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A REPORT ON COMPARATIVE ANALYSIS OF ONLINE TRADING OF THE COMPANY WITH OTHER BROKING COMPANIES BY AMIT MANDOWARA ANKIT BHANSALI

Office: 5 Floor, Sakar-1, Opp. Gandhi gram Rly. Station, Navranpura, Ahmedabad-380009. Tele: 079-66302700, 079-26581133 Fax: 079-26582331

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SUBMITTED TO: Dr. Namrata Bajaj shah (Faculty Guide) ICFAI BUSINESS SCHOOL Ahmedabad. Mr.Jasmin (Company guide) PRSSB Ahmedabad.

A REPORT ON COMPARATIVE ANALYSIS OF ONLINE TRADING OF THE COMPANY WITH OTHER BROKING COMPANIES BY AMIT MANDOWARA (07 BS 0436) ANKIT BHANSALI (07 BS 0591)
A report submitted in partial fulfillment of the requirement of MBA program of ICFAI business school

Distribution list: Company Guide: Mr.Jasmin shah, PRSSB Ahmedabad Faculty Guide: Dr.Namrata Bajaj, ICFAI business school

ACKNOWLEDGMENTS
Firstly I am glad to thank IBS family to have summer internship program (SIP) for more than 3 months in the curriculum which help us to get exposure to corporate life. I would like to express my sincere thanks to MR. Atul P.Sharedalal and MR.Jigen P.Sharedalal (director of the company) for giving us the opportunity to work with their esteemed organization. I would like to thank Mr. Jasmin Shah (company guide) and Dr. Namrata Bajaj (Faculty Guide) for providing great inspiration throughout the training and helping us to explore various avenues in the field. I am indeed grateful to Mr. Nigam Shah (mutual fund advisor) and Mr.Bhavin Shah for providing guidance, faith, constructive suggestion and faith in our ability to perform well who gave me valuable opportunity of involving myself in real life projects. I am also thankful to all the staff members of PRSSB, Ahmedabad who has always guided me whenever required. I thanks to all whose who knowingly or unknowingly have helped me in preparing the project

Ankit Bhansali

Table of content
Acknowledgments Abstract 1. Introduction 1.1 1.2 Purpose and Limitation Sources and Methods 1 2 4-6 6-7 8 ii iv

2. Industry analysis 2.1 Products offered 2.2 Region-wise revenue 3. Online trading 3.1 History of online trading 3.2 About online trading 3.3 Risk of online trading 4. SWOT analysis of different broking companies 5. Comparison of different broking companies 5.1 On the basis of demat cost 5.2 On the basis of online trading 6. Data analysis 7. Conclusion 8. Recommendations Appendices Bibliography CD Attached (online trading demo)

9 10-13 14 16-29

30 31 32-39 40 41 42-44 45

Abstract
In the fourteen week of summer internship project in Pravin Ratilal Share And Stock Brokers Ltd. I have experienced the practical corporate life. In this period I have analyze the broking industry and its future prospects. I have visited different broking firm and drew conclusion thereon. These will help the company in enhancing policies regarding cost and value added services to customer, thereby increasing their customer base. I have compare the services provided by PRSSB with other companies and also I have compare the online features of PRSSB with other broking companies so as to know where the company stand and try to improve the weaken area. I have prepared the demo of online trading so as to educate the customer and encourage them to do online trading so that cost of company could reduce. I have also visited online customer of PRSSB by preparing questionnaire so as to know the feedback of customer, to guide them how to use and also to know there decision pattern .

OBJECTIVES
To prepare online trading USP for the company To compare the online trading facility provided by the company with different Broking companies. To Educate the customer of the company about online trading and getting there feedback for the same.

LIMITATIONS
The field itself is very large so, I wont be able to analyze all the data as I have to complete the project within 14 weeks, so there is some time constraint. As the number of broking companies are very large so, I have to limit myself to few broking companies for better comparison. It wont be possible to get customer feedback of other broking companies as we dont have the database for the same. Indian brokerage industry is highly fragmented. Numerous small firms operate in this space so as to get particular data became quite difficult.

METHODOLOGY
We have collected the information from both the sources i.e. 1) Primary data 2) Secondary data The Data related to the broking industry was collected from various websites as well as from newspapers and magazines. The data related to the different broking firms was collected through primary source by visiting different companies as prospective customers and also by searching their websites. In order to get customer feedback, I personally called the customer of the company from the database provided and meet all the online trading customer in order to get there response . The Data related to PRSSB profile was collected through the companys website and by interacting with the employees. After collecting the remaining data, I will be doing the SWOT analysis of selected broking firm which will help the company to find unique selling proposition (USP) of PRSSB together with identifying its potential to grow. The research instrument questionnaire used in the project is attached with the project.

PHASE 1
ABOUT ONLINE TRADING

INDUSTRY ANALYSIS
The equity brokerage industry in India is one of the oldest in the Asia region. India had an active stock market for about 150 years that played a significant role in developing risk markets as also promoting enterprise and supporting the growth of industry. The roots of a stock market in India began in the 1860s during the American Civil War that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance. Historical records show that as early as 1864, there were about 1,000 brokers with the stock markets functioning from three places in Mumbai. Despite passing through a number of changes in the post liberalization period, the industry has found its way towards sustainable growth. A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational companies, which created a surge in retail investing. The early 1980s witnessed another surge in stock markets when major companies such as Reliance accessed equity markets for resource mobilization that evinced huge interest from retail investors. A new set of economic and financial sector reforms that began in the early 1990s gave further impetus to the growth of the stock markets in India. As a part of the reform process, it became imperative to strengthen the role of the capital markets that could play an important role in efficient mobilization and allocation of financial resources to the real economy. Towards this end, several measures were taken to streamline the processes and systems including setting up an efficient market infrastructure to enable Indian finance to grow further and mature

The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad objectives of the SEBI include:

to protect the interests of the investors in securities To promote the development of securities markets and to regulate the securities markets.

RAPID GROWTH The last decade has been exceptionally good for the stock markets in India. In the back of wide ranging reforms in regulation and market practice as also the growing participation of foreign institutional investment, stock markets in India have showed phenomenal growth in the early 1990s. Investor base continued to grow from domestic and international markets. The value of share trading witnessed a sharp jump too. Stock markets became abuse in intensely the technology Electronic and process digital driven, giving little scope for manual intervention that has been the source of market past. trading, certification, straight through processing, electronic contract notes, online broking have emerged as major trends in technology. Risk management became robust reducing the recurrence of payment defaults. Product expansion now took offer, place in in a speedy to manner. in Indian equity markets and stock addition trading equities,

opportunities in trading of derivatives in futures and options in index

Stock exchange reforms brought in professional management separating conflicts of interest between brokers as owners of the exchanges and traders/dealers

The number of brokers in various stock exchanges rose from 6,711 in 1996-97 to 10115 in FY07.The increase in the number of brokers in last decade is around 40%.you can see from the graph below it. Figure 1

Graph indicating increase in number of brokers during last decade. Sources: dnb PRODUCTS OFFERED In the past couple of years, apart from trading, the firms have started offering various investment related value added services: The sustained growth of the economy in the past couple of years has resulted in broking firms offering many diversified services related to IPOs, mutual funds, company research,etc. However, the core trading activity is still the predominant form of business, forming 90% of the

firms in the sample. 67% firms are engaged in offering IPO related services. The broking industry seems to have capitalized on the growth of the mutual fund industry, which was pegged at 40% in 2006. More than 50% of the sample broking houses deal in mutual fund investment services. The average growth in assets under management in the last two years is almost 48%. Company research is another lucrative area where the broking firms offer their services; more than 33% of the firms are engaged in providing company research services. Additionally, a host of other value added services such as fundamental and technical analysis, investment banking, arbitrage etc are offered by the firms at different levels.

Figure 2

Graph indicating % of companies offering various products


Source:dnb

Of the total number of broking houses providing trading services, 52% are based in the West, followed by 25% from North, 13% from South

and 10% from the East. Around 50% of the firms offering IPO related services are based in the West as compared to 27% in North, 13% in South and 10% in East. In providing mutual funds services, the Western region was dominant amounting to 49% followed by 27% from North; The South and the East are almost at par with 13% and 11%

Figure 3

Graph indicating region wise revenue coming from broking companies.


Source: self generated from the study material

HISTORY OF ONLINE TRADING


Indian exchanges and brokering houses have been slow to move their transactions online. This has been mainly due to Government regulations. There was initial delay in laying down specifications for creating Closed User Groups (CUGs). The issue was resolved between the DoT and the Finance Ministry around 1998 and soon trade portals like ICICIDirect.com, motilaloswal.com, and smartjones.com came into being.

The main challenge in online trading at that time was: 1. Connectivity was perhaps the most important technological factor. The cost of leased lines and VSAT links has been traditionally very high and the reliability of the links has been low. 2. It also took a long time to commission the links as one had to make an application and wait for a few weeks for the link to be up and running. 3. Other issues like security, and backup and recovery procedural costs were also deterrents. 4. Security is the most crucial element in the network. All applications have been built with a conscious approach towards security. The security policies are tightly integrated and regularly scrutinized to leave no room for compromise. All the applications and OSs are hardened periodically for safety." 5. Backup and recovery this has emerged as one of the vital aspects of business continuity. When online exchanges were designed a few years ago, perhaps a lot of emphasis was not placed on this aspect, as it is today. However it's not difficult to add business continuity processes to an existing network.

Thankfully, along with the resolution of regulatory issues, India no longer has any pressing connectivity and bandwidth issues. With, the entry of private players into the broadband scenario and the government opening up the telecom sector, these issues are almost non-existent. Security solutions and services available in the market have matured and it doesn't cost a pretty packet anymore to put a simple backup solution in place.

ABOUT ONLINE TRADING


Traditionally stock trading is done through stock brokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading. Online Stock Market Trading is an internet based stock trading facility. Online trading refers to buying and selling securities via the Internet or other electronic means such as wireless access, touch-tone telephones, and other new technologies. Investor can trade shares through a website without any manual intervention from Stock Broker. Though the spread of internet has been slow in India, the players are catching fast at least in the online trading business. Given the suitability of the product and rising demand of internet there is no surprise that E-broking is picking up fast captivated the imagination of the consumer and created a new breed of investor- the day trader investor who is impulse to buy, own and to sell and must be matched by swift transaction processes. Figure 4

Years

There are two different type of trading environments available for online equity trading.

1. Installable software based Stock Trading Terminals This trading environment requires software to be installed on investors computer. This software is provided by the stock broker... These kind of trading terminals are used by high volume intraday equity traders. Advantages Orders directly send to stock exchanges rather than stock broker. This makes order execution very fast. It provides almost each and every information which is required to a trader on a single screen including stock market charts, live data, alerts, stock market news etc.

Disadvantages Location constrains - You cannot trade if you are not on the computer where you have installed trading terminal software. It requires high speed internet connection. These trading terminals are not easily available for low volume share traders.

2. Web (Internet) based trading application These kind of trading environment doesn't require any additional software installation. They are like other internet websites which investor can access from around the world through normal internet connection. Advantages of Online Stock Trading (Website based)

Real time stock trading without calling or visiting broker's office. Display real time market watch, historical datas, graphs etc. Check the trading history; demat account balance and bank account balance at any time. Provide online tools like market watch, graphs and recommendations to do analysis of stocks. Place offline orders for buying or selling stocks.

Set alert to inform you certain activity on the stock through email or sms. Secure transactions.

Disadvantages of Online Stock Trading (Website based) Website performance - sometime the website is too slow or not enough user friendly. Little long learning curve especially for people who dont know much about computer and internet.

ONLINE TRADING PROCESS


The various transactions involved in online trading can be shown from the point of view of the

Client Broker Stock Exchange

The client places an order via the net by logging onto his broker's site.

The broker accepts and executes the order And places it with the exchange.

The exchange accepts the order after Checking the share limit for the day.

The broker makes the payment either Directly via the clients bank account or indirectly via broker

The exchange receives the money and Completes the settlement.

The client is intimated about the settlement either Through demat account or through e-mail.

BENEFITS OF ONLINE TRADING


Internet trading is expected to: Increase transparency in the market Provide management information system(MIS) Introduce flexibility in the system, to handle growing volumes and to support nationwide expansion plans of market activity. Through internet trading three fundamental objectives of SEBI regulation can be easily achieved. These are: 1) Investor protection 2) Creation of fair and efficient market 3) Reduce risk of systematic risk Real time streaming quotes Instant trade execution and order confirmation

Benefits from the online trading are so much day by day numbers of clients prefer online trading and also revenue coming from online trading is increasing at tremendous speed. Figure 5

Graph indicating % of revenue coming from online trading

Risk of online trading


There is risk of loss associated with investing in securities regardless of the method used. New investors need to understand the principles of investing, their own risk tolerance, and their investment goals before venturing into the market. In addition, online investors may want to consider these other risks. High Internet traffic may affect online investors' ability to access their account or transmit their orders. Online investors should be skeptical of stock advice and tips provided in chat rooms or bulletin boards. Investors should do their own research before acting on these tips. Also, for some online investors, there is a temptation to "overtrade" by trading too frequently or impulsively without considering their investment goals or risk tolerance. Overtrading can effect investment performance, raise trading costs, and complicate your tax situation Online investors need to be aware of the potential for stock market volatility, the possibility of delays due to high Internet traffic or high trading volume, and the difference between market and limit orders. Learn about the possibilities & pitfalls of using the Internet as an investment tool. Still, India has a long way to go for online trading and is lacking behind from other developing countries.

Figure 6

SWOT ANALYSIS OF OTHER BROKING COMPANIES COMPARISION OF DIFFERENT BROKING COMPANIES

ICICI Direct is the sister concern of ICICI Bank. It is an online broking firm which provides the investors to trade in equity, IPOs, mutual funds and derivatives online.

The ICICIdirect Advantages: It has 3-in-1 accounts integrates banking, broking and demat accounts. This enables to trade in shares without going through the hassles of tracking settlement cycles, writing cheques and Transfer Instructions, chasing your broker for cheques or Transfer Instructions etc.

Internet-based Online Trading can be done through software. It is free of cost but the investor has to refresh again after opening it to view the live rates as it does not changes automatically unless refreshed. This is the online portal of ICICIDIRECT.

SWOT ANALYSIS OF ICICIDIRECT


STRENGTH
1 player to start online trading 3-in-1 account integrates your banking, broking and demat accounts. All accounts are from icici and very well integrated.
st

WEAKNESS
Only online is there Brokerage is very high
Online portal does not show

the fluctuation of price

Large distribution network across India Investment online in IPOs, mutual funds, goi bonds, and postal savings schemes all from one website.

General insurance is also

available from icici Lombard.

OPPORTUNITIES
Vast untapped market Number of user in online trading are continuous increasing

THREATS
Facing high competition Various players are using hybrid model i.e. online and offline while icicidirect has only online customer

According to the executive the company have achieved 6-7% (month to month) increase in customer base till date and they are targeting same figure in the future also

Kotak Securities, a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (one of the worlds leading investment banks and brokerage up in firms, holding 25% stake is a in the in company) is Indias leading stock broking house with market share close to 9%.

Set

1994,

Kotak Portfolio

Securities

leader Retail

Institutional Broking &

Stock Broking,

Management,

Distribution and Depository Services. Kotak Securities has 835 outlets servicing over 3, 35, 000 customers and a coverage of 295 cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited has over Rs. 2640 crore of Assets under Management (AUM) as of 30th June, 2007. The company has a full-fledged research division involved in Macro Economic studies, Sectoral research and Company Specific Equity Research combined with a strong and well networked sales force which helps deliver current and up to date market information and news. 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 accolades that Kotak Securities has been graced with Best Performing Equity Broker in India - CNBC TV 18" (2008) Optimix Financial Advisory Awards

SWOT ANALYSIS OF KOTAK SECURITIES


STRENGTH
They provide daily sms alerts, market pointers, periodical research reports, stock recommendations etc.

WEAKNESS
High brokerage is charged Minimum account balance of rs.5000 is required Provide less exposure as compared to other brokerage house.

Won many awards and have a good reputation in the market. Provide various a/c types, so as to cater individual needs. Large distribution network across India.

OPPORTUNITIES
Take benefit of 3 in 1 account scheme

THREATS
Facing competition from icicidirect, HDFC sec., etc because mare or less there services are same.
Competition from low

Capitalize on advisory services Distribution products of financial

brokerage house like angel, motilal oswal, etc

According to the executive they have achieved the growth of 30-35% in online trading customer and they are targeting nearly 45-50% of their customers to get online within 2-3 years

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. 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.

SWOT ANALYSIS OF ANGEL BROKING


STRENGTH Known for giving high margins. Good distribution network across India Angel clients will have the advantage to access their back-office data on mobile phone. Four types of online software are available so as to cater individual customer. WEAKNESS Online customer base are less as compared to peers. Poor quality of service

Company avg. Collection period is 175 days while avg. Payment period is 60 days.

OPPORTUNITIES Targeting service class people Online software according to individual requirement Capitalize on online IPO and MFs services.

THREATS Competition from low brokerage firms Less online customer as compare to peer companies.

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. 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.

SWOT ANALYSIS OF INDIAINFOLINE

STRENGTH
Rates are very competitive then other providers Large number of customer base for online trading as they were among the initial players in the sector Research reports

WEAKNESS
Learning TT advance software is little tough. Long process time for opening an account Min. Deposit of Rs. 5000 is required

High security is there in online trading

Opportunities
Huge service class
customer base

THREATS
Other companies who are charging low brokerage and there account processing time is also very less

Online IPO and mutual funds Huge commodity market is there

Many

new companies have started online trading aggressively which may result in decreasing their market share

According to the executive they have achieved nearly 25 % p.a growth in online trading customer and they are expecting the same in future also. After two years there target is to have 50-60%of there customer to get online

Kunvarji group was founded in 1987, with only 5 person at its helm and 200 Sq feet of office and now they have grow into a force of over 350 employees, 400 Business associates, and spread of 8 states across the country. The company also enjoys establishment of an overseas base at Dubai, UAE. The kunvarji group comprises of: - Kunvarji Finstock Private Limited - Kunvarji Commodities Brokers Private Limited - Shikha Growth Fund Private Limited

SWOT ANALYSIS OF KUNVERJI STRENGTH


Flexibility in brokerage There is no annual maintenance Aggressive approach Provide Odin software for online customer

WEAKNESS
Online trading started very late(2007) No. of branches are few

OPPORTUNITIES
Targeting HNIs clients Vast untapped market for online trading.
To make IPO and F& O online

THREATS
Charges for online trading is very high while many companies provide free of cost. Facing tough competition from small as well as large players.

SHAH INVESTORS
SHAH INVESTORS started at 1980 with a mission to provide excellent services in the stock market, in the capital & F&O segment and as depository participant in NSDL & CDSL, Shah Investors Home Ltd. came into being, a brain child... The strength in retail client base in Gujarat State is an ample testimony to our growing stature in our field. And a tribute to their 'customer first' attitude coupled with services on par with the very best! Banking on assets like core competency of employees - a terrific team of 65, management seeped with concrete ideas of tomorrow like website for trading, tips online to the clients, infrastructure supported with ongoing research for better solutions and a quest to provide the very optimum mix of services to our client base, SIHL will always have very sure footed entry into the future... Till now the number of client is approx. 80000 and still it is continuously increasing.. They have 1000 customers in online trading and out of them 125-150 get online daily .They have formed special team of 4 members for aggressively promoting online trading and for customer queries. They add nearly12-15 client every week in their online trading base. They are targeting 10-15% of the customers to get online in next 2 years

SWOT ANALYSIS OF SHAH INVESTORS


STRENGTH
Flexibility in brokerage There is no annual maintenance No. of branches are few Aggressive approach Provide Odin software for online customer

WEAKNESS
Online trading started very late(2007)

OPPORTUNITIES
Targeting HNIs clients Vast untapped market for online trading. To make IPO and F& O online

THREATS
Charges for online trading is very high while many companies provide free of cost. Facing tough competition from small as well as large players.

They have 1000 customers in online trading and out of them 125-150 get online daily .They have formed special team of 4 members for aggressively promoting online trading and for customer queries .They add nearly12-15 client every week in their online trading base. They are targeting 10-15% of the customers to get online in next 2 years

The services provided by PRSSB:


EQUITY TRADING NSE & BSE DERIVATIVES NSE & BSE DEPOSITORY INTERNET BASED TRADING IPO & BOOKBUILDING MUTUAL FUNDS FIXED DEPOSITS & RBI BONDS PORTFOLIO ADVISORY
1. Equity & Derivatives

In-house team for fundamental research. User friendly Internet Based Trading - https://itrade.prssb.com/ View your transaction details through on-line Back-office. Digitally signed contract notes at www.prssb.com as well as sent through email Trade confirmation through SMS.

2. Depository

Consolidated holding report of family accounts with valuation from our website: www.prssb.com Demat holding status available 24x7 Phone Banking Speed-e unbelievably low transaction charge, eliminating geographical barriers with utmost safety. On-line Branch Network all services are available from any of our branches. Various details sent through Email monthly holding statement, allotment of IPO/Book-building, etc.

IPO allotment intimation through SMS. Excellent surveillance system for greater safety and security of all transactions. Steady, simple and transparent charge structure over the past few years No hidden costs. Dedicated and NCFM Certified professional team Long business hours, as well as working on various public holidays also.

3. Internet Based Trading


Speed and Power of a brokers terminal at your Desk-top. Real time streaming quotes on one screen. Single screen order and trade entry. Instant order and trade confirmation. Freedom of information and greater transparency. Control of your money in your hands Best price for investors. Level playing field.

4. IPO & Book-building


Independent and efficient team. Ranked among top 15 sub-syndicate members in the country. Amongst the above, ranked 2nd in Gujarat. Guidance available during public issues for small and big investors. On-line bidding at all our branches.

5. Mutual Funds, Fixed Deposits & RBI Bonds


Independent department for Mutual Funds as well as Fixed Deposits and RBI Bonds. NCFM qualified and competent team. Proper expert guidance available according to the needs and requirements of the investors. Fixed Deposit and Bonds of various companies are available, including Bonds issued by RBI. Valuation report with gain and loss sent on monthly basis.

6. Portfolio Advisory

In-house team for fundamental research. NCFM Certified professional team.

Personalized guidance on your portfolio with prior appointment. In-house research team equipped with latest softwares Capitaline and Prowess. Provides rational and disciplined approach for your investments

Online portal of PRSSB

SWOT ANALYSIS OF PRSSB

STRENGTH
Have a good relation with the client Flexibility in brokerage Known for clear & transparent business

WEAKNESS
No research report No marketing for online trading

No customer

query desk

Good distribution network around


Ahmedabad

OPPORTUNITIES
Large offline customer base so it can convert into online customer Target smaller cities in Gujarat where competition is less.

THREATS
Various big players like kotak , angel , ICICI direct , reliance money etc are aggressively expanding their market in online trading No commodity exchange yet which is expanding rapidly. Lack of aggressive approach

Table 1 COMPARATIVE ANALYSIS OF BROKING COMPANIES ON THE BASIS OF VARIOUS CHARGES


NAME OF DP Advance deposit ICICI DIRECT Rs.2500,if client does not have a/c. Rs. 750 a/c maintained KOTAK SECURITIES INDIA INFOLINE ANGEL BROKING KUNVERJI SHAH INVESTO RS Nil PRSSB

Rs.5000

NIL

Rs. 5000

Nil

NIL

a/c opening Rs 575 Rs.555 (lifetime) Nil Rs.15 for postal request & Rs. 2 p.c Rs. 25 Rs. 272

Nil

130 NIL

Rs. 500

Nil

Rs. 300

Rs.200individual Rs.500corporate Rs.30 +Rs. 3 p.c

Demat

Rs. 35 and Rs.2 per certificate .02 or minimum Rs. 20 0.02 or minimum Rs. 20 0.02 or minimum Rs. 20 Rs. 25 Rs. 25

Rs. 35 and Rs.2 per certificate Rs. 25

Rs.25 for postal request & Rs. 2 p.c Rs. 25

Rs.450normal a/c Rs.1100traders a/c Rs.35 per DRF up to 15 cert. & Rs.2 p.c extra Rs. 55

Rs. 300

Rs.2 p.c (mini. Rs. 25 per request) Rs. 50

Pledge creation Pledge closure Pledge invocation Off market transactionsale(DP) Off market transaction sale(inter DP)

Rs.25

Rs. 25

Rs. 25

Rs. 25

Rs.25

Rs.30

Rs. 50

Rs. 25

Rs. 25

Rs.25

Rs.25

Rs.30

Rs. 50

Rs.20 Rs.25

Nil Rs. 17

Nil Rs.20

Rs. 10 Rs 20

Nil Rs.25normal a/c Rs.15 traders a/c

RS.17 Rs.25

Source: primary data p.c per certificate DP- depository participant

Table 2
COMPARATIVE ANALYSIS OF VARIOUS BROKING COMPANIES ON THE BASIS OF ONLINE TRADING

PARTICULARS

ICICI DIRECT

KOTAK SECURITIES

INDIA INFOLINE

ANGEL BROKING

KUNVER JI

SHAH INVESTOR

PRSSB

SERVICE STARTED SOFTWARE USED SOFTWARE CHARGES DELIVERY CHARGES INTRA DAY CHARGES % OF ONLINE CUSTOMER % OF GROWTH EXPECTED

7-8 years Web based Nil 0.75 .05 100 40-50

5-6 years Web & application based Nil 0.2-0.59 0.02-0.18 40 40-50

6 years Web & application based Nil 0.25 .05 70 60

4 years Application based Nil 0.5 .05 20 25-30

6 months Odin software 1000 p.m 0.15-0.5 .015-.05 2 90-100

2 years Web & application based Rs.450 p.m 0.4 .04 2 100

1.5 years Web based Nil 0.3-0.7 0.1 3 20

Source: primary data

Phase 3

Data analysis Findings & conclusion Recommendation

We have call the 368 online customers and the response we get are given below.
Figure 7

Response of the customer who have online tradingaccoun t


159

84

int erest ed 71 no problem2 not valid PRS SB family 25 not int erest ed

20 0 50 100 150 200

Number of customer s

20 customers are not at all interested in online trading because they are comfortable with offline trading as it become matter of habit. 25 are staff of PRSSB. 71 customers number are not valid or not responding 84 customers do not have any problem with online trading and satisfied with the services. 159 customers are interested in knowing how to do online

trading

In questionnaire we have ask the client to rate the various services of PRSSB.
Figure 8

Graph indicating the performance of various services of the company

From the graph it can be seen that customers are very much satisfied with the service of depository, equity and initial public offer. However responses for online trading services were not satisfactory and many of customers have negative feedback for online trading portal of PRSSB.

We have also asked the online client about the features of online trading Figure 9

From this it has come to know that many of the clients does not know the features of online trading that the reason the number of online client are less. Customers only know how to buy or sell the scrip but they dont know how to see best market price, how to make portfolio, to see market analysis and many other features

Problems faced by online trading customers


When we have visited various online clients the common problems they are facing are as follows: 1. Change password Online client has to change the password within 14 days and if client does not use for such period, then client password and pin would expire so client has to call to PRSSB and has to ask for new password and pin again. For improvement Default password and pin should be changed frequently for better safety. Reset password and pin should be sending through email for better security and safety for the client. It should see that email is send immediately. When client does not use online portal for more than 14 days then software should ask for old password and pin and then client could change the password and pin. 2. Settings Client could not start online trading as various settings are required like screen resolution, block pop-up, about security level, etc. For improvement: Demo of online trading could be mailed to all the client or could be load on companys website 3. Download java Java is necessary because it helps to fluctuate the price of various stock.jav a could be download from companys website but basic problem is that generally all the client select save the java , so folder of Microsoft java is there on client pc or laptop but it is not install. Client should select open button instead of save button and then extract and save on desktop .so what will happen that Microsoft java folder will be there on desktop and then click on that and one option will be there so select .this would led to download of java

For improvement If possible, procedure of downloading java should be simplified Educate the client by giving them the demo of how to download java. 4. Training is provided As most of the client does not know how to use the online trading so proper training should be provided for them which will help to know the various features of online trading. 5. Response for customer query When online client face any problem during market hours he/she dont get proper reply as there is only one person who handle the online trading. For improvement As the number of online client is increasing day by day there should be proper team of online department. After visiting around 70 clients we decided to check whether number of online transaction is increasing or not, so we decide to collect the information from backoffice to know the number of transaction has increase or not. Figure 10

Months

Graph indicating the number of clients who did online transaction

Figure 11

Months

Graph indicating the average 5 days number of online transaction

Though the number of clients and number of transaction has increased but we are not satisfied with the numbers as we are expecting around 400+ transaction. So we follow up the online client and try to know the reason why they are not doing online trading. We come to know that the clients were facing various other technical problems. The problems are as follows:

1. Order confirmation: When client make transaction of buy/sell then sometimes confirmation for an order is not shown below the screen and it is shown in order book(F3), so client become confused whether transaction is accepted by server or not. Sometimes confirmation for an order is shown below the screen but it is not shown in order book (F3) unless and until refresh is done.

2. Loading: It takes long time to get into companys website When user name, password and pin is entered to get into online portal of PRSSB then it takes long time

3. Automatically log off: When client add scrip in portfolio option then sometimes it hang so client has to again log in. When client add scrip in add instrument option then also it hang and so client has to again log in.

4. Option of scrip code: When client wants to make his/her portfolio it can do by adding scrip in add option and write the symbol of companys name (e.g. For reliance power, symbol- Rpower) so it is little difficult for investor to know the symbol of the various company. So if there is option for scrip code as many client make portfolio by seeing the summary of demat account so it would easy for client to make his/her portfolio Or if possible there should be option of companys name.

CONCLUSION
A new class of tech-savvy investors is increasing in India and also the maturity level of these investors is reaching new heights. E-broking also makes a good business sense as the manpower cost gets reduced and also the reach is amazing. The broking firms can get away from expansion cost and the risk management system is quite robust when technology is used. I see the trend in the e-broking increasing in the years to come and as of now I dont see any major roadblocks in the way. Anup Bagchi, managing director and CEO of ICICIdirect.com. Bagchi expects online business to grow around 80-100 per cent in the coming year. Indiabulls, a relatively late entrant in the game, has been on the fast track with its online customers growing from 35,000 in June 2003 to over 140,000 at present. Jaideep Arora, director, Sharekhan, said, "Online trading represents 30 per cent of Sharekhan's broking business. The number of customers registered with Sharekhan is 130,000 currently, of which 60,000 use Internet trading."

RECOMMENDATIONS
After one and half years of development, Pravin Ratilal Share And Stock Brokers Ltd. (PRSSB) has till a long way to go. After studying the organization and making the analysis of the same, we come to the conclusion that following changes are required to make it an efficient and better organization: In this competitive era, the broking companies are going for heavy marketing thus PRSSB should also go for fruitful marketing so as to create public awareness and maintain the brand image. Franchises network should be adopted across Gujarat so as to generate more revenue from the business (as 52 % of revenue of broking firms comes from west) and should see that franchises should meet the quality standards of services like what branches provided. Online team should be assigned to generate more sales and revenue for the company by following aggressive selling PRSSB is not associated with any bank for cheques payment so as to get direct pay-in and pay-out. Like other broking firms PRSSB should also provide trainings to their online customers and also educate the client about what is happening in the stock market. Quarterly or monthly meetings with the client as per the clients requirements in the retail sector will develop confidence in client towards PRSSB. Like other broking companies PRSSB should go for fortnightly or monthly research report so as their client should which stock to buy and at what price. Demo of online trading should be given to each and every online client so as to educate them how to use it. These can be done by uploading the demo on companys website which will also help them to attract new clients.

APPENDICES
Questionnaire
1- Since how long are you associated with PRSSB? 2- Rate the various services of PRSSB. (1-Very Good,2-Good,3-Average,4-Poor,5-Very Poor) Depository Equity Trading Derivatives Internet Based Trading 3- How Rs much is . your IPO & Book Building Mutual Funds Fixed Deposits & RBI Bonds Portfolio Advisory investment in stock market? years/months

4- Rate the Service Quality of PRSSB on following Dimensions. (1-VeryGood, 2-Good, 3-Average, 4-Poor, 5-VeryPoor) Reliability Understanding Communication Transparency Personal guidance Caring attitude 5- What is your mode of trading? Online trading 6- Which Internet connection are you using? Broadband Dial-up What is the speed of the net? ......................Kbps/Mbps. 7- What according to you are the benefits of online trading?(Please tick your answers) Trading at your convenience Instant Order And Trade Confirmation Easy Access Through Internet Facility Transparency Real Time Quotes Direct control on your investment 8- On what bases you make online transaction or sauda and how frequently? (1-Always, 2Sometimes, 3-Never) Recommendation provided by the dealer Fundamentals of the company Technical analysis through a dealer

9-Are you aware about the following features of online trading portal of PRSSB? (Y-yes, N-no) Short Cut Keys Net Position Portfolio Summary Message History Market by Price Scrip Details Market Analysis FAQs Client trade report Client ledger report 10- When you have a problem in online trading, how often Company has shown sincere effort in solving it? Always sometimes never

11- Are you using online Trading portal of any other company? Yes No

If yes, Name the Company & Mention the Unique Features Rate PRSSB Portal in comparison with others. (1-VeryGood, 2-Good, 3-Average, 4-Poor, 5-VeryPoor) PRSSB Others. 12- What additional features do you like to have on online trading portal of PRSSB? 13- Are you aware of the online back office facility provided by the company? Yes 14- What other services would you like to get online? Online Mutual Fund Online IPO Online Payment Online Research Report 15- Any feedback for the company? Date: Signature:
\

No

Queries of the customers


a. Customer sometimes Automatically get log off from the online portal page b. In morning, service get auto stop so service has to restart frequently. c. Sometimes when order is placed the customers are not getting confirmation from the server because server has not accepted the order. d. Some times when order is placed the customer are not getting confirmation from the server but order directly appears in f3 order book. e. Sometimes it takes lot of time to enter into the itrade even at normal internet speed (from prssb site) with all settings done. f. The add instrument and portfolio page get hang sometimes when we enter the full scrip name or symbol. g. It takes lot of time in loading the required data (while add scrip and add in portfolio). h. Why itrade page opens only in 1024*768 resolutions. why not it opens in other resolutions(view is a different thing) i. Why scrip code and scrip name doesnt appear but only scrip symbol is there. j. Why while entering in the itrade site first password and pin disappears and then loading appears or it take few seconds for the site to start loading k. Why column cannot be changed in portal according to customer requirement. l. Why every time we have to set margin for doing transactions. m. Make something to match scrip name, scrip code and symbol for customer convenience.

n. Why customers have to refresh when he has to see f3 and f8 book to see all necessary entries? o. Why index chart is not available after market hours? p. What is the minimum requirement for the software to work smoothly? q. Like if we restore password from the office, is it possible that it directly goes to the customer email address immediately r. Install java can be done in easier way if possible?

BIBLOGRAPHY
www.icicidirect.com www.prssb.com www.motilaloswal.com www.kunverji.com www.google.com www.dnb.com /broking industry th th Economic times, 15 April2008 Ahmedabad Business line, 4 may 2008 Ahmedabad www.shahinvestors.com www.kotaksecurities.com www.investopedia.com,online trading report www.rediff.com, future of online trading www.chittogarh.com, broking industry. www.myiris.com

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