CHAPTER-I

INTRODUCTION

1

INTRODUCTION TO ONLINE TRADING

Online trading definition is a basic understanding of online trading processes. Since the

invention of Internet people have beena able to do practically everything virtually. Due to

the Internet online trading has become one of the most popular ways to trade as far as

stock trading turned out to be as available to independent investors as possible. Online

trading gives both beginners who've just had a single day trading course and advanced

traders an opportunity to trade stocks, options, forex and futures all over the world

without physical presence of a broker and with much lower commissions, because

everything is done online.

Stock online trading is based on buying and selling stocks. Today stock online trading is

the most popular method to trade owing to computers, because information on stocks was

available only to brokers and you had to call a broker and pay brokerages for buying or

selling stocks and now this information is widely available. Since this modifications

occurred traders can control their investments with the help of Internet.

Stock option online trading is based on buying and selling options and very perspective

financial products. This system gives traders a perfect chance to control and protect their

stocks and generate their investment benefits as far as an option is an agreement to buy or

to sell certain financial product. The main idea of stock option online trading is that an

option you buy has its fixed price and time limitation.

Forex online trading is another speculative online business based on buying and selling

foreign exchange, gaining profits due to rise and fall of currency rate, namely on the

difference between the currency pairs price.

Futures online trading is another kind of online trading which is based on buying and

selling financial products (commodities, labour, currency) by means of futures contracts.

Such contract specifies a particular date (delivery date or final settlement date) in the

future when a certain financial product should be bought or sold and this product's price.

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Speaking about online trading it's necessary to say about safe online trading. It's obvious

that in order to trade online you'll have to open your online account and choose online

trading software. When you choose a certain website for your future account, you should

search for information about a company you are going to fix upon and make sure that it

has a trustworthy reputation. The same refers to choosing online trading software,

platform and online trading portal.

In conclusion it's necessary to say that online trading is a perfect opportunity to trade and

earn money but still it's obvious that online trading is not for everyone. That's why before

you start trading, you should find out more about online trading pros and cons, online

trading concepts and of course about online trading tips. Knowledge is a main key for

your successful online trading, don't ever identify online trading with gambling because

the results of such approach can be disastrous.

Ensure your finances are structured accordingly before you hit the trading floors

online...If debt free advice is required...ensure you seek quality advice.

Internet trading commissions are clearly posted on the websites of the various

services, and are typically a fixed rate charge, depending upon the type of security being

traded and the size of trade. In theory, therefore, an Interest investor always knows what

commission he is being charged on each trade. Internet investors can take as much time

as they would like to take prior to placing a trade order. Similarly the online investor

likely does not have to worry that his broker is making unauthorized trades. Since there is

no individual broker making a commission, the only person who is authorized to trace in

the account is the actual investor. Furthermore, the internet investor can never become a

victim of excessive trading (where for the broker) since the investor maintains total

control over the number of transactions which take place in the account.

All of these positive features of internet trading may lead the unwary investor to

believe that Internet trading is a way to take control of their finances and save more

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money in the process. Unfortunately, this is not always the case. The advantages of

Internet stock trading have also its weaknesses and these weaknesses present significant

drawbacks for the average investor.

First and foremost, the average investor is not an expert in the financial markets.

There is a danger for allowing the autonomy of online trading to hull you into the belief

that you are an expert investor. An online investor sitting at home at a personal computer

also foregoes proper investment advice and financial planning, perhaps among the most

valuable services provided by traditional brokers.

There are, of course, additional risks relative to performing transactions over the

Internet especially on a shared computer. Those people whom investors have provided

their account number and password can freely trade that account while the investor will

have little, if any, resource against the brokerage firm for the breach of security.

The online trading is simply defined as “dealing securities on net”. In online

trading system, from a single location anywhere, can service investors across the country.

NEED FOR THE STUDY:

The present study to review the online trading procedure a case study of ONLINE

TRADING at Share khan Limited, as the exchange has changed it’s trading from it

and there is need to assess the performance of the capital market.

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SCOPE OF THE STUDY

‘Investor can assess the company financial strength and factors that affect the

company. Scope of the study is limited. We can say that 70% of the analysis is

proved good for the investor, but the 30% depends upon market sentiment.

The topic is selected to analyses the factors that affect the future EPS of a

company based on fundamentals of the company.

The market standing of the company studied in the order to give a better scope to

the Analysis is helpful to the investors, share holders, creditors for the rating of

the company.

OBJECTIVES OF THE STUDY:

• It is to analyze the changes in trading after the exchange shifted from outcry to

online trading system.

• It is to study the functions of Share khan Limited through various

departments.

• To know the online screen based trading system adopted by Share khan

Limited and about its communication facilities. The appropriate

configuration to set the network, which would link the Share khan Limited

to individual / members.

• To know about the latest and future development in the stock exchange

trading system.

5

METHODOLOGY OF THE STUDY:

The data collection methods include both primary and secondary

Collection methods.

Primary method: This method includes the data collected from the personal

interaction with authorized members of Share khan Limited.

Secondary method: The secondary data collection method includes:

The lecturers delivered by the superintendents of respective departments.

The brochures and material provided by India infoline Securities limited.

The data collected from the magazines of the NSE, economic times, etc.

Various books relating to the investments, capital market and other related topics.

LIMITATIONS OF THE STUDY:

The study confines to the past data and present system of the trading procedure in theand the

Indiainfoline study is confined to the coverage of all the related issues in brief. The data is

collected from the primary and secondary sources and thus is subject to slight variation than

what the study includes in reality.

The study is confined to online trading procedure only. Problems of listing are not

covered due to limited time and to keep the study in manageable limits.

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CHAPTER-II

INDUSTRY PROFILE

&

COMPANY PROFILE

7

Financial services refer to services provided by the finance industry. The finance

industry encompasses a broad range of organizations that deal with the management of

money. Among these organizations are banks, credit card companies, insurance

companies, consumer finance companies, stock brokerages, investment funds and some

government sponsored enterprises. As of 2004, the financial services industry represented

20% of the market capitalization of the S&P 500 in the United States.

History of financial services

In the United States

The term "financial services" became more prevalent in the United States partly as a

result of the Gramm-Leach-Bliley Act of the late 1990s, which enabled different types of

companies operating in the U.S. financial services industry at that time to merge.

Companies usually have two distinct approaches to this new type of business. One

approach would be a bank which simply buys an insurance company or an investment

bank, keeps the original brands of the acquired firm, and adds the acquisition to its

holding company simply to diversify its earnings. Outside the U.S. (e.g., in Japan), non-

financial services companies are permitted within the holding company. In this scenario,

each company still looks independent, and has its own customers, etc. In the other style, a

bank would simply create its own brokerage division or insurance division and attempt to

sell those products to its own existing customers, with incentives for combining all things

with one company.

Banks

A "commercial bank" is what is commonly referred to as simply a "bank". The term

"commercial" is used to distinguish it from an "investment bank", a type of financial

services entity which, instead of lending money directly to a business, helps businesses

raise money from other firms in the form of bonds (debt) or stock (equity).

8

9

Evolution

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200

years ago. The earliest records of security dealings in India are meager and obscure. The

East India Company was the dominant institution in those days and business in its loan

securities used to be transacted towards the close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place

in Bombay. Though the trading list was broader in 1839, there were only half a dozen

brokers recognized by banks and merchants during 1840 and 1850.

The 1850's witnessed a rapid development of commercial enterprise and brokerage

business attracted many men into the field and by 1860 the number of brokers increased

into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of

Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers

increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a

disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850

could only be sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874,

found a place in a street (now appropriately called as Dalal Street) where they would

conveniently assemble and transact business. In 1887, they formally established in

Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively

known as " The Stock Exchange "). In 1895, the Stock Exchange acquired a premise in

the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was

consolidated.

Other leading cities in stock market operations

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Ahmadabad gained importance next to Bombay with respect to cotton textile industry.

After 1880, many mills originated from Ahmadabad and rapidly forged ahead. As new

mills were floated, the need for a Stock Exchange at Ahmadabad was realized and in

1894 the brokers formed "The Ahmadabad Share and Stock Brokers' Association".

What the cotton textile industry was to Bombay and Ahmadabad, the jute industry was to

Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta.

After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares,

which was followed by a boom in tea shares in the 1880's and 1890's; and a coal boom

between 1904 and 1908. On June 1908, some leading brokers formed "The Calcutta

Stock Exchange Association".

In the beginning of the twentieth century, the industrial revolution was on the way in

India with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel

Company Limited in 1907, an important stage in industrial advancement under Indian

enterprise was reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies

generally enjoyed phenomenal prosperity, due to the First World War.

In 1920, the then demure city of Madras had the maiden thrill of a stock exchange

functioning in its midst, under the name and style of "The Madras Stock Exchange" with

100 members. However, when boom faded, the number of members stood reduced from

100 to 3, by 1923, and so it went out of existence.

In 1935, the stock market activity improved, especially in South India where there was a

rapid increase in the number of textile mills and many plantation companies were floated.

In 1937, a stock exchange was once again organized in Madras - Madras Stock Exchange

Association (Pvt) Limited. (In 1957 the name was changed to Madras Stock Exchange

Limited).

Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with

the Punjab Stock Exchange Limited, which was incorporated in 1936.

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Indian Stock Exchanges - An Umbrella Growth

The Second World War broke out in 1939. It gave a sharp boom which was followed by a

slump. But, in 1943, the situation changed radically, when India was fully mobilized as a

supply base.

On account of the restrictive controls on cotton, bullion, seeds and other commodities,

those dealing in them found in the stock market as the only outlet for their activities.

They were anxious to join the trade and their number was swelled by numerous others.

Many new associations were constituted for the purpose and Stock Exchanges in all parts

of the country were floated.

The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited

(1940) and Hyderabad Stock Exchange Limited (1944) were incorporated.

In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and

the Delhi Stocks and Shares Exchange Limited - were floated and later in June 1947,

amalgamated into the Delhi Stock Exchnage Association Limited.

Post-independence Scenario

Most of the exchanges suffered almost a total eclipse during depression. Lahore

Exchange was closed during partition of the country and later migrated to Delhi and

merged with Delhi Stock Exchange.

Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963.

Most of the other exchanges languished till 1957 when they applied to the Central

Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only

Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and Indore, the well

established exchanges, were recognized under the Act. Some of the members of the other

Associations were required to be admitted by the recognized stock exchanges on a

concessional basis, but acting on the principle of unitary control, all these pseudo stock

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exchanges were refused recognition by the Government of India and they thereupon

ceased to function.

Thus, during early sixties there were eight recognized stock exchanges in India

(mentioned above). The number virtually remained unchanged, for nearly two decades.

During eighties, however, many stock exchanges were established: Cochin Stock

Exchange (1980), Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982),

and Pune Stock Exchange Limited (1982), Ludhiana Stock Exchange Association

Limited (1983), Gauhati Stock Exchange Limited (1984), Kanara Stock Exchange

Limited (at Mangalore, 1985), Magadh Stock Exchange Association (at Patna, 1986),

Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock Exchange Association

Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989), Vadodara

Stock Exchange Limited (at Baroda, 1990) and recently established exchanges -

Coimbatore and Meerut. Thus, at present, there are totally twenty one recognized stock

exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI)

and the National Stock Exchange of India Limited (NSEIL).

The Table given below portrays the overall growth pattern of Indian stock markets since

independence. It is quite evident from the Table that Indian stock markets have not only

grown just in number of exchanges, but also in number of listed companies and in capital

of listed companies. The remarkable growth after 1985 can be clearly seen from the

Table, and this was due to the favouring government policies towards security market

industry.

Trading Pattern of the Indian Stock Market

Trading in Indian stock exchanges are limited to listed securities of public limited

companies. They are broadly divided into two categories, namely, specified securities

(forward list) and non-specified securities (cash list). Equity shares of dividend paying,

growth-oriented companies with a paid-up capital of atleast Rs.50 million and a market

capitalization of atleast Rs.100 million and having more than 20,000 shareholders are,

normally, put in the specified group and the balance in non-specified group.

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Two types of transactions can be carried out on the Indian stock exchanges: (a) spot

delivery transactions "for delivery and payment within the time or on the date stipulated

when entering into the contract which shall not be more than 14 days following the date

of the contract" : and (b) forward transactions "delivery and payment can be extended by

further period of 14 days each so that the overall period does not exceed 90 days from the

date of the contract". The latter is permitted only in the case of specified shares. The

brokers who carry over the outstandings pay carry over charges (cantango or

backwardation) which are usually determined by the rates of interest prevailing.

A member broker in an Indian stock exchange can act as an agent, buy and sell securities

for his clients on a commission basis and also can act as a trader or dealer as a principal,

buy and sell securities on his own account and risk, in contrast with the practice

prevailing on New York and London Stock Exchanges, where a member can act as a

jobber or a broker only.

The nature of trading on Indian Stock Exchanges are that of age old conventional style of

face-to-face trading with bids and offers being made by open outcry. However, there is a

great amount of effort to modernize the Indian stock exchanges in the very recent times.

Over The Counter Exchange of India (OTCEI)

The traditional trading mechanism prevailed in the Indian stock markets gave way to

many functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly

long settlement periods and benami transactions, which affected the small investors to a

great extent. To provide improved services to investors, the country's first ringless,

scripless, electronic stock exchange - OTCEI - was created in 1992 by country's premier

financial institutions - Unit Trust of India, Industrial Credit and Investment Corporation

of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance

Corporation of India, General Insurance Corporation and its subsidiaries and CanBank

Financial Services.

Trading at OTCEI is done over the centres spread across the country. Securities traded on

the OTCEI are classified into:

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• Listed Securities - The shares and debentures of the companies listed on the OTC

can be bought or sold at any OTC counter all over the country and they should not

be listed anywhere else

• Permitted Securities - Certain shares and debentures listed on other exchanges and

units of mutual funds are allowed to be traded

• Initiated debentures - Any equity holding atleast one lakh debentures of a

particular scrip can offer them for trading on the OTC.

OTC has a unique feature of trading compared to other traditional exchanges. That is,

certificates of listed securities and initiated debentures are not traded at OTC. The

original certificate will be safely with the custodian. But, a counter receipt is generated

out at the counter which substitutes the share certificate and is used for all transactions.

In the case of permitted securities, the system is similar to a traditional stock exchange.

The difference is that the delivery and payment procedure will be completed within 14

days.

Compared to the traditional Exchanges, OTC Exchange network has the following

advantages:

• OTCEI has widely dispersed trading mechanism across the country which

provides greater liquidity and lesser risk of intermediary charges.

• Greater transparency and accuracy of prices is obtained due to the screen-based

scripless trading.

• Since the exact price of the transaction is shown on the computer screen, the

investor gets to know the exact price at which s/he is trading.

• Faster settlement and transfer process compared to other exchanges.

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• In the case of an OTC issue (new issue), the allotment procedure is completed in a

month and trading commences after a month of the issue closure, whereas it takes

a longer period for the same with respect to other exchanges.

Thus, with the superior trading mechanism coupled with information transparency

investors are gradually becoming aware of the manifold advantages of the OTCEI.

National Stock Exchange (NSE)

With the liberalization of the Indian economy, it was found inevitable to lift the Indian

stock market trading system on par with the international standards. On the basis of the

recommendations of high powered Pherwani Committee, the National Stock Exchange

was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and

Investment Corporation of India, Industrial Finance Corporation of India, all Insurance

Corporations, selected commercial banks and others.

Trading at NSE can be classified under two broad categories:

(a) Wholesale debt market and

(b) Capital market.

Wholesale debt market operations are similar to money market operations - institutions

and corporate bodies enter into high value transactions in financial instruments such as

government securities, treasury bills, public sector unit bonds, commercial paper,

certificate of deposit, etc.

There are two kinds of players in NSE:

(a) trading members and

(b) participants.

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Recognized members of NSE are called trading members who trade on behalf of

themselves and their clients. Participants include trading members and large players like

banks who take direct settlement responsibility.

Trading at NSE takes place through a fully automated screen-based trading mechanism

which adopts the principle of an order-driven market. Trading members can stay at their

offices and execute the trading, since they are linked through a communication network.

The prices at which the buyer and seller are willing to transact will appear on the screen.

When the prices match the transaction will be completed and a confirmation slip will be

printed at the office of the trading member.

NSE has several advantages over the traditional trading exchanges. They are as follows:

• NSE brings an integrated stock market trading network across the nation.

• Investors can trade at the same price from anywhere in the country since inter-

market operations are streamlined coupled with the countrywide access to the

securities.

• Delays in communication, late payments and the malpractice’s prevailing in the

traditional trading mechanism can be done away with greater operational

efficiency and informational transparency in the stock market operations, with the

support of total computerized network.

Unless stock markets provide professionalized service, small investors and foreign

investors will not be interested in capital market operations. And capital market being one

of the major source of long-term finance for industrial projects, India cannot afford to

damage the capital market path. In this regard NSE gains vital importance in the Indian

capital market system.

Preamble

Often, in the economic literature we find the terms ‘development’ and ‘growth’ are used

interchangeably. However, there is a difference. Economic growth refers to the sustained

17

increase in per capita or total income, while the term economic development implies

sustained structural change, including all the complex effects of economic growth. In

other words, growth is associated with free enterprise, where as development requires

some sort of control and regulation of the forces affecting development. Thus, economic

development is a process and growth is a phenomenon.

Economic planning is very critical for a nation, especially a developing country like India

to take the country in the path of economic development to attain economic growth.

Why Economic Planning for India?

One of the major objective of planning in India is to increase the rate of economic

development, implying that increasing the rate of capital formation by raising the levels

of income, saving and investment. However, increasing the rate of capital formation in

India is beset with a number of difficulties. People are poverty ridden. Their capacity to

save is extremely low due to low levels of income and high propensity to consume.

Therefor, the rate of investment is low which leads to capital deficiency and low

productivity. Low productivity means low income and the vicious circle continues. Thus,

to break this vicious economic circle, planning is inevitable for India.

The market mechanism works imperfectly in developing nations due to the ignorance and

unfamiliarity with it. Therefore, to improve and strengthen market mechanism planning is

very vital. In India, a large portion of the economy is non-monitised; the product, factors

of production, money and capital markets is not organized properly. Thus the prevailing

price mechanism fails to bring about adjustments between aggregate demand and supply

of goods and services. Thus, to improve the economy, market imperfections has to be

removed; available resources has to be mobilized and utilized efficiently; and structural

rigidities has to be overcome. These can be attained only through planning.

In India, capital is scarce; and unemployment and disguised unemployment is prevalent.

Thus, where capital was being scarce and labour being abundant, providing useful

employment opportunities to an increasing labour force is a difficult exercise. Only a

centralized planning model can solve this macro problem of India.

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Further, in a country like India where agricultural dependence is very high, one cannot

ignore this segment in the process of economic development. Therefore, an economic

development model has to consider a balanced approach to link both agriculture and

industry and lead for a paralleled growth. Not to mention, both agriculture and industry

cannot develop without adequate infrastructural facilities which only the state can

provide and this is possible only through a well carved out planning strategy. The

government’s role in providing infrastructure is unavoidable due to the fact that the role

of private sector in infrastructural development of India is very minimal since these

infrastructure projects are considered as unprofitable by the private sector.

Further, India is a clear case of income disparity. Thus, it is the duty of the state to reduce

the prevailing income inequalities. This is possible only through planning.

Planning History of India

The development of planning in India began prior to the first Five Year Plan of

independent India, long before independence even. The idea of central directions of

resources to overcome persistent poverty gradually, because one of the main policies

advocated by nationalists early in the century. The Congress Party worked out a program

for economic advancement during the 1920’s, and 1930’s and by the 1938 they formed a

National Planning Committee under the chairmanship of future Prime Minister Nehru.

The Committee had little time to do anything but prepare programs and reports before the

Second World War which put an end to it. But it was already more than an academic

exercise remote from administration. Provisional government had been elected in 1938,

and the Congress Party leaders held positions of responsibility. After the war, the Interim

government of the pre-independence years appointed an Advisory Planning Board. The

Board produced a number of somewhat disconnected Plans itself. But, more important in

the long run, it recommended the appointment of a Planning Commission.

The Planning Commission did not start work properly until 1950. During the first three

years of independent India, the state and economy scarcely had a stable structure at all,

while millions of refugees crossed the newly established borders of India and Pakistan,

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and while ex-princely states (over 500 of them) were being merged into India or Pakistan.

The Planning Commission as it now exists, was not set up until the new India had

adopted its Constitution in January 1950.

Objectives of Indian Planning

The Planning Commission was set up the following Directive principles :

• To make an assessment of the material, capital and human resources of the

country, including technical personnel, and investigate the possibilities of

augmenting such of these resources as are found to be deficient in relation to the

nation’s requirement.

• To formulate a plan for the most effective and balanced use of the country’s

resources.

• Having determined the priorities, to define the stages in which the plan should be

carried out, and propose the allocation of resources for the completion of each

stage.

• To indicate the factors which are tending to retard economic development, and

determine the conditions which, in view of the current social and political

situation, should be established for the successful execution of the Plan.

• To determine the nature of the machinery this will be necessary for securing the

successful implementation of each stage of Plan in all its aspects.

• To appraise from time to time the progress achieved in the execution of each stage

of the Plan and recommend the adjustments of policy and measures that such

appraisals may show to be necessary.

• To make such interim or auxiliary recommendations as appear to it to be

appropriate either for facilitating the discharge of the duties assigned to it or on a

consideration of the prevailing economic conditions, current policies, measures

20

and development programs; or on an examination of such specific problems as

may be referred to it for advice by Central or State Governments.

The long-term general objectives of Indian Planning are as follows:

• Increasing National Income

• Reducing inequalities in the distribution of income and wealth

• Elimination of poverty

• Providing additional employment; and

• Alleviating bottlenecks in the areas of : agricultural production, manufacturing

capacity for producer’s goods and balance of payments.

Economic growth, as the primary objective has remained in focus in all Five Year Plans.

Approximately, economic growth has been targeted at a rate of five per cent per annum.

High priority to economic growth in Indian Plans looks very much justified in view of

long period of stagnation during the British rule

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COMPANY PROFILE

22

COMPANY PROFILE

SHAREKHAN

SHARE KHAN, a professionally managed Investment advisory services company,

developed in the year 1985 by three young entrepreneurs with an intension to

Minimization of Risk and Maximization of Return in the field of Indian Capital markets

by extensive research work.

As a sub member of NSE, BSE, MCX, NCDEX, NSDL and CDSL, which are pioneers in

the respective operations, SHARE KHAN is having more than 500 branches in all over

India.

Share khan, India’s leading stock broker is the retail arm of SSKI, an organization with

over eighty years of experience in the stock market with more than 280 share shops in

120 cities and big towns, and premier online trading destination www.sharekhan.com.

Share khan offers the trade execution facilities for cash as well as derivatives, on BSE

and NSE depository services, commodities trading on the MCX( Multi Commodity

Exchange of India Ltd) and NCDEX(National Commodity and Derivative Exchange) and

most importantly, investment advice tempered by eighty years of broking experience.

Share khan provides the facility to trade in commodities through Share khan

Commodities Pvt. Ltd – a wholly owned subsidiary of its parent SSKI. Share khan is the

member of two major commodity exchanges MCX and NCDEX.

If you experience our language, presentation style, content or for that matter the online

trading facility, you'll find a common thread; one that helps you make informed decisions

and simplifies investing in stocks. The common thread of empowerment is what

Sharekhan's all about!

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Sharekhan is also about focus. Sharekhan does not claim expertise in too many things.

Sharekhan's expertise lies in stocks and that's what he talks about with authority. So when

he says that investing in stocks should not be confused with trading in stocks or a

portfolio-based strategy is better than betting on a single horse, it is something that is

spoken with years of focused learning and experience in the stock markets. And these

beliefs are reflected in everything Sharekhan does for you!

To sum up, Sharekhan brings to you a user- friendly online trading facility, coupled

with a wealth of content that will help you stalk the right shares.

Those of you who feel comfortable dealing with a human being and would rather visit a

brick-and-mortar outlet than talk to a PC, you'd be glad to know that Sharekhan offers

you the facility to visit (or talk to) any of our share shops across the country. In fact

Sharekhan runs India's largest chain of share shops with over 800 hundred outlets in more

than 300 cities! What's a share shop? How do you locate a share shop in your city? Hit

this link to find out.

Sripal Sravanthi Kanthilal Iswarlal (SSKI)

Apart from Share khan, the SSKI group also comprises of institutional broking and

corporate finance. The institutional broking division caters to domestic and foreign

institutional investors, while the corporate finance division focuses on niche areas such as

infrastructure, telecom and media. SSKI owns 56% in Share khan and the balance

ownership is HSBC, First Caryl and Intel Pacific, SSKI has been voted as the top

domestic brokerage house in the research category, twice by Euro money survey and four

times by Asia money survey.

SHARE KHAN is on par with the investor expectations in providing professional

services, namely Online Trading in Equity, Commodities and F&O

• Framing of Derivative strategies

• Depository Services (D-MAT)

• Initial Public Offers (IPO) and Book Buildings

24

• Distribution of Mutual Funds

• Portfolio Management Service (PMS) etc., through its member

• Corporate training for executives on NCFM (National Stock Exchange Certificate

in Financial Markets)

SHARE KHAN IS IN MAERKET BECAUSE OF:

Investor care is of paramount importance at SHARE KHAN

SHARE KHAN offers large avenues of investment solutions for all classes

of investors under one roof.

SHARE KHAN Experience is one of prized possession. SHARE KHAN

has an experience of more than 20 years wherein grown phenomenally.

One of the most competitive brokerage structure

Hassle free trading experience.

Timely advice along with research support to the clients through SMS and

Emails on Equities, Derivatives, Commodities, IPOs and Mutual Funds.

VALUE FOR INVESTOR’S TRUST

INTEGRITY AND HONESTY

SHARE KHAN APPROACH

UN BIASED INVESTMENT ADVISORY

PERSONALIZED ATTENTION

RESEARCH BASED ADVISORY SERVICES

Share khan won the award by the vote of consumers around the country, as part of India’s

largest consumer study covers 7000 respondents – 21 products and services across 21

major cities. The study, initiated by Awaaz – India’s first dedicated Consumer Channel

and member of the worldwide CNBC Network, and AC Nielsen – ORG Marg, was aimed

at understanding the brand preferences of the consumers and to decipher what are the

most important loyalty criteria for the consume in each vertical.

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In order to select the award recipient, spontaneous responses, rather than prompted

responses were garnered, with an intention to glean unbiased preferences. Opinions were

garnered from owners of each of the categories, to get experiential responses, which are

likely to be more realistic and grounded in nature. Further, preference also indicates

future intensions of repeated purchases.

The reasons behind the preferences for brands were unveiled by examining the following:

Tangible features of product/service

Softer, intangible features like imagery, equity driving preference

Tactical measures such as promotional/pricing schemes

“SHARE KHAN is honored as the Most Preferred Stock Broking Brand in India. Our

focus has always been to demystify the stock market and empower the investors to take

informed decisions,” said Jaideep Arora, Director, Share khan. “The Award increases

Share khan’s responsibility to persistently delight our customers with user-friendly

trading experience and we shall continue our focus to evolve business strategies that keep

us aligned with our customers’ needs.”

VISION:

To become successful investment advisors by developing the strategies that are

implement able and leads to provide better returns than Bench mark portfolios.

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CHAPTER-III

LITERATURE REVIEW

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ONLINE TRADING

Before getting in to the online trading we should know some things about the internet,

e-commerce and etc.

1. Internet

Internet is a worldwide, self-governed network connecting several other smaller

networks and millions of computers and persons, to mega sources of information.

This technology shrinks vast distances, accelerating the pace of business reforms and

revolutionizing the way companies are managed. It allows direct, ubiquitous links to

anyone anywhere and anytime to build up interactive relationships.

A combination of time and space, called the Internet promises to bring

unprecedented changes in our lives and business. Internet or net is an inter-connection

of computer communication networks spanning the entire globe, crossing all

geographical boundaries. It has re-defined the methods of communication, work

study, education, business, leisure, health, trade, banking, commerce and what not it

is virtually changing every thing and we are living in dot.com age. Net being an

interactive two way medium, through various websites, enables participation by

individuals in business to business and business to consumer commerce, visit to

shopping arcades, games, etc. in cyber space even the information can be copied,

downloaded and retransmitted.

The use of Internet has grown 2000 percent in last decade and is currently

growing at 10 percent per month. In India, growth of Internet is of recent times. It is

expected to bring changes in every functional area of business activity including

management and financial services. It offers stock trading at a lower cost. Internet can

change the nature and capacity of stock broking business in India.

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2. E-commerce

Electronic commerce is associated with buying and selling over computer

communication networks. It helps conduct traditional commerce through new way of

transferring and processing of information. Information is electronically transferred

from computer to computer in an automated way. E-commerce refers to the paperless

exchange of business information using electronic data inter change, electronic

technologies. It not only reduces manual processes and paper transactions but also

helps organization move to a fully electronic environment and change the way they

operated.

PC’s and networking attempts to introduce banks of the tools and technologies

required for electronic commerce. The computers are either workstations of

individual office works or serves where large databases and information reside.

Network connects both categories of computers; the various operating systems are the

most basis program within a computer. It manages the resources of the computer

system in a fair and efficient manner.

Now we can enter in to the concept known as online trading.

In the past, investors had no option but to contact their broker to get real time

access to market data. The net brings data to the investor on-line and net broking

enables him to trade on a click of mouse. Now information has become easily

accessible to both retail as well as big investor.

EVOLUTION OF BROKING IN INDIA:

The evolution of a broking in India can be categorized in three phases -

• Stockbrokers will offer on their sites features such as live portfolio manager,

live quotes, market research and news, etc. to attract more investors.

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• Brokers will offer online broking and relationship management by providing

and offering analysis and information to investors during broking and non-

broking hours based on their profile and needs, i.e. customized services.

• Brokers (now e-brokers) will offer value management or services like initial

public offering online, on-line asset allocation, portfolio management,

financial planning, tax planning, insurance services, etc. and enables the

investors to take better and well considered decisions.

The actual definition of “ Online Trading” is as explained below:

“Online trading is a service offered on the internet for purchase and sale of

shares. In the real world you place orders on your stockbroker either verbally

(personally or telephonically) or in a written form (fax).” In online trading,

you will access a stockbroker’s website through your internet enabled PC and

place orders through the broker’s internet based trading engine. These orders

are routed to the stock exchange without manual intervention and executed

thereon in a matter of a few seconds.The net is used as a mode of trading in

internet trading. Orders are communicated to the stock exchange through

website.

In India:

Internet trading started in India on 1st April 2000 with 79 members seeking

permission for online trading. The SEBI committees on internet based securities

trading services has allowed the net to be used as an Order Routing System (ORS)

through registered stock brokers on behalf of their clients for execution of transaction.

Under the ORS the client enters his requirements (security, quantity, price buy/sell)

on broker’s site.

Objectives:

Internet trading is expected to

• Increase transparency in the markets,

• Enhance market quality through improved liquidity, by increasing quote

continuity and market depth,

• Reduce settlement risks due to open trades, by elimination of mismatches,

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• Provide management information system,

• Introduce flexibility in system, so as to handle growing volumes easily and to

support nationwide expansion of market activity.

Besides, through internet trading three fundamental objectives of securities

regulation can be easily achieved, these are:

• Investor protection

• Creation of a fair and efficient market, and

• Reduction of the systematic risks.

Some of the brokers offering net trading include ICICI direct, kotakstreet, etc.

Requirements for net trading:

For investors:

1. Installation of a computer with required specification

2. Installation of a modem

3. Telephone connection

4. Registration for on-line trading with broker

5. A bank account

6. Depository account

7. Compliance with SEBI guidelines for net trading

The following should be produced to get a demat account and online trading

account:

As identity proof & address proof any one of the following:

• Voter ID card

• Driving license

• PAN card( in case of to trade more than 50000)

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• Ration card

• Bank pass book

• Telephone bill

Other requirements, which are necessary

• First page of the bank pass book and last 6 months statement.

• Bank manager’s signature along with bank’s seal, manager registration code on

photograph.

For stock brokers:

1. Permission from stock exchange for net trading

2. Net worth of Rs. 50 lac

3. Adequate back-up system

4. Secured and reliable software system

5. Adequate, experienced and trained staff

6. Communication of order (trade confirmation to investor by e-mail)

7. Use of authentication technologies

8. Issue of contract notes within 24 hours of the trade execution

9. Setting up a website.

The net is used as a medium of trading in internet trading. Orders are

communicated to the stock exchange through website. Internet trading started in India

on 1st April 2000 with 79 members seeking permission for online trading. The SEBI

committees on internet based securities trading services has allowed the net to be

used as an Order Routing System (ORS) through registered stock brokers on behalf of

their clients for execution of transaction.

Under the Order Routing System the client enters his requirements (security, quantity,

price, and buy/sell) in broker's site. They are checked electronically against the clients

account and routed electronically to the appropriate exchange for execution by the

broker. The client receives a confirmation on execution of the order. The customer's

portfolio and ledger accounts get updated to reflect the transaction. The user should

have the user id and password to enter into the electronic ring. He should also have

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demat account and bank account. The system permits only a registered client to log in

using user id and password. Order can be placed using place order window of the

website.

Procedure for net trading

Step 1: Those investors, who are interested in doing the trading over internet system

i.e. NEAT-IXS, should approach the brokers and get them self registered with the

Stock Broker.

Step 2: After registration, the broker will provide to them a Login name, Password

and personal identification number (PIN).

Step 3: Actual placement of an order. An order can then be placed by using the place

order window as under:

(a) First by entering the symbol and series of stock and other parameters like

quantity and price of the scrip on the place order window.

(b) Second, fill in the symbol, series and the default quantity.

Step 4: It is the process of review. Thus, the investor has to review the order placed

by clicking the review option. He may also re-set to clear the values.

Step 5: After the review has been satisfactory, the order has to be sent by clicking on

the send option.

Step 6: The investor will receive an "Order Confirmation" message along with the

order number and the value of the order.

Step 7: In case the order is rejected by the Broker or the Stock Exchange for certain

reasons such as invalid price limit, an appropriate message will appear at the bottom

of the screen. At present, a time lag of about 10 seconds is there in executing the

trade.

Step 8: It is regarding charging payment, for which there are different mode. Some

brokers will take some advance payment from the investor and will fix their trading

limits. When the trade is executed, the broker will ask the investor for transfer of

funds to his account.

Internet trading provides total transparency between a broker and an investor in the

secondary market. In the open outcry system, only the broker knew the actually

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transacted price. Screen based trading provides more transparency. With online

trading investors can see themselves the price at which the deal takes place.

The time gap has narrowed in every stage of operation. Confirmation and execution

of trade reaches the investor within the least possible time, mostly within 30 seconds.

Instant feedback is available about the execution. Some of the websites also offer;

• News and research report

• BSE and NSE movements

• Stock analysis

• IPO and mutual fund centers

Step by step procedure in online trading:

Following steps explain the step by step approach to on-line trading:

• Log on to the stock broker's website

• Register as client/investor

• Fill the application form and client broker agreement form on the requisite value

stamp paper

• Obtain user ID and pass word

• Log on to the broker's site using secure user ID and password

• Market watch page will show real time on-line market data

• Trade shares directly by entering the symbol or number of the security

• Brokers server will check your limit in the on-line account and demat account for

the number of shares and execute the trade

• Order is executed instantly (10-30 seconds) and confirmation can be obtained.

• Confirmation is e-mailed to investor by broker

• Contract note is printed and mailed in 24 hours

• Settlement will take place automatically on the settlement day

• Demat account and the bank account will get debited and credited by electronic

means.

ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS:

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• Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for

this leeway facility since one need to hold a price.

• Market orders: orders can be filled at unexpected prices, but this type is much

more risky, since you have to buy stock at the given price.

• Cash account: where funds have to be available prior to placing the order.

• Margin account: where orders can be placed against stocks, to increase

Purchasing power.

ADVANTAGES OF ONLINE TRADING:

• Online trading has made it possible for anyone to have easy and efficient access to

more reports and charts than it was previously possible if one went to any brokers'

office. Thus we have access to a lot more information online.

• Online trading has let room for smaller organizations to compete with

multinational organizations since it is no longer a leg it issue. Being online does

not identify the size of any particular organization, therefore, this additional

power to the underdogs.

• Online trading has allowed companies to locate themselves where they want as

physical location is not an issue anymore. Companies can establish themselves

according to their gains and losses, for instance where tax (sales and value added

taxes) is best suited to them.

• Online trading gives control to individuals and they can exercise it over accounts

thus comprehend what is going on when they trade. It is like going back to school

and re-educating oneself on how to trade online.

• Individuals’ benefit by saving comparatively a lot more when trading online as

the cost per trade is less.

• Individuals can invest in a variety of products, unlike earlier when people bought

bonds, mutual funds, and stock for long-term basis and sat on them. Now they can

invest in stocks, stock and index options mutual funds, government, and even

insurance.

INVESTORS REASONS TO TRADE ONLINE:

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• They have control over their accounts, can make their own decisions and don’t

have to give reasons for their actions. They are independent.

• They have a reason to participate in the market and learn about it.

• It is interesting, cheap, easy, fast, and convenient.

• A lot of information is online so they can keep up-to-date with what is happening

in the trading world.

• It will give investors a greater choice and better realization.

• The immediate impact will be competition and benefits will accrue to the

investors.

• It will lead to brokerage commissions going down and brokers striving to increase

business afloat.

• Investors will now go to place, which have better trading conditions and also

members to offer them better facilities.

• They have access to numerous tools to invest, and can create their own portfolio.

HERE ARE THE POSSIBLE DISADVANTAGES:

• When network crashes, there will be problems and delays due to a large influx of

rapid online trading criteria.

• Individuals are restricted to first-hand financial guidance. This simply means that

the individual is himself / herself alone to.

• A tax (sales tax and value added tax) evaluation becomes an issue, especially

when you are trading internationally.

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• One has no idea with whom he is dealing with on the other end.

• According to a study conducted by Mary Rowland, careful investor: is online

trading bad for your portfolio, the more one trades the less returns one gets,

meaning that an addicted trader gets, carried away online and begins to trade for

too much which causes losses for him / her.

• Individuals think that they are trading with the market directly and know what

they are doing, but the truth is that even though technology has taken over, the

basic rules of trading are the same. It seems that the middleman has been

removed, but that is not so. When the individuals click on the mouse, his trade

goes through a broker. The commissions online pertain to the intermediary.

• There is a need for more effective communication links over the Internet and the

ability of the server to deal with a large volume of visitors.

STOCK EXCHANGES IN INDIA

Stock exchanges are the perfect type of market for securities whether of government

and semi-govt bodies or other public bodies as also for shares and debentures issued

by the joint-stock companies. In the stock market, purchases and sales of shares are

affected in conditions of free competition. Government securities are traded outside

the trading ring in the form of over the counter sales or purchase. The bargains that

are struck in the trading ring by the members of the stock exchanges are at the fairest

prices determined by the basic laws of supply and demand.

Definition of a stock exchange:

“Stock exchange means any body or individuals whether incorporated or not,

constituted for the purpose of assisting, regulating or controlling the business of

buying, selling or dealing in securities.” The securities include:

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Shares of public company.

Government securities.

Bonds

History of Stock Exchanges:

The only stock exchanges operating in the 19th century were those of Mumbai setup in

1875 and Ahmedabad set up in 1894. These were organized as voluntary non-profit-

marking associations of brokers to regulate and protect their interests. Before the

control on securities under the constitution in 1950, it was a state subject and the

Bombay securities contracts (control) act of 1925 used to regulate trading in

securities. Under this act, the Mumbai stock exchange was recognized in 1927 and

Ahmedabad in 1937. During the war boom, a number of stock exchanges were

organized. Soon after it became a central subject, central legislation was proposed and

a committee headed by A.D.Gorwala went into the bill for securities regulation. On

the basis of the committee’s recommendations and public discussion, the securities

contract (regulation) act became law in 1956.

Functions of Stock Exchanges:

Stock exchanges provide liquidity to the listed companies. By giving quotations to the

listed companies, they help trading and raise funds from the market. Over the hundred

and twenty years during which the stock exchanges have existed in this country and

through their medium, the central and state government have raised crores of rupees by

floating public loans. Municipal corporations, trust and local bodies have obtained from

the public their financial requirements, and industry, trade and commerce- the backbone

of the country’s economy-have secured capital of crores or rupees through the issue of

stocks, shares and debentures for financing their day-to-day activities, organizing new

ventures and completing projects of expansion, diversification and modernization. By

obtaining the listing and trading facilities, public investment is increased and companies

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were able to raise more funds. The quoted companies with wide public interest have

enjoyed some benefits and assets valuation has become easier for tax and other purposes.

Various Stock Exchanges in India:

At present there are 23 stock exchanges recognized under the securities contracts

(regulation), Act, 1956. Those are:

Ahmedabad Stock Exchange Association Ltd.

Bangalore Stock Exchange

Bhubaneshwar Stock Exchange Association

Calcutta Stock Exchange

Cochin Stock Exchange Ltd.

Coimbatore Stock Exchange

Delhi Stock Exchange Association

Guwahati Stock Exchange Ltd

Hyderabad Stock Exchange Ltd.(Presently not working)

Jaipur Stock Exchange Ltd

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Kanara Stock Exchange Ltd

Ludhiana Stock Exchange Association Ltd

Madras Stock Exchange

Madhya Pradesh Stock Exchange Ltd.

Magadh Stock Exchange Limited

Meerut Stock Exchange Ltd.

Mumbai Stock Exchange

National Stock Exchange of India

OTC Exchange of India

Pune Stock Exchange Ltd.

Saurashtra Kutch Stock Exchange Ltd.

Uttar Pradesh Stock Exchange Association

Vadodara Stock Exchange Ltd.

Out of these major stock exchanges were:

NSE

The National Stock Exchange of India Limited has genesis in the report of the High

Powered Study Group on Establishment of New Stock Exchanges, which

recommended promotion of a National Stock Exchange by financial institutions (FI’s)

to provide access to investors from all across the country on an equal footing. Based

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on the recommendations, NSE was promoted by leading Financial Institutions at the

behest of the Government of India and was incorporated in November 1992 as a tax-

paying company unlike other stock exchanges in the country. On its recognition as a

stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993,

NSE commenced operations in the Wholesale Debt Market (WDM) segment in June

1994. The Capital Market (Equities) segment commenced operations in November

1994 and operations in Derivatives segment commenced in June 2000

NSE's mission is setting the agenda for change in the securities markets in India. The

NSE was set-up with the main objectives of:

• Establishing a nation-wide trading facility for equities and debt instruments.

• Ensuring equal access to investors all over the country through an appropriate

communication network.

• Providing a fair, efficient and transparent securities market to investors using

electronic trading systems.

• Enabling shorter settlement cycles and book entry settlements systems, and

• Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology, have become

industry benchmarks and are being emulated by other market participants. NSE is

more than a mere market facilitator. It's that force which is guiding the industry

towards new horizons and greater opportunities.

BSE

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as

"The Native Share and Stock Brokers Association". It is the oldest one in Asia, even

older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary

non-profit making Association of Persons (AOP) and is currently engaged in the process

of converting itself into demutualised and corporate entity. It has evolved over the years

into its present status as the premier Stock Exchange in the country. It is the first Stock

Exchange in the Country to have obtained permanent recognition in 1956 from the Govt.

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of India under the Securities Contracts (Regulation) Act 1956.The Exchange, while

providing an efficient and transparent market for trading in securities, debt and

derivatives upholds the interests of the investors and ensures redresses of their grievances

whether against the companies or its own member-brokers. It also strives to educate and

enlighten the investors by conducting investor education programmers and making

available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies

and regulates the affairs of the Exchange. The Governing Board consists of 9 elected

directors, who are from the broking community (one third of them retire ever year by

rotation), three SEBI nominees, six public representatives and an Executive Director

& Chief Executive Officer and a Chief Operating Officer.

The Executive Director as the Chief Executive Officer is responsible for the day-to-

day administration of the Exchange and the Chief Operating Officer and other Heads

of Department assist him.

The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to

constitution of the Executive Committee of the Exchange. Accordingly, an Executive

Committee, consisting of three elected directors, three SEBI nominees or public

representatives, Executive Director & CEO and Chief Operating Officer has been

constituted. The Committee considers judicial & quasi matters in which the

Governing Board has powers as an Appellate Authority, matters regarding annulment

of transactions, admission, continuance and suspension of member-brokers,

declaration of a member-broker as defaulter, norms, procedures and other matters

relating to arbitration, fees, deposits, margins and other monies payable by the

member-brokers to the Exchange, etc.

REGULATORY FRAME WORK OF STOCK EXCHANGE

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A comprehensive legal framework was provided by the “Securities Contract

Regulation Act, 1956” and “Securities Exchange Board of India 1952”. Three tier

regulatory structure comprising

Ministry of finance

The Securities And Exchange Board of India

Governing body

Members of the stock exchange:

The securities contract regulation act 1956 has provided uniform regulation for the

admission of members in the stock exchanges. The qualifications for becoming a

member of a recognized stock exchange are given below:

• The minimum age prescribed for the members is 21 years.

• He should be an Indian citizen.

• He should be neither a bankrupt nor compound with the creditors.

• He should not be convicted for fraud or dishonesty.

• He should not be engaged in any other business connected with a company.

• He should not be a defaulter of any other stock exchange.

• The minimum required education is a pass in 12th standard examination.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

The securities and exchange board of India was constituted in 1988 under a resolution

of government of India. It was later made statutory body by the SEBI act

1992.according to this act, the SEBI shall constitute of a chairman and four other

members appointed by the central government.

With the coming into effect of the securities and exchange board of India act, 1992

some of the powers and functions exercised by the central government, in respect of

the regulation of stock exchange were transferred to the SEBI.

OBJECTIVES AND FUNCTIONS OF SEBI

• To protect the interest of investors in securities.

• Regulating the business in stock exchanges and any other securities market.

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• Registering and regulating the working of intermediaries associated with

securities market as well as working of mutual funds.

• Promoting and regulating self-regulatory organizations.

• Prohibiting insider trading in securities.

• Regulating substantial acquisition of shares and take over of companies.

• Performing such functions and exercising such powers under the provisions of

capital issues (control) act, 1947and the securities to it by the central

government.

SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES):

• Board of Directors of Stock Exchange has to be reconstituted so as to include

non-members, public representatives and government representatives to the extent

of 50% of total number of members.

• Capital adequacy norms have been laid down for the members of various stock

exchanges depending upon their turnover of trade and other factors.

• All recognized stock exchanges will have to inform about transactions within 24

hrs.

TYPES OF ORDERS:

Buy and sell orders placed with members of the stock exchange by the investors. The

orders are of different types.

Limit orders: Orders are limited by a fixed price. E.g. ‘buy Reliance Petroleum at

Rs.50.’Here, the order has clearly indicated the price at which it has to be bought and

the investor is not willing to give more than Rs.50.

Best rate order: Here, the buyer or seller gives the freedom to the broker to execute

the order at the best possible rate quoted on the particular date for buying. It may be

lowest rate for buying and highest rate for selling.

Discretionary order: The investor gives the range of price for purchase and sale. The

broker can use his discretion to buy within the specified limit. Generally the

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approximation price is fixed. The order stands as this “buy BRC 100 shares around

Rs.40”.

Stop loss order: The orders are given to limit the loss due to unfavorable price

movement in the market. A particular limit is given for waiting. If the price falls

below the limit, the broker is authorized to sell the shares to prevent further loss. E.g.

Sell BRC limited at Rs.24, stop loss at Rs.22.

Buying and selling shares: To buy and sell the shares the investor has to locate

register broker or sub broker who render prompt and efficient service to him. The

order to buy or sell specifying the number of shares of the company of investors’

choice is placed with the broker. The order may be of any type. After receiving the

order the broker tries to execute the order in his computer terminal. Once matching

order is found, the order is executed. The broker then delivers the contract note to the

investor. It gives the details regarding the name of the company, number of shares

bought, price, brokerage, and the date of delivery of share. In this physical trading

form, once the broker gets the share certificate through the clearing houses he delivers

the share certificate along with transfer deed to the investor. The investor has to fill

the transfer deed and stamp it. The stamp duty is one of the percentage

considerations, the investor should lodge the share certificate and transfer deed to the

register or transfer agent of the company. If it is bought in the DEMAT form, the

broker has to give a matching instruction to his depository participant to transfer

shares bought to the investors account. The investor should be account holder in any

of the depository participant. In the case of sale of shares on receiving payment from

the purchasing broker, the broker effects the payment to the investor.

Share groups: The scrips traded on the BSE have been classified into

‘A’,’B1’,’B2’,’C’,’F’ and ‘Z’ groups. The ‘A’ group represents those, which are in

the carry forward system. The ‘F’ group represents the debt market segment (fixed

income securities). The Z group scrips are of the blacklisted companies. The ‘C’

group covers the odd lot securities in ‘A’, ‘B1’&’B2’ groups.

ROLLING SETTLEMENT SYSTEM:

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Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or

5days) after the trading day. The shares bought and sold are paid in for n days after

the trading day of the particular transaction. Share settlement is likely to be completed

much sooner after the transaction than under the fixed settlement system.

The rolling settlement system is noted by T+N i.e. the settlement period is n days

after the trading day. A rolling period which offers a large number of days negates the

advantages of the system. Generally longer settlement periods are shortened

gradually.

SEBI made RS compulsory for trading in 10 securities selected on the basis of the

criteria that they were in compulsory demat list and had daily turnover of about Rs.1

crore or more. Then it was extended to “A” stocks in Modified Carry Forward

Scheme, Automated Lending and Borrowing Mechanism (ALBM) and Borrowing

and lending Securities Scheme (BELSS) with effect from Dec 31, 2001.

SEBI has introduced T+5 rolling settlement in equity market from July 2001 and

subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling

settlement experience it was further reduced to T+2 to reduce the risk in the market

and to protect the interest of the investors from 1st April 2003.

Activities on T+1: conformation of the institutional trades by the custodian is sent to

the stock exchange by 11.00 am. A provision of an exception window would be

available for late confirmation. The time limit and the additional changes for the

exception window are dedicated by the exchange.

The exchanges/clearing house/ clearing corporation would process and download the

obligation files to the broker’s terminals late by 1.30 p.m on T+1. Depository

participants accept the instructions for pay in securities by investors in physical form

upto 4 p.m and in electronic form upto 6 p.m. the depositories accept from other DPs

till 8p.m for same day processing.

Activities on T+2: The depository permits the download of the paying in files of

securities and funds till 10.30 a.m on T+2 from the brokers’ pool accounts. The

depository processes the pay in requests and transfers the consolidated pay in files to

clearing House/clearing Corporation by 11.00am/on T+2. The exchange/clearing

house/clearing corporation executes the pay-out of securities and funds latest by 1.30

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p.m on T+2 to the depositories and clearing banks. In the demat mode net basis

settlement is allowed. The buy and sale positions in the same scrip can be settled and

net quantity has to be settled.

CHAPTER-IV

DATA ANALYSES AND INTERPRETATION

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DATA ANALYSIS&INTERPRETATION

OUTCRY SYSTEM

The broker has to buy or sell securities for which he has received the orders. For this,

the broker or his authorized representatives goes to the stock exchange. This method

is called the open outcry system. Basically the brokers shout while buying or selling

the securities. The floor of the stock exchange is divided into a number of markets

also known as ‘post pit’ or wing based on particular securities dealt there.

In the post pit or wing, the broker using ‘open outcry’ method makes an offer or

bid price. For making the necessary bargain, he quotes his purchase or sale price, also

known as offer or bid price. The dealer, to whom the price is quoted, quotes his own

price when the quotation of the dealer suits the broker, he may loose the bargain. If he

is not satisfied with the quote price, he may turn to some other dealer. On the close of

the bargain, the dealer as well as the broker makes a brief note of the particulars of

the deal. Such notes are made on some pad and on it the number of shares, the price

agreed upon, the name of the party, what membership number etc., are noted.

DISADVANTAGES OF OUTCRY SYSTEM:

• It lacks transparency.

• The scope of manipulation, speculation and mal practice is more.

48

• Signal were more important in the outcry system any member who could not

interpret the buy/sell signal correctly often landed himself in disaster situation.

• In audibility was another disadvantage of the outcry system.

• Due to the above disadvantages of the outcry system the SHARE KHAN has

shifted from outcry system to online trading from February 29th 1997.

MANUAL TRADING

Trading procedure before introduction of online trading

Trading on stock exchanges is officially done in the trading ring. In the trading ring

the space is provided for specified and non-specified sections, the members and their

authorized assistants have to wear a badge or carry with them an identity card given

by the exchange to enter the trading ring. They carry a sauda book or confirmation

memos, duly authorized by the exchange and carry a pen with them. The stock

exchanges operations are floor level are technical in nature .Non-members are not

permitted to enter in to stock market. Hence various stages have to be completed in

executing a transaction at a stock exchange .The steps involved in this method of

trading have given below:

Choice of broker:

The prospective investor who wants to buy shares or the investors, who wants to sell

shares and transact business, have to act through member brokers only. They can also

appoint their bankers for this purpose as per the present regulations.

Placement of order:

The next step is the placing order for the purchase or sale of securities with a broker.

The order is usually placed by telegram, telephone, letter, fax etc or in person. To avoid

delay, it is placed generally over the phone. The orders may take any one of the forms

49

such as At Best Orders, Limit Order, Immediate or Cancel Order, Limited Discretionary

Order, and Open Order, Stop Loss Order.

Execution of order or contract:

Orders are executed in the trading ring of the BSE. This works from 11:30 to 2.30

P.M on all working days Monday to Friday, and a special one-hour session on Saturday.

The members or the authorized assistants have to wear a badge given by the exchange to

enter into the trading ring. They carry a sauda Block Book or conformation memos,

which are duly authorized by the exchange when the deal is struck; both broker and

jobber make a note in their sauda block books. From the sauda book, the contract notes

are drawn up and posted to the client. A contract note is written agreement between the

broker and his clients for the transaction executed.

Drawing Up and Bills:

Both sale and purchase bills are prepared along with the contract note and it is posted

on the same day or the next day. This in a purchase transaction, once the shares are

delivered to the client effects payment for the purchases and pays the stamp fees for

transfer, a bill is made out giving the total cost of purchase, including other expenses

incurred by the broker in the price itself. With this, the process ends.

DEMATERLIZATION:

Dematerialization is the process by which physical certificates of an investor are

converted to an equipment number of securities in electronic from and credited in the

investor account with his DP. In order to dematerialize the certificates, an investor

has to first open an account with a DP and then request for the Dematerialization

Request Form, which is DP and submit the same along with the share certificates. The

investor has to ensure that he marks “Submitted for Dematerialization” on the

certificates before the shares are handed over to the DP for demat. Dematerialization

50

can only be done to those certificates, which are already registered in your name and

belong to the list of securities admitted for Dematerialization at NSDL.

Most of the active scrip’s in the market including all the scrip’s of S&P CNX NIFTY

and BSE SENSEX have already joined NSDL. This list is steadily increasing.

Briefly, the process is as follows: after completion of transfer, the investor gets the

option to dematerialize such shares. Investor’s willing to exercise this option sends a

Demat request along with the option letter sent by the company to his DP. The

company or its R&T agent would confirm the Demat request on its receipt from the

DP to reduce risk of loss in transit.

Dematerialized shares do not have any distinctive or certificate numbers. These

shares are fungible-which means that 100 shares of a security are the same as any

other 100 shares of the security. Odd lot shares certificates can also be

dematerialized.

Dematerialization normally takes about fifteen to thirty days. To get back

dematerialized securities in the physical form, request DP for Rematerialization of the

same is made.

Rematerialization is the process of converting electronic shares in to physical shares.

Benefits of Demat:

• It reduces the risk of bad deliveries, in turn saving the cost and wastage of

time associated with follow up for rectification. This has lead to reduction in

brokerage to the extent of 0.5% by quite a few brokerage firms.

• In case of transfer of electronic shares, you save 0.5% in stamp duty. You

avoid the cost of courier / notarization.

• You can receive your bonuses and rights issues into your DA as a direct

credit, this eliminating risk of loss in transit.

• You can also expect a lower interest charge for loans taken against Demat

shares as compared to loans against physical shares.

• There is no lost in transit, thus the overheads of getting a duplicate copy in

such circumstances is reduced.

51

• RBI has also reduced the minimum margin to 25% for loans against

dematerialized securities as against 50% for loans against physical securities.

TRADING AND SETTLEMENT AT SHARE KHAN

The NSE first introduced online trading in India. The Online trading system imparted

a greater level of transparency and investors preferred exchanges that offered Online

trading because of the following factors:

• The ease of operation from the view of the both members and the investors.

• Increase in the confidence of the investors because of higher level of

transparency.

• Facilities better monitoring of the market by the exchange.

• The best price achieved in buying and selling.

All these resulted in ever-increasing volumes on the exchanges offering the online

trading.

TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING

Share Khan deals in buying and selling equity shares and debentures on the National

Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The-

Counter Exchange of India (OTCEI).

Share Khan is provided with a computer and required software from their

registered stock exchanges. These centers are called “Broker Work Stations”. These

computers are connected to the server at the stock exchanges through cable.

The member or broker sitting in his office can send the quotations, orders,

negotiations, deals, in-house deals, auction orders etc., through the computer. The

Central trading system (CTS) will accept these orders and send it for match. If there is

52

any mistake in the order, CTS will reject the orders and send respective error message

to the member concern. All these operations are in built. The main objective of CTS

is to monitor the Stock Exchanges operations.

Order placed by the broker will be sent for a match and if the match is found suitable,

the transaction will be executed. Otherwise, the order will be deleted automatically

after completion of trading time. The carry forward transactions (Good Till

cancellation) are forwarded to the next day. Even if the match is not found with in the

prescribed period, the order will not cancel.

TRADING SESSION

Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period.

Monday to Friday is the trading period in all the stock exchanges. SEBI has stipulated

that all the stock exchanges in India must have same trading period.

BROKER WORK STATION:

At the broker workstation the BBO’s, the last traded price, the day‘s opening price,

previous day’s closing price, highest and lowest prices, the weighted average price

and total trade value will be available continuously, as the BBO for each scrip.

Other information will be available on query from the BWS. These include top

gainers /losers of the day. Trader-wise, scrip wise net position, client wise net

position, top scrip by the volume/value, market summary etc.

Brokers are also provided with information relating to the companies in the matter of

Book closure, Dividend declarations, resolutions in board meeting, information about

liquidated companies, company report etc.

ORDERS:

Orders can be done one at a time or in a batch mode.

53

The submitted order will be accepted at the CTS, after validation if it finds

any invalid reason the order is return back to the BWS, with the appropriate

error message.

If Accepted at the CTS it will be added to the local pending order book.

The order will then be taken up for matching, if it is a buy order the system

tries to find a sell order, which fits the requirement of the buy order, when

such match is found a trade gets executed. Each trade involves two brokers

and

respective traders who sent the order. Both these traders are informed of the

trade being executed at their respective BWS.

At the BWS the trade is added to the local trade book.

Orders sent by the brokers are two types:

• Good for the day (GFD)

• Good till cancellation(GTC)

Good for the day:

This is also called as “market order”. For an order if the member selects the deal

as good for the day, the order is treated as market order. If a “best bid” founds match

with “best order” then the transaction gets executed. If the match is not found then

after trade time the order gets cancelled that day. Next day he has to place a new

order.

For example if a member wants to purchase 1000 shares of satyam info @ 400 each

through Good for Day order. If the correct match is not found, order gets cancelled

automatically and new quotation has to be placed the next day.

Good till cancellation:

This order is forwarded to the last trading day of that settlement period. This is

also called as carry forward order like GFD; broker has to select the option of GTC

for the order. If the order finds match with in the trading settlement period, the order

54

is executed. If no match is found, the order is cancelled on the last day of settlement

period. This order is not carried forward to the next settlement period.

For example, if a member a place purchase order of 500 shares of SBI @ 690 per

share and selects the order as GTC and place an order. If the match is not found on

that day it will be forwarded to the next day until trading settlement period day.

SETTLEMENT OF TRANSACTIONS:

Clearing of transaction in the form of shares and cash is called settlement. Buyers will

take the delivery of shares through the depository participants like SHARE KHAN

and others.

Finally, the settlement is made by means of delivering the share certificates along

with the transfer deeds. The transferor (or the seller) duly signed transfer deed. It

bears a stamp of the selling broker. The buyer then fills up the certificates fills up the

particulars in the transfer deed. Settlement can be done in the following way.

Spot settlement: under this method, the delivery of securities and payment for them

are affected on the day of the contract itself.

Rolling settlement: Under this rolling settlement the trading is on “T+2”,basis i.e. if

Monday is trading day then Wednesday is the paying day . In case on non-delivery,

the securities will go for auction.

DETAILS OF PROCEDURES:

Delivery in : The members who are in pay-out position delivers share certificates in

to clearing house within the settlement period along with the delivery Chelan filled in

with the details of share certificates which has folio numbers or distinctive numbers

etc.

55

Delivery out: The buyer of shares who made pay in position will take delivery of

shares from the clearing house.

Pay-in: The member who is in paying position shall pay for value of shares with in

the trading settlement period (T+2).

Payout: The cheques paid in the clearinghouse will be paid to members who are in

paying position.

All disputes arising between members regarding non-deliveries, non-payments, good

and bad deliveries pertaining to the settlement will be settled by the settlement

committee of the exchange.

The given flow chart clearly explains the process of online trading:

56

L o g i n

B u y t r a n s c a t i o n S e l l t r a n s c a t i o n

T h e s y s t e m w i l l c h e c k b u y i n gl i m i t s

T h e s y s t e m w i l l c h e c k y o u rd p a c c o u n t q u a n t i t y

O r d e r s a c c e p t e d R e j e c t e d o r d e r s w o u l d b ec o m m u n i c a t e d a l o n g w i t h r e a s o n s

o r d e r s a c c e p t e d

c o n t r a c t n o t e w o u l db e s e n t t o b y m a i l

o r h a n d d e l i v e r y

f l a s h e d o n y o u rs c r e e n i m m e d i a t e l y

o n e x e c u t i o n

c o n f o r m a t i o n c o u ld b e s e n d t o y o u re - m a i l a n d m o b i l e

y o u m a y e d i t y o u rp e n d i n g o r d e r

y o u m a y d e l e t e y o u rp e n d i n g o r d e r

y o u r o r d e r i s t r a n s m i t t e d t o e x c h a n g e f o r e x e c u t i o n

p e n d i n g s e l l o r d e r sw o u l d b e d i s p l a y e d

o n y o u r s c r e e n

p e n d i n g b u y o r d e r sw o u l d b e d i s p l a y e d

o n y o u r s c r e e n

o n e x e c u t i o no f y o u r o r d e r s

y o u m a y e d i t y o u rp e n d i n g o r d e r

y o u m a y d e l e t ey o u r p e n d i n g o r d e r

COMPARATIVE ANALYSIS

Company :TATA MOTORS LTD. 500570 Period: 14-Dec-2012 to 25-Jan-2013

57

Date Open High Low Close WAPNo. of Shares

No. of Trades

Total Turnover

25/01/13 293.60 303.50 293.60 301.05 300.14 9,79,112 13,123 29,38,68,670

24/01/13 286.95 296.15 282.05 293.55 290.88 32,61,952 37,818 94,88,34,325

23/01/13 317.00 318.65 310.15 312.00 312.14 11,83,718 8,816 36,94,87,594

22/01/13 324.40 324.95 315.40 318.30 319.35 6,95,841 7,152 22,22,14,784

21/01/13 329.80 331.00 322.20 323.00 324.09 4,94,031 4,969 16,01,11,938

18/01/13 330.60 332.20 326.15 328.10 328.58 10,66,745 9,390 35,05,14,375

17/01/13 323.10 331.00 323.10 328.60 328.50 13,22,281 12,079 43,43,69,636

16/01/13 329.50 329.90 318.75 320.05 323.33 11,19,357 10,468 36,19,19,382

15/01/13 330.40 333.60 328.00 330.75 330.92 14,81,880 11,481 49,03,88,803

14/01/13 330.55 332.90 327.00 328.00 328.76 15,38,732 8,011 50,58,79,321

11/01/13 335.10 336.00 327.15 330.15 331.22 10,57,205 10,819 35,01,65,740

10/01/13 331.05 337.05 331.00 333.40 333.96 20,30,176 21,213 67,80,00,469

9/01/13 318.00 329.90 318.00 326.65 327.11 24,35,196 23,521 79,65,80,375

8/01/13 313.20 316.30 313.00 314.15 314.21 12,12,771 5,882 38,10,66,337

7/01/13 316.70 318.55 312.55 313.15 315.41 6,07,134 5,541 19,14,97,495

4/01/13 318.05 318.05 313.10 315.30 314.85 10,51,506 10,482 33,10,70,376

3/01/13 320.00 321.65 316.80 317.80 318.91 7,85,580 8,081 25,05,31,245

2/01/13 318.00 320.85 316.20 317.95 318.00 9,92,454 11,357 31,55,97,304

1/01/13 314.65 318.00 314.50 316.40 316.09 8,19,557 9,791 25,90,54,149

31/12/12 309.70 313.90 309.00 312.40 312.18 6,86,331 8,999 21,42,58,956

28/12/12 310.80 312.40 308.00 309.65 310.02 10,26,802 11,535 31,83,31,554

27/12/12 307.05 313.95 304.55 309.50 310.96 14,86,033 16,846 46,20,91,914

26/12/12 305.80 308.45 304.00 305.40 306.06 8,83,417 8,849 27,03,81,867

24/12/12 301.10 310.50 297.45 306.70 305.83 14,95,521 15,399 45,73,74,932

21/12/12 300.30 303.20 298.00 299.40 300.10 5,78,439 7,069 17,35,88,319

20/12/12 308.40 309.45 303.00 305.35 306.65 9,27,117 9,346 28,43,02,245

19/12/12 299.00 308.60 299.00 307.55 305.57 15,45,400 17,121 47,22,34,037

18/12/12 296.50 300.40 294.05 297.75 298.01 19,87,014 18,336 59,21,54,968

17/12/12 292.00 295.70 291.25 293.90 293.98 10,69,066 12,188 31,42,79,241

14/12/12 288.00 294.30 284.90 291.90 291.67 28,78,537 25,462 83,95,94,585

58

INTERPRETATION:

On open value has increased from 286.95 to 335.10. Then compare to higher

value of EPS 294.30 to 337.05. Then coming to lower price from 282.05 to 331.00.

Wholly the conclusion is 291.90 to 333.40 increased.

Then coming to the volume on the same dates or days volumes are increased.

Because totally this session TATA MOTORS. EPS value is increased i.e. percentage

of 6.37%.

Company :STATE BANK OF INDIA 500112

Period: 14-Dec-2012 to 25-Jan-2013 All Prices in

59

25/01/13 2,463.25 2,522.00 2,449.00 2,513.25 2,488.96 2,87,021 13,672 71,43,84,462

24/01/13 2,482.90 2,484.00 2,442.10 2,458.40 2,459.10 2,30,713 11,440 56,73,46,290

23/01/13 2,466.50 2,490.00 2,451.60 2,480.30 2,473.04 2,71,800 12,618 67,21,73,043

22/01/13 2,487.20 2,508.90 2,455.00 2,464.35 2,483.95 2,45,769 11,107 61,04,77,425

21/01/13 2,496.00 2,510.55 2,490.00 2,497.75 2,500.01 1,83,572 9,177 45,89,31,954

18/01/13 2,485.00 2,515.00 2,478.35 2,491.20 2,498.56 3,39,676 14,609 84,87,02,340

17/01/13 2,427.70 2,479.00 2,422.00 2,468.35 2,452.84 2,89,932 14,832 71,11,55,473

16/01/13 2,477.60 2,494.95 2,424.25 2,432.90 2,459.26 2,73,575 13,396 67,27,90,960

15/01/13 2,508.00 2,517.70 2,471.00 2,488.90 2,492.33 2,67,436 12,812 66,65,39,781

14/01/13 2,491.30 2,520.00 2,475.00 2,498.25 2,500.14 4,62,665 14,335 1,15,67,26,099

11/01/13 2,542.30 2,549.00 2,482.30 2,490.95 2,508.82 2,73,757 13,943 68,68,07,130

10/01/13 2,536.50 2,550.00 2,522.35 2,539.20 2,539.37 3,99,468 18,986 1,01,43,95,059

9/01/13 2,493.25 2,535.90 2,493.25 2,521.65 2,517.49 3,90,601 20,105 98,33,32,735

8/01/13 2,468.00 2,500.00 2,461.35 2,493.45 2,482.10 3,87,546 13,724 96,19,26,496

7/01/13 2,489.00 2,497.80 2,461.10 2,467.00 2,481.04 2,27,585 9,132 56,46,46,479

4/01/13 2,457.00 2,491.40 2,452.00 2,484.80 2,475.34 2,85,107 13,997 70,57,38,118

3/01/13 2,454.70 2,482.20 2,435.20 2,470.95 2,465.56 4,14,238 15,413 1,02,13,28,911

2/01/13 2,447.30 2,462.40 2,440.00 2,448.10 2,452.05 2,34,017 12,032 57,38,21,981

1/01/13 2,401.00 2,434.00 2,397.50 2,426.00 2,423.38 3,86,362 16,032 93,63,02,246

31/12/12 2,370.00 2,395.90 2,367.55 2,383.75 2,385.12 1,84,701 8,397 44,05,34,731

28/12/12 2,380.00 2,398.90 2,368.20 2,377.75 2,378.95 2,05,989 9,828 49,00,36,656

27/12/12 2,368.60 2,396.15 2,365.50 2,388.80 2,384.40 3,10,395 14,904 74,01,06,933

26/12/12 2,333.50 2,379.00 2,324.00 2,371.20 2,360.86 3,75,403 14,501 88,62,72,087

24/12/12 2,344.00 2,358.85 2,324.25 2,328.30 2,336.81 2,44,202 10,639 57,06,54,613

21/12/12 2,355.00 2,376.00 2,328.00 2,333.70 2,353.60 2,98,998 14,921 70,37,22,595

20/12/12 2,366.20 2,398.30 2,342.00 2,380.10 2,372.47 3,71,206 16,637 88,06,76,759

19/12/12 2,382.20 2,407.65 2,360.00 2,368.90 2,381.63 3,17,509 17,021 75,61,88,669

18/12/12 2,350.00 2,378.80 2,281.00 2,371.40 2,342.17 9,70,285 43,930 2,27,25,72,469

17/12/12 2,318.00 2,348.40 2,311.90 2,343.50 2,336.75 3,61,787 16,022 84,54,07,271

14/12/12 2,265.00 2,328.00 2,253.75 2,320.15 2,298.19 4,51,156 22,234 1,03,68,40,197

60

INTERPRETATION:

On open value has increased from 2265.00 to 2542.30. Then compare to

higher value of EPS 2328.00 to 2550.00. Then coming to lower price from 2253.75 to

2522.35. Wholly the conclusion is 2320.15 to 2539.20 increased.

Then coming to the volume on the same dates or days volumes are

increased. Because totally this session SBI. EPS value is increased i.e. percentage of

14.56%.

Company :MUTHOOT FINANCE LTD. 533398 Period: 14-Dec-2012 to 25-Jan-2013

Date Open High Low Close WAPNo. of Shares

No. of Trades

Total Turnover

25/01/13 214.00 218.50 211.50 216.60 214.72 32,207 880 69,15,383

24/01/13 216.15 217.00 211.10 213.65 214.09 53,115 1,373 1,13,71,193

61

23/01/13 213.50 216.75 211.40 214.05 213.94 66,499 1,722 1,42,26,997

22/01/13 213.50 217.90 210.10 211.70 214.37 1,26,348 2,366 2,70,84,642

21/01/13 200.00 213.60 200.00 211.40 210.39 1,08,534 2,849 2,28,34,901

18/01/13 210.00 210.40 203.65 205.60 206.53 90,042 1,869 1,85,96,555

17/01/13 213.50 216.70 206.35 210.60 212.31 97,105 1,682 2,06,16,622

16/01/13 221.00 221.90 211.75 212.80 215.91 94,808 3,462 2,04,70,350

15/01/13 226.00 228.40 218.40 220.00 223.08 1,09,035 2,214 2,43,23,795

14/01/13 216.00 231.90 214.75 226.90 227.43 5,48,938 9,827 12,48,45,279

11/01/13 224.45 224.45 215.00 216.30 218.54 84,962 1,493 1,85,67,783

10/01/13 226.35 228.15 221.65 223.15 224.19 1,03,244 2,003 2,31,46,460

9/01/13 231.40 233.10 223.80 225.45 228.89 1,26,076 3,026 2,88,56,929

8/01/13 229.50 233.70 226.20 230.90 230.35 2,41,358 5,356 5,55,95,858

7/01/13 229.00 233.70 223.10 227.85 229.43 4,32,451 10,791 9,92,17,839

4/01/13 233.60 244.50 225.00 226.00 233.84 12,91,821 26,075 30,20,78,279

3/01/13 211.00 246.00 210.70 230.00 235.89 21,54,951 38,971 50,83,22,199

2/01/13 211.50 212.05 208.00 208.70 209.53 25,302 658 53,01,617

1/01/13 210.00 213.50 208.15 209.45 210.83 44,604 1,085 94,03,752

31/12/12 200.65 210.00 200.65 208.55 207.49 67,764 1,417 1,40,60,350

28/12/12 198.30 202.20 197.40 200.65 200.32 9,046 441 18,12,136

27/12/12 202.00 202.00 196.00 197.35 198.54 7,486 263 14,86,237

26/12/12 197.10 203.00 194.50 201.05 200.40 29,199 928 58,51,517

24/12/12 197.50 198.40 194.00 195.60 195.67 13,447 509 26,31,126

21/12/12 198.50 202.00 195.65 197.05 198.33 19,063 574 37,80,850

20/12/12 206.00 206.00 198.00 198.40 200.94 46,264 1,167 92,96,233

19/12/12 208.00 209.55 204.65 205.20 206.53 31,366 589 64,78,119

18/12/12 201.90 211.00 201.00 207.15 207.73 1,90,961 3,487 3,96,68,060

17/12/12 202.00 204.00 197.35 202.10 201.69 91,765 1,740 1,85,08,418

14/12/12 186.00 202.10 184.15 199.90 196.10 1,78,596 3,946 3,50,22,073

62

INTERPRETATION:

On open value has increased from 186.00 to 233.60. Then compare to higher

value of EPS 198.40 to 246.00. Then coming to lower price from 184.15 to 226.20.

Wholly the conclusion is 195.60 to 230.90 increased.

Then coming to the volume on the same dates or days volumes are

increased. Because totally this week MUTHOOT FINANCE LTD. EPS value is

increased i.e. percentage of 6.83%.

Company :MARUTI SUZUKI INDIA LTD. 532500 Period: 14-Dec-2012 to 25-Jan-2013

Date Open High Low Close WAPNo. of Shares

No. of Trades

Total Turnover

25/01/13 1,542.00 1,607.65 1,542.00 1,600.20 1,582.76 2,98,136 14,979 47,18,78,124

24/01/13 1,572.00 1,578.00 1,530.00 1,536.50 1,548.31 61,338 2,572 9,49,69,934

63

23/01/13 1,581.00 1,587.25 1,566.15 1,574.20 1,575.25 2,77,821 1,757 43,76,37,367

22/01/13 1,582.00 1,593.95 1,566.70 1,570.10 1,579.81 90,993 5,957 14,37,51,613

21/01/13 1,559.90 1,582.00 1,553.85 1,574.65 1,569.98 1,18,391 4,341 18,58,71,417

18/01/13 1,501.00 1,562.05 1,501.00 1,545.75 1,548.25 2,02,829 8,055 31,40,29,801

17/01/13 1,510.00 1,521.50 1,491.00 1,496.90 1,507.39 53,451 2,745 8,05,71,740

16/01/13 1,548.00 1,560.55 1,482.35 1,492.95 1,517.65 68,491 3,763 10,39,45,666

15/01/13 1,545.00 1,565.00 1,541.10 1,546.00 1,554.04 98,461 2,174 15,30,12,216

14/01/13 1,555.00 1,577.25 1,532.90 1,539.05 1,540.69 83,678 2,096 12,89,21,697

11/01/13 1,574.00 1,591.90 1,558.00 1,565.95 1,576.93 48,237 2,333 7,60,66,290

10/01/13 1,572.00 1,588.20 1,562.50 1,571.50 1,579.05 69,116 2,358 10,91,37,586

9/01/13 1,572.80 1,595.05 1,561.35 1,569.80 1,581.89 70,637 3,392 11,17,40,233

8/01/13 1,590.25 1,596.00 1,567.00 1,574.50 1,577.93 46,057 2,231 7,26,74,786

7/01/13 1,555.00 1,599.90 1,555.00 1,584.00 1,587.93 1,25,688 4,594 19,95,83,757

4/01/13 1,558.00 1,558.00 1,539.65 1,544.00 1,548.33 26,274 1,540 4,06,80,700

3/01/13 1,560.15 1,567.80 1,540.15 1,542.95 1,550.01 39,548 2,711 6,12,99,901

2/01/13 1,520.00 1,565.70 1,519.95 1,557.70 1,548.20 77,191 4,879 11,95,06,869

1/01/13 1,492.00 1,523.15 1,485.00 1,516.10 1,509.03 45,586 3,068 6,87,90,793

31/12/12 1,482.00 1,514.00 1,482.00 1,488.95 1,497.64 19,188 1,221 2,87,36,757

28/12/12 1,488.00 1,515.20 1,485.00 1,500.15 1,503.46 31,972 2,088 4,80,68,728

27/12/12 1,484.00 1,500.40 1,475.10 1,481.85 1,490.12 64,285 1,671 9,57,92,351

26/12/12 1,481.00 1,493.20 1,478.00 1,479.60 1,481.71 35,864 1,157 5,31,40,002

24/12/12 1,503.00 1,504.00 1,473.90 1,479.70 1,483.48 30,319 1,599 4,49,77,562

21/12/12 1,510.00 1,520.80 1,499.70 1,503.70 1,510.20 23,379 1,319 3,53,07,044

20/12/12 1,509.10 1,528.95 1,509.10 1,517.00 1,520.06 77,655 2,658 11,80,40,592

19/12/12 1,492.00 1,516.00 1,476.05 1,509.65 1,507.60 56,840 3,179 8,56,91,907

18/12/12 1,500.00 1,505.00 1,472.20 1,474.80 1,494.48 1,53,487 2,117 22,93,82,722

17/12/12 1,475.15 1,510.00 1,475.15 1,499.45 1,501.33 57,275 2,519 8,59,88,682

14/12/12 1,474.00 1,488.00 1,452.00 1,474.40 1,468.35 37,977 2,244 5,57,63,573

64

INTERPRETATION:

On open value has increased from 1474.00 to 1590.25. Then compare to

higher value of EPS 1488.00 to 1599.90. Then coming to lower price from 1452.00 to

1567.00. Wholly the conclusion is 1474.40 to 1584.00 increased.

Then coming to the volume on the same dates or days volumes are

increased. Because totally this session MARUTI SUZUKI INDIA LTD. EPS value is

increased i.e. percentage of 8.95%.

65

CHAPTER-V

FINDINGS

SUGGESSIONS

CONCLUSIONS

BIBLIOGRAPHY

FINDINGS

• The volume on the same dates or days volumes are increased. Because totally this

session MARUTI SUZUKI INDIA LTD. EPS value is increased i.e. percentage of

8.95%.

66

• The volume on the same dates or days volumes are increased. Because totally this

week MUTHOOT FINANCE LTD. EPS value is increased i.e. percentage of

6.83%.

• The volume on the same dates or days volumes are increased. Because totally this

session SBI. EPS value is increased i.e. percentage of 14.56%.

• The volume on the same dates or days volumes are increased. Because totally this

session TATA MOTORS. EPS value is increased i.e. percentage of 6.37%.

CONCLUSION

67

The comprehensive study of capital market instrument at Inter Connected

stock exchange has been an enlightening experience stressing on the

positive aspects on Dematerialization.

And settlement of shares, derivative market and capital instrumentshas

done in whole lot of good to the issuer, investor companies and country.

The depository systems has reduced the lag in delivery and settlement of

securities but also supported the cause of providing more liquidity to the

security holder, the need for setting up of a depository paper less trading.

Through online trading system and settlement became inevitable and

unavoidable for the smooth and the efficient functioning of the capital

market.

This system has proved its worthiness by increasing in the speed of

transactions within T+3 days which are earlier T+5 days.

Now there is a proposal that the settlement will be done within T+1days in

near future which is in it an indication of a boon in the system of demat

and capital market instruments.

It has been fairly long since derivative trading started off on the Indian

Indexes.

Actively has failed to really take off with low figures being transacted in

terms of value and volumes.

The introduction of derivative trading was hailed by the punters in the

capital markets but has not really brought about a wave so as to speak.

68

There are several factors, which impede the growth of the derivative

markets in India.

Of these factors the absence of clear guidelines on tax-related issues and

the high cost of transactions are the most prominent.

RECOMMENDATIONS

69

• I recommend the exchange authorities to take steps to educate Investors about

their rights and duties. I suggest to the exchange authorities to increase the

investors’ confidences.

• I recommend the exchange authorities to be vigilant to curb wide fluctuations of

prices.

• The speculative pressures are responsible for the wide changes in the price, not

attracting the genuine investors to the greater extent towards the market.

• Genuine investors are not at all interested in the speculative gain as their

investment is based on the future profits, therefore the authorities of the exchange

should be more vigilant to curb the speculation.

• Necessary steps should be taken by the exchange to deal with the situations

arising due to break down in online trading.

BIBLIOGRAPHY

70

BOOKS:

• Investment management -V.K.Bhalla• Investment management -Preethi Singh• Security Analysis And Portfolio Management -V.A.Avadhani• Marketing of Financial Services -V.A.Avadhani• Indian Financial System -M.Y.Khan

WEBSITES:

• www.sharekhan.com• www.bseindia.com• www.sebi.com• www.moneycontrol.com• www.economictimes.com• www.nseindia.com

MARKET WATCH WINDOWS:

71

BLUE COLOUR INDICATE SHARE VALUE INCREASERED COLOUR INDICATE SHARE VALUE DECREASE

NSE Scrip’s

NSE & BSE Scrip’s

(BUY Order Form)

72

(Sell Order Form)

(Market Depth)

73

(Order Book)

Client Margin

74

Trade Book

Client Activity Report

75

Exercise Report

QUESTIONNAIRE

76

1. Do you know about online trading?

A) YES B) NO

2. Do you feel safe while trading online?

A) YES B) NO

3. Do you believe that the trader is successful in online trading?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

4. In the online trading system the traders /brokers that they believe by share partners?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

5. Hence online trading is accuracy and correctness is measured in online trading?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

6. Online trading is a secure way of trading?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

7. Do you agree Online trading is easy and fast way of trading?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

8. Introduction of online trading helped to attract the new investors thus increasing trading volume?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

9. Online trading is convenient Hassle free trading?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

10. Online trading is a one stop financial investment portal for all your future needs?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

11. Do you believe that the traders/brokers/shareholders are successful in online trading?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

77

12. Online trading can do in equities and derivatives?

A) Strongly Agree B) Agree C) Neutral D) Disagree E) Strongly Disagree

13. Online trading has no Geographical and time limitation?

A.YES B.NO

14. Do you think online trading as helped in growth and development of Indian stock market?

A.YES B.NO

15. Do you prefer online trading method?

A.YES B.NO

16. According to you online trading settled in Indian investors psyche?

A.YES B.NO

17. Would you prefer Television for online trading?

A.YES B.NO

18. Are you aware of about online trading?

A.YES B.NO

19. Do you receive updated online information regarding the stock market from broker?

A.YES B.NO

20. Stock exchange is an organized market place where securities are traded?

A.YES B.NO

78

LIKERT TABLE ( 3 to 12 QUESTIONS)

STRONGLY AGREE-1 DISAGREE-4AGREE-2 NEUTRAL-3 STRONGLY DISAGREE-5

s.no Respondent Qual Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q121 MAHESH BABU MBA 1 2 1 3 1 1 1 2 1 12 ANVESH MBA 2 2 4 4 5 5 1 1 1 23 PRAKASH MBA 5 2 1 1 1 1 2 3 1 14 SURESH MBA 1 1 1 1 1 1 1 1 1 15 SAIDAIAH MBA 3 1 1 1 1 1 1 2 1 16 HEMANTH MBA 4 2 2 1 1 3 1 1 1 27 RISHI MBA 3 2 2 2 2 3 3 4 1 18 GOPAL MBA 5 3 3 2 2 1 2 1 1 19 NARAYANA MBA 5 1 1 2 2 1 4 5 1 1

10 NARESH MBA 1 1 1 1 2 2 1 1 1 211 SANKAR MCA 3 3 2 2 2 2 1 1 1 112 SAI MBA 5 2 2 3 2 2 1 2 1 213 SANTHOSH MBA 4 1 3 1 2 2 1 1 1 114 MADHU MBA 4 2 1 2 1 1 1 3 1 115 SAGAR MCA 3 2 1 2 1 5 1 1 1 116 PRABHA M.COM 4 2 1 2 1 5 2 1 1 217 CHIRANJEEVI MCA 4 2 1 2 1 5 2 1 1 118 BHASKAR B.TECH 3 2 3 2 2 5 2 1 1 119 SIDDAIAH MBA 4 1 3 1 2 4 2 2 1 220 ANUSHA MBA 4 1 3 1 2 5 2 2 1 121 BALAJI B.COM 3 1 1 4 5 5 3 2 1 222 AJAY MBA 4 3 3 3 2 3 2 2 1 123 BHARATH MBA 2 4 3 4 2 5 2 2 1 124 ASHOK MCA 4 5 3 4 2 2 3 2 1 225 NAGESH MBA 4 5 3 5 4 2 4 1 1 126 SANDEEP MBA 5 3 3 3 4 2 5 2 1 227 DEERAJ B.TECH 1 5 5 4 5 4 2 4 1 128 RAJA B.TECH 3 5 5 4 5 4 5 4 1 129 HAREESH BSC 2 2 5 3 5 4 5 4 1 230 JYOTHI MBA 2 2 3 3 3 3 5 1 1 231 ASHWINI MBA 1 2 4 3 4 4 5 1 1 132 MOHAN MBA 5 4 5 4 5 5 5 1 1 133 MADHAN MBA 3 4 5 4 5 4 5 4 1 134 MOULI MCA 1 5 3 4 4 4 4 5 1 135 VIKRAM B.TECH 5 5 3 4 5 4 5 5 1 236 SWATHI MBA 5 5 4 4 5 3 4 4 1 137 RADHIKA MBA 4 5 4 5 4 4 4 4 1 138 NAGAMANI MCA 1 3 3 5 3 4 3 4 1 139 GEETHA MBA 3 3 3 5 5 3 3 4 1 240 ANJALI MBA 5 3 3 3 4 3 3 5 1 141 AAMANI MBA 5 4 4 5 4 3 3 5 1 142 BHUVANA B.COM 1 4 4 5 4 2 3 4 1 243 SWARNA M.COM 5 4 4 3 3 2 3 3 1 144 PURUSHOTHAM M.COM 5 3 5 5 3 2 4 5 1 145 NAGARAJ MBA 4 3 4 3 3 3 4 3 1 146 SWAPNA MBA 2 4 3 3 3 2 4 5 1 147 SIVAJI MBA 5 3 3 3 3 2 4 3 1 148 GANESH MCA 1 3 4 3 3 2 4 3 1 149 SRINIVAS M.COM,CA,LLB,DPM1 3 3 3 4 2 3 5 1 150 MURALI MBA 3 3 3 3 4 2 3 5 1 2

79

DICHOTOMOUS TABLE ( 1,2 &13 to 20 QUESTIONS)YES-1 NO- 2

s.no name Qual Q1 Q2 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q201 SURESH BABU MBA 1 1 1 1 1 1 1 2 1 12 ANVESH MBA 2 2 1 1 1 2 1 1 1 23 PRAKASH MBA 2 2 1 2 1 1 1 1 2 14 SURESH MBA 5 1 2 1 1 1 2 1 1 25 SAIDAIAH MBA 2 2 1 1 2 1 1 2 1 16 HEMANTH MBA 3 1 1 1 1 2 1 1 1 27 RISHI MBA 2 3 1 2 1 1 1 2 1 18 GOPAL MBA 2 1 2 1 1 1 1 1 2 19 NARAYANA MBA 2 2 1 1 2 1 1 1 1 2

10 NARESH MBA 3 4 1 1 1 1 1 1 1 111 SANKAR MCA 3 1 1 2 1 1 2 1 1 112 SAI MBA 1 2 1 1 1 1 1 2 1 213 SANTHOSH MBA 3 1 1 1 1 1 1 1 1 114 MADHU MBA 3 2 2 1 1 1 1 1 1 215 SAGAR MCA 3 4 1 2 1 1 1 1 2 116 PRABHA M.COM 4 3 1 1 1 1 2 1 1 117 CHIRANJEEVI MCA 3 3 1 1 1 1 1 2 1 218 BHASKAR B.TECH 1 1 1 2 1 1 1 1 1 119 SIDDAIAH MBA 4 5 1 1 1 1 1 1 1 120 ANUSHA MBA 1 3 1 1 2 1 1 1 1 221 BALAJI B.COM 3 5 1 1 1 1 1 2 1 122 AJAY MBA 1 3 2 1 1 1 1 1 1 123 BHARATH MBA 1 4 1 2 1 1 1 1 1 124 ASHOK MCA 4 5 1 1 1 1 1 1 1 225 NAGESH MBA 5 4 1 2 1 1 2 1 2 126 SANDEEP MBA 2 5 1 1 1 1 1 1 1 127 DEERAJ B.TECH 3 4 1 2 1 1 1 1 1 228 SRINIVASULU M.S.C 4 5 1 1 2 1 1 1 1 229 HAREESH BSC 1 5 1 1 1 1 1 2 1 130 JYOTHI MBA 1 4 2 1 1 1 1 1 2 131 ASHWINI MBA 2 5 1 2 1 1 1 1 1 132 MOHAN MBA 3 5 1 2 1 2 1 1 1 233 MADHAN MBA 1 1 1 1 2 2 1 1 1 134 V.C.SAJJANAR MBA 2 4 2 1 1 2 1 1 1 135 VIKRAM B.TECH 2 1 1 1 2 2 2 1 1 136 SWATHI MBA 2 3 1 2 1 2 1 2 2 237 RADHIKA MBA 2 1 1 1 2 2 1 1 1 138 NAGAMANI MCA 4 5 1 2 1 2 1 1 1 139 GEETHA MBA 3 1 2 1 1 1 1 2 2 240 ANJALI MBA 5 4 1 1 1 1 1 1 1 141 AAMANI MBA 4 5 1 2 1 1 1 1 1 142 BHUVANA B.COM 3 3 1 1 1 1 1 2 2 243 SWARNA M.COM 3 4 2 1 1 1 1 1 1 144 PURUSHOTHAM M.COM 5 1 1 2 1 1 1 1 1 245 NAGARAJ MBA 4 5 2 1 1 1 2 1 1 146 SWAPNA MBA 4 1 1 2 1 1 1 1 1 247 SIVAJI MBA 4 2 1 2 1 1 1 1 2 148 GANESH MCA 3 2 2 1 1 1 1 2 1 149 SRINIVAS M.COM,CA,LLB,DPM5 2 1 2 1 1 1 1 1 250 MURALI MBA 4 2 1 1 1 1 1 1 1 1

80

LIKERT TABLE ( 3 to 12 QUESTIONS)

LIKERT SCALE

S.NO/DETAILSSTRONGLY AGREE

AGREE

NEUTRAL DISAGREE

STRONGLY DISAGREE RESPONDENTS

Q3 13 10 7 9 11 50Q4 10 5 10 12 13 50Q5 8 14 13 7 8 50Q6 11 4 20 9 6 50Q7 8 9 15 11 7 50Q8 9 13 8 10 10 50Q9 7 15 9 10 9 50Q11 11 10 11 10 8 50Q12 9 12 14 10 5 50

81

DICHOTOUMOUS TABLE(1,2&13 TO20QUESTIONS)

S.NO/DETAILS YES NO RESPONDENTSQ1 41 9 50Q2 39 11 50Q13 50 0 50Q14 35 15 50Q15 40 10 50Q16 33 17 50Q17 43 7 50Q18 44 6 50Q19 41 9 50Q20 32 18 50

82

Q1.Do you know about online trading?YES(41) NO(9) Respondents

41 9 50

Q2. Do you feel safe while trading online?YES(39) NO(11) Respondents

39 11 50

Q3.Do you believe that the traders in successful in online trading?

Strongly Agree(13) Agree(10) Neutral(7) Disagree(9)

Strongly Disagree(11) Respondents

13 10 7 9 11 50

83

Q4.In the online trading system the traders /brokers that they believe by share partners?

Strongly Agree(10)Agree(5)Neutral(10)Disagree(12)Strongly Disagree(13)Respondents10 5 10 12 13 50

Q5. Hence online trading is an accuracy and correctness is measured in online trading?

Strongly Agree(08)Agree(14)Neutral(13)Disagree(7)Strongly Disagree(08)Respondents8 14 13 7 8 50

Q6.Online trading can do in equities and derivatives?Strongly Agree(11)Agree(4)Neutral(20)Disagree(9)Strongly Disagree(6)Respondents

11 4 20 9 6 50

10

5

1012

13Strongly Agree(10)

Agree(5)

Neutral(10)

Disagree(12)

Strongly Disagree(13)

8

14

13

7

8 Strongly Agree(08)

Agree(14)

Neutral(13)

Disagree(7)

Strongly Disagree(08)

11

4

20

9

6 Strongly Agree(11)

Agree(4)

Neutral(20)

Disagree(9)

Strongly Disagree(6)

84