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers Association at Bombay in 1875, the precursor of the present-day Bombay Stock Exchange. This was followed by the formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. In order to check such aberrations and promote a more orderly development of the stock market, the central government introduced a legislation called the Securities Contracts (Regulation) Act, 1956. Under this legislation, it is mandatory on the part of a stock exchange to seek government recognition. As of January 2002 there were 23 stock exchanges recognized by the central Government. They are located at Ahmedabad, Bangalore, Baroda, Bhubaneshwar, Calcutta, Chennai,(the Madras stock Exchanges ), Cochin, Coimbatore, Delhi, Guwahati, Hyderbad, Indore, Jaipur, Kanpur, Ludhiana, Mangalore, Mumbai(the National Stock Exchange or NSE), Mumbai (The Stock Exchange), popularly called the

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Bombay Stock Exchange, Mumbai (OTC Exchange of India), Mumbai (The Inter-connected Stock Exchange of India), Patna, Pune, and Rajkot. While the recognized stock exchanges have been accorded a privileged position, they are subject to governmental

supervision and control. The rules of a recognized stock exchanges relating to the managerial powers of the governing body, admission, suspension, expulsion, and re-admission of its members, appointment of authorized representatives and clerks, so on and so forth have to be approved by the government. These rules can be amended, varied or rescinded only with the prior approval of the government. The Securities Contracts (Regulation) Act vests the government with the power to make enquiries into the affairs of a recognized stock exchange and its business, withdraw the recognition the task of regulating the stock exchange to the Securities Exchanges Board of India.

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BSE (THE STOCK EXCHANGE OF MUMBAI)

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956.

The

Exchange,

while

providing

an

efficient

and

transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education program and making available to them necessary informative inputs.
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A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public

representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.

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NSE (NATIONAL STOCK EXCHANGE) NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It started operations in June 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments.

NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nation-wide, screenbased, automated trading system, with a high degree of transparency and equal access to investors irrespective of geographical location. The high level of information

dissemination through on-line system has helped in integrating retail investors on a nation-wide basis. The standards set by the exchange in terms of market practices, Products, technology and service standards have become industry benchmarks and are being replicated by other market
- 13 -

participants. Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market practices,

infrastructure, technology, risk management, clearing and settlement and investor service.

- 14 -

NCDEX (NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE) NCDEX started working on 15th December, 2003. This exchange provides facilities to their trading and clearing member at different 130 centers for contract. In commodity market the main participants are speculators, hedgers and arbitrageurs. Promoters of NCDEX are National Stock Exchange(NSE) ICICI bank Life Insurance Corporation(LIC) National Bank for Agricultural and Rural Development (NABARD) IFFICO Punjab National Bank (PNB) CRISIL

- 15 -

WHY NCDEX? NCDEX is nationalized screen based system which is providing transparent, private and easy services. NCDEX is one of the traditional media which gives online information NCDEX is one of the Indian commodity exchange, constructed on the basis of the current national institutes the exchange has been established with the coloration of leading institutes like NABARD, LIC, NSI etc. In India NCDEX has maximum settlement guarantee fund. NCDEX has appointed two exports for checking quality at the time of delivery

- 16 -

FACILITIES PROVIDED BY NCDEX NCDEX has developed facility for checking of commodity and also provides a wear house facility By collaborating with industrial partners, industrial companies, news agencies, banks and developers of kiosk network NCDEX is able to provide current rates and contracts rate. To prepare guidelines related to special products of securitization NCDEX works with bank. To avail farmers from risk of fluctuation in prices NCDEX provides special services for agricultural. NCDEX is working with tax officer to make clear different types of sales and service taxes. NCDEX is providing attractive products like weather derivatives

- 17 -

MCX (MULTI COMMODITY EXCHANGE) MULTI COMMODITY EXCHANGE of India limited is a new order exchange with a mandate for setting up a nationwide, online multi-commodity marketplace, offering unlimited growth opportunities to commodities market participants. As a true neutral market, MCX has taken several initiatives for users

In a new generation commodities futures market in the process, become the countrys premier exchange.

MCX, an independent and a de-mutualized exchange since inception, is all set up to introduce a state of the art, online digital exchange for commodities futures trading in the country and has accordingly initiated several steps to translate this vision into reality.

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TRANSACTION CYCLE

Decision to trade

Placing Order

Funds or Securities

Transaction Cycle

Trade Execution

Settlement of trades

Clearing of Trades

A person holding assets (Securities/Funds), either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets, decides to buy or sell the securities. He selects a

broker and instructs him to place buy/sell order on an exchange. The order is converted to a trade as soon as it finds a matching sell/buy order. At the end of the trade cycle, the trades are netted to determine the obligations of the trading members securities/funds as per settlement cycle.

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Buyer/seller

delivers

funds/

securities

and

receives

securities/funds and acquires ownership of the securities. A securities transaction cycle is presented above. Just because of this Transaction cycle, the whole business of Securities and Stock Broking has emerged. And as an extension of stock broking, the business of Online Stock broking/ Online Trading/
E-Broking has emerged.

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INTRODUCTON TO EQUITY MARKET

The Capital Market

INDIAN CAPITAL MARKET

The function of the financial market is to facilitate the transfer of funds from surplus sectors (lenders) to deficit sectors (borrowers). Normally, households have excess of funds or savings, which they lend to borrowers in the corporate and public sectors whose requirement of funds far exceeds their savings. A financial market consists of investors and buyers, sellers, dealers and does not refer to a physical location. Formal trading rules and communication networks for originating and trading financial securities link the participants in the market. As elsewhere in the world, the Indian financial system consists of: Money Market Capital Market

The money market has two components. Organized Market Unorganized Market

- 21 -

The organized market is dominated by commercial banks. The other major players are the Reserve Bank of India, Life Insurance Corporation, General Insurance Corporation, and Unit Trust of India, Securities Trading Corporation of India, other primary dealers and the various mutual funds. Despite rapid expansion of the organized money through a large network of banking institutions that have extended their reach even to the rural areas,

there is still an active unorganized money market. It consists of indigenous bankers and moneylenders.

In the unorganized market, there is no clear demarcation between short-term and long-term finance and even between the purposes of finance. The unorganized sector continues to provide finance for trade as well as personal consumption. The inability of poor to meet the creditworthiness requirements of the banking sector makes them take recourse to the institutions that still remain outside the regulatory framework of banking. But this market is shrinking.

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INDIAN CAPITAL MARKET CLASSIFICATION Indian capital market can be broadly classified, into the following:

I. MONEY MARKET: It is a market, which deals in short term securities such as treasury bills, certificate of deposits etc.

II. DEBT MARKET: It is a market dealing in debt securities such as debentures, bonds etc.

III. SECURITIES MARKET: It is a market dealing in equity and equity linked securities. This market comprises of primary

market and second market.

The capital market provides the framework in which savings and investment take place. On the one hand it enables companies to raise resources from the investors and on the other, it facilitates households to invest their saving in industrial or commercial activities. Those saving instruments that can be bought or sold freely are called securities. These
- 23 -

include a range of products debt and equity that can be traded. The market where such trades take place is the securities market or capital market and comprises the various exchanges, intermediaries and its regulatory institutions.

The capital market consists of these segments. Primary Segments Secondary Segments

The primary market deals with the issue of new instruments by the corporate sector such as equity shares, preference shares, and debentures. The public sector

consisting of central and state governments, various public sector industrial units (PSUs) and statutory and other authorities such as state electricity boards and port trusts also issue bonds. The primary market in which public issue of securities is made through a prospectus is a retail market and there is no physical location. Direct mailing, advertisements and brokers reach the investors. Screen based trading eliminates the need trading floor.

The Secondary Market Or Stock Exchange where existing securities are traded is an auction arena. It may have a physical location like a stock exchange or a trading floor.
- 24 -

Since 1995, the trading in securities is screen-based. Screenbased training eliminates need for a trading floor. And, since the last few years Internet-based trading has also made an appearance in India.

The Secondary Market consists of 23 stock exchanges including the National Stock Exchange (NSE) and the Over-the Counter Exchange Of India (OTCEI) and also Bombay Stock Exchange (BSE). The secondary market provides a trading place or terminals for the securities already issued to be bought and sold. It also provides liquidity to the initial buyers in the primary market to re-offer the securities to any interested buyer at any price, if mutually accepted. An active secondary market actually promotes the growth of the primary market and capital formation because investors in the primary market are assured of a continuous market and they can liquidate their investments in the stock exchange. There are several major players in the primary market. These include the merchant bankers, mutual funds, financial

institutions, foreign institutional investors (FIIs) and individual investors. R & T agents, Custodians and Depositories are capital market intermediaries that provide important

infrastructure services for both primary and secondary markets.

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It is important to ensure a smooth working of this market, as it is the arena where the players in the economic growth of a country interact. Various laws have been passed from time to time to meet this objective. The financial market in India was highly segmented until the initiation of reforms in 1992-93 on account of a variety of regulations and administered prices include barriers to entry. The reform process was initiated with establishment of securities and exchange of India (SEBI).

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CAPITAL MARKET INTERMEDIARIES Merchant Bankers Merchant Bankers means any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management.

Stock Brokers Stockbrokers are regulated by SEBI {Stock brokers and Sub brokers} Regulations, 1992. The stock broker is a member of the stock exchange. Stock brokers are the intermediaries who are allowed to trade in securities on the exchange of which they are members. They buy and sell on their own behalf as well as on behalf of their clients. Stock brokers expand their business by engaging sub broker. Sub brokers means any person not being a member of a stock exchange who acts on behalf of a stock broker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stock brokers.

- 27 -

Custodians Custodians of securities mean any person who carries on or proposes to carry on the business of providing custodial services. Custodian services in relation to securities mean safekeeping of securities of a client. SHCIL, Citibank N.A., Deutsche Bank, Standard Chartered Bank, HSBC Bank, IIT Corporate Services, HDFC Bank is among the few registered custodians in the country.

R & T Agents Registrars to Issue R & T agents are governed by SEBI. R & T agents are intermediaries who provide services to shareholders on behalf of issuers. Issuers may engage share transfer agents for maintaining Register of Members {ROM}, managing corporate benefits like distribution of dividends, interest on debentures, bonus shares, right forms etc. R & T agents extend the depository connectivity services in the depository environment. More information of R & T agents is given in the business activities of Karvy.

Mutual Funds MFs are financial intermediaries, which collect the savings of small investors and invest them in a diversified portfolio of securities to minimize risk and maximize returns for their
- 28 -

participants. MFs have given a major filliped to the capital market both primary as well as secondary. The units of MFs, in turn are also tradable securities. Their price is determined by their net asset value that is declared periodically. More information of mutual fund is given in the business activities of Karvy.

Depositories The principle function of a depository is to dematerialize securities, custody and trading in electronic book entry form. A depository established under the Depositories Act can provide any service connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository. There are two depositories in India, which are given below. NSDL CDSL

Depository participants (DPs): DPs are described as an agent of the depository. They are intermediaries between the depository and the investors. The relationship between the DPs and the depository is governed by an agreement made between the two under depositories Act.
- 29 -

A DP is responsible for maintaining the securities account of the investor and handling it in accordance with the investors instructions. A DP can offer depository-related services only after obtaining a certificate of registration from SEBI.

CAPITAL MARKET PROCESSES

There are various processes that issuers of securities follow or utilize in order to tap the savers for raising resources. Some of the commonly used processes and methods are described below: -

Private Placement: Method of raising funds directly from investors without issue of prospectus to the public is known as private placement. SEBI has prescribed the eligibility criteria for companies and instruments as well as procedures for private placement. Privately placed securities can also be listed if such placement fulfills all listing criteria.

Preferential Offer/Right Issue: Companies can expand their capital b offering the new shares to their existing shareholders. Such offers for sale can be made to the existing shareholders by giving them a

preferential treatment in allocation or the offer can be on a

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right basis i.e. the existing holders can get by the way of their right, allotment of new share in certain proportion to their earlier holding. If the shares are offered to a few of the existing shareholder instead to all shareholders or at a price different from the price at which they are issued to all, such issues are called preferential allotments. Preferential

allotment requires shareholders approval in the general body meeting. Further, all such offers have also to e in compliance with criteria laid down by SEBI.

Internet broking: With the Internet becoming ubiquitous, many institutions have set up securities trading agencies that provide online trading facilities to their clients from their homes. This has been possible since all the players in the securities market, viz. stockbrokers, depositories, stock DPs etc exchange, are linked clearing corporation, Thus

electronically.

information flows amongst them on a real time basis.

Initial Public Offer (IPO): Companies, new as well as old, can offer their shares to the investors in the primary market. This kind of tapping the saving is called an IPO or Initial Public Offering. SEBI guidelines regulate various procedures involved in making a public issue
- 31 -

but price of shares, size of the issue, timing of issue, listing of the issue is decided by the issuer. Issuers have to disclose all relevant facts and information in the prospectus. Prospectus also has to disclose risk factors and management perception about those risks.

Stock trading: An investor in securities needs assurance that they can convert their security holding to cash to meet their cash requirements. The ability to convert value of securities into cash is called liquidity. The liquidity is provided by the stock exchange. Stock exchange is a platform where buyers and sellers of securities will match their bids and offer for securities and exchange securities with cash. The offers and bids are routed through members of the stock exchange, popularly known as a broker. Stock exchange regulates the transaction are conducted fairly and transparently with justice to both buyers and sellers.

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EQUITY MARKET
Equity represents an ownership position in a corporation. It is a residual claim, in the sense that creditors and preference shareholders must be paid as scheduled before equity shareholders can receive any payment. In bankruptcy equity holders are in principle entitled only to assets remaining after all prior claimants have been satisfied.

Thus, risk is highest with equity shares and so must be its expected return. When investors buy equity shares, they receive certificates of ownership as proof of their being part owners of the company. The certificate state the number of states the number of shares purchased and their par value.

A Brief History of the rise of the Equity trading in India

July 9, 1875: Native brokers from the Native share and Stock Brokers Association in Bombay. Membership fee is Re. 1. The association has 318 members. 1899 : Bombay stock Exchange acquires own premises. 1921 : Clearing houses are established for settlement of trades as volumes increase. 1923 : K R P Shroff becomes the honorary president of BSE.

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1925 : Bombay Securities Contract control Act (BSCCA) comes into force.

Dec 1, 1939 : Stock Exchange building is acquired. 1943 : Forward trading banned till 1946. Only ready to deliver and hand delivery contracts permitted. 1956 : Securities Contract Regulation Act drafted on the lines of BSCCA comes into force. 1957 : BSE becomes the first exchange in India to get the permanent recognition. 1964 : Unit Trust of India (UTI) is born.

Apr 1, 1966 : K R P Shroff retires and Phiroze J Jeejeebhoy becomes chairman. Jun 29, 1969 : Morarji Desai bans forward trading. 1973 : Construction of P J Towers, named after late Phiroze Jamshedji Jeejeevhoy, starts. Jan, 2 1986 : BSE Sensesex launched as the first stock market index with1978-79 as the base year. Nov 1987 : SBI Mutual Fund launches Magnum Regular Income Scheme. Apr 1988 : Securities and Exchange Board of India (SEBI) set up. Jan 1992 : SEBI had given statutory powers.
- 34 -

May 1992 : Harshad Mehta securities scam breaks. May 27, 1992 : Reliance is the first Indian company to make a GDR issue. May 30, 1992 : The capital Issues Control Act, 1947 is replaced. Sep 1992 : Foreign Institutional Investors are permitted to invest in the Indian securities market. Nov 1992 : Finance Minister Manmohan Singh inaugurates Over the Counter Exchange of India. Oct 30, 1993 : The first private sector mutual fund, Kothari Pioneer Mutual fund, begins operations. 1993 : SEBI bans badla trading on BSE. June 1994 : NSE commences operations in wholesale debt market segment. Nov 1994 : The capital market segment of NSE goes o stream. Trading is screen based for the first time in India. March1995 : BSE online trading system (BOLT) replaces open outcry system. Apr 1995 : The National Securities Cleaning Corporation Limited, Indias first clearing corporation is set up. Oct 1995 : NSE overtakes BSE as the largest stock exchange in terms of volume of trading. Apr 1996 : The National Securities Depository Limited is created.
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Feb

1997

SEBI

releases norms for takeovers

and

acquisitions. May 1997 : BSE introduces screen based trading. Nov 1998 : SEBI recognized Interconnected Stock Exchange founded by 15 regional stock exchanges. This exchange starts functioning in Feb., 1999

Feb 1999 : Launch of automated lending and borrowing mechanism (ALBM) on NSE. Mar 11, 1999 : Infosys Technologies is the first company to be listed on NASDAQ through a public offering of American Depository Receipts. Mar 22, 1999 : Central Depository Services (India) promoted by BSE operations. Sep 1999 : ICICI is the first India Company to be listed on the New York Stock Exchange (NYSE). Oct 11, 1999 : For the first time in BSEs history, the Sensex closes above the 5,000 mark at 5,031.78. Jan 2000 : BSE creates a Z category of scrips in addition to A, B1, and B2 comprising scrips that breached or failed to comply with the listing agreement. Feb 2000 : Internet trading commences on NSE. On Feb 14, 2000, BSE Sensex hits all-time high of 6150. On Feb. 21, NSE records peak market capitalization of Rs. 11, 94,282 crore.
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Apr 10, 2000 : The Sensex is revamped to include Dr. Reddys Lab, Reliance Petroleum, Satyam Computers and Zee Telefilms replacing Indian Hotels, Tata Chemicals, Tata power, and IDBI. June 2000 : BSE and NSE introduce derivatives trading in the form of index futures. July 9, 2000 : BSE turns 125. Oct 19, 2000 : Wipro lists in the NYSE. Jan 22, 2001 : Borrowing and Lending Securities Scheme (BLESS) launched on BSE to promote securities lending and borrowing activities. Mar 2001 : Ketan Parekh scam breaks. SEBI suspends all the broker directors of the BSE in relation to KP scam. May 2001 : BSE advises compulsory demat for B2 scrips. June 2001 : Index options start trading on NSE. July 2001 : A SEBI directive bans carry forward. All major securities are moved to rolling settlement. Options of individual scrips start trading NSE. Nov 9, 2001 : BSE and NSE launch futures in individual stocks.

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Changing Attitude towards Equity Ownership

With a broadening of the corporate sector, volume of business on the exchange s in India is likely to increase. The greater interest shown in recent years by investors is partly reflected in the over-subscription of new issues. There has been great demand for growth issues. I.e. shares of companies with growth prospects. It has been observed that the wider the distribution of corporate securities among investors, the grater the reception accorded to new or additional issues of capital; the more mobile the additional issues of capital; the more mobile the market, the grater the participation of investors and traders in the raising of corporate capital. The available data about the share ownership in the country show that there is gradual widening if ownership. The increasing participation in stock market activities by financial and non financial intermediaries, particularly of institutions which are mainly investors has tended to create an orderly and stable market. Further, the various growth-permitting factors including regulatory measures, progressive spread of literacy and dissemination of investment information all tend to

contribute to a healthy growth of the stock market. In the

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security market, equity shares are the most romantic of all the form of securities. Further more, equity analysis is more complicated than bond appraisal, and greater skill is required in selecting equity than fixed income securities. The attitude towards equity shares has varied from extreme pessimism to optimism from time to time. It is equity shares that entice most investors, and some investors have been known to feel grater sympathy for their equity than their spouses. Presence of market and business risks associated with such investments fails to keep the investing public and institution out of the market because of their confidence in the ultimate success of the equity shares, i.e. towards overshadow risks. In fact the advantages of equity shares ownership are enough to lure the investors and change their attitude towards securities.

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MAJOR PLAYERS
1. UTI Securities 2. Angle Broking 3. INDIAINFOLINE SECURITIES PVT.LTD. 4. S S KANTILAL ISHWARLAL SECURITIES PVT LTD. (www.sharekhan.com) 5. KOTAK SECURITIES LTD. (www.kotakstreet.com) 6. INDIA BULLS (www.indiabulls.com) 7. HDFC SECURITIES LTD. (www.hdfcsec.com) 8. RELIANCE MONEY

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Introduction to stock broking Firms

S. S. KANTILAL ISHWARLAL SECURITIES PVT. LTD. (SHAREKHAN.COM):

Sharekhan, Indias leading stock broker is the retail arm of SSKI, and offers you depository services and trade execution facilities for equities, derivatives and commodities backed with investment advice tempered by decades of broking experience. A research and analysis team is constantly working to track performance and trends. Thats why Sharekhan has the trading products, which are having one of the highest success rates in the industry. Sharekhan is having 240 share shops in 110 cities; the largest chain of retail share shops in India is of Sharekhan.

In future, Sharekhan is planning to enter in Mutual funds, Insurance sector and banking sector to expand beyond the market currently covered by it. And it has started MF (Mutual Funds) on priority basis but wants to grow in it.

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KOTAK SECURITIES LIMITED (kotakstreet.com):

Kotak Securities Ltd., a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% - one of the worlds leading investment banks and brokerage firms) is Indias leading stock broking house with a market share of 5 6 %. Kotak Securities Ltd. has been the largest in IPO distribution - It was ranked number One in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME Database. It has also won the Best Equity House Award from Finance Asia - April 2004.

Kotak Securities Ltd is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) providing dual benefit services wherein the investors can use the brokerage services of the company for executing the transactions and the depository services for settling them. The company has 42 branches servicing around 1, 00,000 customers.

Kotakstreet.com the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments.

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Kotak Securities Limited manages assets over 1700 crores under Portfolio Management Services (PMS) which is mainly to the high end of the market. Kotak Securities Limited has newly launched Kotak Infinity as a distinct discretionary Portfolio Management Service which looks into the middle end of the market.

INDIA BULLS:

An India bull is India's leading retail financial services company with 77 locations spread across 64 cities. Its size and strong balance sheet allows providing varied products and services at very attractive prices, our over 750 Client Relationship Managers are dedicated to serving your unique needs.

India bulls is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides real-time service & 24/7 access to information and products. The India bulls all

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

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by our knowledgeable and customer focused Relationship Managers.

Indiabulls offers a full range of financial services and products ranging from Equities, Derivatives, Demat services and Insurance to enhance wealth and to achieve the financial goals.

HDFC SECURITIES LTD (HDFCsec):

HDFC sec is a brand brought to you by HDFC Securities Ltd, which has been promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base of the HDFC Group and other investors a capability to transact in the Stock Exchanges & other financial market transactions. The services comprise online buying and selling of equity shares on the National Stock Exchange (NSE). Buying and selling of select corporate debt and government securities on the NSE would be introduced in a subsequent phase. In a few months, they will also start offering the following online trading services on the BSE and NSE: 1. Buying and selling of shares on the BSE 2. Arbitrage between NSE & BSE 3. Trading in Derivatives on the NSE 4. Margin trading products.
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UTI SECURITIES LTD.: (UTISEL) UTI Securities Ltd was incorporated on June 24, 1994 by Unit Trust of India as a 100% subsidiary and on the repealing of the UTI Act, the capital is now held by the Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI). UTI Securities has been working as an independent professional entity for providing financial intermediary and advisory services to its corporate and retail clientele. The Company has presence in major cities with 20 branches and 50 franchisees to service a wide range of clients. The company has also invested in the joint-venture company with Standard Chartered Bank viz. Standard Chartered UTI Securities (P) Ltd. that is engaged in primary dealership and Government securities. The company is very soon going to start Commodity Trading through its subsidiary, USEc Commodities Ltd, which provides facility of commodity trading on NCDEX and MCX.

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ANGEL BROKING The Angel Group has emerged as one of the top 3 retail broking houses in India. Incorporated in 1987, it has memberships on BSE, NSE and the two leading commodity exchanges in India i.e. NCDEX & MCX.

Angel has always believed in offering the best of services to their customers. Be it in form of focused research or state of the art technology or customized product offering or personalized touch to our services. Angel is the only 100% retail stock broking house offering a gamut of retail centric services.

E broking Investment Advisory Portfolio Management Services Wealth Management Services Commodities Trading

Angel Broking Ltd. Angel Capital & Debt Market Ltd. Angel Commodities Broking Ltd. Angel Securities Ltd.

Member on the BSE and Depository Participant with CDSL Membership on the NSE Cash and Futures & Options Segment Member on the NCDEX & MCX Member on the BSE

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INDIA INFO LINE

India info line one-stop financial services shop, most respected for quality of its advice, personalized service and cutting-edge technology. Vision is to be the most respected company in the financial services space. The India Info line group, comprising the holding company, India Info line Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments to loan products and Investment banking. India Info line also owns and manages the websites www.indiainfoline.com and www.5paisa.com The Company has a network of 596 branches spread across 345 cities and towns. It has more than 500,000 customers. India Info line Ltd India Info line Limited is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients trading in the equities market. It has recently launched its Investment banking and Institutional Broking business.

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RELIANCE MONEY

Reliance money belongs to Anil Dhirubhai Ambani Group. It is a Reliance capital company. It believes in simplifying trade. Reliance money is mainly into:

IPO Personal finance Equity Derivatives Commodity Forex Mutual funds

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CHAPTER-3
(Project Work)

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PROJECT WORK

Research Design/ Research Methods

Research Design

A research design is simply a frame work or plan for a study that is used as a guide in collecting and analyzing the data. It is the overall operational pattern or frame work of the project that stimulate, what information is to be collected from which sources and by what procedure.

As far as the project is concerned, our study focuses on the following design:

Exploratory Research Design:

The objective of our exploratory research is to find new ideas of relationships between several facts. Exploratory research reveals and helps us to understand the practices of Stock broking. The exploratory research includes the experts opinion with the help of the company personnel and an interview with customers,,
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Descriptive Research Design:

Descriptive design is a sound basis for making predictions pertaining to the specific marketing practices which is a part of the conclusive research. Its main aim is to collect data with a definite purpose, which makes the facts practical and valuable. The descriptive research data would be collected by secondary data sources like books, magazines, newspapers.

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Research Methodology
Research Philosophy: Research Philosophy depends on the way we think about the development of knowledge. Research Philosophy applied in our project on Studying Customer satisfaction level is that of Interpretivism. We will use this research to understand the various practices of company. It is therefore the role of the interprevists (us) to seek, to understand the subjective reality of those that they study in order to be able to make sense of and understand their motives, actions and intentions in a way that is meaningful.

Data Collection Methods The data would be collected in the form of Primary data through an interview with the company personnel and survey at Ahmedabad city with the help of Questionnaires for personnel who are customers of broking firm and Secondary data. DATA SOURCES Primary Data: Primary data would be collected by taking the interview of the brokerage firms customers. Qualitative, descriptive research would be conducted with the help of structured questionnaires.
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Secondary Data: The secondary data will be gathered through company brochures, company internal data already collected by the company researchers and websites and websites of other companies.

Sampling Design Process

Target Population:

As far as the project is concerned, the target population would be people of Ahmedabad city who are associated in trading activities.

Sampling Technique:

The Probability technique which will be used in the project is that of Simple Random Sampling.

Sample Size:

Total Sample size would be 125.

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Field Work
The Project work is limited to Ahmedabad city. Field work would include the following:

Taking the prior appointment from the respondents and filling up the Questionnaires Phone interviews. Personnel interview with the company personnel

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CHAPTER-4
(Data Analysis)

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DATA ANALYSIS

1) In which brokerage house presently you have demat a/c?

Particulars India Infoline India bulls Angel broking Kotak securities Reliance money Sharekhan Others

No of Respondents 30 18 35 8 12 6 16

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2) What is the reason for choosing this brokerage house?

Particulars Brokerage Funding SMS tips ON-OF line trading facility Exposure Convenience RM facility

No. of respondents 34 46 25 66 77 95 20

Majority of the respondents have given the verdict that convenience is at the top for them while choosing the broking firm. Exposure is their second choice for their brokerage house.RM facility is least preferred by the customers.
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3) What is your monthly turnover?

Particulars 5000-10000 10001-25000 25001-50000 50001-100000 100001-500000 500000 or above

No. of Respondents 16 24 21 19 30 15

From the above graph we can say that 22.4% peoples monthly turnover is between 100001 to 500000 while at the second position 19.2% respondents told that their monthly turnover is between 10001 to 25000.
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4) Do you have any other demat a/c along with this?

Yes No

50 75

40% respondents have more than one demat A/C Some of them have opened more than one A/C for good trading tips. Various firms provide tips so they analyze tips and trade accordingly.

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5) WHAT IS ANNUAL MAINTENANCE CHARGE YOU ARE PAYING?

Company name India Infoline Indiabulls Kotak securities Reliance money Sharekhan Angle Broking

AMC 0 300 350 0 300 200

Kotak Securities is charging the highest annual maintenance charge Rs.350. India Infoline & Reliance money are not charging the annual maintenance charge. In the survey most of the respondents are of the view that annual maintenance charge should not be there. Most of the firms are charging AMC at an average of Rs.300

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6) FOR HOW LONG HAVE YOU BEEN TRADING ?

Particulars < 1 month 1 to 6 month 6 to 12 month 1 to 5 years > 5 years

No of Respondents 12 37 20 25 31

Looking at the graph we can say that people who trade in the market 1 to 6 months is highest 30% .

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7) HOW IS THE SERVICE OF YOUR BROKERAGE HOUSE?

Particulars Excellent Very good Good Very bad Bad Poor

No of Persons 9 41 37 24 11 3

Most of the respondents have favored their broking firm and told that their firms service is very good. Only 2% respondents have told that their firms service is poor. 33 % respondents have ranked their firm as very good.

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8) SATISFACTION LEVEL OF INVESTORS WITH THEIR BROKING FIRM.

Particulars Highly Satisfied Moderately satisfied Satisfied Dissatisfied Highly dissatisfied

No of Persons 25 28 34 26 12

Graph shows that 27.2% respondents are satisfied with their broking firm. While 9.6% respondents are highly dissatisfied with their firm. The dissatisfied respondents were of the view that their service provider should improve their Service and should provide better facility. Like their queries should be solved immediately.

Some service provider neglects their customers & that is the major reason of clients dissatisfaction.
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9) WHAT IS YOUR EXPECTATIONS FROM YOUR BROKING FIRM?

Suggestions Low brokerage Good tips Less formal process Good service No AMC

No. of respondents 41 33 29 21 26

In response to this question 32.8% respondents have demanded low brokerage. While 26.4% respondents require good trading tips. Other suggestion includes RM facility, more exposure, Online fund transfer facility, profit generation etc. Some Reliance customer does not want recharge system.
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10) On which trading type you are trading more?

Intraday Delivery

Trading Intraday Delivery Both

No. of respondents 42 55 28

Most of the people would like to trade on delivery basis, because they want to reduce the risk of their money being lost.

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11) Which company has the highest satisfied customers?

Particulars India Infoline India bulls Angel broking Reliance money Others

Satisfied(%) 70 55 33 58 56

Dis-satisfied(%) 30 45 67 42 44

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HYPOTHESIS TESTING

TESTING OF HYPOTHESIS USING CHI-SQUARE TEST 1) Null Hypothesis (H0): Investors are satisfied with their broking firm.

2) Alternate Hypothesis (H1) : Investors are not satisfied with their broking firm. OBSERVED FREQUENCY(fo) TABLE

Factor Satisfied Dissatisfied Total

Brokerage 42 22 64

Exposure 36 25 61

Total 78 47 125

EXPECTED FREQUENCY(fe) TABLE

Factor Satisfied Dissatisfied Total

Brokerage 39.94 24.06 64

Exposure 38.06 22.94 61

Total 78 47 125

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CHI-SQUARE TABLE Observed Frequency Oi 42 36 22 25 Expected Frequency Ei 39.94 38.06 24.06 22.94

Sr no. 1 2 3 4 Total

(Oi-Ei) 2.06 -2.06 -2.06 2.06

(Oi-Ei)2/Ei 0.11 0.11 0.18 0.18 0.58

Now Putting these values in the Equation :

2 =

(f0 - fe)2 ----------fe

(Chi-Square calculated)

= 0.58

Degree of freedom: (C-1) (R-1) = 1

5% LEVEL OF SIGNIFICANT: Table value = 3.84

Statistical conclusion: Table value is grater then the calculated value so null hypothesis is accepted.

Conclusion: Here null hypothesis is accepted that means Investors are satisfied with their broking firm.
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CHAPTER-5
(Findings)

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FINDINGS
India Infoline is among the best broking firms, preferred by the customer. Most of the Investors are satisfied with their broking firm. Most of the companies provide similar brokerage slab to the customer. People trade only in equity; most of the people do not trade in derivatives & commodity. People prefer the firm which offers low brokerage & Funding facility. People are not aware of the benefits of trading in derivatives so lots need to be done in this direction. People generally prefers safe & risk less investment avenue. Some people have fear of stock market in their mind. Some Investors have more knowledge than employees of brokerage house about broking services. People wants to invest in stock market but they do not have adequate knowledge of stock market so firms should educate people & help them to invest in stock market.

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CHAPTER-6
(RECOMMENDATIONS AND SUGGESIONS)

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RECOMMENDATIONS AND SUGGESIONS

Stock Broking Firms should provide better services to acquire and retain customers. Firms should establish efficient Research & Analysis Department for Security research, so that they can give accurate tips for trading. Stock should not be sold out in case of debit. A person sitting on terminal should not be over crowded. Firms should provide Large screen for displaying stock updates. Relationship Manager should be more knowledgeable than client. Operational Activity (System) should be improved to make process less cumbersome. Stock Broking Firm needs to make its marketing team strong and also it should increase marketing activities such as promotional campaigns. Stock Broking Firm should educate the investors about Derivatives & Commodities by organizing classes, corporate presentations, taking part in consumer fairs, organizing events. Stock Broking Firm should turn existing customers (who are trading in Equity only) towards Derivatives & Commodities. Stock Broking Firm may also use its helpline number for giving education on securities. Company may appoint special team for giving education & attracting people towards trading securities.

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Webography

1. www.Google.com

2. www.nseindia.com 3. www.bse-india.com

4. www.India Infoline.com

www.5Paisa.com

ww.mcx.com

6. www.ncdex.com

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QUESTIONNAIRE
1) In which brokerage house presently you have demat A/C? Ans. ____________________________________

2) What is the reason for choosing this brokerage house? Brokerage Funding SMS Tips RM Facility Online- Offline trading facility Exposure Convenience

3) What is your monthly turn over?

5000-10000 25001-50000 100001-500000

10001-25000 50001-100000 500000 or above

4) Do you have any other demat A/C along with this ? Yes No

If yes, Name the broking firm ___________________________

5) On which transaction you are paying brokerage? Intraday Delivery

6) What is the annual maintenance charge you are paying?

Ans._________________________________

7) For how long have you been trading? < 1Month 1 to 6 Months 6 to 12 Months - 74 1 to 5 years > 5 years

8) How is the service of your brokerage house? Excellent Very good Good Very bad Bad Poor

9) How is the overall satisfaction level of your broking firm? Highly satisfied Moderately Satisfied Satisfied Dissatisfied Highly dissatisfied

10) What are your expectations from your broking firm? Ans._____________________________________________________ ______________________________________________________

Name: Age :

____________________________________ ____________________________________

Occupation : ____________________________________ Address: ____________________________________ ____________________________________ Mo: ____________________________________

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