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INDIA INFOLINE LIMITED

1. INTRODUCTION

1.1 ONLINE TRADING IN INDIA:

India’s main capital market regulator has approved online share trading in a move designed to

boost the country’s equity markets. The body also announced that individuals and foreign

investors would be allowed to invest in Indian shares up to 5% of a company’s total equity. The

head of the securities and exchange board (SEBI), D R Mehta, announced internet share trading

could take place in India “within the existing legal framework-although cyber laws need

strengthening”. However, online trading would still have to be done through brokers.

Mr. Mehta said the necessary guidelines would be issued to various exchanges and brokers, who

could then decide when they wanted to start. A SEBI panel submitted a report on internet stock

trading in December recommending procedures and other details for domestic stock exchanges.

The country’s biggest exchange- the national stock exchange (NSE)-has got the necessary

software, and is currently testing interconnectivity with brokers’ systems.

The Bombay stock exchange (BSE) should be ready currently in the process of developing a

central web server who can be accessed by all brokers registered with the exchange. According

to some analysts, the introduction of internet trading should boost business volumes and further

fuel a bull run on the Indian markets. However, the BBC, s Sanjeev Srivastava in Bombay says

other analysts are not so optimistic. He says they believe that the country’s internet infrastructure

is still not advanced enough, and that effective online trading will be difficult until bank, brokers

and exchanges are all successfully interconnected. India is believed to have about 30m domestic

investors at the moment.

REGIONAL INSTITUTE OF CO-OPERATIVE MANAGEMENT,BENGALURU-701


HISTORY OF STOCK BROKING:

To understand how brokerages compete contemporaneously with the advent of internet

related technology, it is necessary to look briefly into how the securities industry has changed in

the last three decades. In 1974, charles schwab changed the competitive landscape of the

securities industry by becoming the first discount brokerage. In 1982, Tradepils, the predecessor

of E*trade came to life after its founder, bill porter envisioned a world where everyone would

soon own a computer and trade stocks through them (Wyatt). And in 1984, Charles schwab

begins offering on-line trading service. One half of today’s 1.5 million on-line accounts belong

to schwab (Young).

Online trading initially caught on slowly. But the crash of 1987 caused the trading volume to

virtually dry up (Wyatt). Next, enter the “cyberbrokerages”who then changed the competitive

landscape to full service brokerages versus cyber brokerages using internet technologies.

E*trade’s early success with internet based trading forced traditional brokers into the internet

game(Lux “on the net…”) the result is three distinct intra industrial rivals who differ

significantly to the extent in which internet technologies is part of the distribution channel.

Full service brokerages are reluctant to offer internet or online trading. Kizman Reeves of

Merrill lynch suggested that internet trading is not for everybody and the internet will merely

lynch force full service brokers prove they really do offer comprehensive financial advice

(Weasel “internet joy…”.). Firms similar to prudential, Smith Barney, and Merrill lynch are

positioning themselves as reliable and secure places to visit. They cannot compete or find it quite

difficult to compete with online discounts on price (Deck). Full service brokers tend to charge

five to six times more in commissions than discount brokers (Hoffmann).

Customers are attracted to them because their web sites offer savings strategies and advice,

retirement fund calculators and college fund formulas (Decj). For them, web sites can be used to

guide visitors to regional offices and toll free telephone numbers to connect with staff members



(Deck). Merrill lynch&co. don’t allow customers to conduct electronic trades on their sites.

However, in the first quarter of 1998, Merrill lynch & co. will offer web based trading. The

trades must be channeled through an investment advisor though (Hoffman) this strategy reflects

the position of traditional brokerages who have high fixed cost. They are trying to keep

customers in their traditional relationship.

Merrill lynch views internet Technologies has a way to tighten customer relationship

nevertheless, Merrill finds itself struggling to find the appropriate mix between there

commissions driven sales structure and customer demand of internet trading services Smith

Barney is looking for ways to leverage their work force via internet technologies such as e-mail.

As the potential to increase productivity. But some say e-mail would decrease destroy of other

wise undermine client –broker relationship however, in the opinion of smith Barney there would

no negative effects upon the client broker relationship.

With cyber brokerages, internet based trading is the main channel for distribution. There are

about 30 well known on line brokerages (stir land). A visit to internet site rivals 53 companies

offering online trading business_and_ecconomy / companies/ financial services/ investment

services/brokerages/ online trading) sea appendix a to view this listing these new entrants to the

business of stock broking are promoting bold but captivating message to potential

customers.they are asserting customers are being “ripped of” by the traditional wall street firms

(lux the search for…) e*trade ran another ad with a kid sticking his tong out that said “boot your

broker” while yet another ad read “don’t let high commissions bite your assets.” (qt dib Wyatt).

These advertisements are apparently working. “Cyber brokerages,” such as E*trade and

Lombard brokerage, are attracting technically proficient investors who in the past, have relieved

on discount for low cost trade executions (Hoffman). E*trade estimates 70 percent of its

customers are defecting from discount brokers while 20 percent defect from full service brokers.

The cyber brokers are following self-service approach as advocated by C.H.lovesick and

R.F. young. The service process is enhanced by having the customer via the internet, a greater

role in the production (research and execution of trades for example) of the service. In general

customers like self-service it puts the customer in control (chase etal 118) when it is taken into



account the shift that customers have taken and demanded over the last twenty or more years

toward self service (examples include automatic teller machines, self service gas stations, etc.), it

is no surprise that customers like and want to have the option of internet based trading. On the

other end of this spectrum is the full service brokers who view allowing the client to take more

control will result in many mistakes. In the middle is schwab who has a large share on trades

conducted online. Yet, the firm still offers “hand holding” to minimize mistakes and is not taken

the extreme approach of the customer being heavily involved in the production of the service.

These deep discount cyber brokerages, who also are called deep discounters, have contributed

to an evolution in the financial services industry. Discount brokers are being compelled to offer

more research and value added services similar to those offered by the full service brokers

(Hoffman). The low cost structure or these deep discount firms allows them to have a

competitive advantage over traditional brokerages and traditional discounters. They are able to

attract customers away from traditional discount brokerages because they can compete on the

basis of price. To gain some insight in the disparities in the price of a stock or option trade

among the various brokers from full service brokerages to deep discount brokerages, visit the

following internet site: http://www.intrepid.com/~robertl/commissions-pricer1.html the site

calculates the price of a trade among various brokerages with you inputting the stock price and

number of shares traded. A report is generated showing the cost of the trade with many different

brokerages listed by both alpha and by ascending commissions cost. See appendix barter visiting

this site, it is very easy to see why online trading is increasing given the piece advantage. The

lower price of trades is a direct result of the lower cost structure of firms offering internet trades.

However, this low cost structure advantage is also a disadvantage. Competition from within the

deep discount brokers is fierce. For example, E*trade has dropped it pieces at least seven times

since 1992(Wyatt). Low barriers to entry result in difficulty in maintaining a competitive edge

among the deep discounters (Wyatt).of utmost importance to their ability to compete on price is

the low cost structure they enjoy because of technology online trading allows and information

dissemination allows stockbrokers their time more productively. They are feed from the time

consuming task of information and quote tasks. The paper trail is shortened dramatically. Online

trading leads to greater profits resulting from improved efficiencies (prins 81). The internet

technology results in the virtual firms who do not need branch offices. The connectivity of


http://www.intrepid.com/~robertl/commissions-pricer1.html


clients with their brokers enables brokers to communicate more easily with their clients (Weisul

“internet joy…”). Cost efficiencies are not limited to just brokerages offering online trading. The

full service brokers can enjoy cost efficiencies as well. Some firms to distribute research use the

internet. Thus, they save on paper, printing, and postage cost (Weisul “the new planning…”). In

essence, internet related technology is “geared” to helping firms make money in the front office.

The technology of the past was just geared to processing he work in the back office (schmerken

“net clearing…”). Other firms, such as schwab, a traditional discounted, see internet based

trading as a part of the firm’s multi-distribution channel. At schwab, they call their strategy

“open architecture” which means they offer many options for making a purchase. Schwab wants

to build up the volume by attracting customers with as many options as possible (Wines).

Schwab still finds local branches to be an important element in their multi-channel distribution

network. This is evidenced by the fact that schwab has opened 22+branch offices as in 1997. in

contrast, cyber brokerages are virtual brokerages who do not utilized branch offices. Not

surprisingly, schwa’s cost structure is higher than firms who utilized online/internet as their main

distribution channel. Accordingly, schwa’s prices are higher than the deep discounters. The firm

does not strive to be the cheapest. Rather, they think of themselves as a value story (schmerken

“schwab sweeps internet…”)

Schwab believes they still need a distribution channel that offers face to face contact with

their customers along with guidance (schmerken “schwab sweeps internet…”) customers have

the option of using the telephone (tiebreaker), pc or internet, call centers and branch offices.

Schwab is focusing on giving consumers a choice in the customers interact with the company

(Clark). However, the cyber brokerages have proven to be serious competition to schwab and

other traditional discount brokerages (schmerken “schwab sweeps internet…”). Web based

trading allows schwab to compete internationally. Schwab gas customers 88 countries that use

the web for schwab, the internet has been very successful internationaly.the success is due in part

to the fact that customers can get direct access any time of the day or night for just the local

phone call(power).thus, Schwab is truly reaps the benefits of the internet: greater connectivity,

speed and efficiency even though online trading phenomena into perspective. as of

approximately December 1996,actual trades comprised only two percent of all transactions

according to a survey conducted by FIND/SVP and Jupiter communications, research firms



based in New York .it is projected to increase to eight percent by 2001 according to SRI

consulting in Menlo park, California(prins).estimates have been made by Forrester research, a

consulting firm in Cambridge, \Massachusetts, that the number on online brokerage accounts will

accelerate from 1.5mn to 10mn in five years(Wyatt 190)there is about 60 million brokerage

accounts now (Wyatt) e*trade may be the leader in the internet trading with over 6000 internet

based transactions a day .schwab is leader in online trading consisting of direct dial connections

and the internet(Wyatt).

Even with all online tracing’s potential, there are problems. Internet brokerage does result in

unhappy customers\.the Securities and Exchange Commission notes the complaints about online

brokerages are the rise. However, the percentage of complaints, 1.4 percent is minute to

traditional brokerages (Fredrick).the connectivity that internet related technologies offers

experiences occasional interruptions.

In the heavy trading on July 16, 1997, i.e schwab Online’s computer went down for about 15

min (hill131) E*Trade had a significant mishap with online trading in may 1996(Wyatt).their

computer briefly went down resulting in costing the company two) weeks worth of work and 1.7

mn dollars (Wyatt), however, there are ways to diminish or eliminate these costly interruptions.

For schwab uses a backup network in the event of of an internet outage or an access problem

with a client’s internet service provider. The issue of fraud remains at the forefront of potential

problems with online trading. schwa’s position is the web is sufficiently secure enough to bear

the risk putting customer accounts online (smith91)art Shaw of schwab ,senior vice president for

electronic brokerage, acknowledges security is incredibly important(smith91). Art Shaw of

schwab, senior vice president for electronic brokerage, acknowledges security is incredibly

important (smith 91) but the biggest problem revolves around the perception of security on the

web (smith 91). it is commonly believed web fraud is running rampant. However, statistics show

the internet to be the least vulnerable of several commerce vehicles (smith91) there are effective

preventative measures to minimize the possibilities against fraud. They include not allowing

maintenance functions, such as address changes, of redemption’s to take place through a Webster

(weisul “schwab gives go-ahead...”) Blake Darcy, president of DLJ direct (formerly known as

PC financial network), believes confidence in online trading is growing. He believes most of the



assets being traded online previously was basically an experimentation by customers “..To see

whether this (online trading) woks ...” (srirland). Another way the internet has the potential to

impact the securities industry is to either exacerbate or diminish panic selling by investors

whenever there is a “market hiccup.” Investors, armed with current portfolio information via the

internet, could avoid making poor decisions. Alternatively, the opposite could happen because of

the increased velocity of transactions via the internet (rule.)Even with these potential problems,

internet technology has had a profound effect on the stock broking industry. How critical

offering internet based trading distribution channel for a full service stock-broking firm is not

determinable yet. However, they will be of a significant importance if you agree with the

consultant who advocates an internet distribution channel. For instance, Julio Gomez, a

consultant and president of Gomez advisors in Boston recommends that firms start an internet

delivery strategy now. He believes it could take three to four years for firms just to learn World

Wide Web technologies and how those technologies can affect the firm’s business (power). Paul

Davis, vice president and technology equity research analyst at JP Morgan echoes this “early

start” approach because “there’s a big learning curve in terms of presentation, style and learning

how to communicate effectively on it. For example, although graphics are great. You have to use

them prudently because it takes so long for the average computer to download them. “(Lux” wall

street wires...”).

It is hard to predict what the future of online trading will be. Intuitively, is seems reasonable

to believe the online trading will always be a part of the distribution channel. It may be only on a

limited basis similar to how Merrill lynch utilizes internet trading because of competitive forces

and customer demand. However, just how many trades that will be conducted online in the future

will depend on the competitive forces and the fortunes of the internet and the related

technologies. Also, since the current bull market is a significant driver of the rapid growth of the

online trading phenomenon, a bear market is certainly how some detrimental effect on online

trading. Trading volume could easily be halved in a severe downturn (Wyatt). It has been said

that the fate of online trading is tied to the fortunes of the internet and the related technologies.

Both of these appears to be unlimited (wyatt190). And just because the cyber brokers are able to

offer huge savings in commissions, they want necessarily depart from their current broker deal.

Therefore it is difficult to predict the timing of technology’s impact on stock brooking services



(the economist 15). Furthermore, the rapid growth of internet technology is not an indicator that

the legacy systems are in decline. The legacy systems are just essential to firms operations as

they were in 1987 (Coffey).

Interestingly, 20% of prospective electronic financial services users who own computers rank

the television ahead of the personal computer as the preferred means of conducting electronic

transactions (“technology that talks back”). Perhaps when web television becomes popular , if ir

ever does, there may be a potentially viable way of offering yet another distribution channel for

clients to interact with the stock broking firms.

The tower group, a research and consulting firm in association with the securities industry

association has recently completed a major review of information technology in the securities

industry. The resulting report, “new frontiers for internet trading technology” by Lawrence tab

was presented at the internet securities trading conference, September 22-03.1997

Wall Street is anticipated to be relying heavily on TCP/IP protocols and java based

applications in the near future. Internet technology is leading Wall Street’s efforts in new

application development in the internet affects distribution channels as well. Internet technology

standardizes internal and external messaging and firms seems to be simplifying communications

to be TCP/IP. Furthermore, the report shows that 91%are redesigning their systems to be TCP/IP

compliant. Larry tab expects technology to play a more important role in facilitation the

investment process. The key technology will be that of the internet. He says “Every single area

you look at in the firm, people are examining the internet or internet enabled technologies to

enhance distribution and simplify communication.” (Coffey).

1.2 INDIAN STOCK MARKET OVERVIEW:

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India LTD (NSE)

are the two primary exchanges in India. In addition, there are 22 regional stock exchanges.

However, the BSE and NSE have establishes themselves as the two leading exchanges and

account for about 80 per cent of the equity volume traded in India. The NSE and BSE are equal

is size in terms of daily traded volume. The average daily turnover at the exchanges has



increased from Rs851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and further to Rs 2,273

crore in 1999-2000 (April- august 1999). NSE has around 1500 shares listed with a total market

capitalization of around Rs 9, 21,500 crore (Rs 9215- bn). The BSE has over 6000 stocks listed

and has a market capitalization of around Rs 9,68,000 crore (RS 9680-bln). Most key stocks are

traded on both the exchanges and hence the investor could buy them on either exchange. Both

exchanges have different settlement cycle, which allows investors to shift their positions on the

bourses.

The primary index of BSE is BSE sensex comprising 30 stocks. NSE has the S&P NSE 50

index (nifty) which consists of fifty stocks. The BSE sensex is the older and more widely

followed index. Both these indices are calculated on the basis of market capitalization and

contain the heavily traded shares from key sectors. The markets are closed on Saturdays and

Sundays. Both the exchanges have switched over from the open outcry trading system to a fully

automated computerized mode of trading known as BOLT (BSE on line trading) and NEAT

(National Exchange Automated Trading) system. It facilitates more efficient processing,

automatic order matching, faster execution of trades and transparency. The scrip’s traded on the

BSE have been classified into ‘A’, ‘B1’,’B2’, ‘F’,and ‘Z’, groups. The ‘A’ group shares

represent those, which are in the carry forward system (Badla). The ‘F’ group represents the debt

market (fixed income securities) segment. The ‘Z’ group scrip’s are the blacklisted companies.

The ‘C’ group covers the odd lot securities in ‘A’, ‘B1’, &’B2’, groups and rights renunciations.

The key regulator governing stock exchanges, brokers, depositories, depository participants,

Mutual funds, FIIs and other participants in Indian secondary and primary market is the

securities and exchange board of India (SEBI) LTD

ROLLING SETTLEMENT CYCLE:

In a rolling settlement, each trading day is considered as a trading period and trades executed

during the day are settled based on the net obligations for the day. At NSE and BSE, trades in

rolling settlement are settled on a T+2 basis i.e. on the 2nd working day. For arriving at the

settlement day all intervening holidays, which include bank holidays, NSE/BSE holidays,



Saturdays and Sundays are excluded. Typically trades taking place on Monday are settled on

Wednesday, Tuesday’s trades settled on Thursday and so on.

WORKING OF A STOCK MARKET:

To learn more about how you can earn on the stock market, one has to understand how it

works. A person desirous of buying/selling shares in the market has to first place his order with a

broker. when the buy order of the shares is communicated to the broker he routes the order

through his system to exchange. The order stays in the queue exchange ‘system and gets

executed when the order logs on to the system within buy limit that has been specified. The

shares purchased will be sent to the purchaser by the broker either in physical or demat format.

1.3 TRADING SYSTEM:

The fully computerized, on-line trading system used in the WDM segment of the exchange has

changed the very manner in which trading is perceived in the indian securities market. Beside the

fact that the system helped increase in trading velocities and cut time frames, it has also managed

to incorporate the critical aspect of security in its functioning. The exchange provides a facility

for screen based trading with order matching facility. The members are connected from their

respective offices at dispersed locations to the main system at the NSE premises through a high-

speed, efficient satellite tele-communication network. The trading system is an ordered-driven,

automated order matching system, which does not reveal the identity of parties to an order or a

trade. This helps orders whether large or small to be placed without the members being

disadvantaged by disclosure of their identity. The trading system operates on a price time

priority. Orders are matched automatically by the computer keeping the system transparent,

objective and fair. Where an order does not find a match it remains in the system and is

displayed to the whole market, till a fresh order which matches, comes in or the earlier order is

cancelled or modified. The trading system provides tremendous flexibility to the users in terms



of the type of orders that can be placed on the system. Several time-related, price-related or

volume-related conditions can easily be placed on an order. The trading system also provides

complete on-line market information through various inquiry facilities. Detailed information on

the total order depth in a security, the best buys and sells available in the market, the quantity

traded in that security, the high, the low and last traded prices are available through the various

market screens at all the points of time.

TRADING ACCOUNT:

Trading account positions can be taken purely for intra day purposes. All trading

account positions have to be compulsorily squared off before the end of the market or any

other specified by the trading stock broker. In case any outstanding position remains the

stock broker will square off the same at the prevailing market price. In case the square off

cannot be done, the trading account will get shifted to investment account off the client.

STANDARD DOCUMENT REQUIRES OPENING AN INTERNET

TRADING ACCOUNT:

PROFF OF RESIDENCE: (Address proof)

Driving license

voters ID

passport

photo credit card

photo ration card

utility bill (Telephone bill, Electricity Bill)

PROFF OF IDENTITY:

Driving license

Voters ID

Passport



Photo ration card

PAN card

Two photographs

1.4 THEORETICAL BACK GROUND

The rapid economic growth and globalization of financial market is perhaps one of the most

significant developments at the international level. The past two decades have witnessed a

process of accelerating changes in the global financial market. Driven by an interacting process

of liberation and innovation, controls and regulation have been removed, new financial products

have emerged and old boundaries between financial intermediaries have blurred.

Financial innovations have brought many advantages, a large number of financial assets and

liabilities are now available to end users. The costs of financial intermediation have fallen. Risk

management tools have become increasingly sophisticated. Global economics have found new

ways to mobilize domestic and international savings.

The Indian financial market plays a crucial role in economic development through the savings

investment, also known as capital formations.

In Indian contest, Government of India, RBI,SEBI are the major regulators that play a crucial

role both pro-active and reactively in the development of financial market, financial reforms viz.

Globalization, liberalization and deregulation along with technological advancement has

integrated international market which has facilitated the scope for uninterrupted mobility funds

in various financial markets the world.

1.5 INDIAN FINANCIAL SYSTEM:

Indian financial system is broadly classified into two groups:

1. Unorganized market



2. Organized market

1. Unorganized market:

The unorganized financial system comprises of money lenders, indigenous bankers,

lending pawn brokers, landlords, traders, etc. there are also a host of financial companies,

investment companies, chit funds, etc. in the unorganized sector. The central bank or the

government does not regulate these in a systematic manner.

2. Organized market:

This market consists of

a) Money market

b) Capital markets

a. Money market: Money market deals with all transaction in short instruments which have a

maturity period of one year or less. in other words the money market is the market in which

short term funds are barrowed and lend. the leading money market institutions are.

1. Discount and finance house of India ltd (DFHI)

2. Securities trading corporation of India ltd (STCI)

Money market sub divided as fallows

1. Call money market: The call money market forms part of the national money market, where

day to day surplus fund, mostly banks are traded. The call money loans are of very short term in

nature and the maturity periods of these loans vary from 1 to 15 days. The money that is call

money market.

2. Treasury bills: These are short term barrowing instruments issued by govt of India .they are of

two durations 91 day and 364 day. Treasury bills have been issued ever since the inception of

reserve bank of India in the year of 1935.treasury bills also called t-bills, are negotiable securities

and sine they can be rediscounted with RBI,they are highly liquid.



3. Commercial paper: These introduced in January 1990,to enable highly rated corporate

barrowers to diversify their sources short term ,unsecured and to provide an additional

instrument to the investor. The holder issues commercial papers in the form of promissory notes,

redeemable at par on maturity. Commercial papers can be issued only by corporate who have a

minimum net worth of 5 crores and an investment grade rating from credit rating agencies.

4. Certificates of deposits: These are shorterm deposit certificates issued by a bank/financial

institution with maturity ranging from 3 months to one year. They are bank deposits, which are

transferable from one party to another. Banks are issuing certificates deposits in since 1989,

either directly to the investor or through the dealers.

5. Commercial bills: bills of exchange are negotiable instruments drawn by the seller on the

buyer for the value of goods delivered to him. When such type of bills are accepted by

commercial bank, they are called commercial bills

b) Capital market: this market is tenor of more than one year. This is the place where corporate

(which have credibility in the market) can raise money to funds/ existing business. the capital

market is divided into as follows.

1) Industrial securities market

2) Government securities

3) Long term loans market

1.Industrial securities market: it consist of

Equity shares

Preference shares

Debenture bonds

It is further divided as

Primary market/New issue market

Secondary market/Stock market

Primary market

The main objectives of the capital issue are:



To promote a new company

To expand an existing company

To diversify the production

To meet the working capital requirements .

To capitalize the reserves.

In this primary market a company can raise capital in three ways.

Public issue

Rights issue

Private placement

Public Issue :In public issue capital raised through sale of securities to public or it is nothing but

first issue to public parties involved in public issue are lead manager, underwriters ,bankers,

advertising agency, financial institutions and govt/statutory agencies.

Right Issue: As per sec 81 of the companies act 1956, if public company wants to increase its

subscribed capital by allotment of further shares after 3-years from the date of its formation or 1

year from the date of its first allotment whichever is earlier, should offer share at first to the

existing share holders in proportion to the shares held by them at the time of offer.

Private placement; Issue is placed with a small number of financial institutions, corporate bodies

and high net worth individuals .the financial intermediaries purchase the shares and sell them to

investors at a later date for a suitable price. The special feature of the private placement is that

there is need for underwriting .the private placement technique is gaining importance in the

Indian capital market. It is increased from 12.8% to 49.1% of the total resources mobilized by

the government and non-governmental companies in 1996-97.public sector are the major user of

private placement i.e.83.4% in 1997.

Merits

o Cost effective



o Time effective

o Structure effectiveness

o Access effective

Secondary market: secondary market is for secondary sale of securities .i.e. securities which have

already passed through the new issue markets, are traded in the this market. such securities are

quoted in the stock exchange and it provides a continuous and regular market for buying and

selling of securities .

Government securities market: This market is also called as Gilt-edged securities market. it is

market where government securities are traded .there are both short term and long term

government securities, long term securities are traded in this market. securities issued by central

government, state government: semi government authorities like city corportions,port trust etc.

the forms of government securities are stock certificates,promisory notes and bearer bonds.

Long terms loans market: Development banks and commercial bank play a significant role in this

market by supplying long term loans to corporate customer, again this market is sub divided as.

Term loans market

Mortgages market

Financial guarantees market

Term loan market :The government both at the national and regional to supply long term and

medium terms loans to corporate customers directly or indirectly has created industrial financing

institutions like IDBI,IFCI,ICICI and other state financial corporate come under this category.

Mortgages Market: The transfers of interest in a specific immovable property to secure loan is

called mortages,these loans mainly for individual customers .the HUDCO and LIC play a

dominant role in financing residential projects.



Financial Guarantees Market: Guarantee is a contract to discharge the liability of a third party in

case of his default. a guarantee market as a centre where finance is provided against the

guarantee of a reputed person in the financial circle. these guarantees are provided by

commercial banks, development banks, central and state governments and institutions like export

credit guarantee corporation (ECGC) and deposit insurance and credit guarantee

corporation(DICGC)

1.6 SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government

of India through an executive resolution, and was subsequently upgraded as a fully autonomous

body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board

of India Act (SEBI Act) on 30th January 1992. In place of Government Control, a statutory and

autonomous regulatory board with defined responsibilities, to cover both development &

regulation of the market, and independent powers have been set up.

The basic objectives of the Board were identified as:

To protect the interests of investors in securities;

To promote the development of Securities Market;

To regulate the securities market and

For matters connected therewith or incidental thereto.

Since its inception SEBI has been working targeting the securities and is attending to the

fulfillment of its objectives with commendable zeal and dexterity. The improvements in the

securities markets like capitalization requirements, margining, establishment of clearing

corporations etc. reduced the risk of credit and also reduced the market.

FUNCTIONS

(a) Regulating the business in stock exchanges and any other securities markets;

(b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents,

bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters,



portfolio managers, investment advisers and such other intermediaries who may be associated

with securities markets in any manner;

1[13][(ba) registering and regulating the working of the depositories,2[14] [participants,]

custodians of securities, foreign institutional investors, credit rating agencies and such other

intermediaries as the Board may, by notification, specify in this behalf;]

(c) Registering and regulating the working of 3[15][venture capital funds and collective

investment schemes],including mutual funds;

(d) Promoting and regulating self-regulatory organizations;

(e) Prohibiting fraudulent and unfair trade practices relating to securities markets;

(f) Promoting investors' education and training of intermediaries of securities markets;

(g) Prohibiting insider trading in securities;

(h) Regulating substantial acquisition of shares and take-over of companies;

SEBI has legal and investigation departments. It has got separate committees for the primary and

secondary market to assist the policy formulation. It has regulated:

Primary market

Secondary market

Mutual funds

Foreign institutional investments.

123



REFORMS:

SEBI has introduced a few reforms, but the stock brokers have been slow to accept the need for

reform. Reform measures include improved transparency, computerisazation, and enactment

against insider trading, improved capital adequacy, restrictions on forward trading, and

provisions to encourage corporate membership in the stock exchanges. The restriction on

forward of Contango trading referred to in Indian as ‘Badla’ has been met with cynicism,

New measures include provision for cash margin, and need for physical transfer of settlement

date.

What is Stock Exchange?

The stock exchange is an organize market for purchase and sale of listed industrial and financial

securities. The securities trader on stock exchanges includes share and debentures of public

limited companies. Govt, securities etc.

According to securities contract (regulation) Act 1956 “stock exchange is an association,

organization of body of individuals, whether incoporated of act, established for the purchase of

assisting, regulation & controlling business in buying and selling and dealing securities.

1.7 NATIONAL STOCK EXCHANGE (NSE):

The national stock exchange of India started its operation in 1995 in Mumbai. The genesis of the

NSE lies in the recommendation of the pherwani committee (1991). The main promoters of NSE



are IDBI, IFCI, LIC, GIC, SBI, Bank of Baroda, CanaraBank, Corporation Bank, Indian Bank

and Union Bank of India, Punjab National Bank IL&FS, and SHCIL.

The National Stock Exchange (NSE), located in Bombay, is India's first debt market. It was set

up in 1993 to encourage stock exchange reform through system modernization and competition.

It opened for trading in mid-1994. It was recently accorded recognition as a stock exchange by

the Department of Company Affairs. The instruments traded are, treasury bills, government

security and bonds issued by public sector companies.

The Organization: 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 (FIs) to provide access to

investors from all across the country on an equal footing. Based 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 1994, 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

The main objectives of NSE are as follows.

To establish the nation wide trading facility for equities, debt instruments and hybrids.

To ensure equal access to investors all over the country through appropriate

communication network.

To enable shorter settlement cycle and bulk entry settlement system,

To meet current international standards of securities market.

1.8 BOMBAY STOCK EXCHANGE (BSE):



The premier stock exchange is the oldest stock exchange in Asia. The origin of Bombay stock

exchange dates back to 1875. It was organized under the name of ‘the native stock and share

brokers association as voluntary and non-profit making association. It was recognized on the

permanent basis in 1957. In March 1995, the Bombay stock exchange has introduced screen

based trading called BOLT (Bombay Online Trading).

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

Native Share and Broker Association”. It is the oldest one in Asia, even older than the Tokyo

Stock Exchange, which was established in 1878. It is an voluntary non-profit making

Association of Persons (AOP) Ana is currently engaged in the process of converting itself into

demutualised and corporate entity. It has evolved over the years into its present status as the

premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have

obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts

(Regulation) Act 1956.

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

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

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

enlighten the investors by conducting investor education programmed 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 A 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 role no.126 A in its rules, bye-laws & regulation 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 and CEO and chief operating officer has been constituted. The committee considers

judicial and quasi matter in which the governing board as powers as an appellate authority,

matters regarding annulment of transaction, admission, continuance and suspension of member

brokers, declaration of a member broker as a defaulter, norms, producer and other matters

relating arbitration, fees, deposits, margins and other money payable by the member broker to

the exchange.

The main objective on the stock exchanges is

To safeguard the interest of investing public having dealing on the exchanges.

To establish and promote honorable and just practices in securities transactions.

To promote, develop and maintain well-regulated market for dealing in securities.

To Promote industrial development in the country through efficient resource mobilization by

way of investment in corporate securities

1.9 OVER THE COUNTER EXCHANGE OF INDIA (OTCEI)

OTCEI was started in 1992 with the objective of providing a market for the smaller companies

that could not afford the listing fees of the large exchanges did not fulfill the minimum capital

requirement for listing. It is aimed at fully transparent market. Here counter refers to the location

of the dealer or member of the OTCEI where the deal or trade takes place. The promoters are

IDBI, IFCI, LIC, GIC, SBI, Canara Bank, and SBI Capital market.

The players activities in the market are:

Act as brokers, buy and sell securities according to the instruction of the investors.



Market maker in securities, they quote the price at which members are willing to buy and sell

specified number of securities.

1.10 DEPOSITORY NATIONAL SECURITY LIMITED (NSDL)

In order to solve the myriad problems associated with trading in physical securities, NSE joined

the hand the with Industrial Development Bank Of India (IDBI) and Unit Trust Of India (UTI).

To promote dematerialization of the securities. Together they set of National Securities

Depository Limited (NSDL), the first depository in India.

NSDL commenced operations in November 1996 and has since established a national

infrastructure of international standard to handle trading and settlement in dematerialized from

and thus completely eliminated.

NSDL is an organization established to provide electronic depository facilities for security traded

in the equity and debt market. IDBI, UTI, and National Stock Exchange of Indian Ltd promote it.

The functions of NSDL are

Helps in enables surrender and withdrawal of securities to and from depository

To maintain investors holding in electronic form.

Settlement of security traded of exchanges.

To carry out settlement of trader that has not been done on the stock exchange.

NSDL operates on two tier structures where in it maintains accounts of its DP and DP’s maintain

the account of their clients. And all the transactions are made through brokers only. While

dealing with securities all transaction should be made through electronic form. So de-

materialization and Re-materialization exist.

1.11 NATIONAL SECURITIES CLEARING CORPORATION LTD.

(NSCCL)



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

was incorporated in August 1995. It was set up to bring and sustain confidence in clearing and

settlement of securities; to promote and maintain, short and consistent settlement cycle; to

provide counter-party risk guarantee, and to operate a tight risk containment system. NSCCL

commenced clearing operations in April 1996.

NSCCL carries out the clearing and settlement of the trades executed in the Equities and

Derivatives segments and operates Subsidiary General Ledger (SGL) for settlement of trades in

government securities. It assumes the counter-party risk of each member and guarantee financial

settlement. It also undertakes settlement of transaction on other stock exchange like, Over

Counter Exchange of India. NSCCL has successfully brought about an up-gradation of the

clearing and settlement procedures and has brought Indian financial market in line with

international market.

1.12 NSE.IT LTD

NSE.IT was spun off as an independent company in October 1999. Prior to this it was the IT

department of NSE right from it incorporation in Nov 1992. It had the mandate to serve the

trading community with state of the art software products and services, in addition to its

continued role as the Operation and Technology arm of the National Stock Exchange. From

October 2006, the part of the organization supporting NSE's operations was demerged from

NSE.IT Limited in to a separate entity called NSE InfoTech Ltd.

NSE.IT Limited is head quartered in India and is a 100% subsidiary of the National Stock

Exchange of India Limited (NSEIL) - the 3rd largest exchange in the world. A Vertical Specialist

Enterprise, NSE.IT offers end-to-end Information Technology (IT) products, solutions and

services. NSE.IT Ltd has expertise in a wide range of business applications including high-end

mission critical applications requiring real-time processing speeds.



NSE.IT specializes in providing complete IT solutions to Stock Exchanges, Clearing

Corporations, Brokerage Firms, and other organization in the financial sector. We also offer a

wide range of IT solutions and support to NSE, its member and associated companies.

NSE.IT is focused on developing mission-critical technology solutions for the Financial Services

market and the facilitation of change within these markets. With over 4000 + online trading

terminals spread across the country, NSE.IT has emerged as the preferred technology partner for

deploying high end solutions for the financial services sector both in national and in the

international markets.

With a pool of around 300 + highly experienced IT professionals and Business Domain

specialists, NSE.IT offers Software Products, Enterprise Management Services (EMS),

Consultancy Services, Turnkey Solutions and Application Software Development for the

securities market. Our top of the line software products encapsulates the operations of Front

Office, Middle Office and Back Office for any intermediary of the Indian capital market.

NSE.IT is a SEI CMM level 5 organization and has also acquired ISO 27001 international

certification for information security.

Any unlike other stock exchanges in the country.



CHAPTER-2

2.0 RESEARCH DESIGN:

An investment means employment of funds on assets (i.e. securities mutual funds or any other

investment avenues) with the aim of earning of income as well as capital appreciation. There are

manly two attributes while investing any of the means, i.e time &risk. There are mainly four

objectives which the investments activities will carry on those are

return

risk

liquidity

hedge against inflation

safety

There are many alternatives which investment avenues are open to the investors to suit their

needs and nature. The selection of investment alternatives depends upon the required level of

return and risk tolerance level. These alternatives range from financial securities to traditional

non security investment alternatives

Negotiable and fixed income securities

Equity shares

Preference shares

Debentures

Bonds

Government securities



Money market securities (i.e. treasure bill, commercial paper, certificate of deposits etc.)



Non- negotiable securities

Bank deposits

Post office deposits

NBFC deposits

Tax saving schemes

Public provident funds schemes

National saving scheme

Life insurance

Mutual funds

Real estates etcs

Securities market

Company raises funds to finance their projects through various methods. The funds may raise

through issue of fresh shares, or preference shares, debentures or globally depositary receipts

(GDR).there are mainly two markets from which any company can raise their funds; Those are

primary market where new shares are issued and secondary market where existing shares are

traded. The companies raise funds for following purposes

To promote new company

To expand an existing company

To diversify the production

To meet the regular working capital requirements

To capitalize the reserve

Stock exchanges are established in different centers like Mumbai, Chennai, Delhi, Nag poor,

Hyderabad and Bangalore. At present we have twenty three stock exchanges. The main activity

of stock exchanges are maintain active trading, fixation of prices, ensure fair dealing, aids in

financing the industry, dissemination of information performance inducer’s and self-regulating

organization.



There are mainly two stock exchanges that control all the trading and investments of stocks

on India. Those are Bombay stock exchangers and National stock exchange. And there are many

depositary services such as NSDL and CDSL and OTCEI

Securities market is a wider term, which includes number of markets in which securities are

bought and sold. Securities market may be classified by the types of securities bought and sold

there i.e. whether the securities are new issues or are already outstanding and owned by investors

if the securities are new, they are traded in primary markets and if they are already out standing

and owned by investor are usually bought and sold on a secondary market

The Indian stock market as come to a long way since the early 18 th century when securities

trading was initiated under a scrolling banyan tree in front of town hall in Mumbai. The

companies act , passed in 1850 singled the beginning of the era of joint stock companies in

India.in1874, dalal street became the place where brokers meet to conduct this business. On

july9, 1875 their brokers organized themselves in to the native charea brokers association.

The early 1980’s witnessed the equity cult gaining ground. The government constituted the

Securities and Exchange Board Of India (SEBI) in April 12, 1988. Subsequently the over counter

the exchange of India (OTCEI) was formed in 1992 to encourage small companies list their

securities.

The creation of the National Stock Exchange (NSE) by leading financial institution in 1992

triggered the mood to screen based trading for equities, debt instruments and hybrids.

The process of globalization began with opening up of the Indian capital market to foreign

institutional investors (FII) in1992.This lead for an custodians and brokerages setting up base in

India.

A significant reform was the 1996 decision to move a dematerialized demand form

settlement. Prior to December 1996, securities were traded and settled only in the physical mode,



result in delays and other operational Hansel. Today, 90%of markets trisection in the demat

form.

Derivatives –trading began in june2000 with index futures of first product. Since then, a host

of other derivatives instruments such an index options have been introduced by exchanges.

Recently, SEBI approved trading in single stock futures. In further efforts to integrate with

international markets, SEBI introduced the compulsory rolling settlement on a T+5 basis for 409

scripts on July 2,2001. to stream line settlement system. In a parallel a slew of risk containment

measure and new margining norms were introduced.

Today, the capital market is poised to take a significant leap in to the future with the

following developments, a move towards a T+3 settlement and introduction of continuous net

settlement (CNS) enabling real time from settlement (RTGC). Margin trading for canalization

and utilization of bank funds in the secondary markets will help investors borrow money to

finance purchase of securities or borrow of securities needed for sale.

However, the globalization of markets as made the Indian financial markets more

vulnerable to external events as a result of which any movement in the global market have

corresponding ripple-efforts in India. While integration and compatibility or critical driven for a

robust market, it is bent to maintain a steady pace up the development curve.

2.1 STATEMENT OF THE PROBLEM

The sum of all things companies stand for that it will not for sake in good times or bad.

Good value system creates goodwill in the market and this begets better customer, better

vendors, better and motivational employees and in general happier relationship with online

traders.

The online trade process reflects how a company approaches rights of online traders. This

online trading process is a electronic system, it involves buying and selling of various scrip’s in



any place, where online trading brokers available. Brokers like India Infoline limited ltd, kotak

securities ltd, karvy , etc.

Topic: “The process of online trading INDIA INFOLINE Ltd.”

2.2 OBJECTIVES OF THE STUDY

Objectives of this study are as fallows

To know the online screen based system adopted by India infoline ltd and about its

communication facilities for the appropriate configuration to set the network, which link

securities to individual brokers/members.

To study about the back up measure with respect to primary communication facilities in

order to active network availability and connectivity and back up options

To know about the latest and future developments in the stock exchange trading system

Clearly defining each and every term of stock exchange procedures

To get the practicable knowledge about operations of online trading system

To know the background of IIL financial services ltd.

2.3 NEED FOR THE STUDY

In September1996 SEBI has issued guidelines to the stock exchange to go for on-line trading

procedure by the end of year1996. Following its directives India infoline ltd has installed on-line

trading system, as on around90’s .the major need for thus is to know effectiveness of the on-line

trading system, to study its advantages and recommended for beneficial and effective use of the

system. the study also includes the emergency of the depositary system in the country to rule out

the drawback of the system if physical transfer of the shares.



METHODOLOGY:

The value of any systematic scientific research lies in its methodology giving a clear idea of the

forms of study & procedure adopted in conducting the study.

For the study, the methodology adopted is based on survey method. For primary data a

sample of respondents are contacted & data obtained from them through questionnaire.

Sample design

a) Sample size: It refers to the members of respondents to be included in the survey. The

study is of thirty respondents, which includes investors, intermediaries and others.

b) Sample area: It refers to the place where the studies are conducted. Sample is selected for

the study is sirsi town.

2.4 TOOLS FOR DATA COLLECTION

The data collection method includes primary and secondary data

Sources of data

(a) Primary data

(b) Secondary data

a) Primary Data

Primary data are those that are collected as fresh for the first time & thus happen to be origin in

character. Here primary data was collected through a structured questionnaire.

The selection of respondents is based on simple random sampling. Information was collected

from personal interview & discussion with the manager of IIL financial service ltd.& also with

the respondents



b) Secondary data

The secondary data are those, which have collected by same others that have been processed. For

the study, the secondary data is called from various publications and journals of stock

exchanges, newspapers, books, business and investment magazines, articles & websites.

Data sources

Tools used for the techniques of analysis

Major tools used for the analysis of the data are tables, percentages, bar charts and pie charts.The analysis of both primary and secondary data in the light of objectives lay down in order to support the conclusion with referenced statistical tools.

Lastly in addition to the necessary data was collected from the various website like

www.indiainfoline. com

www. 5paise .com

www.nse.com

www.bse.com

www.icicidirect.com

PERIOD OF STUDY:

Period of study include a period of Forty two days as in plant trainee in trading

procedure in the IIL financial services limited from 25 feb 2009 to 8 apr,2008.

2.5SCOPE OF THE STUDY

The research on a study of investor’s preference towards online market helps to know the

attitude, awareness & preferences on the investors. Based on the information investment brokers

can carry out further research on specific problem. The research suggestion through report will

help them to improve their services. Many services will be undertaken to attract new investors.

This study helps to give value-added services & maintain healthy investor relationship.


http://www.icicidirect.com/

http://www.bse.com/


The scope extends to various classes of investors being classified as employees, professionals,

and businessmen and other. Concerning to the fact that, there is a need of institutional support

which may be broker, agents or even financing institutions. The study extends to these areas too.

2.6 REVIEW OF LITERATURE

Review of literature means the literature review followed for the purpose of preparing this

report. If the literature followed is sound in nature ,surely the report is going to be shaped

literally sharp, which not only attracts the reader but also gives him the quality of the work done

Firstly for the introduction and other aspects the literature was taken from daily newspapers

business magazine company journals etc . For the second chapter, i e research methodology of

the study .the information were taken from previous project report and guidelines provide by the

university. Information regarding the industry was taken from magazine industry journals

company journals and previous insurance related projects review from college library.

Information regarding the company profile was taken from company journals. company

brochures and yearly magazines. Lastly for the analysis and interpretation of the study the

sources literature was previous projects reviewed from the libraries of college and books.

the literature processed from these sources was made use of in an organized manner to shape

this study or report. The following literature I followed.

2.7 LIMITATION OF STUDY

The study is confirmed to sirsi city with minimum sample size.

The information provided by respondents was assumed to be true.

The survey was conducted only for the sample size respondents.

The limitation of time is another factor.



CHAPTER-3

3.1 PROFILE OF THE COMPANY

INDIA INFOLINE LTD India Infoline is one of the stock broking company, it is listed in 1995 on both leading

stock exchanges in India, the Bombay stock exchange (BSE), Mumbai and the National Stock

Exchange (NSE). The India Infoline group comprising the holding company India Infoline Ltd

and its subsidiaries.

The company deals with equities and Derivates Trading, commodities trading, Portfolio Management Service, Mutual funds, Life Insurance. The company owns and manages the following websites: www.indiainfoline.com and www.5paisa.com

India infoline are a one-stop financial services shop, most respected for quality of its advice, personalized service and cutting-edge technology

VisionIIL vision is to be the most respected company in the financial services space.

3.2 India Infoline Group milestone

The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, portfolio management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites www.indiainfoline.com and www.5paisa.com

The company has a network of 976 business locations (branches and sub-brokers) spread across 365 cities and towns. It has more than 800,000 customers.

India Infoline LtdIndia Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients trading in the equities market. It has recently launched its Investment banking and Institutional Broking business.


http://www.indiainfoline.com/aboutus/abouthp.asp?lmn=0#%23

http://www.indiainfoline.com/aboutus/abouthp.asp?lmn=0#%23

http://www.5paisa.com/


http://www.indiainfoline.com/


A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients. These services are offered to clients as different schemes, which are based on differing investment strategies made to reflect the varied risk-return preferences of clients.



Subsidiaries of India Infoline Ltd

INDIA INFOLINE LTD

INDIA INFOLINE SECURITY PVT.LTD

INDIA INFOLINE .COM DISTRIBUTION CO.LTD

INDIA INFOLINE INSURANCE SREVICE LTD

INDIA INFOLINE COMMODITY PRIVATE LTD

INDIA INFOLINE INSURANCE BROKING LTD


LISTED ON BSE AND NSEEQUITY RESEARCH AND ONLINE MEDIA

SECONDARY MARKET SECURITIES BROKING

PORTPOLIO MANAGEMENT SERVISES

MOBILISATION OF MUTUAL FUNDS AND OTHERSPERSONAL INVESTMENT PRODUCTS

CORPORATE AGENT FOR ICICI PRUDENTIAL LIFEINSURANCE CO. LTD

COMMODITIES BROKING

INSURANCE BROKING


Subsidiaries of India Infoline:

India Infoline Securities Pvt. Ltd.

India info line Securities Pvt. Ltd is a 100% subsidiary of India Info line Ltd, which is

engaged in the business of Equities broking and Portfolio Management Services.

It holds members of both stock exchange of India BSE and NSE.

India Infoline Distribution co ltd. (IILD)

India Infoline Distributes Company Ltd is a subsidiary of India Infoline Ltd and is

engaged in the business of distribution of Mutual funds, IPOs fixed deposits and other

small savings products.

It is the one of the ‘vendor independent’ distribution houses and has over 232

branches, which helps source and service customer across the length and breadth of

India.

India Infoline insurance services ltd.

India Infoline Insurance Services Ltd is also a subsidiary of India info line ltd and

registered corporate agent with the insurance regulatory and development

authority(IRDA)

It is largest corporate agent for ICICI Prudential Life Insurance Company Ltd, which is India’s

largest private insurance company

India Infoline Commodity Pvt. Ltd.

India Infoline Commodities is subsidiary of India Infoline ltd, which is engaged in

the business of commodities broking.

The company is member of the MCX and NCDEX and also DGCX.

India Infoline Insurance Broking Ltd.

Newly formed subsidiary which will carry out the business of insurance banking.

India infoline investment services ltd.



It is also subsidiary of India Infoline; it has an NBFC license from the reserve bank of India (RBI).

India Infoline Media and Research Services Limited.

The content services represent a strong support that drives the broking, commodities, mutual fund and portfolio management services businesses. Revenue generation is through the sale of content to financial and media houses, Indian as well as global.

It undertakes equities research which is acknowledged by none other than Forbes as 'Best of the Web' and '…a must read for investors in Asia'. India Infoline's research is available not just over the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where India Infoline is amongst the most read Indian brokers.

India Infoline Commodities Limited.

India Infoline Commodities private Limited is engaged in the business of commodities broking. Our experience in securities broking empowered us with the requisite skills and technologies to allow us offer commodities broking as a contra-cyclical alternative to equities broking. We enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired membership of DGCX. We have a multi-channel delivery model, making it among the select few to offer online as well as offline trading facilities.

India Infoline Marketing & Services

India Infoline Marketing and Services Limited is the holding company of India Infoline Insurance Services Limited and India Infoline Insurance Brokers Limited.

(a) India Infoline Insurance Services Limited is a registered Corporate Agent with the Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential life insurance Com Limited, which is India's largest private Life Insurance Company. India Infoline was the first corporate agent to get licensed by IRDA in early 2001.

(b) India Infoline Insurance Brokers Limited India Infoline Insurance Brokers Limited is a newly formed subsidiary which will carry out the business of Insurance broking. We have applied to IRDA for the insurance broking license and the clearance for the same is awaited. Post the grant of license, we propose to also commence the general insurance distribution ltd.



3.3

BOARD OF DIRECTORS Mr.Nirmal Jain Chairman and Managing Director

Mr. Venkataraman Executive Director

Mr.Nilesh vikamsey Independent Director

Mr Sat Pal Khattar Non Executive Director

Mr Kranti Sinha Independent Director

Mr Arun K. Purvar Independent Director



Corporate Structure of India Infoline Limited:


Chairman and managing director

Executive Director

Head - Technology

Head - Marketing

Head – Risk/ Compliance

Company Secretary

Head – Back Office & Depository Services

Head - Accounts

Head Distribution &Insurance

Head – Internal Auditor

Head - News

Head - Commodities Vice President Broking

Head - institutional Vice - research


Competitive Advantage of the Company;

Research: The company roots in equity research. The original business model was to provide

research and information service on Indian business and capital markets to institutional

customers. The executive directors have equity research and investment experience in leading

banks and brokerage houses.

Integrated technology platform: Since the launch of websites, www.indiainfoline.com and for

online trading platform, www.5paisa.com the technology starts developing in the company.

Multiple product offerings make us a “one stop” shop: Company provide a range of products

and services to customers, either directly or through any one of our wholly owned subsidies.

These multiple offerings across multiple channels either online through internet or offline

through any of the branches or over the telephone enables the company to emerge as a

financial “one stop” shop.

Pan India distribution network: The Company is having 73 branches across 36 towns and

cities in India. This is a part of a conscious “bricks and clicks” strategy to reach out to our

customers.

“India Infoline.com” and “5paisa.com” have developed into brands: India Infoline.com and

5paisa.com are well known brands amongst retail investors across India.

Experienced Management Team: Management team has hands on experience in financial

services, especially targeted at retail sales and relationship management.

Customer Relationship Management (CRM): Management team also consists of Customer

Relationship Managers across India to handle key customer accounts. This allows customers

to offer unbiased advice on equity and also on other investment products.

Strategy of the India Infoline: Strategy of the business plan is to become the leading

investment advisor and intermediary for financial services in India. The key driver is to



http://www.indiainfoline.com/


increase customer base in all of the products, give them a platform of choice to transact and

support them with quality research. The elements of company’s strategy include:

“One Stop Shop” from advice to transactions: The company has emerged as one of India’s

leading financial information Internet portal in India. Distribute mutual funds and life

insurance products through branches as well as directly through our sales team.

Multi Channel Delivery Model: Company provides a single convenient and reliable platform,

from which users can obtain information, trade online or purchase offline.

3.4 PRODUCT AND SERVICES

IIL, a member of NSE and BSE, has a network of over 960 branches in India and abroad,

rendering quality equity trading services. IIL not only has a strong offline presence but also

provides automated online trading service.

IIL also provides a Call & Trade facility to its customers wherein they can place and track their

orders through our dedicated Call Centre .(Standard Rates Apply).

IIL retail spread caters to the need of individual investors. Trading in equities is made simple,

safe and interesting with smart advice from the research desk through daily SMS alerts, market

pointers, periodical research reports, stock recommendations and customer meets organized

frequently.

The online trading system allows customers to track the markets by setting up their own market

watch, receiving research tips, stock alerts, real-time charts and news and many more features

enable the customer to take informed decisions.

The brokerage structure* makes IIL Online trading all the more attractive:

0.05% for day trading (applicable on both sides)

0.50% for delivery



DERIVATIVES INFORMATION

The National Stock Exchange and The Stock Exchange, Mumbai have commenced trading in

Derivatives Market with Index Futures being the first instrument. Now both the exchanges

provide trading in Index Futures and Options and Stock Futures and Options.

A derivative is a financial contract, between two or more parties, which is derived from the

future value of an underlying asset. At any point of time there will always be available near three

months contract periods. For e.g. in the month of Jan 2006 one can enter into Jan, Feb or Mar

contracts. The last Thursday of each month is the expiry day for that months contract. When one

contract expires, a new contract is introduced. For instance, on expiry of Jan 2006 contract, April

contract shall get activated.

Currently, settlements of all Derivatives trades are in cash. There is Daily as well as Final

Settlement. As long as the position is open, the same will be marked to Market at the Daily

Settlement Price, the difference will be credited or debited accordingly and the position shall be

brought forward to the next day at the daily settlement price. Any position which remains open at

the end of the final settlement day (i.e., last Thursday) shall be closed out by the Exchange at the

Final Settlement Price which will be the closing spot value of the underlying.

There are two types of margins collected on the open position, viz., Initial Margin which is

collected upfront and Mark to Market Margin to be paid on T+1 day. As per SEBI Guidelines it

is mandatory for clients to give margin, failing which the outstanding positions may Be closed

out.

Futures and Options Segment:

Trading Members are only eligible to trade, their trades are settled by the Clearing Members.

Trading cum clearing members are members who are eligible to trade and also settle trades on

their own behalf and also settle on behalf of other trading members.

Professional Clearing Members are members who are only specialized in the clearing and

settlement activities. They do not trade on their own behalf or on behalf of other members



Self Clearing Members are those who trade and settle only their own trades

IIL is Trading cum Clearing member at NSE.

MarginTradingFundingScheme

India infoline limited. Offers Margin Trading Funding facility to all offline customers under the

scheme of Margin Funding approved by SEBI.

Key features of the Scheme are as follows:

1. Easy and prompt account opening formalities

2. No processing fees

3. Margin funding of up to 50% of the purchase value

4. Shares purchased are credited to customers Demat account maintained specifically for the

purpose of Margin Trading

5. Bonus, and Rights are also directly credited to the customers said demat account. Similarly

dividend shall be credited to the bank account stated in the said demat account.

6. Margin calls are made if there is fall of 10% in the Margin Funded Portfolio. Margins can

be replenished by cheque or by transferring funds from Normal Trading account.

7. Liquidation if margins are not topped up on a 20% falls in the Margin Funded Portfolio. In

such an event liquidation will be at the lenders discretion.

8. This is a product to facilitate investments for short term. Interest is charged a monthly rests

at the rate of 1.50% per Month.

9. Purchases can be made only against clear funds

10. We provide Margin Funding only for scrip’s traded at NSE only

Margin Ratios

Margin Ratio: 50:50



Maintenance margin/ Call Margin: 40 % Liquidation Margin: 30 %

Registration Procedure:

Currently, customers who have an offline trading account with India infoline limited can avail

the Margin Trading Funding facility. Clients desirous of registering for Margin Trading Funding

Scheme are required to complete / provide the documents given below. Rs.300/- is recovered

towards Agreement and documentation charges for opening the Margin Trading Funding

Account.

MARGINAL TRADING ACCOUNT

Separate Demat account to be opened for the purpose (standard demat charges shall apply)

a. POA to be issued in favor of India infoline Ltd. to operate the said demat account.

b. Authorization to India infoline ltd DP to debit demat account for shares soldc. Undertaking that MTFS has been availed of from only one brokerd. Authorization letter to transfer funds from/to MTF ledger

LoanAgainstShares

IIL Credits Pvt. Ltd., a subsidiary of India infoline Financial Services Ltd, registered as a Non-

Banking Finance Company (NBFC) offers Loans against security of shares. The facility is

available to all customers of IIL Financial Services Ltd.



Key Features of the Scheme:

1. Loan against Shares are extended against security of over 600 scrip’s traded on BSE/ NSE

2. Loan is provided against a minimum of two securities and minimum loan amount is

Rs.50000/-

3. Loan up to 50% of the current market value of approved shares.

4. Upper ceiling on quantum of loan shall be as determined by IIL Credits P Ltd on a case to

case basis

5. Speedy disbursal through RTGS / direct credit to the customer’s bank account / cheque

6. Hassle free processing and simple documentation

7. Securities are to be transferred to India infoline Ltd

8. The credit is provided as an overdraft facility for a period of One year at a time, renewable

by mutual consent.

9. Loan can also be redeemed by instructing India infoline Ltd to sell the securities.

10. Loans are re-valued daily.

11. Margin calls are made if the value of the securities fall by 10% which can be met with either

by redeeming the loan partially or placing additional securities

12. Securities may be sold to ensure adequacy of stipulated margins with out reference to clients

in case the margins are not maintained.




To avail the facility customer is required to complete the following Registration formalities:

1. Applicant should have DP and Trading account with India infoline limited.

2. Client should complete the Loan Application along with necessary documents

Loans for Commodities Trading

IIL Credits Pvt. Ltd offers loans against Pledge of Warehouse Receipts for delivery at

Commodity Exchanges.

Key Features of the Scheme

1. Loans against Pledge of Physical and Demat warehouse receipts

2. Loans up to 80% of sale value price contracted for Futures delivery

3. Loans are also considered against Pledge of warehouse receipts without Futures Sell contract

on a case-to-case basis at higher margins ranging from 30% to 50% of the value

4. Loans available till sale proceeds are realized on settlement from the Commodity Exchange

else up to a maximum of three months

5. Provision to switch between different future contracts (subject to validity of warehouse

receipts)

6. Simple documentation

7. Speedy disbursal of loans through RTGS




It is essential to have a Trading account with IIL Commodities and DP account with INDIA

INFOLINE Financial Services Ltd.

Commodities Loan Application to be submitted along with necessary Resolutions and

Letter of authority for operating the account by partners/ directors/ officers, etc.

Documents required for Credits compliance:

1. Proof of identity- Passport/ Voter Identity/ Driving License / PAN

2. Proof of residence and place of business / Telephone / Electricity Bill

3. Photograph 3 copies of proprietor/ partners/directors

4. Partnership deed/ Memorandum and articles of association/ Trade License

5. Sales Tax Registration and TIN

6. Product license

7. Copy of Last three years Financial Statements with Tax Audit report

8. Credit Limit sanction letter from customers Bank (where they enjoy credit facilities) OR

copy of Bank Statement for 6 months

Check list for availing Loan against Pledge of Commodities Warehouse Receipts

1. Separate application for each disbursement.

2. Physical Warehouse receipts must be endorsed and delivered to IIL Credits / Demat

receipts must be pledged in favour of IIL Credits Pvt. Ltd.

3. Original Contract Note duly acknowledged by the Borrower.

4. The sale position against which Loan has been availed shall not be squared off

Rate of interest ( subject to change from time to time) 15% pa.

DEPOSITORY



A depository can be compared to a bank. It holds securities such as shares, debentures, bonds,

government securities, units etc. of investors in electronic form. There are two depositories in

India, The National Securities Depository Limited (NSDL) and Central Depository Services

Limited (CDSL). An individual who desires to avail the depository services can approach a

Depository Participant (DP). Banks, financial institutions, custodians, brokers or any other entity

eligible as per SEBI (Depositories and Participants) Regulations, 1996 can apply to the

Depository to become a Depository Participant. As on 31st March, 2006 there are 526

Depository Participants in India.

India infoline ltd, is a depository participant of NSDL & CDSL. Investors can open demat

accounts with NSDL & CDSL through IIL. One can approach the nearest branch of IIL for

opening an account. Agreement charges (statutory charges) along with Annual Maintenance

Charge (AMC) are collected upfront while opening an account. It takes two to three days to open

a demat account. Upon activation of the demat account, a Welcome Letter is sent to the customer

along with the Delivery Instruction Slip book.

DP facilities offered by IIL

De-materialization : You can convert your physical shares into electronic form by

surrendering the shares for dematerialization at the IIL branch.

Re-materialization : Re-materialization enables you to convert the dematerialized shares into

physical form.

Repurchase : This facility helps you to submit the units of open-ended Mutual Funds in case

of re-purchase.

Pledge : You can pledge securities to avail a loan.

Transfer : You can transfer securities from one demat account to another.

IPO’s : In case you have applied for an IPO and receive an allotment then the securities are

transferred directly to your demat account. The same applies for bonus and rights issues.

Commodity De-mat Account : If you are a commodity player, you may need to open a

commodity de-mat account with India infoline ltd.



Speed-e : If you register for Speed-e services, then transfer instructions can be placed online

over the internet to pre-notified Clearing Members Pool a/c. This does away with the need

to submit a physical delivery instruction slip.

Internet Services : If you have access to Internet then you can register with us to view your

demat account over the Internet. This is very beneficial as you can avail of a host of services

at no extra cost. You will be able to view your holdings, reports, ledger and will have free

access to our research reports at any time.

SMS Alert Facility : The alert messages for debits(transfers) and IPO credits would be sent

to the account holders who have subscribed to this facility. Depository provides this facility

and no charge is levied on DPs for providing this service to investors.

Introduction to Commodity Futures Trading

India infoline limited Commodities, a subsidiary of India infoline Financial Services Limited, is

mainly engaged in the business of Commodity Futures Trading. IIL Commodities is a member

of:

National Multi – Commodity Exchange of India limited (NMCE)

National Commodity & Derivatives Exchange Limited (NCDEX)

Multi – Commodity Exchange (MCX)

India Pepper and Spice Trade Association (IPSTA)

Singapore Commodity Exchange (SICOM)

Dubai Gold Commodity Exchange (DGCX).

IIL provides information on commodity futures, along with technical and fundamental analysis

online at its website and also through the company's large branch network. The company

conducts Seminars, distributes free in-house literature and holds interactive sessions that help

raise awareness on the futures market. The number of participants is continuously on the rise

thus leading to increased volumes and market efficiency.

IIL Commodity offers futures trading through multiple exchanges in varied commodities such as:



Agri commodities: oilseeds, Soya, groundnut, pulses, rice, wheat, sugar, spices, rubber,

guar, pepper, cardamom, coffee, etc

Precious metals: gold and silver,

Base metals: steel, aluminum, nickel, zinc, copper, etc

Energy products: crude oil and furnace oil

IIL clientele in commodities range from investors, co-operative societies, state and national

institutions to dealers, traders, manufacturers, financiers, speculators, arbitragers, etc.

IIL does not have proprietary interest in any commodity and therefore is price neutral.

Transaction costs are highly affordable attracting a spectrum of investors. Membership in

multiple exchanges gives clients the added advantage of arbitrage. IIL has specialized staff that

provide the required guidance, help and enable clients to enter at the appropriate price.

How to trade in Commodities @ IIL

Open a trading account and maintain initial margin with IIL.

When an order request is entered for buying/selling for a match with the existing orders in

the Exchange system. If the order matches another order in the system it results in a trade.

Contract note is issued in the exchange specified format containing details such as

transaction, quantity, price etc. Contract note is a legal document enforceable in the court of

law.

Mark to market margin are levied on the contract.

The open purchase/sale positions can be squared off at any time during the contract period.

NMCE however does not allow members to enhance their position during the settlement

month. Existing positions can be squared off.

This means that the seller has the right to make delivery of the sold position any time between

the 1st to 15th of the contract month. The first buyer (as per the exchange records) shall have to

necessarily take delivery of the same. The seller shall receive payment from the exchange on

T+3 day while the buyer has to make payment on T+1 day. (T is the transaction day)



The seller who places his commodity with Central Warehousing Corporation (CWC) is

issued a CWC receipt against this delivery. This receipt is accepted by IIL and sent to the

exchange that gives it to the buyer. The buyer presents it at CWC and takes delivery of his

commodity

Commodity Depository

1. The Commodity Depository account can be opened by individuals, partnerships firms,

companies, etc. unlike in the capital market segment where Partnership firms cannot open the

demat account in the firm name.

2. The content of the Agreements shall differ for each category

3. Depository charges differ for each category

4. Only warehouse electronic receipts are considered for the purpose debiting / crediting

depository account

5. Commodities depository account can be availed at both the Depositories i.e. NSDL and

CDSL

6. The Commodities Identification number i.e. INC is akin to the ISIN

The Commodities Depository account may be credited in the following situations:

1. Demat

2. Revalidation

3. Actual purchase from market.

Demat:

If the customer has some commodities with him, he may unload it in the warehouse and take the

warehouse receipt after due verification of the Assayer appointed by NCDEX AND MCX . To

convert the warehouse receipt in demat form, he has to fill up necessary details in the

Commodity Deposit Form available in the Warehouse. The Warehouse shall inform the Registrar

and Transfer Agents (RTA) with the required details who shall then arrange to credit the

depository account of the customer through NSDL/CDSL. Currently, there is only one RTA for

commodities i.e. IIL



Revalidation:

If the client doesn’t wish to open the DP account then he may trade directly in the market with

the physical warehouse receipts ( in MCX AND NMC)

Normally the warehouse receipt (whether demat or physical) is for duration of 3 months. After

the expiry of 3 months the owner of the receipt needs to revalidate it. He will request the

Warehouse to revalidate the receipt. The assayer will examine the commodity and take into

account the wear and tear (normal as well as abnormal) for revalidating the warehouse receipt

PORTFOLIO MANAGEMENT SERVICES

IIL has a team of experts who carefully take investment decisions based on the clients'

objectives. The Portfolio Management team has a successful track record of more than 10 years

in the capital market. The team has access to IIL strong Equity Research, and Fundamental &

Technical Analysis

Investment Objective

To generate medium to long-term capital growth (2-3 years) by identifying undervalued stocks

and those with growth opportunities from a select list of well researched stocks.



Strategy

Identifying growth stocks from a select list through extensive research.

Minimum Investment

Rs.10 lakhs for resident Indians and Rs.25 lakhs for Non-Resident Indians.

Reports

Portfolio and NAV are communicated bi-weekly via e-mail.

Risk factors

As the stocks are normally held for medium to long term, the net asset value will be affected by

market volatility.

DISTRIBUTION

IIL undertakes the distribution of variety financial instruments such as mutual funds, bonds, life

insurance products, fixed deposits etc. The wealth centre team understands the universe of

investment options, analyzes the risk and return from these options and recommends investment

options to clients to help them achieve their financial goals.

IIL has a tie up with all the Mutual Funds across the country. IIL offers life insurance products of

the following life insurance companies:

MetLife India Life Insurance Company

LIC of India

ICICI Prudential

IIL also helps its customers in investing in 8% RBI taxable bonds, Capital gain bonds (Sec 54

EC bonds), fixed deposits (KPFC, KTDFC) etc. through its tie- up with the required

organizations.



IIL Commodities Limited

IIL Commodities, a subsidiary of IIL Financial Services Limited is mainly engaged in the business of Commodities Futures Trading.IIL Commodities is a member of:

National Multi – Commodity Exchange of India limited (NMCE)

National Commodity & Derivatives Exchange Limited (NCDEX)

Multi – Commodity Exchange (MCX)

India Pepper and Spice Trade Association (IPSTA)

Singapore Commodity Exchange (SICOM)

Dubai Gold Commodity Exchange (DGCX).

IIL Financial Distribution (P) Limited

This is a subsidiary of IIL Commodities Limited, engaged in the distribution of Mutual Funds

and Insurance products.

IIL Financial Management Services (P) Limited

This is a subsidiary of IIL Commodities Limited, engaged in providing wealth management

services.

IIL Credits (P) Limited

IIL Credits, a subsidiary of IIL Financial Services Ltd. is registered with Reserve Bank of India

as an NBFC. It is engaged in the business of margin funding for securities trading, loan against

shares, loan against commodity futures, etc.

A product for every need : ICICI direct.com is the most comprehensive website, which allows

you to invest in shares, mutual funds, derivatives (futures and options) and other financial

products. Simply put we offer you a product for every investment need of yours.



Trading in shares:

IIL financial service Ltd offers you various options while trading in shares.

Cash trading: this is a delivery based trading system, which is generally done with the intention

of taking delivery of shares or monies.

Margin trading: you can also do an intra-settlement trading up to 3to4 times your available funds,

wherein you take long buy/short sell positions in stocks with the intention of squaring off the

position within the same day settlement cycle.

Margin Plus Trading : through margin PLUS you can do an intra-settlement trading up to 25

times your available funds, wherein you take long buy/short sell positions in stocks with thaw

intention of squatting off the position within the same day settlement cycle. Margin PLUS will

give a much higher leverage in your account against your limits.

Spot trading : this facility can be used only for selling you’re demat stocks which are already

existing in your demat account. When you are looking at an immediate liquidity option, ‘cash on

spot’ may work the best for you, on selling shares through “cash on spot”, money is credited to

your bank a/c the same evening &not on the exchange payout date. This many can them be

withdrawn from any of the kotak securities ltd authorized bank ATMs.

BTST : buy today sell tomorrow (BTST) is a facility that allows you to sell shares even on 1 st

and 2nd day after the buy order date, without you having to wait for the receipt of shares into your

Demat account.

Call and trade : call and trade allows you to call on a local number in your city & trade on the

telephone through our customer service executives. This facility is currently in over.

OPTION

An option is a contract, which gives the buyer the right to buy or sell shares at a specific price,

on or before a specific date. For this, the buyer has to pay to the seller some money, which is



called premium. There is no obligation on the buyer to complete the transaction if the price is not

favorable to him.

To take the buy/sell position on index/stock option, you have to place certain % of order value as

margin. With options trading, you can leverage on your trading limit by taking buy/sell positions

much more than what you could have taken in cash segment.

The buyer of a CALL OPTION has the right but not the obligation to purchase the underlying

asset at the specified strike price by paying a premium whereas the seller of the call has the

obligation of selling the underlying asset at the specified strike price.

The buyer of a PUT OPTION has the right but not the obligation to sell the underlying asset at

the specified strike price by paying a premium whereas the seller of the put has the obligation of

buying the underlying asset at the specified strike price.

By paying lesser amount of premium, you can create positions under OPTIONS and take

advantage of more trading opportunities.

4. IPO’s and Bonds online:

You could also invest in initial public offers (IPO’s) and bonds online without going through the

hassles of filling ANY application form/paperwork.

Get in-depth analyses of new IPO’s issues (initial public offerings) which are about to hit the

market and analysis on these. IPO calendar, recent IPO listing, prospectus/offer documents, sync

IPO analysis are few of the features, which help you, keep on top of the IPO markets.

RESEARCH

IIL has a team of experts who track the markets and related events very closely. Sophisticated

tools are used for technical analysis and research to offer recommendations, technical analysis

and research reports. Each day IIL Research team brings to table information that helps you

profit from it.



Daily Market View: Technical Analysis - Market, a daily report on markets gives a clear

picture on the expected market movements (NSE and BSE). It also covers the key support

and resistance levels. It also provides clues on market direction and the expected profit

booking levels.

Daily Stock View: Technical Analysis - Stocks, a daily report on the stocks for the day.

These are prepared with "Departure Oscillators" tool that have a high degree of accuracy on

stock readings; which in turn helps investors, day traders, High Networth Individual's with

stock ideas that may benefit them.

F&O Analysis: F&O Analysis is a daily report that gives near 100% accurate reading on both

Futures and Options. Tools such as PC ratios, Open Interest and volatility combined with RSI

indicator are used for the purpose. It is helpful for day traders, long-term holders and HNI

clients

SMS: SMS alerts are sent to those who have registered for the service. These are prepared

with utmost care, ensuring that it is suitable for both the Bulls and the Bears. It provides

instantaneous buy/sell/hold recommendations purely on technical. It also provides option

strategies with the use of Implied/Historical Volatility study. SMS is especially handy for

Index Traders.

IIL Data: IIL Data is a monthly research report covering most financial instruments. It is

quite comprehensive, and provides in-depth information on stocks to watch out for,

recommended Mutual Funds, performance of schemes, Futures and Options update and a

review of the commodities markets.

CHAPTER-4



DATA ANALYSIS AND INTERPRETATION

4.1) INTRODUCTION:

Internet share trading has been generalized. The traditional system of open outcry has

been replaced by ‘screen based trading’. The stock exchanges have setup their terminals in

major cities across the country. The basic purpose is to ensure the accessibility of trading

system and stock exchanges index to all those who seek investment in capital market. The

investors can quote their orders at specified prices from their places to carry on the

transactions. The order placed is further compared with order sleeked and the transactions are

tallied virtually with conformity of both parties. This current system still is not accessible to

many cities in the country and hence is violent.

The government and stock exchanges need to analyze and study awareness and attitude of

investors towards online share trading. The attitude of investors is the function of their

reactions to risk, return, safety, and liquidity. The awareness has major influence from

technology awareness and the extent of trading through online. Such a study enables the

stock exchanges to take the measures to build awareness and attitude towards capital market.

The questionnaire is prepared in accordance with the objectives laid down for the study. It

is designed to collect the primary data for the analysis of ‘investors’ perception. The project

is the questionnaire which tries to analyze investor’s attitude and perception towards online

share trading IIL financial services ltd SIRSI town.



Table No. 4.1

Number of respondents investing their surplus in trading

Investing in

trading

No. of respondents Percentage

Yes 18 60%

No 12 40%

The Table -4.1 tells that 60% of respondents invest their surplus in trading and 40%

of respondents are not interested to invest their surplus in trading.



Table No. 4.2

Reasons for investing in Shares, Bonds, Mutual Funds etc.

Reasons for investing No. of respondents Percentage

To earn high profit21 70%

To meet future needs 03 10%

To meet future contingencies 03 10%

If any other purpose 03 10%

The table-4.2 reveals that 70% of respondents said that the reason for investing in trading is

quick yield, higher profit & remaining 30% of respondents express the reasons to meet the future

contingencies and other purposes.

Table No. 4.3



The respondents aware of various sources of investment

Aware of various sources of

investment


Bank deposits 12 40

Insurance 06 20

Equity market 07 23

Bonds 00 0

Mutual fund 03 10

Others 02 7

Table-4.3 indicates that out of 30 respondents 40% of them are aware of the sources of

investment “Banks Deposits” only remaining 60% of them are aware of insurance, Equity,

Mutualfunds Etc. However none of them are aware of Bonds, In spite of financial sector

growing at faster rate.

Table - 4.4



Respondents know how to buy & sell shares in online

Respondents know buy

& sell shares in online

No.of respondents Percentage

yes 18 60

No 12 40

Table -4.4 tells that 60% of respondents know to buy & sell shares through online trading

and 40% respondents are not.

Table – 4.5

The No. of respondents who can give better advice for investment in online trading.

Better advice for investment

in online trading


Share Brokers 10 33

Magazine 3 10

TV channels 8 27

Friends & relatives 5 16



News paper 4 14

Table-4.5 highlights that 60% of the respondents feel that share brokers, TV channels can

give better advice for investing in online trading and remaining 40% of respondents come to

know from magazines, news papers & friends and relatives.

Table – 4.6

The number of respondents would you like to invest in online trading.

Respondents invest

in online trading


yes 19 63

No 11 37



Table-4.6 informs that 63% of respondents would like to invest in online trading and 37% of

respondents not interested in online trading.

Table – 4.7

The number of respondents for factors influence for investing in online trading

The factors influence

investing in online trading


Returns 14 47

Liquidity 02 7

Tax concession 09 30

More investments in others 07 16



Table-4.7 reveals that the 47% of respondents would like to invest in online trading because

of higher quick returns, 30% of them invest for tax concession, 7% for liquidity and

remaining 16% of respondents are liking to invest in more in other securities.

Table – 4.8

The no of respondents are more preferred to invest.

Respondents are more prefer to

invest


Long term investment 20 67

Short term investment 10 33



Table- 4.8 tells that 67% of respondents preferred to invest in long term investment & 33%

of them preferred to invest in short term investment.

Table – 4.9

The no. of respondents are heard about IILfinancial services ltd.

Heard about IILfinancial

services Ltd


Yes 24 80%

No 6 20%



Table-4.9 indicates that 80% of respondents are aware about IIL Financial services Ltd &

remaining 20% of the respondent do not know about IIL financial services ltd

Table – 4.10

The No of respondents are satisfied with the service provided by IIL financial services ltd.

Services provided by

IILfinancial services ltd.

No.of respondents Percentage

High Satisfied 4 13



Satisfied 18 60

Moderately satisfied 8 27

Dissatisfied 0 0

Table-4.10 tells that 60% of the respondents are satisfied with the service provided by IIL

financial services ltd., 13% of the respondents are highly satisfied, 27% of the respondents’

were moderately satisfied and none of them were dissatisfied. This indicates that cent

percent are satisfies with the customer services provided by this company.

Table – 4.11

The Stock exchange at which internet trading are commonly done.

Stock

exchange


NSE 18 60



BSE 12 40

Table-4.11 indicates that 60% of respondents trade with NSE and remaining 40% of

respondent trade with BSE.

Table – 4.12

Investors trading habits.

Trading habits No. of respondents Percentage

Daily 18 60

Weekly 06 20



Monthly 04 13

Occasionally 02 07

Table-4.12 indicates that 60% of investors are trading regularly, 20% of the investors

trading weekly, 13% of the investors trading monthly and 07% of investors trading

occasionally. Thus it can be concluded that 60% of total customers are engaged trading

every day

INVESTOR QUESTIONNAIRE

Dear Sir / Madam,

I am PRASAD P HEGDE studying in final year M.B.A in Regional Institute of Co-

Operative Management, Bangalore. As a part of academic program I am pursuing a project work



on the topic entitled " THE PROCESS OF ON-LINE TRADING “ with reference to INDIA

INFOLINE LIMITED, Hence, I kindly request you to spare few minutes in answering the

following questions.

The information provided by you will be used only for academic purpose. I hope you will co-

operate for this.

DATE : PRASAD P HEGDE

PLACE:

1) Name:

2) Address:

3) Age :

4) Qualification:

(a) Post Graduate (b) Graduate

(c) Under Graduate (d) others

5) Occupation:

(a) Service (b) Business

(c) Self employment (d) others

6) Do you currently invest a part of your income in trading?

(a) Yes. (b) No

7) What is your objective of investing in Shares, Bonds and Mutual Funds etc?

(a) To earn high profit (b) To meet future needs



(c) To meet emergency (d) If any other purpose

8) Tick the investment option you are aware of: -

(a) Fixed / other Deposits (b) Insurance

(c) Equity market ( d) Bonds

(e) Mutual Fund (f) Others

9) Do you know online Trading and how to buy and sell shares in online?

(a) Yes (b) No

10) Who can give better Advise for investment in online Trading?

(a) Shares Brokers (b) Magazine

(c) T.V. Channels (d) News Papers

(e) Friends & Relations

11) Would you like to invest in Online Trading?

(a) Yes (b) No

12) What factors influence you for investing in online trading?

(a) Returns (b) Liquidity

(c) Tax concession (d) more investment option



13) How often do you trade?

(a) Regular (b) Occasionally

(c) Once in a week (d) once in a month

(e) Other time

14) Do you trade at?

(a) NSE (b) BSE

15) Which more preferred to invest?

(a) Long Term Investment b) Short term Investment

16) Have you heard about IIL Financial Services Ltd?

(a) Yes (b) No

17)If yes, who influence you to deal with IIL Financial Services Ltd

(a) News paper (b) Magazine

(c) T.V. Channels (d) Friends & Relatives

18) Are you satisfied with the service provided by India infoline limited.?

(a) Satisfied (b) High Satisfied

(c) Average (d) Dissatisfied

19) Your Opinion about the survey.



__________________________________________________________

__________________________________________________________

______________________________________________________ .

-THANKING YOU-

CHAPTER -5

FINDINGS & SUGGESTIONS



FINDINGS

From the analysis we have found that most of the individual investors are other i.e. retired person & other persons because they know the advantages they get stock broking.

Most of the people are high income group level.

Most of the investor are occasional investor.

Most of the investor have been investigate in shares is 1-6 months.

Most of the investor considered commission is a important attributes.

Public awareness can be through any media, but we see that the awareness is through the customer of the company through advertisements, which would make the company fell great, & even it can reduces its promotional coasts & time.

Most of the people impressive because of good behavior of staff.

As we know in any industry services play a vital role and so most of them said that the services of this company are satisfied.

In IILfinancial service ltd 57% of the investors are not ready to take risk, they are risk averse. But 43% of investors are ready to take to risk.

33% of the investor’s investment decisions depend on the market analysis and remaining 67% are investors considering advice of IIL financial service ltd.

50% of investors invested their money after through study of company but remaining 50% investors invested their money based on advisory service of IIL financial service ltd.

SUGGESTIONS:

The company should give the best of services in its industry, so that customers get satisfies

&they get the new customer, which would reduce the promotional costs & activities.



The company should maintain a good relationship in realty & should render quick services

according to the customers, in case of necessary.

The company’s preferences & objectives should be more equivalent from that of its

customers.

The company should have a separate customer care department, so that they keep in touch

with customers, which makes them feel that they are cared, loved &needed.

The company should keep up its image in the industry, by keeping up its words, so that it can

reach the pinnacle.

The company should go for doorstep services, which would help the customers to get

educated regarding the services &be the prospective customers.

The survival would require them the best possible service to client able or to encourage in to

a new business either to practice in other exchanges of world.

The existing system can be further improved by the introduction of STOP-LOSS, facility,

which will help reduce trader’s losses.

There is need for exchanges to set up standing & to issue press release in cases where break

down is for long time.

Good till cancelled or limit order practice has to be cultivated among the clients. The on-line

traders have to encourage such practice.

CONCLUSION:

Issues like entry of large international players, interest rate changing technology, privatization,

inflation, acquisition and political turmoil’s are facing India’s economy frequently and severally.

In such an environment in IIL financial service ltd is performing on a consistent basis. It is not a



result of luck, but service misfortune of the competitors but service schemes ltd. IIL financial

service ltd sustained efforts are yielding superior long term result.

The above study showed that most of the investor’s investment decision in on-line trading

depended on advisory service of IIL financial service ltd, but they give more importance to risk,

tax, safety and return. So IIL should consider these factors before advice. They need more

experience and trained people in their company.



CHAPTER-6

RECOMMENDATIONS:

General investing public having surplus funds can opt equity shares as their best source

of investment.

The company should give wide publicity and propaganda for popularizing, the mutual

funds, bonds etc. Through all medias.

Awareness about online trading should be increased by

a) Publishing articles in regional languages

b) Conducting seminars, workshops through advertisements in regional

Languages and through online education

Educating the investors by supplying materials regarding online trading and its benefit by

capital market research analysis.

Advisors should give proper information to the investors about investing in shares

through online trading.

To attract new investors to share market for improving the portfolio management, which

gives more returns in a short term period and with less risk.

More advertisement is necessary to reach all the common public to invest in shares,

strong networking system should be adopted. Changes in the pattern of advertisements

with changing scenario and suiting to the needs of the investors should be followed.

Most of the investors prefer fixed deposits rather than shares. So comparative advantages

of investing in stock market should be convinced.



BIBLIOGRAPHY

BOOKS REFERRED

Investment and Portfolio Management by Prasanna Chandra.

Security Analysis and Portfolio Management by Punithavathy Pandian.

A manual of stock broking

Guide to Indian capital markets- Bharat

Internal records of the company

www.INDIAINFOLINE.com

www.5PAISE.com

www.nse.com

www.bse.com

www.icicidirect.com


http://www.icicidirect.com/

http://www.bse.com/

http://www.nse.com/

http://www.5PAISE.com/

http://www.INDIAINFOLINE.com/

Download - Prasad Project Report

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