mutualfund a better option

8/11/2019 Mutualfund a Better Option

1/94

A

Project Study Report

On

Training Undertaken at

Titled

ESEA CH ON CAPITAL MA KET WITH

INDIAINFOLINE LTD

REPORT SUBMITTED ON PARTIAL ULILMENT

O

MASTER IN BUSINESS ADMINISTRATION

Su!"itted To# $ Su!"itted By#$

Dr%Pankaj &upta &aura' Ban(al

aculty o) AIMS M!a Part ii

APE* INSTITUTE O MANA&EMENT + S,IEN,E- .AIPUR

/Appro'ed !y AI,TE- Ne0 Del1i + A))iliated to Uni'er(ity o) Raja(t1an- .aipur2

34566 7 45689

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TABLE O ,ONTENTS

PARTI,ULARS PA&E NO%

A,:NO;LED&MENT 8

PREA,E ?

RESEAR,@ ,APITAL

INDIA INOLINE 88

,USTOMER BE@A=IOR ?

ANAL>SIS 8

RESEAR,@ MET@ODOLO&> C

DATA ANAL>SIS C4

INDIN&S 8

,ON,LUSION

APPENDI,S 5

BIBLIO&RAP@> 8

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ACKNOWLEDGMENT

Achieving a milestone for any person is extremely difficult without any kind of support.

Therefore, the persons who make my task easier, it becomes my humble and

foremost duty to acknowledge all of them.

I am heartiest thankful to MR% @ar'inder Sand1u(Company uide!, for giving me

valuable information, support and guidance during my pro"ect work. #ithout them itwould have not possible for me to work on this pro"ect.

I would like to express my gratitude to various Customers to whom I met during the

pro"ect and other faculty members for giving help and support.

I am also thanking to all of persons who helped me directly or indirectly for completing

this report successfully.

&AURA= BANSAL

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P EFACE

$ro"ects are very important for the beginners to gain a practical knowledge about

organi%ations and the market. Theory till not used in practical field is of no use. &o our

institute has fixed a period for summer training when we can enter into the market

through some organi%ation in order to gain some real knowledge.

This in mind I carried out my pro"ect in 'INDIA INOLINE which is one of the largest

and reputed company in India.

The pro"ect was a study of Re(earc1 on capital "arket 0it1 INDIA INOLINEF IN

SRI &AN&ANA&AR ,IT>%

This report has been prepared after the intensive study of both primary and secondary

market as well as their instruments with respect to broking firm. The information is also

collected from the Customers to understand their investment behavior in both primary

and secondary market respectively as well as their attitude towards the broking firm

and its features.

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EXECUTIVE SUMMA Y

Training is the first step to enter into the permanent "ob. )arket research,

market surveys are some of the pillars which helps us in future to stand with

potentiality, knowledge and smart work.

*eeping this in mind I had carried out my summer training in I+IA I+-/I+0

which is India1s favorite share trading company with the largest number of customers.

India infoline offers investors a seamless, hassle2free and paperless way to trade

shares, as it integrates the banking, trading and settlement part of the business. India

infoline is trusted by over a lakh share investors, due to its negotiable brokerage rates,consultation services, margin facilities, good software as well as many other services

like insurance mutual funds etc.It provided me a platform to deeply analy%e the capital

market as well as customer investment perception towards it.

As &ystematic, planned and disciplined work always leads to success. *eeping this in

mind the pro"ect has been divided into parts.

-irstly with the "oining of company as a trainee my induction process was started

where I got familiar with the employees working there.

&econdly, I talked to all the knowledgeable people of the organi%ation who helped me

to get an initial idea about the company and its product and services. I was than lead

by the officer who dealt with the customer to know the kind of services that the

company offers to their customers.

Thirdly, I learned about the various instruments of capital market, working of broking

industry as well as got the practical experience about it also. Then the consumers of

&ri anganagar city were selected and interviewed about the company that they used,

their views on India infoline and stock market of India, their expectation from the

company, their satisfaction regarding the special services provided by the companyand their investment preferences regarding the capital market. I got the real time

experience about the process of listing of I$1s as two I$1s i.e. Technofeb

engineering /td., 3industhan media venture /td. were released and widely promoted

by II-/ during my training period. I also learned the practical knowhow of the trading

mechanism of e4uities, commodities, mutual funds, currencies etc.

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/astly, all the data were compiled together to make a complete report by analy%ing the

data collected. &ome findings and recommendation were also added to keep the

brand ssssssname growing with its value.

ABOUT INDIAINOLINE LTD%

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O!jecti'e o) t1e (tudy

The main ob"ective of the study is to analy%e the capital market mainly theprimary and secondary market and their instruments, understanding the working of

broking industry as well as competitive analysis of India infoline with reference to other

broking firms operating in the same area.

The following study was mainly done with an ob"ective to know the state of mind of the

investors who wanted to invest in the stock market B also to know the attitude and

preference of the prospective investors regarding capital market with special reference

to India infoline which is a online brokage house in India.

Re(earc1 on capital "arket

,apital Market#

A capital "arketis a market for securities (debt or e4uity!, where business

enterprises (companies! and governments can raise long2term funds. It is defined as a

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market in which money is provided for periods longer than a year5D, as the raising of

short2term funds takes place on other markets (e.g., the money market!. The capital

market includes the stock market (e4uity securities! and the bond market (debt!.

-inancial regulators, such as the E*Fs -inancial &ervices Authority (-&A! or the E.&.

&ecurities and 0xchange Commission (&0C!, oversee the capital markets in their

designated "urisdictions to ensure that investors are protected against fraud, among

other duties.

Capital markets may be classified as primary markets and secondary markets. In

primary markets, new stock or bond issues are sold to investors via a mechanism

known as underwriting. In the secondary markets, existing securities are sold and

bought among investors or traders, usually on a securities exchange, over2the2

counter, or elsewhere.

Pri"ary Market:

A market that issues new securities on an exchange. Companies, governments and

other groups obtain financing through debt or e4uity based securities. $rimary markets

are facilitated by underwriting groups, which consist of investment banks that will set a

beginning price range for a given security and then oversee its sale directly to

investors.

Also known as Gnew issue marketG (+I)!. The primary markets are where investors

can get first crack at a new security issuance. The issuing company or group receivescash proceeds from the sale, which is then used to fund operations or expand the

business. 0xchanges have varying levels of re4uirements which must be met before a

security can be sold.

nce the initial sale is complete, further trading is said to conduct on the secondary

market, which is where the bulk of exchange trading occurs each day. $rimary

markets can see increased volatility over secondary markets because it is difficult to

accurately gauge investor demand for a new security until several days of trading

have occurred.

Secondary "arket#

A market where investors purchase securities or assets from other investors, rather

than from issuing companies themselves. The national exchanges 2 such as the +ew

:ork &tock 0xchange and the +A&AH are secondary markets.

&econdary markets exist for e4uities, commodities or when funds, investment banks,

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or entities such as -annie )ae purchase mortgages from issuing lenders. In any

secondary market trade, the cash proceeds go to an investor rather than to the

underlying companyentity directly.

,apital Market In(tru"ent(#

Capital market instruments are responsible for generating funds forcompanies,

corporations, and sometimes national governmentsthese are used by the investors to

make a profit out of their respective markets. There are a number of capital market

instruments used for market trade, including

&tocks

04uitie

commodities

@ondsebentures

Treasury2bills

-oreign

0xchange-ixed deposits

Capital market is also known as securities market because long term funds are raised

through trade on debt and e4uity securities. These activities may be conducted by

both companies and governments. This market is divided into primary capital market

and secondary capital market. The primary market is designed for the new issues and

the secondary market is meant for the trade of existing issues. &tocks and bonds are

the two basic capital market instruments used in both the primary and secondary

markets. There are three different markets in which stocks are used as the capital

market instrumentJ the physical, virtual, and auction markets.

$hysical market

Kirtual )arket

Auction )arket

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@onds, however, are traded in a separate bond market. This market is also known asa debt, credit, or fixed income market. Trade in debt securities are done in this market.

There are also the T2bills and ebentures which are used as capital market

instruments by the investors.

These instruments are more secured than the others, but they also provide less return

than the other capital market instruments. #hile all capital market instruments are

designed to provide a return on investment, the risk factors are different for each and

the selection of the instrument depends on the choice of the investor. The risk

tolerance factor and the expected returns from the investment play a decisive role in

the selection by an investor of a capital market instrument.

Capital market instruments should be selected only after doing proper research inorder to increase one.

Brie) a!out (tock "arket

The &ecurities Contracts (9egulation! Act, 578;, has defined &tock 0xchange as an

Gassociation, organi%ation or body of individuals, whether incorporated or not,

established for the purpose of assisting, regulating and controlling business of buying,

selling and dealing in &ecuritiesG. &tock exchange as an organi%ed security marketprovides marketability and price continuity for shares and helps in a fair evaluation of

securities in terms of their intrinsic worth. Thus it helps orderly flow and distribution of

savings between different types of investments. This institution performs an important

part in the economic life of a country, acting as a free market for securities where

prices are determined by the forces of supply and demand. Apart from the above

basic function it also assists in mobili%ing funds for the overnment and the Industry

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and to supply a channel for the investment of savings in the performance of its

functions.

The &tock 0xchanges in India as elsewhere have a vital role to play in the

development of the country in general and industrial growth of companies in the

private sector in particular and helps the overnment to raise internal resources for

the implementation of various development programmes in the public sector. As a

segment of the capital market it performs an important function in mobili%ing and

channeli%ing resources which remain otherwise scattered. Thus the &tock 0xchanges

tap the new resources and stimulate a broad based investment in the capital structure

of industries.

A well developed and healthy stock exchange can be and should be an important

institution in building up a property base along with a socialist in India with broader

distribution of wealth and income. Thus &tock 0xchange is a vital organ in a modern

society. #ithout a stock exchange a modern democratic economy cannot exist. The

system of "oint stock companies financed through the public investment as emerged

has put the vast means of finances almost to entrepreneursF needs.

-inance from external sources mainly from the investing public can become possible

only when an institute like &tock 0xchange provides opportunities for the conversion

of scattered savings into profitable investments with the promises of a reasonableyield and minimum element of risk. &uch a mechanism as provided by &tock

0xchanges is not merely a source of capital but also a conduit which channeli%es the

savings into investment along with a free movement of capital.

#ith the probable exception of a totalitarian state no overnment will be able to

mobili%e resources from the public if the money market in the form of stock exchange

does not exist. The &tock 0xchange benefits the entire community in a variety of way.

It enables the producers to raise capital which directly and indirectly gives gainful

employment to millions of people on the one hand and helps consumers to getL the

variety of goods needed by them on the other. It provides opportunities to savers tostore the value either as temporary abode of purchasing power or as a permanent

abode of purchasing power in the form of financial assets. It also helps the segments

of the savers who put their savings in commercial firms and non2banking financial

intermediaries because these institutions avail themselves of the services of &tock

0xchange to invest the money thus collected.

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The &tock 0xchange comes close enough to a perfectly competitive market allowing

the forces of demand and supply a reasonable degree of freedom to operate as

compared to other markets specially the commodity markets. This segment of the

factor market can be considered as a perfect or a nearly perfect market. Apart from

providing a mechanism for transacting business in stock and shares it generates

genuine potential for a new entrepreneur to take up initiative in the private sector

enterprises and allows the expansion of investing community by offering gainful

development of their otherwise sluggish or shy capital. The &tock 0xchange must

assume the responsibility of protecting the rights of investors specially the small

investors in the Moint &tock Companies.

E'olution

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Indian &tock )arkets are one of the oldest in Asia. Its history dates back to nearly >??

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

The 0ast India Company was the dominant institution in those days and business in

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

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The &econd #orld #ar broke out in 57 company has to disclose all the necessary information

regarding pricing of issues, listing re4uirements, disclosure norms lock2in2period for

promoters contribution, contents of offer documents pre and post issue obligations etc.

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Company can issue shares at face value, at premium or at discount. Another

method of pricing which is now days common is issuing the securities through online

system of the stock exchange has to comply with the section 88 to ;6a of the

companies Act, 578; and &0@I guidelines >???. The company is re4uired to enter in

to an agreement with the stock exchanges which have the re4uisite system for online

offer of securities. The advantages for this new system areJ2

The investors part with money only after allotment.

It eliminates refunds except in case of direct applications.

It reduces the time taken for issue process

Secondary Market

&econdary market is the place for sale and purchase of existing securities. It enables

an investor to ad"ust his holdings of securities in response to changes in his

assessment about risk and return. It enables him to sell securities for cash to meet his

li4uidity needs. It essentially comprises of the stock exchanges which provide platform

for trading of securities and a host of intermediaries who assist in trading of securities

and clearing and settlement of trades. The securities are traded, cleared and settled

as per prescribed regulatory framework under the supervision of the exchanges and

oversight of &0@I.

Trading Mec1ani("

0arlier trading on stock exchanges in India used to take place through open outcry

without use of information technology for immediate matching or recording of trades.

This was time consuming and inefficient. This imposed limits on trading volumes and

efficiency. In order to provide efficiency, li4uidity and transparency +ational &tock

0xchange introduced a nation wide on line fully automated screen based trading

system where a member can punch in to the computer 4uantities of securities and the

prices at which he likes to transact and the transaction is executed as soon as it findsa matching sale or buy order from a counter party. &creen based trading electronically

matches orders on a pricetime priority and hence cuts down on time, cost and risk of

error, as well as on fraud resulting in improved operational efficiency. It enables

market participants, irrespective of their geographical locations to trade with one

another and it provides e4ual access to everybody.

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Pri"ary Market

6% ,orporate Securitie(#

The isclosure and Investor $rotection (I$! guidelines prescribe a substantial

body of re4uirements for issuersintermediaries, the broad intention being to ensure

that all concerned observe high standards of integrity and fair dealing, comply with

all the re4uirements with due skill, diligence and care, and disclose the truth, whole

truth and nothing but truth. The guidelines aim to secure fuller disclosure of relevant

information about the issuer and the nature of the securities to be issued so that

investors can take informed decisions. -or example, issuers are re4uired to

disclose any material Orisk factors1 and give "ustification for pricing in their

prospectus. An unlisted company can access the market up to 8 times its pre2issue

net worth only if it has track record of distributable profits and net worth of 9s. 5

crore in < out of last five years. A listed company can access up to 8 times of its

pre2issue net worth. In case a company does not have track record or wishes to

rise beyond 8 times of its pre2issue net worth, it can access the market only through

book building with minimum offer of ;?P to 4ualified institutional buyers.

Infrastructure companies are exempt from the re4uirement of eligibility norms if

their pro"ect has been appraised by a public financial institution and not less than

8P of the pro"ect cost is financed by any of the institutions, "ointly or severally, byway of loan andor subscription to e4uity. The debt instruments of maturities more

than 56 months re4uire credit rating. If the issue si%e exceeds 9s. 5?? crore, two

ratings from different agencies are re4uired. Thus the 4uality of the issue is

demonstrated by track recordappraisal by approved financial institutionscredit

ratingsubscription by HI@s. The lead merchant banker discharges most of the pre2

issue and post2issue obligations. 3e satisfies himself about all aspects of offering

and ade4uacy of disclosures in the offer document. 3e issues a due diligence

certificate stating that he has examined the prospectus, he finds it in order and that

it brings out all the facts and does not contain anything wrong or misleading. 3e

also takes care of allotment, refund and dispatch of certificates. The admission to adepository for demateriali%ation of securities is a prere4uisite for making a public or

rights issue or an offer for sale. The investors, however, have the option of

subscribing to securities in either physical form or demateriali%ed form. All new

I$s are compulsorily traded in demateriali%ed form. 0very public listed company

making I$ of any security for 9s. 5? crore or more is re4uired to do so only in

demateriali%ed form.

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4 % &o'ern"ent Securitie(#

The government securities market has witnessed significant transformation in the

577?s. #ith giving up of the responsibility of allocating resources from securities

market, government stopped expropriating seigniorage and started borrowing at near

2 market rates. overnment securities are now sold at market related coupon rates

through a system of auctions instead of earlier practice of issue of securities at very

low rates "ust to reduce the cost of borrowing of the government. )a"or reforms

initiated in the primary market for government securities include auction system

(uniform price and multiple price method! for primary issuance of T2bills and central

government dated securities, a system of primary dealers and non2competitive bids

to widen investor base and promote retail participation, issuance of securities acrossmaturities to develop a yield curve from short to long end and provide benchmarks

for rest of the debt market, innovative instruments like, %ero coupon bonds, floating

rate bonds, bonds with embedded derivatives, availability of full range ( 752day and

2day! of T2bills, etc.

Secondary Market

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,orporate Securitie(#

The stock exchanges are the exclusive centres for trading of securities. Though the

area of operation"urisdiction of an exchange is specified at the time of its

recognition, they have been allowed recently to set up trading terminals anywhere in

the country. The three newly set up exchanges (TC0I, +&0 and IC&0! were

permitted since their inception to have nation wide trading. The trading platforms of a

few exchanges are now accessible from many locations. -urther, with extensive use

of information technology, the trading platforms of a few exchanges are also

accessible from anywhere through the Internet and mobile devices. This made a

huge difference in a geographically vast country like India.

EGc1ange Manage"ent#

)ost of the stock exchanges in the country are organi%ed as 'mutuals which was

considered beneficial in terms of tax benefits and matters of compliance. The trading

members, who provide brokering services, also own, control and manage the

exchanges. This is not an effective model for self2regulatory organi%ations as the

regulatory and public interest of the exchange conflicts with private interests. 0fforts

are on to demutualise the exchanges whereby ownership, management and trading

membership would be segregated from one another. Two exchanges vi%. TC0I and+&0 are demutualised from inception, where ownership, management and trading

are in the hands of three different sets of people. This model eliminates conflict of

interest and helps the exchange to pursue market efficiency and investor interest

aggressively.

Me"!er(1ip:

The trading platform of an exchange is accessible only to brokers. The broker enters

into trades in exchanges either on his own account or on behalf of clients. +o stock

broker or sub2broker is allowed to buy, sell or deal in securities, unless he or sheholds a certificate of registration granted by &0@I. A brokersub2broker complies with

the code of conduct prescribed by &0@I. ver time, a number of brokers 2 proprietor

firms and partnership firms Q have converted themselves into corporate. The

standards for admission of members stress on factors, such as corporate structure,

capital ade4uacy, track record, education, experience, etc. and reflect a conscious

endeavor to ensure 4uality broking services.

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Li(ting#

A company seeking listing satisfies the exchange that at least 5?P of the securities,sub"ect to a minimum of >? lakh securities, were offered to public for subscription,

and the si%e of the net offer to the public (i.e. the offer price multiplied by the number

of securities offered to the public, excluding reservations, firm allotment and

promoters1 contribution! was not less than 9s. 5?? crore, and the issue is made only

through book building method with allocation of ;?P of the issue si%e to the 4ualified

institutional buyers. In the alternative, it is re4uired to offer at least >8P of the

securities to public. The company is also re4uired to maintain the minimum level of

non2promoter holding on a continuous basis. In order to provide an opportunity to

investors to investtrade in the securities of local companies, it is mandatory for the

companies, wishing to list their securities, to list on the regional stock exchange

nearest to their registered office. If they so wish, they can seek listing on other

exchanges as well. )onopoly of the exchanges within their allocated area, regional

aspirations of the people and mandatory listing on the regional stock exchange

resulted in multiplicity of exchanges. The basic norms for listing of securities on the

stock exchanges are uniform for all the exchanges. These norms are specified in the

listing agreement entered into between the company and the concerned exchange.

The listing agreement prescribes a number of re4uirements to be continuously

complied with by the issuers for continued listing and such compliance is monitored

by the exchanges. It also stipulates the disclosures to be made by the companiesand the corporate governance practices to be followed by them. &0@I has been

issuing guidelinescirculars prescribing certain norms to be included in the listing

agreement and to be complied with by the companies. A listed security is available

for trading on the exchange. The stock exchanges levy listing fees 2 initial fees and

annual fees 2 from the listed companies. It is a ma"or source of income for many

exchanges. A security listed on other exchanges is also permitted for trading. A

listedcompany can voluntary delist its securities from non2regional stock exchanges

after providing an exit opportunity to holders of securities in the region where the

concerned exchange is located. An exchange can, however, delist the securities

compulsorily following a very stringent procedure.

Trading Mec1ani("#

The exchanges provide an on2line fully2automated screen based trading system

(&@T&! where a member can punch into the computer 4uantities of securities and

the prices at which he likes to transact and the transaction is executed as soon as it

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finds a matching order from a counter party. &@T& electronically matches orders on

a strict pricetime priority and hence cuts down on time, cost and risk of error, as well

as on fraud resulting in improved operational efficiency. It allows faster incorporation

of price sensitive information into prevailing prices, thus increasing the informational

efficiency of markets. It enables market participants to see the full market on real2

time, making the market transparent. It allows a large number of participants,

irrespective of their geographical locations, to trade with one another simultaneously,

improving the depth and li4uidity of the market. It provides full anonymity by

accepting orders, big or small, from members without revealing their identity, thus

providing e4ual access to everybody. It also provides a perfect audit trail, which

helps to resolve disputes by logging in the trade execution process in entirety.

Trading Rule(#

9egulations have been framed to prevent insider trading as well as unfair trade

practices. The ac4uisitions and takeovers are permitted in a well2defined and orderly

manner. The companies are permitted to buy back their securities to improve li4uidity

and enhance the shareholders1 wealth

Price Band(:

&tock market volatility is generally a cause of concern for both policy makers as well

as investors. To curb excessive volatility, &0@I has prescribed a system of price

bands. The price bands or circuit breakers bring about a coordinated trading halt in

all e4uity and e4uity derivatives markets nation2wide. An index2based market2wide

circuit breaker system at three stages of the index movement either way at 5?P,

58P and >?P has been prescribed. The movement of either &B$ C+ +ifty or

&ensex, whichever is breached earlier, triggers the breakers. As an additional

measure of safety, individual scrip2wise price bands of >?P either way have been

imposed for all securities except those available for stock options.

De"at TradingJ

The epositories Act, 577; was passed to proved for the establishment of

depositories in securities with the ob"ective of ensuring free transferability of

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securities with speed, accuracy and security by /a2making securities of public limited

companies freely transferable sub"ect to certain exceptionsL/!2 dematerialising the

securities in the depository modeL and /c2 providing for maintenance of ownership

records in a book entry form. In order to streamline both the stages of settlement

process, the Act envisages transfer of ownership of securities electronically by book

entry without making the securities move from person to person. Two depositories,

vi%. +&/ and C&/, have come up to provide instantaneous electronic transfer of

securities. At the end of )arch >??>, N,5=> and N,>6N companies were connected to

+&/ and C&/ respectively. The number of demateriali%ed securities increased to

8;.8 billion at the end of )arch >??>. As on the same date, the value of

demateriali%ed securities was 9s. N,;;7 billion and the number of investor accounts

was N,;?8,866. All actively traded scrips are held, traded and settled in demat form.emat settlement accounts for over 77P of turnover settled by delivery. This has

almost eliminated the bad deliveries and associated problems To prevent physical

certificates from sneaking into circulation, it has been mandatory for all new I$1s to

be compulsorily traded in demateriali%ed form. The admission to a depository for

demateriali%ation of securities has been made a prere4uisite for making a public or

rights issue or an offer for sale. It has also been made compulsory for public listed

companies making I$ of any security for 9s. 5? crore or more to do the same only

in demateriali%ed form.

,1arge(:

A stock broker is re4uired to pay a registration fee of 9s.8, ??? every financial year, if

his annual turnover does not exceed 9s. 5 crore. If the turnover exceeds 9s. 5 crore

during any financial year, he has to pay 9s. 8,??? plus one2hundredth of 5P of the

turnover in excess of 9s.5 crore. After the expiry of five years from the date of initial

registration as a broker, he has to pay 9s. 8,??? for a block of five financial years.

@esides, the exchanges collect transaction charges from its trading members. +&0

levies 9s. N per lakh of turnover. The maximum brokerage a trading member can

levy in respect of securities transactions is >.8P of the contract price, exclusive of

statutory levies like &0@I turnover fee, service tax and stamp duty. 3owever,brokerage charges as low as ?.58P are also observed in the market. 9olling

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To pre2empt market failures and protect investors, the regulatorexchanges have

developed a comprehensive risk management system, which is constantly monitored

and upgraded. It encompasses capital ade4uacy of members, ade4uate margin

re4uirements, limits on exposure and turnover, indemnity insurance, on2line position

monitoring and automatic disablement, etc. They also administer an efficient market

surveillance system to curb excessive volatility, detect and prevent price

manipulations. 0xchanges have set up tradesettlement guarantee funds for meeting

shortages arising out of no fulfillment partial fulfillment of funds obligations by the

members in a settlement. A clearing corporation assures the counterparty risk of

each member and guarantees financial settlement in respect of trades executed on

+&0.

&o'ern"ent Securitie(#

The reforms in the secondary market include elivery versus $ayment system for

settling scrip less &/ transactions to reduce settlement risks, &/ Account II with

9@I to enable financial intermediaries to open custody (Constituent &/! accounts

and facilitate retail transactions in scrip less mode, enforcement of a trade2for2trade

regime, settlement period of TR? or TR5 for all transactions undertaken directly

between &/ participants and up to TR8 days for transactions routed through +&0

brokers, routing transactions through brokers of +&0, TC0I and @&0, repos in all

government securities with settlement through &/, li4uidity support to $s toenable them to support primary market and undertake market making, special fund

facility for security settlement, etc. As part of the ongoing efforts to build debt market

infrastructure, two new systems, the +egotiated ealing &ystem (+&! and the

Clearing Corporation of India /imited (CCI/! commenced operations on -ebruary 58,

>??>. +&, interalia, facilitates screen based negotiated dealing for secondary

market transactions in government securities and money market instruments, online

reporting of transactions in the instruments available on the +& and dissemination

of trade information to the market. overnment &ecurities (including T2bills!, call

money, noticeterm money, repos in eligible securities, Commercial $apers and

Certificate of eposits are available for negotiated dealing through +& among themembers. The CCI/ facilitates settlement of transactions in government securities

(both outright and repo! on elivery versus $ayment (v$2II! basis which provides

for settlement of securities on gross basis and settlement of funds on net basis

simultaneously. It acts as a central counterparty for clearing and settlement of

government securities transactions done on +&.

24


25/94

T@E NATIONAL STO,: E*,@AN&E O INDIA LIMITED

The +ational &tock 0xchange of India /imited has genesis in the report of the 3igh

$owered &tudy roup on 0stablishment of +ew &tock 0xchanges, which

recommended promotion of a +ational &tock 0xchange by financial institutions (-Is! to

provide access to investors from all across the country on an e4ual footing. @ased on

the recommendations, +&0 was promoted by leading -inancial Institutions at the

behest of the overnment of India and was incorporated in +ovember 577> as a tax2

paying company unlike other stock exchanges in the country.

n its recognition as a stock exchange under the &ecurities Contracts (9egulation!

Act, 578; in April 577???.

NSEH( Mi((ion

25


26/94

+&0Fs mission is setting the agenda for change in the securities markets in India. The

+&0 was set2up with the main ob"ectives ofJ

5. 0stablishing a nation2wide trading facility for e4uities, debt instruments and hybrids,

>. 0nsuring e4ual access to investors all over the country through an appropriate

communication network,


27/94

)ay 5776. II&/ has a consulting and licensing agreement with the &tandard and

$oorFs (&B$!, worldFs leading provider of investible e4uity indices, for co2branding

e4uity indices.

National Securitie( Depo(itory Ltd% /NSDL2

+&0 "oined hands with I@I and ETI to promote demateriali%ation of securities. This

step was taken to solve problems related to trading in physical securities. It

commenced operations in +ovember 577;.

Bo"!ay Stock EGc1ange /BSE2

A very common name for all traders in the stock market, @&0, stands for @ombay &tock

0xchange. The oldest market not only in the country, but also in Asia. The early days of

@&0 was known as GThe +ative &hare B &tock @rokers Association.G It was established

in the year 56=8 and became the first stock exchange in the country to be recogni%ed

by the government. In 578;, @&0 obtained a permanent recognition from theovernment of India under the &ecurities Contracts (9egulation! Act, 578;.

In the past and even now, it plays a pivotal role in the development of the countryFs

capital market. This is recogni%ed worldwide and its index, &0+&0, is also tracked

worldwide. 0arlier it was an Association of $ersons (A$!, but now it is a demutualised

and corporati%ed entity incorporated under the provisions of the Companies Act, 578;,

27


28/94

pursuant to the @&0 (Corporati%ation and emutuali%ation! &cheme, >??8 notified by

the &ecurities and 0xchange @oard of India (&0@I!.

BSE act(-irst in India to introduce 04uity erivatives

-irst in India to launch a -ree -loat Index

-irst in India to launch E&S version of @&0 &ensex

-irst in India to launch 0xchange 0nabled Internet Trading $latform

-irst in India to obtain I& certification for &urveillance, Clearing B &ettlement

F@&0 n2/ine Trading &ystem (@/T! has been awarded the globally recogni%ed the

Information &ecurity )anagement &ystem standard @&==772>J>??>.

28


29/94

SEBI#$

&0@I as the Capital )arket 9egulator in India, has twin ob"ectives i.e. of regulating aswell as developing the )arket.

The &0@I is the main regulatory body in the Indian capital market scenario . &0@I is

responsible for J

$rotecting the interests of investors in securities

$romoting the development of the securities markets

9egulating the securities markets

n April 5>, 5766, the &ecurities and 0xchange @oard of India (&0@I! was established

with a dual ob"ective of protecting the rights of small investors and regulating anddeveloping the stock markets in India. In 577>, the @ombay &tock 0xchange (@&0! ,

the leading stock exchange in India, witnessed the first ma"or scam masterminded by

3arshad )ehta ()ehta! . Analysts unanimously felt that if more powers had been given

to &0@I, the scam would not have happened. As a result, the overnment of India

(oI! brought in a separate legislation by the name of F&0@I Act 577>F and conferred

statutory powers to it.

&ince then, &0@I had introduced several stock market reforms. These reforms

significantly transformed the face of Indian stock markets. &0@I introduced on2line

trading and demat of shares which did away with the age2old paper2based trading, thusbringing more transparency into the trading system. Analysts and experts appreciated

&0@I for these reforms. ne stock market analyst said, GIFm sure that most of us would

agree that &0@I has handled the challenges exceptionally well.G

In spite of &0@IFs capital market reforms and increasing regulatory powers over the

years, analysts felt that it had failed miserably in stopping stock market scams. In the

ten years after the )ehta scam, several scams came to light, casting doubt on the

efficiency of &0@I as a regulatory body. 3owever, a few analysts felt there was a need

to confer more powers to &0@I to stop these scams. ne analyst commented, GItFs

rather daunting task of putting in place a regulatory framework for the market against allodds.G

In the 576?s, Indian capital markets witnessed significant changes. uring the sixth

-ive2:ear plan (576?268!, many ma"or industrial policy changes were introduced. These

included opening up the Indian economy to foreign corporations and emphasi%ing a

greater role for the private sector.

29


30/94

)any companies tapped the primary market to raise re4uired funds from the public.

The total capital raised from the primary market increased from 9s 5.7; bn in the fiscal

57=726? to 9s. ;8 bn in 576727?. #ith more companies raising money by issuing

shares, retail investors got another investment avenue to park their surplus funds.

@etween 576= and 5775, 5>P of household savings were invested in e4uity and

corporate debentures as compared to only =P between 576> and 5768, signifying the

increasing number of retail investors in the stock market.

TRADIN& MEMBERS@IP

Stock Broker(

Introduction

A broker is an intermediary who arranges to buy and sell securities on behalf of clients

(the buyer

and the seller!. According to 9ule > (e! of &0@I (&tock @rokers and &ub2@rokers!

9ules, 577>, a stockbroker means a member of a recogni%ed stock exchange. +o

stockbroker is allowed to buy, sell or deal in securities, unless he or she holds a

certificate of registration granted by &0@I. A stockbroker applies for registration to&0@I through a stock exchange or stock exchanges of which he or she is admitted as

a member. &0@I may grant a certificate to a stock2broker as per &0@I (&tock @rokers

and &ub2@rokers! 9ules,577>D sub"ect to the conditions thatJ

a! 3e holds the membership of any stock exchangeL

b! 3e shall abide by the rules, regulations and bye2laws of the stock exchange or

stock exchanges of which he is a memberL

c! In case of any change in the status and constitution, he shall obtain priorpermission &0@I to continue to buy, sell or deal in securities in any stock

exchangeL

d! 3e shall pay the amount of fees for registration in the prescribed mannerL and

30


31/94

e! 3e shall take ade4uate steps for redressal of grievances of the investors within

one month of the date of the receipt of the complaint and keep &0@I informed about

the number, nature and other particulars of the complaints. #hile considering the

application of an entity for grant of registration as a stock broker, &0@I shall take into

account the following namely, whether the stock broker applicant 2

a! is eligible to be admitted as a member of a stock exchangeL

b! 3as the necessary infrastructure like ade4uate office space, e4uipment and man

power to effectively discharge his activitiesL

c! 3as any past experience in the business of buying, selling or dealing in securitiesL

d! Is being sub"ected to any disciplinary proceedings under the rules, regulations and

bye2laws of a stock exchange with respect to his business as a stockbroker involving

either himself or any of his partners, directors or employees.

Su!$Broker(

A &ub2broker is a person who intermediates between investors and stock brokers.

3e acts on behalf of a stock2broker as an agent or otherwise for assisting the

investors for buying, selling or dealing in securities through such stock2broker. +o

sub2broker is allowed to buy, sell or deal in securities, unless he or she holds a

certificate of registration granted by &0@I. A sub2broker may take the form of a sole

proprietorship, a partnership firm or a company. &tockbrokers of the recogni%ed

stock exchanges are permitted to transact with sub2brokers. &ub2brokers are

re4uired to obtain certificate of registration from &0@I in accordance with &0@I

(&tock @rokers B &ub2brokers! 9ules and 9egulations, 577>, without which they are

not permitted to buy, sell or deal in securities. &0@I may grant a certificate to a sub2

broker, sub"ect to the conditions thatJ

(a! 3e shall pay the fees in the prescribed mannerL

(b! 3e shall take ade4uate steps for redressal of grievances of the investors within

one month of the date of the receipt of the complaint and keep &0@I informed about

the number, nature and other particulars of the complaints receivedL

31


32/94

(c! In case of any change in the status and constitution, the sub2 broker shall obtain

prior permission of &0@I to continue to buy, sell or deal in securities in any stock

exchangeL and

(d! 3e is authori%ed in writing by a stock2broker being a member of a stock exchange

for affiliating himself in buying, selling or dealing in securities. In case of company,

partnership firm and sole proprietorship firm, the directors, the partners and the

individual, shall comply with the following re4uirementsJ

(a! The applicant is not less than >5 years of ageL

(b! The applicant has not been convicted of any offence involving fraud or

dishonestyL

(c! The applicant has at least passed 5>th standard e4uivalent examination from an

institution recogni%ed by the overnment.

(d! They should not have been debarred by &0@I.

(e! The corporate entities applying for sub2broker ship shall have a minimum paid up

capital of 9s. 8 lakh and it shall identify a dominant shareholder who holds a

minimum of 85P shares either singly or with the unconditional support of hisher

spouse.

ABOUT INDIAINOLINE LTD%

4%4 ,OMPAN> O=ER=IE;

32


33/94

India Infoline originally incorporated on ctober 56, 5778 as PROBITY RESEARCH

AND SERVICES PVT LTD. at )umbai under the Companies Act,578; with

9egistration +o.5576, >???.The

name of the Company was changed to India Infoline.com/imited on )ay >??? and

later to India Infoline /imited on )arch >??5. It is the first Company in India to foray

into the online distribution of )utual -unds It is a one2stop financial services shop,

most respected for 4uality of its advice, personali%ed service and cutting2edge

technology. The+o.5Corporate agent for II-/$rudential/ife Insurance Company.

9esearchacknowledged by -orbes as ')ust 9ead for investor in &outh Asia '/isted

on @ombay and +ational &tock 0xchange with a net worth

of I+9 >?? crore and a market cap of over I+9 57=? crore.The company has a

network of 7=; business locations (branches and sub2brokers! spread across


34/94

Per)or"ance o) t1e co"pany#

6?#Incorporated as an e4uity research and Consulting firm with a client base thatincluded leading -IIs, banks, consulting firms and corporate.

6# 9estructured the business model to embrace the internetL launched

000%indiain)oline%co" L mobili%ed capital from reputed private e4uity investors.

4555J Commenced the distribution of personal financial productsL launched online

e4uity tradingL entered life insurance distribution as a corporate agent. Acknowledged

by -orbes as O@est of the #eb1 andO...)ust read for Investors1.

455


35/94

member of both the exchanges. It is engaged in the businesses of 04uities broking,

#ealth Advisory &ervices and $ortfolio )anagement &ervices. It offers broking

services in the Cash and erivatives segments of the +&0 as well as the Cash

segment of the @&0. It is registered with +&/ as well as C&/ as a depository

participant, providing a one2stop solution for clients trading in the e4uities market. It

has recently launched its Investment banking and Institutional @roking business.

35


36/94

INDIA INOLINE MEDIA AND RESEAR,@ SER=I,ES LIMITED.

The content services represent a strong support that drives the braking, commodities,

mutual fund and portfolio management services businesses. 9evenue generation is

through the sale of content to financial and media houses, Indian as well as global. It

undertakes e4uities research which is acknowledged by none other than -orbes as

F@est of the #ebF and F...a must read for investors in AsiaF. India Info line1s research is

available not "ust over the internet but also on international wire services like @loomberg

(CodeJ II//!, Thomson -irst Call and Internet &ecurities where India Infoline is amongst

the most read Indian brokers.

INDIA INOLINE ,OMMODITIES LIMITED.

India Infoline Commodities $vt /imited is engaged in the business of commodities

broking. ur experience in securities broking empowered us with the re4uisite skills and

technologies to allow us offer commodities broking as a contra2cyclical alternative to

e4uities braking. #e en"oy memberships with the )C and +C0, two leading Indian

commodities exchanges, and recently ac4uired membership of Cx. #e have a multi2

channel delivery model, asking it among the select few to offer online as well as offline

trading facilities.

36


37/94

INDIA INOLINE MAR:ETIN& + SER=I,ES

India Infoline )arketing and &ervices /imited is the holding company of India Infoline

Insurance &ervices /imited and India Infoline Insurance @rokers /imited.(a! India

Infoline Insurance &ervices /imited is a registered Corporate Agent with the Insurance

9egulatory and evelopment Authority (I9A!. It is the largest Corporate Agent for

II-/$rudential /ife Insurance Co /imited, which is IndiaFs largest private /ife Insurance

Company. India Infoline was the first corporate agent to get licensed by I9A in early

>??5. (b! India Infoline Insurance @rokers /imited India Infoline Insurance @rokers

/imited is a newly formed subsidiary which will carry out the business of Insurance

broking. #e have applied to I9A for the insurance broking license and the clearancefor the same is awaited. post the grant of license, we propose to also commence the

general insurance distribution business.

INDIA INOLINE IN=ESTMENT SER=I,ES LIMITED

Consolidated shareholdings of all the subsidiary companies engaged in loans and

financing activities under one subsidiary. 9ecently, rient lobal, a &inga$7re2based

investment institution invested E& =;.= million for a >>.8P stake in India Infoline

Investment &ervices. This will help focused expansion and capital raising in the said

subsidiaries for various lending businesses like loans against securities, &)0 financing,

distribution of retail loan products, consumer finance business and housing finance

business. India Infoline Investment &ervices $rivate /imited consists of the following

step2down subsidiaries.

(a! India Infoline istribution Company /imited (istribution of 9etail /oan $roducts!

(b! )oney line Credit /imited (Consumer -inance!

(c! India Infoline 3ousing -inance /imited (3ousing -inance!

IIL /A(ia2 Pte Li"ited

II-/ (Asia! $te /imited is wholly owned subsidiary which ,has been incorporated in

&ingapore to pursue financial sector activities in other Asian markets. -urther to

obtaining the necessary regulatory approvals, the company has been initially capitali%ed

at 5 million &ingapore dollars.

37


38/94

PRODU,TS AND EUITIES

SER=I,ES

India Infoline provided the prospect of researched investing to its clients, which was

hitherto restricted only to the institutions. 9esearch for the retail investor did not existprior to IndiaF Infoline. India Infoline leveraged technology to bring the convenience of

trading to the investorFs location of preference (residence or office! through

computeri%ed access. India Infoline made it possible for clients to view transaction costs

and ledger updates in real time.

PMS

ur $ortfolio )anagement &ervice is a product wherein an e4uity investment portfolio is

created to suit the investment ob"ectives of a client. #e at India Infoline invest your

resources into stocks from different sectors, depending on your risk2return profile. This

service is particularly advisable for investors who cannot afford to give time or donFt

have that expertise or day2to2day management of their e4uity portfolio.

Re(earc1

&ound investment decisions depend upon reliable fundamental data and stock selection

techni4ues. India Infoline 04uity 9esearch is proud of its reputation for, and we want

you to find the facts that you need. 04uity investment professionals routinely use our

research and models as integral tools in their work.They choose -ord 04uity 9esearch

when they can clear your doubts.

38


39/94

,o""oditie(

India Infoline1s extension into commodities trading reconciles its strategic intent to

emerge as a one2stop solutions financial intermediary. its experience in securities

broking has empowered it with re4uisite skills and technologies. The CompanyFs

commodities business provides a contra cyclical alternative to e4uities broking. The

Company was among the first to offer the facility of commodities trading in IndiaFs young

commodities market (the )C commenced operations only in >??

turnover on the commodity exchanges increased from 9s. ?.?.?> bn. The

commodities market has several products with different and non2correlated cycles. n

the whole, the business is fairly insulated against cyclical gyrations in the business.

Mortgage( and 1o"e loan(

uring the year under review, India Infoline ac4uired a =8P stake in )oney tree

Consultancy &ervices to mark its foray into the business of mortgages and other loan

products distribution. The business is still in the investing phase and at the time of the

ac4uisition was present only in the cities of )umbai and $une. The Company brings onboard expertise in the loans business coupled with existing relationships across a

number of principals in the mortgage and personal loans businesses. India Infoline now

has plans to roll the business out. across its pan2Indian network to provide it with a truly

national scale in operations.

Per(onal Loan(

reedo" to c1oo(e )ro" < )leGi!le option( to repay

/oan against residential and commercial property, 0xpert recommendations, 0asy

documentation, Huick processing and disbursal, +o guarantor re4uirement, 0xpertrecommendations 0asy documentation, Huick processing and disbursal, +o guarantor

re4uirement

39


40/94

In'e(t Online

India Infoline has made investing in )utual funds and primary market so effortless. Allyou have to do is register with us and thatFs all. +o paperwork no 4ueues and +o

registration charges.

In'e(t In M

India Infoline offers you a host of mutual fund choices under one roof, backed by in2

depth research and advice from research house and tools configured as investor

friendly.

Apply In IPOH(

:ou could also invest in Initial $ublic ffers (I$Fs! online without going through thehassles of filling A+: application formU $aperwork.

SMS

Stay connected to t1e "arket

The trader of today, you are constantly on the move. @ut how do you stay connected to

the market while on the moveV &imple, subscribe to India InfolineFs &tock )essaging

&ervice and get )arket on your )obileU

T1ere are t1ree product( under SMS Ser'ice#

)arket on the move.

@est of the lot.

KA& (Kalue Added &ervice!

In(urance

An entry into this segment helped complete the clientFs product basketL concurrently, it

graduated the Company into a one2stop retail financial solutions provider. To ensuremaximum reach to customers across India, we have employed a multi pronged

approach and reach out to customers via our +etwork, irect and Affiliate channels.

-ollowing the opening of the sector in 57772>???, a number of private sector insurance

service providers commenced operations aggressively and helped grow the market..

The CompanyFs entry into the insurance sector derisked the Company from a

predominant dependence on broking and e4uity2linked revenues. The annuity based

40


41/94

income generated from insurance intermediation result in solid core revenues across

the tenure ofthe policy.

;ealt1 Manage"ent Ser'ice

Imagine a financial firmF with the heart and soul of a two2person organi%ation. A world2

leading wealth management company that sits down with you to understand your needs

and goals. #e offer you a dedicated group for giving you the most personal attention at

every level.

Ne0(letter(

The aily )arket &trategy is your morning dose on the health of the markets. -ive intra2

day ideas, unless the markets are really choppy coupled with a brief on the global

markets and any other cues, which could impact the market. ccasionally an

investment idea from the research team and a crisp round up of the previous dayFs top

stories. ThatFs not all. As a subscriber to the aily )arket &trategy, you even get

research reports of India Infoline research team on a priority basis. The India Infoline

#eekly +ewsletter is your flashback for the week gone by. A weekly outlook coupledwith the best of the web stories from India Infoline and links to important Investment

ideas, /eader &peak and features are delivered in your inbox every -riday evening.

EJuitie(

India Infoline provided the prospect of researched investing to its clients, which was

hitherto restricted only to the institutions. 9esearch for the retail investor did not exist

prior to India Infoline leveraged technology to bring the convenience of trading to the

investorFs location of preference (residence or office! through computeri%ed access.

India Infoline made it possible for clients to view transaction costs and ledger updates inreal time.

41


42/94

O'er t1e la(t )i'e year(- India In)oline (1arpened it( co"petiti'e edge t1roug1 t1e

)ollo0ing initiati'e(#

Multi$c1annel deli'ery "odel#

T1e Company is among the few financial intermediaries in India to offer a complement

of online and offline broking. The CompanyFs network of branches also allows

customers to place orders on phone or visit our branches for trading.

Integrated "iddle and !ack o))ice#

The customer can trade on the @&0 and +&0, in the cash as well as the derivatives

segment all through the available multiple options of Internet, phone or branch

presence.

Multiple$trading option(#

The Company harnessed technology to offer services at among the lowest rates in the

business. )embershipJ GThe Company widened client reach in trading on the domestic

and international exchanges.1

Tec1nology#

The Company provides a prudent mix of proprietary and outsourced technologies,

which facilitate business growth without a corresponding increase in costs.

,ontent#

The Company has leveraged its research capability to provide regular updates and

investment picks across the short and long2term.

Ser'ice#

Clients can access the customer service team through various media like toll2free lines,

emails and Internet2 messenger chat for instant 4uery resolution. The CompanyFs

customer service executives proactively contact customers to inform them of keychanges and initiatives taken by the Company. @usiness #orld rated the CompanyFs

customer service as F@estF in their survey of online trading sites carried out in ecember

>??


43/94

:ey )eature(

)embership on the @ombay &tock 0xchange /imited and the +ational &tock

0xchange.

9egistered with the +&/ as well as C&/ as a depository participant, providing

a one2stop solution for clients trading in the e4uities market. @roking services in cash and derivative segments, online as well as offline under

the brand of 8paisa.com $resence across 57 states through a 5== strong branch network, with =8,???

online registered users. F $rovision of free and world2class research to all clients.

PILLARS O T@E OR&ANIKATION

Enlike others, India Infoline has the concept of an Investment Team.

The brains behind all the investment strategies and decisions regarding #ealth

)anagement &ervices areJ

43


44/94

;OR:IN& O BRO:IN& INDUSTR> ;%R%T%IIL

DEMAT A,,OUNT

e2mat account is a safe and convenient means of holding securities "ust like a bank

account is for funds. Today, practically 77.7P settlement (of shares! takes place on

e2mat mode only. Thus, it is advisable to have a @eneficiary wner (@! account to

trade at the exchanges.

Bank Account =( De$"at Account

S%

No%

Ba(i( O)

Di))erentiatio

n

Bank Account De$"at Account

6%

or" o)

@olding(Dep

o(it(

-unds &ecurities

4% U(ed )or&afekeeping ofmoney

&afekeeping ofshares

8% acilitate(Transfer of money(without actuallyhandling money!

Transfer of shares(without actuallyhandling shares!

??;!

%Intere(taccrual on

1olding(

Interest income issub"ect to theapplicable rate ofinterest

+o interest accrualson securities held indemat account

C%

Mini"u"

!alance

reJuire"ent

AH@W maintenanceis specified forcertain bankaccounts

+o suchre4uirement


45/94

%

Eit1er or

Sur'i'or)acility

Available +ot available

AB2 Average Huarterly @alance

&.+o.

@A&I& -&I)I/A9IT:

$A9TICE/A9&

6%Security and

,on'enience@oth are very safe and convenient meansof holding depositssecurities

4%Nu"!er o)

account(

+o legal barrier on the number of bank ordemat accounts that can be opened

8%

Tran()er o)

depo(it( /)und(

or (ecuritie(2

-undssecurities are transferred only at theinstruction of the account holder


46/94

Bene)it( O) De$"at Account #

5. A safe and convenient way of holding securities (e4uity and debt instruments

both!.

>. Transactions involving physical securities are costlier than those involving

demateriali%ed securities ("ust like the transactions through a bank teller are

costlier than AT) transactions!. Therefore, charges applicable to an investor are

lesser for each transaction.


47/94

55. &ecurities are transferred by the $ itself,so no need to correspond with the

companie.

Opening a De$"at Account

To start dealing in securities in electronic form, one needs to open a e2mat account

with a $ of his choice. An investor already having shares in physical form shouldensure that he gets the account opened in the same set of names as appearing on

the share certificateL otherwise a new account can be opened in any desired pattern

by the investor.


48/94

&etting (tarted

5. Choose a $>. -ill up an account opening form

provided by $, and sign anagreement with $ in a standardformat prescribed by thedepository.


49/94

De"aterialiation Proce((JAn investor having securities in physical form must get them demateriali%ed, if he

intends to sell them. This re4uires the investor to fill a e2mat 9e4uest -orm (9-!

which is available with every $ and submit the same along with the physical

certificates. 0very security has an I&I+ (International &ecurities Identification

+umber!. If there is more than one security than the e4ual number of 9-s has to

be filled in.

The whole process goes on in the following mannerJ22


50/94

Re"ateriali(ation

The process of getting the securities in an electronic form, converted back into the


51/94

physical form is known as 9ematerialisation. An investor can remateriali%e his

shares by filling in a 9emat 9e4uest -orm (99-!.

The whole process goes on as followsJ 222

Depo(itory $An organi%ation that facilitates holding of securities in the electronicform

and enables $s to provide services to investors relating to transaction insecurities.There are two depositories in India, namely +&/ and C&/. As per a&0@I


52/94

guideline, the minimum net worth stipulated for a depository is 9s.5?? crore.

NSDL,DSL $The securities are held in depository accounts, like the funds are held

in bank accounts. There are two depositories in India namely +&/ and C&/.

+&/ (+ational &ecurities epository limited! was established in August 577; and is

the first depository in India. C&/ (Central epository &ecurities /imited! is the other

depository and was established in 5777.

DP /Depo(itory Participant2 $ A epository $articipant can be a financial

organi%ation like banks, brokers, financial institutions, custodians, etc., acting as an

agent of the epository to make its services available to the investors. There are atotal of 5


53/94

Address proof of all "oint holders

&pecimen copy of che4ue

or NRI

-oreign and Indian Address proof

$A+ Card(compulsory!

@ank ac indicating type of ac as +90+9


or @U

Address proof and identity proof of karta

$A+ Card of 3E-(compulsory!


eclaration giving details of the family members of the 3E- with their names,

date of birth B relationship with the karta.

or Minor

)inor $A+ Card

@irth certificate of minor

Address and identity proof of guardian


Product( and Ser'ice( o))er !y India In)oline ltd

A product for every needJ 8paisa.com is the most comprehensive website, which

allows you to invest in &hares, )utual funds, erivatives (-utures and ptions! and


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other financial products. &imply put we offer you a product for every investment need

of yours.

6% Trading in (1are(# 8 paisa.com offers you various options while trading in shares.

,a(1 Trading#

This is a delivery based trading system, which is generally done with the intention

of taking delivery of shares or monies.

Margin Trading#

:ou can also do an intra2settlement trading upto 8 to < ti"e(your available funds,

wherein you take long buy short sell positions in stocks with the intention of s4uaring

off the position within the same day settlement cycle.

Spot Trading#

This facility can be used only for selling your demat stocks which are already existing

in your demat account. #hen you are looking at an immediate li4uidity option, FCashon &potF may work the best for you, n selling shares through Gcash on spotG, money

is credited to your bank ac the same evening B not on the exchange payout date.

BTST :

@uy Today &ell Tomorrow (@T&T! is a facility that allows you to sell shares even on

5stand >ndday after the buy order date, without you having to wait for the receipt of

shares into your demat account.

,all NTrade #

Call+TradeX allows you to call on a local number in your city B trade on the

telephone through our Customer &ervice 0xecutives. This facility is currently

available in over "" a#or states across India.

Trading on NSEBSE #

Through 8paisa.com, you can trade on NSEas well as BSE.
http://funct%28%29/http://funct2%28%29/http://funct3%28%29/http://funct33%28%29/http://funct4%28%29/http://funct%28%29/http://funct2%28%29/http://funct3%28%29/http://funct33%28%29/http://funct4%28%29/


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Market Order #

:ou could trade by placing market orders during market hours that allows you to

trade at the best obtainable price in the market at the time of execution of the order.

Li"it Order #

Allows you to place a buysell order at a price defined by you. The execution can

happen at a price more favorable than the price, which is defined by you, limit orders

can be placed by you during holidays B non market hours too.

4% TRADE IN DERI=ATI=ES#

UTURES

Through 8paisa.com, you can now trade in index and stock futures on the +&0. In

futures trading, you take buysell positions in index or stock(s! contracts having a

longer contract period of up to < months.Trading in -ETE90& is simpleU If, during

the course of the contract life, the price moves in your favor (i.e. rises in case you

have a buy position or falls in case you have a sell position!, you make a profit.

$resently only selected stocks, which meet the criteria on li4uidity and volume, havebeen enabled for futures trading.

OPTIONS

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. -or 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 buysell

position on indexstock options, you have to place certain P of order value asmargin. #ith options trading, you can leverage on your trading limit by taking buysell

positions much more than what you could have taken in cash segment. The @uyer of

a ,all Optionhas the 9ight but not the bligation to $urchase the Enderlying Asset

at the specified strike price by paying a premium whereas the &eller of the Call has

the obligation of selling the Enderlying Asset at the specified &trike price.

The @uyer of a Put Option has the 9ight but not the bligation to &ell the

Enderlying Asset at the specified strike price by paying a premium whereas the

&eller of the $ut has the obligation of @uying the Enderlying Asset at the specified

&trike price.


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@y paying lesser amount of premium, you can create positions under $TI+& and

take advantage of more trading opportunities.

8% In'e(ting in Mutual )und(#

8paisa.com brings you the same convenience while investing in )utual funds also 2

3assle free and $aperless Investing. #ith the inclusion of -idelity )-, you can now

invest on2line in 57 mutual -unds through India Infoline. $rudential II-/)-, M) )-,

Alliance )-, -ranklin Templeton )-, &undaram )-, @irla &un /ife )-, 3-C )-,

$rincipal )-, ETI )-,9eliance )-,*otak )-,Tata )-,&$ )errill /ynch )-, I+

)-,C3/A )-,eutsche )-,3&@C )- and &tandard Chartered )- are the )utual

-unds available for investment. :ou can invest in mutual funds without the hassles of

filling application forms or any other paperwork. :ou need no signatures or proof of

identity for investing.

nce you place a re4uest for investing in a particular fund, there are no manual

processes involved. :our bank funds are automatically debited or credited while

simultaneously crediting or debiting your unit holdings. :ou also get control over your

investments with online order confirmations and order status tracking. et to know

the performance of your investments through online updation of )- portfolio with

current +AK.

Rede"ption#

In addition to giving hassle2free paperless redemption, India Infoline offers faster

li4uidity. :ou can redeem the mutual fund units through India Infoline. The money will

be credited to your bank account automatically < days after the order placement

date.

S0itc1#

To suit your changing needs you may wish to shift monies between different

schemes. :ou can switch your monies online from one scheme to another in the

same fund family without any thassles..

Sy(te"atic In'e(t"ent plan( /SIP2#

&I$ allows you to invest a certain sum of money over a period of time periodically.

Must fill in the investment amount, the period of investment and the fre4uency of

investing and submit. India Infoline will do the rest for you automatically investingperiodically for you.


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Sy(te"atic 0it1dra0al plan#

This allows you to withdraw a certain sum of money over a period of time

periodically.

Tran()er$in#

:ou can convert your existing )utual funds into electronic mode through a transfer2in

re4uest.


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Sc1edule option.ive your feedback or viewpoint through the =ie0point online

The marketing strategy is such that people are made aware of the of advantages ofon2line trading. The other important thing is customer service. If you ask me as to

what II-/ is doing in customer service, I would put it succinctly as the ease of

allowing trading, back2office operations and seamless connectivity to the bank and

the $.

Per)ect Port)olio Manage"ent Ser'ice(

Intermediaries and investment consultants for retail, high net worth individuals and

corporations helping them leverage the booming Indian economy by profitably

participating in Indian 04uity and Commodities )arkets. #e offer customised

solutions based on the risk profile of each investor by planning a personalised asset

allocation program and effectively utilising various available cash and derivative

products (including futures options and related strategies like spreads, straddles,

strangles etc.!

eature( o) IIL

AC opening charge29s.=8?2 (refundable against brokerage!R 8882

)argin money2 minimum 9s.5?, ???2

+ame of the software used2 Trader Terminal advance

&oftware installation charge2 +il.

+o. of scripts provided by the software2 unlimited.

)aintainance charge2 +il.

0xposure2 6 to 5? times (intra day! N times (delivery!.

+ame of the bank with the help of which customer get the facility of net banking2

3-C @ank, Axis @ank, ICICI @ank, @ank of @aroda

&ervices provided2 04uity, I$, )-, $)&, Commodities, Insurance, #ealth

)anagement &ervices, )ortgages.

$ sells charge2 58 per instruction R service tax.


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@rokerage2 ?.?5P to.?8P intraday ?.5P to ?.8P deliveries.

Transaction 9eport2 sms, daily mail, daily courier,

$repaid &cheme2 not available.

Types of trading accounts provided2 e2)at ac, Trading ac , )argin ac.

+etwork2 55N8 branches and 6????? customers.

,u(to"er !e1a'ior in relation to (tock "arket

;1o i( a cu(to"er

A cu(to"errefers to individuals or households that purchase goods and services

generated within the economy. The word historically derives from Gcustom,G meaningGhabitGL a customer was someone who fre4uented a particular shop, who made it a
http://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Economy


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habit to purchase goods there, and with whom the shopkeeper had to maintain a

relationship to keep his or her Gcustom,G meaning expected purchases in the future.

#hy the stock market is called a market

A market is a place where goods are bought and sold. The stock market is where

people buy and sell one type of product. That uni4ue product is shares of ownership

in a company, which are also known as stocks. $otential investors get to choose

from many companies that sell a variety of goods, from clothing to medicines to

sports e4uipment to toys. #hen people buy and sell stock, itFs called trading.

T1e 'ariou( categorie( o) cu(to"er in (tock "arket

+ot every person use to invest in stock market nor persons of a particular class

invests in stock market .the ma"or type of investors belongs to following categoriesJ

@usinessmen &alaried person

9etired person

Be1a'ior o) cu(to"er 0it1 re(pect to t1e 'ariou( categorie(

Bu(ine(("en#$They are more likely to take risks in investing because they have previous

experience of taking risks in their previous wealth creation. These individuals have a

high2risk tolerance and less of a need for security. They also need to feel in control of

their investments, often to the extent of becoming highly involved with the running of

their investments, researching or becoming overly involved with technicalities. The

need for control is related to the fact that they have a strong belief in themselves and

their own abilities. nce they feel they are losing control of an investment situation,

their risk tolerance reduces. @y being actively involved and in control, these investors$ee%they are reducing risk. 3owever such involvement may actually be detrimental

as it is likely to be a source of irritation to their investment advisor who cannot get on

with the business of running their clients affairs due to constant 4uestioning and

harassment. The classes of occupation that are likely to be active investors includeJ

small business owners who have developed their own businesses rather than

inherited, medical surgeons, independent professionals, such as lawyers or

accountants, who work for themselves rather than a large firm, entrepreneurs, and

self2employed consultants.


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Active investors are more likely to get personally involved with the running of their

financial affairs, and may believe they know more than their advisor does. They areless likely to delegate the maintenance of those parts of their investment portfolio in

which they believe they have experience or have had personal success. 3owever,

these individuals are more likely to be contrarian in their stock picking habits and

have less need to be completely diversified. Age tends to soften their need to be

constantly in control, so that older clients may be more malleable and open to their

advisors suggestions.

&o'ern"ent e"ployee( Salaried per(on#$

To these investors security is more important than risk In addition, certain classes ofoccupation are more likely to contain passive investors. -or exampleJ2 &tateCentre

govt. employees, non2surgical doctors, corporate executives, lawyers and

accountants who work in companies. 9easons for this are that these individuals are

less likely to have high financial resources at an early stage in their careers, having

had to delay earning good salaries in order to study or having to repay student loans.

nce earning a decent wage, they are then more careful with their money, having a

greater need for security. Anyone, therefore, with reduced financial recourses is likely

to be more risk conscious and, hence, a passive investor. -or these individuals itFs

important to hang on to their money.

$assive investors make good clients because they tend to trust their financial advisor

and are more likely to delegate the running of their financial affairs. And because

they are risk averse, they tend to like diversified portfolios of investments in 4uality

companies or investment products. 3owever, they can believe that an investment is

more risky than it is, which may keep them out of potentially lucrative opportunities.

$assive investors are also more likely to need the approval of others and are unlikely

to take a first step into unknown investment territory by being a contrarian.

Conse4uently, they are more likely to follow the investment herd when it comes to

stock market investment and stick to following the trend.

Retired per(on#$

These investor are cautious and intent on safeguarding their wealth, shunning

volatility or excitement.

those who take the path of least resistance, looking primarily for security and safety

in their investments and doing what has worked previously.


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,USTOMER BE@A=IOR ;IT@ RESPE,T TO INDIA INOLINE LTD

;1o are t1e cu(to"er( in INDIA INOLINE LTD

All those person who had there demat account open with India Infoline ltd are called the

customer of India Infoline ltd.

=ariou( categorie( o) cu(to"er de)ined !y India In)oline ltd

I+IA I+-/I+0 /T classify there customer on the basis of there response to stock

market. &uch as ifa customer is regularly trading in stock market through it1s demat

account then that customer is treated as T0H (trading on e4uity! customer.

In the same way other categories of customer are

NT /non trader2#

All those customer who had open there demat account with India Infoline ltd but not

started trading in stock market through that demat account after < month of its account

opening date those customer are treated as non trader by India Infoline ltd.

ST /(top trader2

Those entire customers who had traded with its account once or twice and after thatstop trading through its account due to some reasons are known as stop traders.

62


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ANAL>SIS

S;OT analy(i( o) India In)oline

;@AT IS S;OT ANAL>SIS

A scan of the internal and external environment is an important part of the strategic

planning process. 0nvironmental factors can be classified as Strengt1( /S2 or

;eakne(( /;2-and those external to the firm can be classified as OPPURTUNIT> /O2

orT@REATS /T2%&uch an analysis of the strategic environment is referred to as a

S;OT ANAL>SIS%

The T analysis provides information that is helpful in matching the firm1s resources

and capabilities to the competitive environment in which it operates. As such, it is

instrumental in strategy formulation and selection. The following diagram shows how

S;OT ANAL>SISfits into an environmental scanJ

63


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S;OT ANALSIS RAME;OR:

Strengt1(#

A firm1s strengths are its resources and capabilities that can be used as a basis for

developing acompetitive advantage. 0xamples of such strengths includeJ

64

INTERNAL ANALYSIS EXTERNAL ANALYSIS

THREATOPPURTUNITIESWEAKNESSSTRENGTHS

ENVIRONMENTAL SCAN


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>2in25 account integrates your broking and demat accounts. All accounts are from

II-/ and very well integrated. This feature makes II-/ the most interesting playerin online trading facility. There is absolutely no manual interfere re4uire. This is

truly online trading environment.

Enlike most of the online trading companies in India which re4uire transferring

money to the brokerFs pool or towards deposits, at II-/ you can manage your

own demat.

Investment online in I$s, )utual -unds, I @onds, and $ostal &avings

&chemes all from one website. eneral Insurance is also available from II-/

/ombard.

Trading is available in both @&0 and +&0

ood reputation among customers as I+IA I+-/I+0 ltd provides a

relationship manager to every cli

mutualfund a better option

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