nipun final

8/9/2019 Nipun Final

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STUDY ON INDIAN EQUITY BROKERAGE INDUSTRY

Summer Project Report

Submitted in partial fulfillment of the requirement for the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

By:

NIPUN SACHDEVA

(BBA 4549/ 08)

Department of Management

Birla Institute of Technology

Noida Campus

BIRLA INSTITUTE OF TECHNOLOGY

(Deemed University U/S 3 of UGC Act 1956)

Mesra, Ranchi, Jharkhand


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DECLARATION

This is to certify that the work presented in the project entitled STUDY ONCOMPARITIVE ANALYSIS BETWEEN EQUITY AND MUTUAL FUNDS in the

partial fulfillment of the requirement for the award of degree ofBachelor of

Business Administration ,Birla institute of Technology, Mesra, Ranchi, is

an authentic work carried out under my supervision and guidance.

To the best of knowledge, the content of this project does not form a basis for

the award of my previous degree to anyone else.

Date: Mrs. K.L Misra

Department ofmanagement

Birla Institute of

Technology

Noida (U.P)

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CERTIFICATE OF APPROVAL

The foregoing thesis entitled STUDY ON COMPARITIVE ANALYSIS BETWEENEQUITY AND MUTUAL FUNDS is hereby approved as a creditable study of the

research topic and has been presented in satisfactory manner to warrant its

acceptance as prerequisite to the degree for which it has been submitted.

It is understood that by this approval, the undersigned do not necessarily

endorse any conclusion drawn or opinion expressed therein, but approve the

project for the purpose for which it has been submitted.

Mrs. Meenakshi Sharma Dr. S L Gupta

Co-ordinator BBA Academic Co-ordinator

Director

BIT Noida

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PREFACE

A well planned, properly, executed and evaluated industrial training helps a lot in inculcating

good work culture.It provides linkage between the student and industry in order to develop

the awareness of Industrial approach to problem solving based on broad understanding of

the mindset of the investor and understanding their approach towards the stock market and

different kinds of market instruments available in the market, which one of the important

aspect of my industrial was training.

My project titled STUDY ON INDIAN EQUITY BROKERAGE INDUSTRY has

enabled me to have a broader knowledge about this procedure in Aditya Birla Money Ltd.Basically it has given me the opportunity to have a detailed study about the existing systems

and practices being followed by the company.

This facility has also provided me an opportunity to gain practical experiences, which have

increased my sphere of knowledge to a great extent. It has also given me an opportunity to

gain knowledge of the stock market.

I have tried to summarize all my observations, experience and the knowledge acquired in this

project report.

Nipun Sachdeva

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ACKNOWLEDGEMENT

As any good work is incomplete without acknowledging the people who made it

possible, this report is incomplete without thanking the people without whom this project

wouldn't have taken shape.

This project is a result of continuous cooperation, effective guidance and support from our

project mentorMrs. K .L . Mishra associated with this project.

We would like to express our regards and thanks to Mr. Gyanesh kumar, for giving us the

opportunity to work on this project and learn something new. We are indebted to him for

clarifying our concepts by sharing his valued experience in teaching, research and training

which have thereby become an unconscious part of our ideas and thoughts while analyzing

the brokerage industry.

A special thank to the Almighty for giving us the opportunity and strength to complete this

project.

Lastly we would like to thank our families and friends for their continuing support, blessings

and encouragement.

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Executive Summary

This report analyzes the Indian retail brokerage industry taking into account the health of the

capital markets and the intensity of competition among the brokerage companies.

The major growth drivers for brokerage revenue and trading volume are:

Continuous fall in brokerage fees

Adoption of technology screen-based trading, electronic matching, and paperless

securities

Centralized operations, effective risk management, and control on large

interconnected operations spanning multiple locations, which is enabled by telecom

connectivity and low costs

Increasing access to capital and the ability to provide margin finance

Though the Indian brokerage industry has been consolidating steadily over the last 10 years,

the share of the top 10 brokers has risen to only around one-fourth of the total industry

revenues. In this fragmented market, leading players like ICICI Direct, Kotak Securities,

Indiabulls, Sharekhan, and 5 Paisa, apart from many small players, compete on the basis of

low brokerage fees and customer service.

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CONTENTS

Chapter 1 Introduction (8-13)

1.1 Introduction of the Study 8-9

1.2 Company Profile 10-11

1.3 Companys products 12-13

Chapter 2 Literature Review (14-22)

2.1 Overview 14-17

2.2 Indian equity brokerage industry 17-22

Chapter 3 Objectives & Research Methodology (23-24)

3.1 Objectives of the Study 23

3.2 Research Methodology 24

Chapter 4 Data Analysis and Interpretations (25-33)

4.1 Statistical Analysis 25-29

4.2 SWOT Analysis 30-31

Chapter 5 Findings of the Study (32-40)

Chapter 6 Conclusion and Recommendation (41-42)

Bibliography 43

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CHAPTER 1 INTRODUCTION

Aditya Birla Group

US$28 billion, diversified business conglomerate led by Mr. Kumar Mangalam Birla

with a Decades of track record in building and acquiring global and scalable businesses

Experience in multiple businesses across 25 countries with a Conservative

management, strong governance and rigorous financial discipline

Aditya Birla Money Limited formerly known as Apollo Sindhoori Capital Investments is a

leading player in the broking space with nearly 15 years of experience. It became a part of

Aditya Birla Group in March 2009, when the group acquired 76% of the company.

The Company has a strong distribution network of over 800 own branches and franchisee

network, a large customer base in excess of 1,80,000, a strong technology backbone and a

range of products delivered through a robust online and offline model. The Company

boasts of immense talent pool and vertical specialists which add to its positioning as a

major player in this segment.

Aditya Birla Money is listed on National Stock Exchange of India Limited [NSE] and The

Bombay Stock Exchange Limited [BSE]. It is also registered as Depository Participant

with both NSDL and CDSL

ABFSG is the umbrella brand for the financial services business of the Aditya Birla

Group

Vision : To be a leader and a role model in a broad based and integrated financial

services business

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Includes seven businesses:

Aditya Birla Capital Advisors Private Limited

Aditya Birla Money Limited

Aditya Birla Finance Limited

Birla Insurance Advisory & Broking Services Limited

Birla Sun Life Asset Management Company Limited

Aditya Birla Money Mart Limited

Birla Sun Life Insurance Company Limited

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COMPANY PROFILE

Aditya Birla Money is a leading player in broking space with nearly 15 years of

experience. Incorporated in 1995, the Company became a part of Aditya Birla Group in

March 2009.

The Aditya Birla Group is a household name in India, a US $28 billion conglomerate that

is in the league of the Fortune 500 companies. The Aditya Birla Group has a strong

presence across various financial services verticals as a part of the Aditya Birla Financial

Services Group (ABFSG) that include life insurance, fund management, distribution &

wealth management, security based lending, insurance broking and private equity.

Company has a strong network of 600 sub brokers & Direct Selling Agents in 416 cities

and towns across India, sub brokers and direct selling agents are focused business people

with a drive to succeed, equipped with expertise and support provided by us. We have

seen many success stories in the past and hope to continue to the same path of growth.

Aditya Birla Money Limited offers you immense scope as a Direct Selling Agent (DSA)

to generate attractive revenues, without any upper ceiling by marketing our bouquet of

products including,

Internet Equity and Derivative Trading Accounts

Internet Commodity Trading Accounts

Gold Harvest Scheme

Equity & Derivative trading account Internet & Branch

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Introduce clients to trade online and earn a share of the brokerage. Clients will be able to

trade on both NSE and BSE simultaneously across equity and derivatives segments. We

have state-of-the art technology and a dedicated team of staff to support clients. Our

clients enjoy highly competitive brokerage and excellent trading inputs from our

accomplished Research team.

Commodity trading account Internet & Branch

Commodity trading has immense scope in view of the improving international commodity

trading scenario. Aditya Birla Money Limited has an excellent trading platform for trading

on NCDEX & MCX, at branch level and also on Internet. Clients also benefit from the

research reports offered by us.

GOLD HARVEST SCHEME

This scheme enables investors to derive the benefits of buying gold (Minimum 100 grams

and multiples thereof) in futures on commodity exchanges by locking in the price at the

current level. This is a highly beneficial scheme for investors who plan to invest in gold on

an installment basis.

The clients can enter into this scheme by paying just Rs.25,000/- as initial margin alongwith duly filled in application form. The balance payment towards the 100 grams of gold

can be made in installments of Rs.10000/- or Rs.5,000/- or Rs.3,500/- depending on the

scheme duration.

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ABMLS PRODUCTS

EQUITY

Provides online investing along with Secure Electronic Integrated Broking Service

and a seamless and rich online trading experience to customers, offers a choice of 2

trading platforms customized on the basis of investment needs i.e. SpeedEx and Classic

EQUITY TRADING ON THE BASIS OF:

DELIVERY : In this type of trading the investors have to pay the full price of the

stock and the stocks are deposited in their demat account. There is no predefined time

limit in case of the delivery based trading for selling the stocks

INTRADAY : In this type of trading the investors have to pay the full price of the

stock and the stocks are deposited in their demat account. There is no predefined time

limit in case of the delivery based trading for selling the stocks

DERIVATIVES

Derivatives are investments which have no value of their own and derive their value from

underlying assets or stock

They mainly have three features which differentiate them from shares

They have a particular lot size

A time period associated with them

Right and possession with the holder

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COMMODITIES

Commodity is raw or primary products and is traded on regulated commodities exchanges,

in which they are bought and sold in standardized contracts.

It comprises of:

Oil

Agro-products

Seeds

Metals

gold

The indices for commodities are:

MCX

NCDEX

CURRENCY

Foreign exchange rates, like any other asset class move depending on various factors, like

demand supply, interest rate parity, trade and capital flows, speculators taking positions,

clients hedging risk arising from their trade and capital flows etc. Introduction of

Currency Futures complete the suite of instruments available for trading and hedging to

the Indian resident. The strong correlation that foreign exchange has to interest rates,

equity flows and commodities translate to opportunities to trade currency futures

independently or in conjunction with equities, commodities like gold or oil etc

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CHAPTER 2 LITERATURE REVIEW

OVERVIEW

The Indian retail brokerage industry consists of companies that primarily act as agents for thebuying and selling of securities (e.g. stocks, shares, and similar financial instruments) on a

commission or transaction fee basis.

It has two main interdependent segments: Primary market and the Secondary market.

Evolution of the Indian Brokerage Market

The Indian broking industry is one of the oldest trading industries that had been around even

before the establishment of the BSE in 1875. Despite passing through a number of changes in

the post liberalization period, the industry has found its way towards sustainable growth. The

evolution of the brokerage market is explained in three phases: pre1990, 1990-2000, post

2000.

Early Years

The equity brokerage industry in India is one of the oldest in the Asia region. India had an

active stock market for about 150 years that played a significant role in developing risk

markets as also promoting enterprise and supporting the growth of industry.

The roots of a stock market in India began in the 1860s during the American Civil War that

led to a sudden surge in the demand for cotton from India resulting in setting up of a number

of joint stock companies that issued securities to raise finance. This trend was akin to the

rapid growth of securities markets in Europe and the North America in the background of

expansion of railroads and exploration of natural resources and land development.

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Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance

companies and 62 joint stock companies.

In the aftermath of the crash, banks, on whose building steps share brokers used to gather to

seek stock tips and share news, disallowed them to gather there, thus forcing them to find a

place of their own, which later turned into the Dalal Street. A group of about 300 brokers

formed the stock exchange in Jul 1875, which led to the formation of a trust in 1887 known

as the Native Share and Stock Brokers Association.

A unique feature of the stock market development in India was that that it was entirely driven

by local enterprise, unlike the banks which during the pre-independence period were owned

and run by the British. Following the establishment of the first stock exchange in Mumbai,other stock exchanges came into being in major cities in India, namely Ahmedabad (1894),

Calcutta (1908), Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944).

The stock markets gained from surge and boom in several industries such as jute (1870s), tea

(1880s and 1890s), coal (1904 and 1908) etc, at different points of time.

Beginning of a new equity culture

A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign

Exchange Regulation Act (FERA) that led to divestment of foreign equity by the

multinational companies, which created a surge in retail investing. The early 1980s witnessed

another surge in stock markets when major companies such as Reliance accessed equity

markets for resource mobilisation that evinced huge interest from retail investors.

A new set of economic and financial sector reforms that began in the early 1990s gave furtherimpetus to the growth of the stock markets in India. As a part of the reform process, it

became imperative to strengthen the role of the capital markets that could play an important

role in efficient mobilisation and allocation of financial resources to the real economy.

Towards this end, several measures were taken to streamline the processes and systems

including setting up an efficient market infrastructure to enable Indian finance to grow further

and mature. The importance of an efficient micro market infrastructure came into focus

following the incidence of market abuses in securities and banking markets in 1991 and 2001

that led to extensive investigations by two respective Joint Parliamentary Committees.

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The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an

administrative arrangement, was given statutory powers with the enactment of the SEBI Act,

1992. The broad objectives of the SEBI include

to protect the interests of the investors in securities

to promote the development of securities markets and to regulate the securities

markets

The scope and functioning of the SEBI has greatly expanded with the rapid growth of

securities markets in India in the last fifteen years.

Following the recommendations of the High Powered Study Group on Establishment of New

Stock Exchanges, the National Stock Exchange of India (NSE) was promoted by financial

institutions with an aim to provide access to investors all over the country. NSE was

incorporated in Nov 1992 as a tax paying company, the first of such stock exchanges in India,

since stock exchanges earlier were trusts, being run on no-profit basis. NSE was recognized

as a stock exchange under the Securities Contracts (Regulations) Act 1956 in Apr 1993. It

commenced operations in wholesale debt segment in Jun 1994 and capital market segment

(equities) in Nov 1994. The setting up of the National Stock Exchange brought to Indian

capital markets several innovations and modern practices and procedures such as nationwide

trading network, electronic trading, greater transparency in price discovery and process

driven operations that had significant bearing on further growth of the stock markets in India.

Faster and efficient securities settlement system is an important ingredient of a successful

stock market. To speed the securities settlement process, The Depositories Act 1996 was

passed that allowed for dematerialisation (and rematerialisation) of securities in depositories

and the transfer of securities through electronic book entry. The National SecuritiesDepository Limited (NSDL) set up by leading financial institutions, commenced operations

in Oct 1996. Regulations governing selection of various types of market intermediaries as

depository participations were made. Subsequently, Central Depository Services (India)

Limited promoted by Bombay Stock Exchange and other financial institutions came into

being.

Rapid Growth

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The last decade has been exceptionally good for the stock markets in India. In the back of

wide ranging reforms in regulation and market practice as also the growing participation of

foreign institutional investment, stock markets in India have showed phenomenal growth in

the early 1990s. The stock market capitalization in mid-2007 is nearly the same size as that of

the gross domestic product as compared to about 25 percent of the latter in the early 2000s.

Investor base continued to grow from domestic and international markets. The value of share

trading witnessed a sharp jump too. Foreign institutional investment in Indian stock markets

showed continuous rise reaching about USD10 bn in each of these years between FY04 to

FY06. Stock markets became intensely technology and process driven, giving little scope for

manual intervention that has been the source of market abuse in the past. Electronic trading,

digital certification, straight through processing, electronic contract notes, online broking

have emerged as major trends in technology. Risk management became robust reducing the

recurrence of payment defaults. Product expansion took place in a speedy manner. Indian

equity markets now offer, in addition to trading in equities, opportunities in trading of

derivatives in futures and options in index and stocks. ETFs are showing gradual growth.

Within five years of introduction of derivatives, Indian stock markets now are ranked first in

stock futures and fourth in index futures. Indian stock markets are transaction intensive and

thus rank among the top five markets in this regard. Stock exchange reforms brought in

professional management separating conflicts of interest between brokers as owners of the

exchanges and traders/dealers. The demutualisation and corporatisation of all stock

exchanges is nearing completion and the boards of the stock exchanges now have majority of

independent directors. Foreign institutions took stake in Indias two leading domestic stock

exchanges. While NYSE Group led consortium took stake in the National Stock Exchange,

Deutsche Borse and Singapore Stock Exchange bought equity in the Bombay Stock

Exchange Ltd.

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Indian Brokerage Industry

India in Global Markets

The stature and significance of India is growing in the world capital markets. India is not

only attracting greater interest from world markets, but is also assuming increasing

importance in global finance.

India is a major recipient of foreign institutional flows amongst the emerging markets.

Since the opening up of domestic stock markets to foreign investors, cumulative net

FII investments reached Rs 517 Bn by 2008 end.

India is major destination of private equity flows into the emerging markets

India was host to the annual meetings/conference of the World Federation of

Exchanges (2005) and International Organization of Securities Commission (IOSCO)

(2007)

India emerged a trillion dollar market capitalisation market in 2007, and was among

the top 10 stock exchanges in the world in terms of market capitalisation

India is amongst the top fifteen stock exchanges in the world in respect of equity

turnover

India emerged as a leading player in commodities futures market

India is amongst the top five in the number of transactions

India is among the top five in respect of volume traded in Stock Index Futures and

Stock Futures

India is one of the few markets with extensive dematerialisation of shares

Indias T+2 securities settlement cycle is at par with the global standards

Indian stock markets have the largest number of listings, with trading taking place in

about 2,500-3,000 stocks

Indias most popular stock index (Sensex) is constructed on the basis of full float

methodology, one of the firsts in the Asian region and a global standard

Indian market indices such as Sensex and CNX Nifty are listed in foreign exchanges

for trading as ETFs.

The year that was(2008)

Secondary market trading volumes down 33% YoY

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FII outflows of ~USD 12 bn

Nifty down ~36%

Advisory transactions stable though some ground lost

PE deals had fallen to almost half

ECM activity down ~90%

DCM relatively stable, though activity level were lower in second half of the FY08

due to liquidity crunch and counterparty fears

Recent Trends (2009)

Global risk aversion is unwinding and Confidence levels returning, being reflected in

performance of the indices

Liquidity and credit flows improving

Political stability and India re-rating

FII and Domestic Flows resuming, USD 7bn FII inflow in April & May

Secondary volumes showing early signs of uptrend, average daily volumes of Rs 800

bn vs. 620 bn in previous year

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Various important measures taken by the Indian Government toimprove the condition of Indian stock market.

Measures Objective Status

Allow foreign institutional

investors to invest in equity

and debt markets

Liberalization of stock market

to attract foreign investment

in order to boost economic

growth.

Foreign investment up to 49% will be

allowed in these companies with a

separate FDI cap of 26% and FII cap

of 23% after approval from FIPB

Outstanding limit for FII investment in

debt securities raised from USD1.75

bn to USD2.0 bn and the same for the

corporate debt raised from USD0.5 bn

to USD1.5 bn

Expanding the product range

offered by the stock

exchanges

Bring Indian market at par

with the international

standards and diversify

product portfolio.

SEBI approved new derivative products :

mini-contracts on equity indices, options

with longer life/tenure, volatility index and

F&O contracts, Options on Futures, Bond

Indices and F&O contracts, Exchange-

Traded Currency (Foreign-Exchange)

Futures and Options and Exchange Traded

products to cater to different investment

strategies

Allowing Indian companies to

issues ADRS and GDRS

Allow Indian nationals and

companies to invest abroad

Facilitate market

integration and give

freedom to the companies.

Access to more funds for

investment

Mutual funds were allowed to invest in

ADRs/GDRs and foreign securities

within the overall limit of USD4 bn

Venture capital funds were allowed to

invest in foreign securities

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Guidelines on issue of Indian

Depository Receipts (IDRs) were

issued

Divestment of government

ownership

Facilitate growth through

privatization

Providing minimum public shareholding

of 25% in all listed companies

Strengthening of institutional

framework in primary and

secondary markets

Demutualization

To ensure transparency

Investor protection

Provide a standard

framework for operations

Deregulation

Reduces the conflict of

interest

SEBI permitted listed companies to

send abridged annual report to the

shareholders

Exclusive email ID to be given by the

primary market intermediaries for

registering investor complaints

Stock exchanges advised to update the

applicable VAR margin rates at least

five times in a day

SEBI approved and notified the

Corporatization and Demutualization

Schemes of 19 stock exchanges

BSE and NSE to set up and

maintain corporate bond

reporting platforms

To capture all information

relating to trading.

Investor protection

BSE and NSE began maintaining a

reporting platform for corporate bonds.

BSE and NSE jointly launched a

common portal at

www.corpfiling.co.in to disseminate

filings made by companies listed in

both the exchanges.

Making PAN compulsory Strengthening KYC (Know

Your Client)

PAN made compulsory for all categories

of investors for opening a DEMAT

account with effect from Apr 1, 2006

Transactions necessarily

settled through the clearing

corporations/clearing house

Investor protection and

greater control.

It was made mandatory.

Permit Gold Exchange

Traded Funds

Generate options for

companies and investors

SEBI allowed the launch of Gold

Exchange Traded Funds (GEFTs)

Introduction of mutual fund

schemes

Minimize risk for investors

and ensure returns.

Mutual funds were allowed to invest in

ADRs/GDRs and foreign securities

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within the overall limit of USD4 bn

Mutual fund trustees are required to

certify that the scheme approved by

them is a new product and is not aminor modification of an existing

scheme/product

SEBI Mutual Fund regulations were

amended so as to permit the launch of

Capital Protection Oriented schemes

SEBI directed MFs to dispatch

statement of accounts to unit holders

under SIP/STP/SWP on every quarter.

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CHAPTER 3 OBJECTIVES AND RESEARCH

METHODOLOGY

Objectives

To give idea to retail investor about the concept of fundamental analysis of

shares the safest approach for investing in stock market.

To give an overview of the Indian brokerage industry.

To evaluate the causes for share market fluctuations both in terms of volumes

and price.

To learn different patterns of investment

To disseminate the improvement suggested by the customer to the

organization.

To evaluate the advantages and disadvantages of the various schemes

launched by a Brokerage firm on itself.

To understand Customer behavior in investment pattern

Pyramids of customers and their interest I investment

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Research Methodology

Research Methodology is a way to systematically solving the research problem. It may be

understood as a science of studying how research is done scientifically. Here we talk of

Research Methodology we not only talk of Research Methods adopted to get the desired

results but also consider the logic behind these methods. The well defined Methodology

means all the methods to views of the business profile, market segmentation to analyses

the data.

SOURCES OF DATA

This research is based mostly on secondary sources .

Methodology (OTJ-On the job)

Methodology of the project starts with

In the first phase we are trained and they teach us different things about market.

After that they conduct a mock viva, in this they ask about the real life problem faced

by the customers.

They provide leads and after that we make calls.

Then after that we have to provide details of product and convince them

Then we have to visit them and get the formed filled from them.

Maintaining diary of clients and contacting them at regular basis.

The next part is knowing the pattern of the banking sectors scripts. How they move with

the correspondence to the market movement and also the economy.

Get the knowledge of technical as well as fundamental methods.

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Observe the patterns of the scripts.

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Chapter 4 Data Analysis And Interpretation

Statistical Analysis

FII & MF Activity in Equity Markets

FY09 was the first fiscal in India's history when FIIs were net sellers in Indian equities;

secondary market FII outflows for the year were Rs. 479 billion. Interestingly, FY08 was the

year of record net FII inflows of Rs. 517 billion. However, mutual funds continued to be net

buyers for the sixth consecutive year. In FY09, mutual funds were net buyers to the tune of

Rs. 66 billion, which is a 52% drop from Rs. 137 billion of net buying in FY08.

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Equity Market Volumes:

The average daily equity market volumes for FY09 were Rs. 612 billion, down 16% from Rs.

726 billion in FY08. However, during the six years beginning FY03, the year when cash and

derivatives were fully active on both the exchanges, total market volumes have grown by

50% compounded annually. During this period, volumes in the derivatives and cash segments

have grown at a compounded annual growth rate (CAGR) of 72% and 27%, respectively. The

notable trends in customer segmental volume mix that influence market volumes are as

follows:

1. The contribution of retail volumes has declined from 61% in FY08 to 55% FY09; the

retail contribution ratio has been more volatile than the other two market segments.

2. The contribution of institutional volumes, i.e. volumes from FII and domestic

institutional investors (DIIs) such as mutual funds, banks and insurance companies

has remained stable at 15% for FY08 and FY09.

3. The contribution of proprietary volumes, which include arbitrage and other

proprietary volumes of stock brokers, has increased from 24% in FY08 to 30% in

FY09.

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Growth in average daily volumes on the NSE & BSE from FY03 to FY09 (Rupees in

billions)

Source: NSE & BSE

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Segmental mix of total volumes (NSE & BSE combined)

2008-09

2009-10

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Source: NSE & BSE

Demat Accounts

Increasing Equity penetration by growth in demat accounts (in millions)

Source: CDSL & NSDL

Note:

1. Number of demat accounts in million

2. FY09 figure includes figures of NSDL as on 31 March 2009 and figures of CDSL as on 28

February 2009

3. All the above numbers indicate active accounts except of CDSL for the period between

FY00 to FY05, which are total number of demat accounts with CDSL .The number of demat

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accounts in the country shows the depth of equity penetration. CDSL and NSDL together

have over 15 million active demat accounts.

~INR 140 bn

Figures in brackets indicate revenue size in INR bn

Source: Edelweiss Capital Investor Presentation

Capital MarketPlayers

Individual Clients (Broking and

Distribution) (60)

Asset Management (Traditional and

alternative) (20)

Investment Banking (Advisory, ECM)(12)

Institutional Equities (Equities &Derivatives) (20)

Others (Treasury, Financing, Tradingetc.)(25)

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SWOT ANALYSIS ON BROKERAGE INDUSTRY

SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats

SWOT analysis is an important tool for auditing the overall strategic position of a business

and its environment.

STRENGTHS WEAKNESSES

Multiples engines of growth- an

integrated financial services platform

Well established and continuouslyexpanding geographical footprints

Unique, stable and scalable business

model

Adoption of technology screen-

based trading, electronic matching,

and paperless securities

Centralized operations, effective risk

management, and control on large

interconnected operations spanning

multiple locations, which is enabled

by telecom connectivity and low costs

Accessibility of capital increases and

margin finance increases

Lack of visible goodwill among minor

players

Lack of trust on companies bycustomers

Psyche of people in India is

converging

Companies are still running on selling

concept

Weak infrastructural facilities

Compliance with strict rules andnorms set by govt.

OPPORTUNITIES THREATS

Structure of the industry, market size,

and growth rates-huge potential in

Indian market

Government is continuously

liberalizing the market

Proactive and progressive nature of

Indian brokerage industry(India ranks

amongst top five globally in this

High degree competition

Fluctuations in government policies

Political framework

Developing Indian economy

Companies must develop and

implement physical, administrative

and technical safeguards to achieve

the following

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segment)

Economy is still growing at healthy

rate leading to investment / capital

requirement

Huge market opportunity for wealth

management service providers as

Indian wealth management business is

transforming from mere wealth

safeguarding to growing wealth.

Leveraging technology to enable best

practices and processes

Corporates looking at consolidation /acquisitions / restructuring opens out

opportunities for the corporate

advisory business.

goals:

o Ensure the security and

confidentiality of customer

records and informationo Secure against any anticipated

threats or hazards to the

security or integrity of such

information

o Secure against unauthorized

access to or use of such

information that could result in

substantial harm or

inconvenience to any customer

Corporate espionage

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Exchange-wise Brokers and Sub-Brokers in Indian Stock

Exchanges

Stock Exchange Brokers Sub Brokers % Corporate

Brokers

Ahmedabad 317 119 48

Bangalore 256 156 49

Bombay 840 10691 79

Bhubaneshwar 219 17 9

Calcutta 962 88 21

Cochin 434 42 18

Coimbatore 135 22 36

Delhi 375 343 57

Gauhati 110 4 4

Hyderabad 304 199 40

Inter Connected 788 3 36

Jaipur 507 34 4

Ludhiana 293 38 29

Madhya Pradesh 174 5 20

Madras 182 115 39

Magadh 198 3 11

Mangalore 66 1 14

National SE 1014 11359 91

OTCEI 769 19 76

Pune 192 161 30

Saurashtra Kutch 426 20

UPSE 463 19 20

Vadaodara 311 41 21

Source: Securities and Exchange Board of India

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Major players

Comparative Financials

Rs. Crore Rs. Crore Rs. Crore

Company Name Total

income

PAT Net

worth

Apollo Sindhoori Capital Invsts. Ltd.(Now

ABML)

122.03 21.59 45.1

Arihant Capital Markets Ltd. 61.24 14.18 39.07

Bajaj Capital Insurance Broking Ltd. 26.05 2.87 6.99

Brics Securities Ltd. 68.01 48.89 111.78

Edelweiss Securities Ltd. 384.97 186.44 258.24

Emkay Global Financial Services Ltd. 131.79 23.5 132.26

Geojit B N P Paribas Financial Services Ltd. 208.52 48.23 233.61

India Infoline Ltd. 672.45 128.69 989.85

Indiabulls Securities Ltd. 628.31 248.66 364.02

L K P Securities Ltd. 59.06 3.46 15.66

Motilal Oswal Financial Services Limited. 34.79 17.18 399.92

Networth Stock Broking Ltd. 54.22 3.05 53.89

Reliance Capital Ltd. 952.76 1039.23 5926.97

Religare Commodities Ltd. 32.31 0.88 4.93

Total 3436.51 1786.85 8582.29

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Chapter 5 Findings From The Study

Performance Highlites

1. Edelweiss Securities Ltd.

Segment sales (net) Rs.( in cr.)

Agency Business 370.29

Capital Based Business 140.16

2. Indiabulls Securities Ltd.

Segment sales

Broking & Related Activities 618.05

Others 0.59

3. India Infoline Ltd.

Segment sales ( Net)

Commodities Brokerage & Related 3.57

Equity Brokerage & Related Income 156.36

Financing & Investing Income 105.49

Life Insurance Agency Income 0.65

Marketing & Online Media 3.09

4. Motilal Oswal Financial Services Ltd.

Segment sales (net)

Equity Broking & Other Related Activities

(Consolidated) 593.68

Financial Activity (Consolidated) 35.58

Investment Banking (Consolidated) 62.82

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5. Reliance Capital Ltd.

Segment Sales (Net)

Asset Management (Consolidated) 472.92

Consumer Finance (Consolidated) 394.58

Finance & Investments (Consolidated) 1742.76

General Insurance (Consolidated) 2346.12

6. Religare Enterprises Ltd.

PRODUCT GRID FOR BROKERAGE INDUSTRY

Segment sales

Financial Advisory Services 1.13

Investment Operations 30.73

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Product grid comprises of all the products offered by brokerage or securities industry. This

industry is one of major emerging industry in the country as it helps in dealing with various

financial aspects which help in building a good financial portfolio for an individual orcorporate. Product grid, in simpler terms, can be explained as the whole basket of products

offered by brokerage industry to its customers. This can further be explained by taking

various companies operating in this sector and thereby comparing the products offered by

these companies.

MotilalOswal

RelianceMoney

Karvy IndiaBulls

KotakSecurities

IndiaInfoline

BirlaGlobal

Finance

ShareKhan

Equities Y Y Y Y Y Y Y Y

Derivatives Y Y Y Y Y Y Y Y

Margin

funding

Y N N N N N Y N

Depository

services

Y Y Y Y Y N N Y

Portfolio mgt Y Y Y Y Y Y Y Y

Commodities

trading

Y Y Y Y N Y N Y

Wealth mgt Y N N N N Y N N

Research Y N N Y Y Y N Y

Mf Y Y Y Y Y Y Y Y

Structured

products

N Y N N Y N N N

Third party

products

N Y Y N Y N N N

Insurance N Y Y N N Y N N

Real estate N Y Y N N N Y N

Tax planning N Y N N N N N N

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Off-shore

investments

N Y N N N N N N

e-broking Y Y N N Y N N N

Mortgages N N Y N Y Y N N

IPO Y Y N Y Y Y Y Y

Loans N N Y N Y Y Y N

BPO N N Y N N N N N

KPO N N Y N N N N N

Bonds N N Y N N N N N

Promoter

financing

N N Y N N N Y N

Buy-back

financing

N N Y N N N Y N

ESOP

financing

N N N N N N Y N

Retail

financing

N N Y Y N N N N

Corporate

financing

N N Y N N N Y N

Asset

financing

Y N N N N N N N

On-line Y Y N Y Y Y N Y

Debt market Y Y Y Y Y N N Y

Investment

banking

N N Y N N N N N

In the above grid, various companies operating in brokerage sector has been taken which

helps in contributing to make it an industry. Along with the companies list of products have

been taken which are offered by different company. On Y-axis list of products has been taken

and on X-axis list of companies has been taken in order to study which product is being

offered by which company. In other words, comparison between the companies has been

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done on the basis of products offered by them which help in establishing one firm distinct

from other.

Therefore, while comparing different companies on the basis of their product basket or

product portfolio we have seen that Equities and Derivatives are two main products offered

by each and every firm in this industry in our country. Apart from this there are huge

difference among the firms in their product offerings as there are few products which are

being offered by one company only whereas, there are few which are offered by many firms.

In the list of 33 different products, Karvy offers 21 products to its customers reaching on top

in our analysis whereas, Share Khan Limited offers only 10 products and remains at the last

position.

RECENT DEVELOPMENTS GOVERNING REGULATION OF

STOCK MARKETS

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Systematic and streamlined regulation is the key strength and sustainability of the securities

markets. Though formal regulation of the securities markets is about 70 years old, some of

the recent developments in the financial markets are reshaping the scope and focus of the

regulation. These include -

There is growing harmonisation of regulation across different markets. Organisations

such as International Organisation for Securities Commissions (IOSCO) are playing a

very important role in adoption of uniform principles and guidelines across the

markets.

Markets have become more democratized with more people and institutions

participating in the market related activities.

Securities markets are transforming from being membership driven to public

corporation following demutualization and corporatisation of stock exchanges in

mature and emerging markets.

Two most important pieces of regulation that came into being in the recent period are

in the form of market structure reforms in the US, known more popularly as

regulation NMS, which underlines the promotion of competition across the markets

under three major principles; best price, open access and transparency. Under the new

trade-through role, in whichever market a customer placed his order, it should be able

to access the best price that is immediately and automatically available anywhere in

the national market system.

The trade-through rule will not allow markets to ignore better priced automated

quotes displayed by the competitors. Similarly, open access to displayed prices will be

a major feature governing the competition of the markets. The regulation also

stipulates that all significant markets must display their quotations and trade reports

should be available to all interested parties on fair terms and non discriminatorymanner.

Another equally important development is the Markets in Financial Industry Directive

(MiFiD) that will come into force from 1 Nov, 2007 and stipulates wide ranging

norms for financial institutions in the European Union. Major features of the MiFiD

include wider scope of coverage of the financial institutions and the related business

activities, greater degree of harmonization across the European markets and facilitate

cross border business and stipulated capital requirements.

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Chapter 6 Conclusion And Recommendation

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Conclusion

The project is INDIAN EQUITY BROKERAGE INDUSTRY. So to analyze the

marketing research some important findings have been obtained about the

Indian investors and Indian investment organization. Most of the Indians are

aware about high risk and high return. So it is necessary that government will

encourage to investors to invest in Market.

Large census are not well aware of this financial instruments, they only known

with the term mutual & share are something which exit in the market. Traditional

person take it as a speculation.

Lack of awareness is declining the market of such financial product so from my

point of view proper mechanism should be adopted to make learn this census

about the product and make him able to understand the market of such product

so that they also penetrate.

Some important findings are that the women are defensive investors and small

investors want to invest their money in banks or post offices. But after research

it has found that the current economic situation and government role people areattracting towards market investment.

Investment related organization should be transparent and they should be less

flexible. Government should guide to people about the investment Organization

and investment options because people are very conscious about the

government approval organization, because they are ready to take the risk if

government is ready to prevent or sustain them.

Aditya Birla Money Ltd has a great opportunity to increase their market potential

especially in this market situation. Most of the branded broking agencies are

coped by security exchange board of India due to their illegal works and scams

related to IPOs. Aditya Birla Money Ltd has a unique brand name who assures to

people about the transparent work and obtaining their belief.

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Recommendation

Since the project is related to assess the risk profile of investor and

how to increase the market potential of Aditya Birla Money Ltd. So

every precise aspect like risk taking, influencing factors of

investment Organization government role, age, sex income factors

have been analyzed.

Since the problem is related to investors profiles. Market potential of

Aditya Birla Money Ltd therefore some recommendations are

being put for improvement.

Investors (especially lower and middle income group should

invest some percent of their income in stock market or mutual

fund.

Investment related organization should be transparent and

they should guide to see the mentality of investors like

attacking investors or defensive investors

Government should monitor the stock market closely and they

should provide some guide to investors about investment

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BIBLIOGRAPHY

BOOKS

PHILIP KOTLER PRINCIPLES OF

MARKETTING

CR KOTHARI C. R. KOTHARI

WEBSITES

www.adityabirlamoney.com

www.indiabulls.com

www.moneycontrol.com

www.nseindia.com

JOURNAL

BUSINESS TODAY NEW EDITION

NEWS PAPER

ECONOMIC TIMES
http://www.indiabulls.com/http://www.indiabulls.com/

nipun final

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