Stock Market

A
SUMMER PROJECT ON
ONLINE TRADING IN EQUITY MARKET

AT
SUBMITTED TO:
AES Post Graduate Institute of Business Management
SUBMITTED BY:
Doli Tandel Harish Chauhan Viraj Sisodia
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ACKNOWLEDGMENT
An acknowledgment is something which is so often over looked by people who read a project but to us this is something very important, an integral part of this project as this expresses our hearts feel gratitude towards all those people who helped us during the course of this project. Hence, our project bears the imprints of many people.
We wish to express our deep sense of gratitude towards Ms.Jignasha Sevak and Hemant Chaudhari at IL&FS InvestSmart Ltd. for their immense help and valuable guidance in conducting this summer industrial project from its conception to its completion.
We are greatly indebted to Mr.A.H.Kalro, the director of AES Post Graduate Institute of Business Management, who gave us the valuable opportunity of involving ourselves in such project assignments.
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PREFACE
Being Management students, we need to understand how industry analysis is done. Therefore, we are required to identify the industry of our interest to conduct a thorough analysis of the selected Industry. This helps us as the students to develop a sense of awareness around us to keep the details of the industry. Such an analysis helps to understand the industry and is highly useful for career development
Today as we all know that the share market field is full of stiff competition. And days all the stock broking company has began to offer one or other type of services to its account holder. Share market has been my interest of field from the beginning. So at this moment we have got this opportunity to prepare this report on the IL&FS INVESTSMART. Stock broking company charges have been of much important from account holders point of view. It is difficult to cover up all the fields so we had taken into accounts the field of our interest. For each and every stock broking company, whether it is small or big, the brokerage charges are very important. The stock broking company follows that charges as per the boundaries given by SEBI.
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INDEX
TOPICS
Company Profile Il&FS InvestSmart Ltd. Stock Market Stock History of stock Market-Global Scenario Indian Stock Market Introduction Bombay Stock Exchange (BSE) National Stock Exchange of India Limited (NSE) Primary & Secondary Market Depository Exchanges and their Participants Rematerialization and Dematarialization Trading Online & Offline Online Trading Introduction History Global Scenario & Indian Context Basic Requirements Procedure Working of On-Line Trading Advantages & Disadvantages 33 34 36 36 37 38 20 20 22 24 27 29 16 16 07 PAGE NO
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Offline Trading Introduction Purchase Selling Advantages & Disadvantages 43 43 44 45
Online Products at IL&FS InvestSmart SmartInvest SmartTrade SmartStart 47 48 49
Methodology of Reserch Design Process of Project Work Comparision Findings Conclusion Bibliography
50 51 54 58 78 79
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WHY SHOULD INVEST IN SHARE ?
Historically shares have outperformed all the other investment instruments and given the maximum returns in the long run. In the twenty- five- year period of 1980-2005 while the other instruments have barely managed to generate returns at a rate higher than the inflation rate (7.10%), on an average shares has given returns of about 17% in a year and that does not even take into account the dividend income from them. Were we to factor in the dividend income as well, the shares would have given even higher returns during the same period.
RETURNS ON DIFFERENT TYPES OF INVESTMENT BETWEEN 1980 AND 2005
Stock Market Bank Fixed Deposits Gold Inflation Grew
17.00% p.a. 09.00% p.a. 05.70% p.a. 07.10% p.a.
*Sources: RBI Handbook of Statistics, BSE India
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COMPANY PROFILE
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IL&FS Investsmart Limited (IIL), formally Investsmart India Ltd. was incorporated in the year 1997 as a wholly owned subsidiary of Infrastructure Leasing and Financial Services Ltd. later name of the company was changed to the present name as IL&FS Investsmart Ltd. from 25th March 2003. IIL is a financial services company mainly engaged in the intermediation of financial products and financial advisory services for retail institutional investors and corporate. The company is promoted by IL&FS which is one of the Indias leading non-banking finance companies and it holds 51.33% of the equity stake. The company has amalgamated IL&FS Merchant Banking Services Ltd. (IMBSL), a wholly owned subsidiary and DebtonNet India Ltd. with itself with effect from 1st January 2002. Consequently the name of the company was changed to IL&FS Investsmart Ltd. The company made an Initial Public Offer of 8,800,000 equity shares. The company was incorporate on 1st September 1997 and received the Certificate of Commencement of Business on 7th October 1997. IL&FS has set up a financial center in Bandra Kurla Complex in Mumbai with a view to house all its subsidiaries, ventures etc. at the same place for administrative convenience and to pursue group synergy. Pursuant to this, on June 14, 2000 the register office of the Company was changed from Mahindra Towers, 4th Floor, B1 Wing, Dr. G.M. Bhosale Marg, Worli, Mumbai to The IL&FS Financial Centre, Plot C-22, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai-400 051. IL&FS registered with SEBI as a Category merchant banker since the inception of the SEBI (Merchant Banking Regulations) 1992. Consequent to changes in SEBI regulations on segregating merchant banking from fund based activities, IL&FS set up IL&FS Merchant Banking Services Limited (IMBSL) as a wholly owned subsidiary. IMBSL was set-up to provide fullfledged merchant banking services and was registered as a Category I merchant banker with SEBI. IL&FS has a 50% stake in DebtonNet India Limited (OIL), which was set up alone with, National Stock Exchange of India Limited. DIL was set up to
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provide an automated and transparent platform, using the Internet, for book built debt issuances. Over a period of time DIL had enhanced the scope of the platform to provide a wide range of information, news and analytics relevant to the debt market. Infrastructure Leasing & Financial Services Limited (IL&FS) is one of India's leading infrastructure development and finance companies. IL&FS has a distinct mandate - catalyzing the development of infrastructure in the country. The organization has focused on the commercialization and development of infrastructure projects and creation of value added financial services. From concept to execution, IL&FS houses the expertise to provide the complete array of services necessary for successful project completion: visioning, documentation, development, finance, management, technology and execution. Business Operations Infrastructure and Development Services: Sectors such as Surface Transport and Transportation Systems, Water Supply, Hydro Power, Special Economic Zone, Port and Environment & Social Management Group. Investment Banking: Strategy, Asset Financing, Corporate Advisory, Capital Markets, Project Financing. Made contribution to the following trusts: IL&FS Infrastructure Equity Funds, IL&FS Investment Trust I, II, IV. The Indian Innovation Award-2005: Awarded to IL&FS by president of India. HSBC, through Group subsidiaries, is to acquire 73.21 per cent of IL&FS Investsmart Limited (Investsmart), a leading retail brokerage house in India. Under the terms of the agreements, HSBC proposes to acquire a 43.85 per cent stake from E*TRADE Mauritius Limited, an indirectly wholly-owned subsidiary of E*TRADE Financial Corporation, and an additional 29.36 per cent from Infrastructure Leasing and Financial Services Limited (IL&FS). Both shareholders will receive a price of INR200 per share for their respective stakes, making a total consideration of INR10,225.5 million (approximately US$241.6 million). In addition, IL&FS will be paid, as part of
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a threeyear non-compete agreement, INR820.1 million (approximately US$19.4 million). Board of Directors Chairman Managing Director & CEO Executive Director-Finance & Operation Executive Director-Retail Business Head-Reserch Chief Technology Officer Mr. Ravi Parthasarathy Mr. James Leslie Whiteford Mr. Sachin Joshi Mr. Deepak Sharma Mr. R. Sreesankar Mr. Kersi Tavadia
Registered Office The IL&FS Financial Centre Plot C-22, G Block Bandra Kurla Complex, Mumbai 400 051 E-mail iilipo@InvestSmartindia.com Web site www.InvestSmartindia.com
Financial Results Annual Result for the year ended 31 March, 2008 Net Income up 83% at 383.64 Crores Net Profit up 109% at 193.11 Crores as against Rs. 89.54 Crores Quarterly Result (Q4, 2008) compared with (Q4, 2007) Net Income up 87% at 139.76 Crores as against Rs. 92.89 Crores Net Profit up 66% at Rs. 87.34 Crores as against Rs. 37.33 Crores
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Table A.1 Financial Results Rs. In Crores Particulars Income Net Profit EPS Book Value Auditors S B Billimoria & Co 2005-06 212.8 69.3 10.4 66.9 2006-07 289.11 89.54 12.89 93.31 2007-08 383.64 193.11 14.22 159.89
Bankers Centurian Bank Citibank HDFC Bank Ltd. IDBI Bank UTI Bank Ltd. Corporation Bank
Group Companies IL&FS IL&FS IL&FS IL&FS IL&FS IL&FS IL&FS Investsmart Ltd. Investsmart Securities Ltd. Investsmart Commodities Ltd. Investsmart Insurance & Risk Management Services Ltd. Academy for Insurance & Finance Ltd. Investsmart Asia-Pacific Pvt. Ltd. Investment Financial Services Ltd.
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IL&FS InvestSmart Limited (IIL) is an initiative in the field of Financial Services stated by Infrastructure Leasing & Financial Services (IL&FS), an institution known for its innovative and pioneering initiatives in the areas of Infrastructure, Corporate Finance and Investment Banking. IIL was set up in October 1997 and began its retail operations in September 1998. IL&FS InvestSmart Limited (IIL) set up with the objective of becoming one of the leading full service brokerage houses in the country with a strong expertise in web-based technology as well as strengths in physical distribution. Today with a presence in more than 90 cities across India through more than 200 outlets, IIL has become one of the most prominent players in the Financial Services Industry with service offerings across different categories.
IL&FS InvestSmart Limited (IIL) is an initiative in the field of Financial Services started by Infrastructure Leasing & Financial Services (IL&FS), an institution known for its innovation and pioneering initiatives in the areas of Infrastructure, Corporate Finance and Investment Banking. We would like to take this opportunity to inform you that IL&FS InvestSmart Ltd is now comeup with its On-line Trading Portal. Strategic partnerships with global majors E*TRADE and Soft Bank. IPO in July 2005. Stupendous success and post listing. Pan-India presence; Over 211 branches/franchisees across 90 cities. FY 2008 PAT: Rs 489.38 mn FY 2008 Total Income: Rs 1427.23 mn FY 2008 EPS: Rs 14.87 Book Value Per Share: Rs 32.67
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Compliance and Regulation When dealing with Investsmart, you are dealing in fully regulated and reliable environment. We are subject to stringent financial reporting and specific regulations regarding client treatment. Transparency InvestSmart is a leading direct access brokerdealer committed to giving the trading tools and services necessary to help you own the trade. Innovative Continually enhancing our features, products, partnerships and alliance, Investsmart strives to give you the best opportunities while keeping you ahead in a changing market place. All in one Whether youre looking for a brokerage specializing in derivatives, capital markets, mutual funds, IPOs, we understand you have unique requirements and we tailor our products and services to meet them. Service oriented Our goal is to provide a superior level of service to you that will support a long-term relationship and enable us to respond more efficiently and proactively to your changing needs. Customer oriented services Accessibility with an Investsmart online trading account you can buy and sell shares in an instant anytime you like and from anywhere, Choice - you can choose the online trading account that suits your trading habits and preferences the SmartInvest account for serious investors and SmartTrade for active day traders. Both these accounts also come with a TeleTrade facility free* (*for the first 1 month), which is an exclusive service for trading using your telephone. Flexibility Investsmart constantly strives to offer the capability to trade in a manner that meets each customers needs.
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Trading Online Access the InvestSmart secure Internet trading site 24 hours a day. InvestSmart online offers SmartInvest for the Serious Investor and SmartTrade for the Active Trader. Use the platforms to trade with unique features.
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STOCK MARKET
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STOCK Stock symbolizes ownership in a company. The more stock investors in a particular company means larger the % of the company they own.
Experts identify a number of stock types that people can acquire. PENNY STOCK Stock offered by small companies with limited growth potential. Such stocks tend to be worth very little. GROWTH STOCK Stock offered by relatively new companies that are high on potential but low on stability. BLUCHIP STOCK Stock offered by established and successful company. These stocks are relatively safe investment.
STOCK MARKET Essentially a market is a place which introduces a buyer to a seller. In the case of stocks the buyer and seller are dealing in small ownership portions of companies or shares. A stock exchange, share market or bourse is a corporation or mutual organization which provides facilities for stock brokers and traders, to trade company stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities, as well as, other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a local & central location at least for record keeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives those advantages of speed and cost of transactions. Trade on an exchange is by members only & stock & share holders. The initial offering of stocks and bonds to investors is by definition
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done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stock There is usually no compulsion to issue stock via the stock nor must stock be subsequently traded on the exchange. said to be off exchange or over-the-counter. This is the bonds are traded. Increasingly, stock exchanges are part of for securities. exchange itself, Such trading is usual way that a global market
Overtime Stock Markets have become the very symbol of commerce in the modern world. They are truly unique in their scope and in the complexity of the number of transactions they handle each day. The economy of the world relies on the stock exchanges to facilitate even trade in the stocks of companies. HISTORY OF STOCK MARKET-GLOBAL SCENARIO When people talk about the Stock Market, it's no always immediately clear what they're referring to. Is the Stock Market a place? Or is it something different? To many people it is an abstract idea. They buy stocks in "the stock market" without ever leaving the comfort of their computer terminal. But the stock market is indeed a physical place with buildings and addresses, a place you can go and visit. In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. As these men also traded in debts, they could be called the first brokers. Some stories suggest that the origins of the term "bourse" come from the Latin bursa meaning a bag because, in 13th century Bruges, the sign of a purse (or perhaps three purses), hung on the front of the house where merchants met. However, it is more likely that in the late 13th century commodity traders in Bruges gathered inside the house of a man called Van der Burse, and in 1309 they institutionalized this until now informal meeting and became the "Bruges Bourse". The idea spread quickly around Flanders and neighboring counties and "Bourses" soon opened in Ghent and Amsterdam. In the middle of the 13th century Venetian bankers began to trade in government securities. In 1351 the Venetian Government outlawed
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spreading rumors intended to lower the price of government funds. There were people in Pisa, Verona, Genoa and Florence who also began trading in government securities during the 14th century. This was only possible because these were independent city states ruled by a council of influential citizens, not by a duke. The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits - or losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. WALL STREET Many folks think of Wall Street and the Stock Market as one in the same, and that view isn't really far from the truth. Wall Street is the place where it all started and where the world's largest financial market was born and prospered. From Wall Street a new industry sprang with its own language and terminology. Wall Street can trace its name back to 1653. Originally it was set up for defense and not for commerce. Settlers of Dutch descent, who were always on the lookout from attacks by Native Americans and the British built a 12 foot stockade fence. Little did they know that this fence would go on to become the center of financial activity in the world. The wall lasted a good while, until 1685. At that point the wall was torn down and a new street was built. The British called it Wall Street.
Factors which affect stock market Actions of investors Business conditions Government actions Economic Indicators International events
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INDIAN STOCK MARKET
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INTRODUCTION Security market has essentially three categories of participants, namely the issuer of the securities, investor of the securities and the intermediaries; and two categories of product, namely the service of the intermediaries and the securities including derivatives.
The security market has two interdependent and inseparable segments, the new issues (primary market) and the stock (secondary market). The primary market provides the channel for sale of new securities while the secondary market deals in securities previously issued.
THE BOMBAY STOCK EXCHANGE (BSE) The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai; popularly called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia. It is located at Dalal Street, Mumbai, India. Bombay Stock Exchange was established in 1875. There are around 3,500 Indian companies listed with the stock exchange, and has a significant trading volume. As of October 2006, the market capitalization of the BSE was about Rs. 33.4 trillion (US $ 730 billion). The BSE SENSEX (SENSitive indEX), also called the BSE 30, is a widely used market index in India and Asia. As of 2005, it is among the 5 biggest stock exchanges in the world in terms of transactions volume. An informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall of Bombay from the mid-1850s, each investing a (then) princely amount of Rupee 1. This banyan tree still stands in the Horniman Circle Park, Mumbai.
In 1875, Brokers organized an association known as the Native share Brokers Association, and the countrys first stock exchange the Bombay Stock Exchange (BSE), set up in Mumbai with 318 members. The membership fee gradually increased from Re. 1 in 1887 to Rs. 1000 in 1896 and Rs. 48,000 in 1920.
In 1986, The BSE came out with 30-share Sensitivity Index (a.k.a. the Sensex) that subsequently became the barometer of the Indian stock market which is updated every two minutes.
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In 1995, BSE has launched an electronic (e-Trading) system named BOLT, the BSE Online Trading system. In 2005, the status of the exchange changed from an Association of Persons (AOP) to a full-fledged corporation under the BSE (Corporatization and Demutualization) Scheme, 2005 (and its name was changed to The Bombay Stock Exchange Limited). How BSE works? The scripts traded on BSE have been classified into the following; A - Large capitalization, profitable, reliable, high-liquid companies B1 - Mid-capitalization, reliable, high-liquid companies B2 - Mid- capitalization, moderate liquid companies T - Trade to trade companies (compulsory delivery of trade within a day), low liquid companies S - Not reliable, low liquid companies Z - Blacklist companies
Jobbers play an important role on the BSE. A jobber or a broker who trades on his own account and hence offers a two-way quote or a bid-ask quote. The bid price reflects the price at which the jobber is willing to buy and the ask price represents the price at which the jobber is willing o sell. Investors have to transact via jobber/ broker. The jobber / broker feed his buy/sell quotes in his terminal, which is linked to the main server at the BSE. Since both jobbers and brokers feed their orders, the NSE has adopted a quote-driven system and an order driven system.
BSE SENSEX The BSE SENSEX (also known as the BSE 30) is a value-weighted index composed of 30 scripts. The base year of SENSEX is 1978-79 and the base value is 100. SENSEX is not only scientifically designed but also globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and
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representative companies. The set of companies which make up the index has been changed only a few times in the last 20 years. These companies account for around one-fifth of the market capitalization of the BSE. The index is widely reported in both domestic and international market through print as well as electronic media. The Index was initially calculated based on the Full Market Capitalization methodology but was shifted to the Free float methodology with effect from September 1, 2003. The Free Float Market Capitalization methodology of index construction is regarded as an industry best practice globally. Due to its wide acceptance amongst the Indian investors, SENSEX is regarded to be the pulse of the Indian stock market.
NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)
National Stock Exchange (NSE), established in the mid 1990s as a demutualised electronic exchange by leading Indian financial institutions, offers trading, clearing and settlement services in a range of products covering equity, debt and equity derivatives. It is India's largest exchange and ranks third globally by number of trades in the equities market. NSE provides a modern, fully automated screenbased trading system, named NEAT (National Exchange Automated Trading system) with nearly 40,000 trading terminals giving it extensive reach. Its flagship index, the NIFTY 50, is used extensively by investors in India and around the world to take exposure to the Indian equities market.
In the fast growing Indian financial market, there are 23 stock exchanges trading securities. The National Stock Exchange of India (NSE) is the largest and most advanced exchange with 1016 companies listed and 726 trading members. NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities. The National Stock Exchange of India Ltd. provides its clients with a single, fully electronic trading platform that is operated through a VSAT network. Unlike most world exchanges, the NSE uses the satellite communication system that connects traders from 345 Indian cities. The advanced technologies enable up to 6 million trades to be operated daily on the NSE trading platform.
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In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the Indian financial market by gaining many awards such as 'Best IT Usage Award' by Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).
How NSE works?
The NSE has opted for an order-driven system. When an order is placed by a trading member, an order confirmation slip is generated. When a trade takes place, a trading confirmation slip is printed at the trading members workstation. It gives details like quantity, price, code number of counterparty, and so on. The identity of the trading member is not revealed to other when he places an order or when his pending orders are displayed. Hence, large orders can be placed on the NSE. On the eighth day of trading, each member gets a statement showing his net position, the amount which he has to transfer to the clearing bank, and the security he has to deliver to the clearing house. Members are required to deliver securities and cash by the thirteenth and fourteenth day respectively. The fifteenth day is the payout day. All trades on NSE are guaranteed by the National Securities Clearing Corporation (NSCC). This means that when A buys from B, NSCC becomes the counterparty to both the legs of the transaction. In effect, NSCC becomes the seller to a and the buyer from B. This eliminates counterparty risk.
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PRIMARY & SECONDARY MARKET
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PRIMARY MARKET AND SECONDARY MARKET A stock market may be thought of in terms of two separate functions. The stock market consists of a two segment namely primary segment and secondary segment. PRIMARY MARKET Where companies can raise long-term funds for their operations by issuing shares (and other securities) to investors. The primary market deals with newly issued shares. The companies can raise the capital from issuing new shares in this market.
The securities Act 1933 govern the issuance of securities. This act requires that a registration statement must be filled with the SEC (security exchange commission) by the issuer of a security. The registration statement includes the information regarding the nature of business, key features of security, the nature of risk associated with the security, and background of management. Financial statement must be included in the registration statement and they must be certified by an independent public accountant.
Initial Public Offering - IPO
Corporation's first offering of stock to the public. An initial public offering (IPO) is the process through which a privately held company issues shares of stock to the public for the first time. Also known as "going public," an IPO transforms a small business from a privately owned and operated entity into one that is owned by public stockholders. An IPO is a significant stage in the growth of many small businesses, as it provides them with access to the public capital market and also increases their credibility and exposure. The primary advantage a small business stands to gain through an initial public stock offering is access to capital. Becoming a public entity involves significant changes for a small business, though, including a loss of flexibility and control for management. In many cases, however, an IPO may be the only means left of financing growth and expansion. The decision to go public is sometimes influenced by venture capitalists or founders who wish to cash in on their early investment.
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Staging an IPO is also a very time-consuming and expensive process. A small business interested in going public must apply to the Securities and Exchange Commission (SEC) for permission to sell stock to the public. The SEC registration process is quite complex and requires the company to disclose a variety of information to potential investors. The IPO process can take as little as six months or as long as two years, during which time management's attention is distracted away from day-to-day operations.
Overall, going public is a complex decision that requires careful consideration and planning. Experts recommend that small business owners consider all the alternatives first (such as securing venture capital, forming a limited partnership or joint venture, or selling shares through private placement, self-underwriting, or a direct public offering), examine their current and future capital needs, and be aware of how an IPO will affect the availability of future financing.
SECONDARY MARKET Where investors can buy and sell those shares at current prices as determined by other investors in the market. The key distinction between a primary market and secondary market is that in secondary market the issuer of the asset does not receive funds from the buyer rather the existing issues changes hands in the secondary market and funds flow from buyer of the asset to the seller. Function of secondary market
1. Secondary market provides to an issuer of securities, whether the issuer is a corporation or a governmental unit, regular information about the value of the security. The periodic trading of the asset reveals to the issuer the consensus price that, the asset commands in an open market. Thus, firm can discover what value investors attach to their stocks, and firm & non corporate issuers can observe the prices of their bonds and the implied interest rates investors expect & demand for them. Such information helps issuers assess how well they are using the funds acquired from earlier primary market activities, and it also indicates how receptive investors would be to new offering. 2. Secondary market offers issuer is that it provides the opportunity for the original buyers of asset to reverse their investment by selling it for cash. Unless investors feel confident that they can shift from one financial asset to another as they may deem necessary, they would naturally be reluctant to buy any financial asset. Such reluctance would harm potential issuers in one of two ways: either issuer would be unable to sell new securities at all or their would have to pay a
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high rate of return, because investors would demand greater compensation for the expected illiquidity of the securities. 3. Investors in financial assets receive several benefits from a secondary market. Such a market obviously offers them liquidity for their assets as well as information about the assets fair or consensus values. 4. Secondary market brings together many interested parties and so can reduce the cost of searching for likely buyers and sellers of assets. 5. Moreover, by accommodating many traders. Secondary markets keep the cost of transactions low. By keeping the costs of both searching and transacting low, secondary market encourage investors to purchase financial assets. Many Secondary markets are continuous markets, which mean that prices are determined continuously throughout the trading day as buyers and sellers submit orders. For examples, Given the order flowc at 10 A.M., the market clearing price of a stock on some organized stock exchange may be Rs.70; at 11 a.m. of the same trading day, the market clearing price of the same stock, but with different order flows, may be Rs.70.75.Thus, in a continuous market, prices may vary with the patterns of orders reaching the market and not because of any change in the basic situation of supply and demand. A contrasting market structure is the call market, in which orders are batched or grouped together for simultaneous execution at the same price. That is, at certain times in the trading day (or possibly more then once in a day), a market maker holds an auction for a stock. The auction may be oral or written.
DEPOSITORY EXCHANGES AND THEIR PARTICIPANTS
DEPOSITORY EXCHANGES Depository exchanges are organizations that hold shares of investors, on request, in electronic form through a registered depository participant (DP). It can be compared with a bank as it holds securities in an account , transfers securities between accounts on the instruction of the account holder, facilitates the transfer of ownership without the account holder needing to handle securities and makes the safe keeping of shares easy.
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DEPOSITORY PARTICIPANT
The agent through which a depository exchange interfaces with the investor is known as the Depository Participant. You can create a demat account with a DP, who will keep an account of all the shares you own.
This is much like the banking system, where you just create an account and have a passbook which updates you on the money you own and the transactions you have made. In your demat account you own shares in an electronic format and your account gets updated as you buy and sell shares.
As per SEBI regulation DP could be organization involved in the business of providing financial services like banks, custodians and financial institution.
You can select your DP to open a demat account just like you select a bank for opening a savings account. Some of the important factors for selection of a DP can be: Convenience: proximity to the office/residence, business hours. Comfort: Reputation of the DP, past association, range of services etc. Find out if the DP is in a position to give the specific service you may need. Cost: The service charges levied by DP and the service standard. NSDL/CDSL : The National Securities Depository Ltd (NSDL) and the Central Depository Securities Ltd (CDSL) are like the Reserve Bank of India in the sense that they are the clearing and holding house for all the demat transaction. DPs : Depository Participants are like banks who are agents of NSDL or CDSL in providing depository services.
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REMATERIALIZATION & DEMATARIALIZATION
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REMATERIALIZATION Rematerialization is the process by which a client can get his electronic holdings converted into physical certificates. The client has to submit the rematerialization request to the DP with whom he has an account along with a Remat request form. The physical shares will be posted by the company directly to the clients.
DEMATERIALIZATION Dematerialization called as Demat is the process by which an investor can get physical certificates converted into electronic form maintained in a account with the depository participant. The investors can dematerialize only those share certificates that are already registered in their name and belong to the list of securities admitted for dematerialization at the depositories.
Dematerialization and trading in the demat mode is the safer and faster alternative to the physical existence of securities. Demat as a parallel solution offers freedom from delays, thefts, forgeries, settlement risks and paper work. This system works through depository participants (DPs) who offer demat services and the securities are held in the electronic form for the investor directly by the Depository.
IL&FS Depository Services offers dematerialization services to individual and corporate investors.
In order to promote dematerialization of securities, NSE joined hands with leading financial institutions to establish the National securities Depository limited (NSDL), the first depositors in the country. CDSL (central depositorys service limited) was set up in February, 1999 to provide depository services.
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PROCEDURE FOR DEMATERIALIZATION

1
INVESTOR
DEPOSITORY PARTICIPANTS
2A 3
R&T AGENT
NSDL 4
STEPS : 1. Clients or investor submits the DRF (Demat Request form) and physical certificates to DP. DP checks whether the securities are available for Demat. Client defaces the certificate by stamping surrendered for Dematerialization. DP punches two holes on the name of the company and draws two parallel lines across the face of the certificate. 2. DP enters the Demat request in his system to be sent to NSDL. Do dispatch the physical certificates along with the DRF to the R & T Agent. 3. NSDL records the details of the electronic request in the system and forwards the request to the R &T Agent. 4. R&T Agent, on receiving the physical documents and the electronic request, verifies and checks them. Once the R&T Agent is satisfied, dematerialization of the concerned securities is electronically confirmed to NSDL. 5. NSDL credits the dematerialized securities to the beneficiary account of the investor and intimates of the DP electronically. The DP issues a statement of transaction to the client. The DP checks the DRF for validity, completeness and correctness.
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TRADING OFFLINE & ONLINE
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ONLINE TRADING
INTRODUCTION On-line trading is buying and selling securities through electronic medium. Online trading is the way of buying/selling securities through internet.
In off-line, we place orders on your stockbroker either verbally or in written form, while in online you will access a stockbrokers websites through the brokers internet based order routing and trading engine. These orders routed to stock exchange without manual intervention and executed thereon.
There are certain inherent characteristics of this market , which make it more vulnerable to risks associated with e-commerce. The market requires knowledge, information and ability to analyze and quick decision making. This requires utmost care while trading on the net. A single click can make or destroy investors wealth.
Since the coming age is of online trading, more people have been investing their money in stocks than ever before because of the advantages it offers. Online trading allows people to trade stocks quickly without the help of a broker, letting the investors have more control over their transactions. In addition to that, an ordinary person now has access to the information that could only be seen by brokers. Overall, online trading serves time, money and gives power to the investor rather than the broker.
HISTORY Global Scenario
The history of E-Trading began in 1983, when a doctor in Michigan placed the first online trade using E-trading, technology. What began with a single click over 24 years ago has now taken the world by storm. One BILL PORTER, a physicist and inventor more than a dozen patents to his credit, who provided online quotes and trading services to fidelity, Charles Schwab, and Quich Reilly, visualized the concept. This led Bill to wonder why, as an individual investor, he had to pay a broker hundreds of dollars for stock transactions with incredible foresight, he saw
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the solution at hand. Someday everyone would own computers and invest through them with unprecedented efficiency and control.
Today online trading has become a way of investing in the developed world and is soon catching on in developing countries too. Since that time, online trading has increased dramatically. According to recent estimate there are more than 10 million individuals trading online, making more than 10 lakh trades per day. Currently, there are over 250 broker dealers providing retail investors with the ability to trade online. Along with the growth in online trading, there has been a surge in investor complaints related to online trading.
The downfall of a few international websites like Value America Inc, Net Inoperative Ltd., Toysmart.com, boo.com, has not diminished the opportunities thrown open by Internet trading. There are investment banking firms which offer a suit of services such as online trading, research reports, real-time market commentary, java based charts, analysis and other professional services. E-Trade, which has presence in around 119 countries, it is one of the renowned players in the international market.
e-Trade securities Inc was floated in 1992 to offer online investing services through America Online and CompuServe and launched www.etrude.com in 1996. Recently, it announced Strategic Wit sound wise the online banking subsidiary of Wit Capital Group Inc, to capitalize on the complementary care strengths of the two groups.
TD water house, the second largest global brokerage house has over 2.9 million customer accounts worldwide and more than $150 billion in customers assets under administration. In addition to securities trading services, it also provides banking, mutual funds, and other financial products services to its customers.
HISTORY - Indian Context
India ranks amongst the top 10 countries in terms of the market capitalization of its stock market.
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Online trading began in India on Jan 31, 2000, the Securities Exchange Board of India (SEBI) formally notified all the stock exchanges, giving them a green signal for online trading. The various players of the securities marked which includes NSE, BSE, other regional stock exchanges and the brokers, had been waiting long for the go ahead sign. Trading via the net is expected to generate greater volumes than ever before, and this has attracted a large number of players. The chairman of the Securities and Exchange Board of India (SEBI) also announced that foreign companies and individual could now trade on Indian stock Exchange.
One day after, SEBI announced its regulations for net trading, Kerala based Geojit Securities took the lead and started online trading in Mumbai. The first net transaction was a trade for 100 shares 07 Reliance executed by D.R. Mehta, chairman of SEBI.
ICICI is the first Indian financial entity to make available Internet trading by a click of mouse. Its internet trading facility, christened as ICICI Direct e-invest, is provided by seamless unification of two pirating units. E-invest is a combo account consisting of trading bank and one and more demat accounts. It is pre condition that the account should be maintained only with ICICIs operating units. This enables an e-invest investor to buy & sell securities over the net transfer securities through the demat account and funds through bank account automatically. As ICICI Ltd. is a depository participant, the demat account is required to be opened with it and the bank account with ICICI Bank Ltd.
Today there are many big companys are in the market like Angel Broking Ltd., Share Khan Ltd., India Bulls, Kotak securities, Reliance Money, Motilal Oswal, 5 paisa.com, indiainfoline.com, HDFC securities, and other players.
The Indian stock market has the potential of becoming one of the most active in the world primarily on account of its retail investor base, listed and traded companies, if an efficient and inexpensive infrastructure is make available. At this juncture, we should look at Indias potential because this aspect of trading is in its nascent stage an estimate of which can be made by the projecting population of its neitzens. We have, therefore, looked at the various projections of Indian netizens.
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BASIC REQUIREMENTS FOR ONLINE TRADING Bank Account Bank should be having an alliance with the online trading service provider. Bank account will facilitate as a payment and receipts gateway. Demat Account The depository account also should be having an alliance with the online trading service provider. This account will act as a bank for the shares we hold. Online Service Provider Account This can be opened with any of the major service providers like depository Participants, the custodian etc.
Once these three accounts are opened, the money and shares are transferred to your bank and Demat account automatically electronically and without any paper work. PROCEDURE Sitting in ones own home or office or even from your car, as long as, you can trade on the market.
The first step is to pen Saving account which link with particular bank which help in
purchasing securities , mutual funds, IPOs, Future & Option, and commodities then after open the Demat a/c which is the account where securities are debited and credited. One can open multiple accounts with himself or herself as the first name in the account. (One can open up to 5 demat accounts with Sharekhan.)
Then
it is necessary to determine the type of account that you want and how you
want to pay for the trades your make. Joint accounts are allowed but for that you will need to have certain infrastructure about those people. Accounts can be Individual, Joint, Sole proprietorship, corporate partnership etc. The form filling requires simple personal details like full legal name, Citizenship Status, Residency status, employers name and address, your passport/PAN number, date of birth etc.
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After
that we will get three things such as User ID, Membership password and
Trading password. These three things are unique to an individual and ensure security of transactions and for activation online trading account.
After
getting User ID and Password, your account has been set up, you can access
the website and login using the same.
Then
after you are supposed to transfer money from bank account to Trading
account. In order to start trading online its important that you deposit money in your bank account before placing a buy order. In order to place a sell order you must have shares in your demat account. You can sell your shares anytime as long as shares are these in your demat account. In order to place a buy order you need to fund your account. You can do this by depositing money in your bank account or else you can sell same-shares existing in your demat account and use the proceeds of sale to fund your purchase transaction. The amount of money required before placing a buy order would depend on the value of order and the type of e-invest account you have enrolled for whether cash or margin.
The
account opening charge commission rates and the minimum limit of
transaction vary from site to site. Other charges can include annual services charges, custody charges; demat account maintenance charges, etc. Also most online traders offer a host of other tools to aid the investment decision. A full research back up in terms of repairs, articles, opinions, etc. live time quotes latest news on the script, technical charts to see how the stocks prices has changes over time.
So
sitting at home one can take an investment decision at ease after having
researched and read up fully about the stock. With the advent of online trading it world seem that the markets are just a click away.
WORKING OF ON-LINE TRADING The procedure for trading dematerialized securities in stock exchanges is similar to the procedure for trading physical securities. Instead of delivering physical
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securities to the broker, you instruct your DP to debit your account with the number of securities sold by you and credit your broker's clearing account. This delivery instruction has to be given to your DP using the delivery instruction booklet received from the DP at the time of opening the account. The procedure for selling securities is to be like: Investor sells securities in any of the stock exchanges linked to NSDL through a broker. Investor gives instruction to DP to debit his account and credit the broker's (clearing member pool) account. Before the pay-in day, investor's broker gives instruction to his DP for delivery to clearing corporation. The broker receives payment from the stock exchange (clearing corporation). The investor receives payment from the broker for the sale in the same manner payment is received for a sale in the physical mode.
ADVANTAGES Online trading has shifted the trading power from stock brokers to individual investors. Online trading system has changed the environment for retail investor community. Online trading allows you to buy & sell shares on the exchanges through INTERNET. It is a truly powerful medium to be in direct control of your investments.
INDEPENDENT
Because online trading greatly diminishes the role of brokers, investors have more freedom of making investment decisions and entering an order. Investors have not to relay brokers. Online promotes self empowerment.
ENSURES THE BEST PRICE FOR INVESORS
Online trading offers the best price for the buy and sell orders of the investors and traders. Also due to high level of transparency with regard to display of information relating to the specific stocks and company profiles, investors will be able to get the best quote for buy orders. This leads to a reduction in the transaction cost for the investors.
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FLEXIBILITY Flexibility is the greatest advantage of online trading. Want to cancel our order or do it in seconds. If we want to modify the order, can do easily. For example, if we have placed an order to buy stock called B at Rs.1,000.We keep tracking the movement of the stock for and in a couple of minutes we find that the prices are heading to downwards. What will be our decision Modify our order immediately and put a buy at Rs.900.We can cash on the market opportunities.
OFFERS LIQUIDITY TO THE INVESORS
Online trading offers 24 hours trading facilities or trading for longer hours compared to the traditional stock exchanges. This provides added liquidity to the investors. OFFERS GREATER TRANSPARENCY
Online trading offers you greater transparency by providing you with an audit trail. This involves a complete integrated electronic chain starting from order placement, to clearing and settlement and finally ending with a credit into your depository account. All these stages are subject to inspection, thus bringing in transparency into the system and greater transparency helps ij reducing the systematic risk for the investor. ENABLES HASSLE FREE TRADING Online trading integrates the bank, the brokerage from and the demat accounts, which leads to easy and paperless trading for the client.
PERSONAL ADVICE STILL AVAILABLE The service providers have combined off-line as well online services. They give the personal touch added to e-trading thus combining structured advice and fast trades.
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FREEDOM OF INFORMATION Investor can know the price of any stock at any time. He can review the price history of any stock in chart format and also follow market events in-depth. He can also conduct extensive financial research on any company.
RESEARCH INFORMATION Service providers carry stock analysis for our reference. This helps in making the right choices. One cannot afford to hire analysts to review the stocks and companies with given our indent and situation, the sites that provide research reports could be useful.
ALLOW INSTANT TRADE EXECUTION Online customer will be able to execute the online trading transaction, right from logging on to our site, to the execution and settlement of your bank account, in a very short period of time.
VALUE ADDED SERVICES Service providers offer a variety of trading options like Buy Today Sell Tomorrow (BTST) gives the advantage to take short-term positions in the market and take advantage of price fluctuations. This is very useful when we want to cash in on new specific developments. BANK STATEMENTS Bank Statements and transactions that we have made for stocks online can be viewed at the click of a button on our computer. We do not have to run behind the bank executives to get the Bank Statements. TIME SAVING Time is like money. Most of us dont find time in our hectic work schedules to go to stock broker and asking him to do market research. Through internet, it gives not only the advantage to save time; it also enables us to trade from anywhere. Imagine a person sitting in a remote village having to contact his broker in a city to get a trade through. In
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present times a person can conveniently trade from anywhere using the tool of the internet. AVAILABILITY By business trading online they can have access to real-time market data, news and charting Traders can trades 24 hours a day and seven days a week, this is most beneficial to the trades and even the buyers.
DISADVANTAGES
LESS KNOWLEDGE
Elimination of a stock broker could also be a trouble. Without proper advice of stocking trade persons, it could prove risky to enter the stock game. Expertise and experience will helps a lot. In a boom of stock market phase, money making is not a difficult task. If we see plenty of money & start feeling like a stock market genius. We get carried away and make some mistakes that could be more chances of risk.
RESTRICTED FINANCIAL GUIDANCE
Individuals are restricted for first hand financial guidance. This simply means that the individual is himself/herself alone to make the decision.
OUT DATED INFORMATION Many sites let we have the Added Advantage of research reports, may be outdated and not updated to the changes of fast trends. But take a look at one of the four corners on the web page and see the date of the analysis.
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HIGHER BROKERAGE Sometimes on the online trading depository participants charging high brokerage. For examples, if we buy stocks on 1st day of the month for Rs.500 and sell it for Rs.700 on 5th day, we have made profit of 40% in 5 days. We have also to think about the Depository Participant charging the brokerage. If we calculate the same, our return could be below 40%. TRADING ERRORS Trading errors are also consideration for the trading online, but the main errors are made by humans so firms have to take precaution to prevent this type of human error, because it could cost the firm large amounts of money when trading online, this is what firms do not want to deal with it because it time consuming and in business time is money. STABILITY The internet is unpredictable and unstable. One can never know when a web site will fail. In a situation where, there is a problem like this, investors can usually call their brokerage firm and the problem is fixed right away. However, the problem with online trading companies is that they are too large and are not easily reaches by E-mail or phone.
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OFFLINE TRADING
INTRODUCTION The internet has not spared trading in shares and still the conventional system of offline trading continues in todays world. In offline trading system, two parties i.e. an individual and a broker come into contact with each other and the transactions takes place. The investor goes to the broker for the purpose of buying or selling of securities for that he has to make a payment to settle the transactions.
PURCHASE For receiving demat securities you may give a one time standing instruction to your DP. This standing instruction can be given at the time of account opening or later. The transactions relating to purchase of securities are summarized below;
You purchase securities through broker.
You make payment to your broker who arranges payment to clearing corporation on the pay-in day.
Your broker receives credit of securities in its clearing account (clearing member pool accounts) on the play out day.
Your broker gives instruction to its DP to debit clearing account and credit your account.
You receive shares into your account. However if standing instruction are not given at the time of opening the account, you will have to give Receipt instructions to your DP. For receiving credit, you should ensure that your broker transfers the securities from its clearing account to your depository account, before the book
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closure. If the securities remain in the clearing account of the broker, the company will give corporate benefits (dividends or bonus) to the broker.
SELLING
The procedure for selling dematerialized securities is very simple. After you have sold the securities, you would instruct your DP. To debit your account with the number of securities sold by you and credit your brokers clearing account. This delivery instruction has to be given to your DP using the delivery instruction slips given to you by your DP at the time of opening the account. Procedure for selling the securities is given below;
You sell securities in any of the stock exchanges limited company NSDL through broker.
You give instruction to your DP to debit your account and credit the brokers account.
Before the pay in day, your brokerage gives instruction to its DP for delivery to clearing corporation.
Your broker receives payment from the stock exchange (clearing corporation)
You receive the payment from the broker for the sale of securities.
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ADVANTAGES
1. Low brokerage
In case of offline trading, brokerage charged by the broker is quite low because of personal relation. It also provides benefit of low cost of installation as compared to online trading. He has authority to customize brokerage according to customers.
2. Less margin Generally online trading company charges atleast 25% margin while the broker charges nearly 10% margin to the investor in case of trading on derivatives. Sometimes broker charges negligible amt & he allows trading up to his limit.
3. Flexibility in credit period Local brokers allow their customers to trade in shares with longer credit periods which facilitate the payments for the investors. Whereas in online trading a customer is required to make the payment in less than two days which is not the case in offline trading. Sometimes broker also allow to delay in settlement of payment as per the relation with customers.
4. Customized advice Normally, investor would like to take the advice before taking an investment decision. Online trading is not provide such kind of personal touch. In off-line there is a person to whom you ask about your investment problem and also you can make trust on him because of personal relation.
DISADVANTAGES
Blindly trust on broker makes investment at risk. Problem of attention from broker due to load. Problem in getting in touch with the broker. Reliance on the brokers information. Reconciliation of accounts of cash settlement. Geographical restriction and lots of paperwork.
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ONLINE PRODUCTS
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Trading Platform for Serious Investors Instant Loading Works behind a Proxy Live streaming quotes Multiple Watch lists NSE & BSE Access Single order from for Cash and FnO Point and Click order entry Hot Key Functions Market Depth Windows Back Office Access
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Trading Platform for Active Trader. Fully customizable display Dynamic Charts with Indicators EOD Charts Real-Time Market Data Advanced Alerts capabilities Live order status Real time position updates Dynamic buying power Derivative chain Lock terminal option Message window docking
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Smart start is a powerful browser based trading system for those who are relatively new to online investing. Smart Start is a unique integrated account, which integrated your banking, broking and Demat account. It is a comprehensive trading service, which allows you to invest in equities and derivatives.
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METHODOLOGY OF RESEARCH DESIGN
Sample Techniques
Non Random Sampling Technique will be used to draw the sample of about 200 sublets who are active traders in trading sector, who do have their DPs with any of the existing trading firms.
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The type of sampling going to be used is Judgment Sampling or Purpose Sampling, it because the focus is on the specific clients who are High Net worth individual for the company and the definition of the HNI is changing form one firm to another, producing the amount of brokerage beyond some extent. And again the study is going to cover all the firms of same industry with different definitions of the terms HNIs and Average clients.
PROCESS OF PROJECT WORK

The project work is mainly focusing on the competitive analysis of the business strategies adopted by the various players in an online trading industry. The main focus is on the product features and product offerings.
As mentioned and described in the SIP and project proposal sample of 200 people or clients will be selected from various DPs available in the market. The sample will be judgmental and non random. Its a specific in the nature. Questionnaires with the combination of both open and close ended questions are administered to all the subjects of the sample. As per schedule from 18th
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May to 26th June, the data collection activity is already started. For few initial days, references were collected from all known and company people. Tele calling was done to them to seek an appointment and started proceeding for the same. In total 190 questionnaires were get filled up.
LIMITATIONS
IL&FS as brand is not that much known in the market of Ahmedabad. So brand awareness is also one of the biggest constrain to pitch the product in to the market. As IL&FS do not believe in any promotional activities, its really difficult to convince the customer about the brand name, as rest all Online Trading Competitors promote their brand in one or other way around. ICICI, Kotak - Banking business
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Sharekhan, 5 Paisa
Promotional activities
Smart Invest and Smart Trade is good package as whole but still lacking in few very essential features which are provided by rest of the market players in an industry which most of the customer would like to seek. Lack of support from IL&FS for sharing customer references and other guidance.
The Product Offering from IL&FS is not competitive enough with other market players, major of them are: Limit Option Learning Centers Company Information Research Report SMS Alerts etc. No potential leads were provided from company side to achieve the targets in a short time span. Sticking to only one brand not allowed us to offer a wide range of schemes of company.
For the new OJT the small constrains were there like: People were not ready to disclose their identity and contact no as they were carrying the fear they might receive a call for some selling purpose. Perception of people regarding investment activities also affects their attitude.
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COMPARISON
Followings are the comparisons of IL&FS InvestSmart Ltd. with other stockbroking companies as:
Emkay Share and Stock Brokers Limited Geojit Financial Services Limited Indiabulls Services Limited
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ICICIdirect.com Indiainfoline (5Paisa) Kotak Securities
Table 1a Comparison With Respect to Financial Earnings Basis IL&FS Equity* 66.90 Income* 212.80 Net Profit* 69.30 OPM 51.10 Promoters 12.63% Holding * Figures in Crores Geojit 15.20 87.97 18.44 40.90 51.03% Emkay 24.10 47.53 15.45 43.20 97.76% Indiabulls 32.50 610.30 253.40 65.30 30.34% Indiainfoline 45.10 44.70 26.50 87.60 36.10%
Table 1b Comparison With Respect to Valuation Ratio Basis EPS IL&FS 10.40 Geojit 12.12 Emkay 6.40 Indiabulls Indiainfoline 15.60 5.89
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P/E Book Value
13.00 32.40
15.60 32.40
10.30 46.40
16.80 8.80
19.40 20.50
Table 1c Comparison With Respect to Operating Ratio* Company ROE (%) IL&FS 18.54 Geojit 38.3 Indiabulls 11.14 Indiainfoline 23.93 Emkay 52.28 Source: Capital Market OPM (%) 7.25 26.71 81.92 87.68 51.26 NPM (%) 4.68 17.03 35.10 53.45 32.52 ROCE (%) 26.63 43.52 12.25 27.49 75.04
Table 1d Comparison With Respect to Customer Database Share Broking Company IL&FS Icicidirect.com Geojit Indiabulls Kotak Securities HDFC Securities Sharekhan Customer Database (More Than) 4,90,000 8,50,000 2,50,000 2,90,000 4,00,000 1,85,000 1,75,000
Table 1e Comparison with Respect to The Financial Charges (excluding tax) Share Broking Opening Annual Brokerage Brokerage
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Company IL&FS Icicidirect.com Geojit Angel Broking Indiabulls Indiainfoline Motilal Oswal Kotak Securities Karvy Share Khan HDFC Securities
Charges 750 750 200 500 250 555 550 550 500 750 799
Maintenance Charges 300 375 280 375 200 Nil Nil 270 375 300 500
(intra-day) 0.10% 0.10% 0.06% 0.10% 0.10% 0.10% 0.10% 0.10% 0.05% 0.10% 0.10%
(delivery) 0.50% 0.75% 0.30% 0.50% 0.50% 0.50% 0.50% 0.50% 0.35% 0.50% 0.50%
Table 1f Comparison with Respect to Stock Market Data Basis Face Value Share Price Year High Year Low Market* Capitalization Dividend IL&FS 10 110 260 103 897.40 30% Geojit 10 164 263 93 288.60 40% Emkay 10 63 163 54 159.60 10% Indiabulls 02 198 369 141 4,244.10 Nil Indiainfoline 10 99 227 84 512.30 30%
Terms Used in Comparison Financial Year is 2007-08 Book value shows ration of Equity Capital plus Reserve to the number of Equity shares Sales includes sales from there business for the year 2007-08 Net Profit are the Profit for the year 2007-08 after tax OPM (Operating Profit Margin) this ration indicates the operating efficiency of the company. The OPM is calculated as Operating Income Operating Expenses Operating Income
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Dividend shows in percent of dividend declared by the company for the FY 08 EPS means earning per shares, is the ratio of Net Profit less Preference dividend to the number of Equity Shares. P/E ratio means price-earning ration calculated as Market Price dividend by EPS Market Capital shows the current price of share multiply by the number of equity shares Promoters holding indicates the percentage of equity holding with the promoters of the company Face Value Value of per share OPM Operating Profit Margin and it is calculated as operating profit divided by net sales or profit before interest and tax divided by Net Income/ Net Sales ROE Return of Equity and it is calculated as net profit after tax divided by equity capital plus reserves and surplus ROCE Return on Capital Employed NOM Net Profit Margin, it is calculated as net profit divided by net sales
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Findings
QUESTIONNAIRE
Q-1 As per your view, which are the market players in trading industry? Rank them. ICICI DIRECT Emkay 5 PAISE KOTAK Indiabulls IL&FS Geojit
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Q-2 Which On-line product offering are preferred most by you? EQUITY MUTUAL FUND IPO FNO PORTFOLIO MANAGEMENT COMMODITIES POSTAL SERVICES Q-3 for you which are the 4 unique features offered by current on-line product? ICICI DIRECT.COM_________________________________________ KOTAK __________________________________________________ Emkay __________________________________________________ SHAREKHAN______________________________________________ IL&FS ___________________________________________________ Q-4 Kindly suggests few trading features you seek to have in your product? ICICI DIRECT.COM_________________________________________ KOTAK __________________________________________________ Emkay __________________________________________________ SHAREKHAN______________________________________________ IL&FS ___________________________________________________
Q-5 After market hours, do you specify the Limit Option for your trade orders? ONCE IN A WHILE SOMETIMES MOST OF THE TIMES ALWAYS NEVER Q-6 Would you prefer SMS alert? YES NO Q-7 Are you industry specific investor? YES NO
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Q-8 Which are the source of information availed by your existing online trading product? NEWS TIPS ALERT MESSAGES ANY OTHER Q-9 As an investor do you consider tips provided by your product? Following given tips, how many times you get desired results? ONCE IN A WHILE SOMETIMES MOST OF THE TIMES ALWAYS NEVER Q-10 As an investor would you like to evaluate the company information? If yes then which information would you like to seek? COMPANY BACKGROUND FINANCIAL RATIO QUARTERLY RESULT RECENT DEVELOPMENTS BALANCE SHEET & P/L A/C
Q-11 In general in market the minimum brokerage slot is Rs. 500000, so as a trader what minimum slot you expect from the company? 1 2 3 4 5 Q-12 As a regular trader how many time of exposure you seek from your DP? ___________ Q-13 As a customer which kind of extra benefits you seek out of product? VARIOUS SCHEME DISCOUNTS
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OTHERS Q-14 Would you like to have online registration in your product? YES NO Q-15 Are you satisfied with your back office access? YES NO Q-16 Being fast profit generating industry, what will be growth of the online trading industry? LIMITED MODERATE TREMENDUOUS CAN NOT SAY
Q-1 As per your view, which are the market players in trading industry? BRAND AWARENESS OF VARIOUS ON-LINE TRADING PRODUCTS PARTICULA ICICI Emk 5 KOT Indiabu IL&F Geoj TOT R DIRECT ay PAISE AK lls S it AL RESPONDE 46 27 25 36 32 24 10 200 NTS
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ICICI Direct.com is the most well known online trading platform followed by Kotak securities; the lowest awareness is for IL&FS Invesmart as its well known for its infrastructure projects and not for online trading.
Q-2 Which On-line product offering are preferred most by you? PREFERRED WAYS TO MULTIPLY MONEY BY THE TRADERS PORTFOLI POSTAL EQ MUTUAL FN O COMMO RESPON SERVICE UIT IPO FUND O MANAGEM DITIES SE ID S Y ENT TOTAL 73 31 51 22 8 9 6
TOTA L 200
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Q-3 for you which are the 4 unique features offered by current on-line product? FOUR UNIQUE FEATURES OFFERED PRODUCTS ICICI COMPANY RESEARCH DIRECT.COM COMFORT SPEED ONLINE BANK ACCOUNT LINKS BY ON-LINE TRADING
NO PAPER WORK OFFLINE ORDERS AUTOALLOCATION OF MONEY BY SELF
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FULL FACILITY FOR PORTFOLIO MUTUAL FUND NEW IPO 3 IN 1 PACK RESEARCH DATA, OFFLINE ORDERS ONLINE VIEW OF 25 SCRIPTS 2 LEVEL PASSWORDS OFFLINE ORDERS TERMINAL LIMIT OPTION DAILY TIPS ACTIVE PAY-IN PAY-OUT DIRECT MONEY TRANSFER TECHNICAL CHARTS
POSTAL SAVINGS BANK/DMAT COMBINED AT ICICI NO DELAY IN TELEPHONIC INTIMATION MARGIN TRADING PORTFOLIO MANAGEMENT OFFLINE ORDERS TERMINAL FACILITY
KOTAK
Emkay
BUY AGAINST SELL
SHAREKHAN
EASY OF CASH TRANSFER FAST & TRANSPERENT
IL&FS
LIVE QUOTES
Important features which are making the product unique are the most over the commonly available features which add convenience in the usage and capturing less time of the traders. Q-4 Kindly suggests few trading features you seek to have in your product? SUGGESTED TRADING FEATURES ICICI DAILY TIPS DIRECT.COM INTERNATIONAL MARKET UPDATE ONLINE INTRADAY CHARTS UNLIMITED SCRIPTS LATE SQUARE OFF TERMINAL PRINTED INTIMATION THROUGH
AES Post Graduate Institute of Business Management Page 65
POST OR COURIER OPPOSITE OF STOPLOSS TECHNICAL CHARTS WEEKLY STATEMENT AUTO REFRESH EASY FUND TRANSFER ONLINE INTRADAY CHARTS UNLIMITED SCRIPTS PORTFOLIO TRADING ONLINE TIPS
KOTAK
Emkay
BEING REAL TIME TERMINAL MUTUAL FUND SHAREKHAN INSURANCE NSE-BSE 52 WEEK HIGH-LOW PAST CLOSING ORDERS & PLACEMENTS SHORT SELLING
IL&FS
Products which are lacking in the genuine features and which are directly affecting the profit margin of the customer are the expected ones by the customers. Q-5 After market hours, do you specify the Limit Option for your trade orders? PREFERENCE OF THE LIMIT OPTION PARTICULAR RESPONDENTS YES 134 NO 66 TOTAL 200
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RESPONDE NT ID TOTAL
PREFERENCE OF THE LIMIT OPTION ONCE IN A SOMETI MOST OF THE ALWA WHILE MES TIMES YS 71 27 45 53
NEV ER 4
TOT AL 200
Limit option is preferred by most of the customers to have convenience to put trade orders after market hours, to have flexibility in the absence of the online terminals during market hours. Q-6 Would you prefer SMS alert? PREFERENCE FOR THE SMS ALERT RESPONDENT REASON S Inability to stay online all the time, lack of 138 time 62 no tips, please 200
PARTICULA R YES NO TOTAL
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SMS alerts are preferred by majority of the customers to get them updated irrespective of time and place which help the traders to make the meaningful trading decisions.
Q-7 Are you industry specific investor? PERCENTAGE OF THE INDUSTRY SPECIFIC INVESTORS PARTICULAR RESPONDENTS YES 154 NO 46 TOTAL 200
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Majority of the traders is making their investment in various industries to diversify their portfolio and minimizing their risk.
Q-8 Which are the source of information availed by your existing online trading product?
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Tips are the most preferred source of information provided by the Dps as its a precise and directly related to profit and loss of the trader, followed by the descriptive and detailed source of information like news.
Q-9 As an investor do you consider tips provided by your product? Following given tips, how many times you get desired results?
PERCENTAGE OF TIPS CONSIDERATION PARTICULAR RESPONDENTS
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YES NO TOTAL
136 64 200
FREQUENCY OF OBTAINING DESIRED RESULTS PARTICULAR RESPONDENTS ONCE IN A WHILE 112 MOST OF THE TIMES 30 SOMETIMES 14 ALWAYS 34 NEVER 10 TOTAL 200
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Majority of the traders consider the tips provided by the DPs before making the trading decision and the frequency of getting desired result out of it is about 50% to 70%.
Q-10 As an investor would you like to evaluate the company information? If yes then which information would you like to seek? PREFERENCE FOR COMPANY INFORMATION PARTICULAR RESPONDENTS YES 106 NO 94 TOTAL 200
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TYPE OF INFORMATION PARTICULAR RESPONDENTS COMPANY BACKGROUND 28 FINANCIAL RATION 19 QUATERLY RESULTS 21 RECENT DEVELOPMENTS 22 BALANCE SHEET & P/L A/C 16 TOTAL 106
Q-11 In general in market the minimum brokerage slot is Rs. 500000, so as a trader what minimum slot you expect from the company?
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For normal persons trading slab of 500000 is very high but for hard core traders is less. On and average 250000 is the desirable turn over to seek discount from the DPs.
Q-12 As a regular trader how many time of exposure you seek from your DP? CUSTOMER PREFERENCE FOR THE EXPOSURE OR MARGIN MONEY PARTICULAR 1 2 3 4 5 6 7 8 9 10 >10 RESPONDENTS 0 7 9 42 46 16 8 6 7 23 36
For majority of the players 4 times exposure is sufficient to play intraday or delivery. But trader whose turnover is higher than certain extent is seeking for more than 10 times.
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Q-13 As a customer which kind of extra benefits you seek out of product? PREFERENCE FOR EXTRA PRODUCT BENEFITS PARTICULAR RESPONDENTS VARIOUS SCHEMES 93 DISCOUNTS 96 ANY OTHER 11 TOTAL 200
Q-14 Would you like to have online registration in your product? PREFERENCE FOR ONLINE REGISTRATION PARTICULAR RESPONDENTS YES 154 NO 46 TOTAL 200
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More than 75% of the respondents are seeking the facility of an online registration to reduce the tedious process of filling up long form and to cut down time consumption on the same.
Q-15 Are you satisfied with your back office access? SATISFACTION LEVEL WITH BACK OFFICE ACCESS PARTICULAR YES NO TOTAL ICICI DIRECT.COM 35 11 46 KOTAK 29 7 36 Emkay 19 8 27 SHAREKHAN 28 4 32 IL&FS 16 8 24 OTHERS 21 14 35 TOTAL 149 51 200
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Majority of the customers are satisfied with the back office access and timely updation of the various accounts and statement and along with the generation of the various reports. Q-16 Being fast profit generating industry, what will be growth of the online trading industry? POTENTIAL GROATH OF THE ONLINE TRADING INDUSTRY PARTICULAR RESPONDENTS LIMITED 26 MODERATE 59 TREMENDOUS 98 CAN NOT SAY 17 TOTAL 200
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CONCLUSION
Each and every beginning has an end in the same ways, each and every introduction has conclusion. We are thankful and express our gratitude who have directly or indirectly co-operated us in preparation of our project report and suggested some New ideas.
We did our summer industrial project in the IL&FS Investsmart Ltd. as partial fulfillment of our course curriculum. We have worked on Online trading in equity market with IL&FS Investsmart.
During our course of training, we interacted with many people of Ahmedabad city and outside. We also learned the basic fundamentals of online trading; demat accounts and transactions in stock market.
This training has been the first time practical exposure to us to the corporate world and thats why this training has been the immense professional value to us.
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BIBLIOGRAPHY
Financial Management By Prasanna Chandra
NCFM-Capital market (Dealers) module
WEBOGRAPHY
www.investsmartindia.com
HT TH
www.ilfsindia.com www.bseindia.com
HT TH HT
www.nseindia.com
TH HT
www.sebi.gov.in
TH HT
www.google.com
TH
www.wikipedia.com
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ONLINE TRADING IN EQUITY MARKET

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AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

Offline Trading Introduction Purchase Selling Advantages & Disadvantages 43 43 44 45

Online Products at IL&FS InvestSmart SmartInvest SmartTrade SmartStart 47 48 49

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WHY SHOULD INVEST IN SHARE ?

RETURNS ON DIFFERENT TYPES OF INVESTMENT BETWEEN 1980 AND 2005

Stock Market Bank Fixed Deposits Gold Inflation Grew

17.00% p.a. 09.00% p.a. 05.70% p.a. 07.10% p.a.

*Sources: RBI Handbook of Statistics, BSE India

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

INDIAN STOCK MARKET

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AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)

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How NSE works?

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PRIMARY & SECONDARY MARKET

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Initial Public Offering - IPO

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AES Post Graduate Institute of Business Management

DEPOSITORY EXCHANGES AND THEIR PARTICIPANTS

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AES Post Graduate Institute of Business Management

REMATERIALIZATION & DEMATARIALIZATION

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AES Post Graduate Institute of Business Management

PROCEDURE FOR DEMATERIALIZATION

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TRADING OFFLINE & ONLINE

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HISTORY Global Scenario

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HISTORY - Indian Context

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AES Post Graduate Institute of Business Management

AES Post Graduate Institute of Business Management

the website and login using the same.

account opening charge commission rates and the minimum limit of

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ENSURES THE BEST PRICE FOR INVESORS

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AES Post Graduate Institute of Business Management