ABOUT INDUSTRY

PROJECT REPORT ON

Sharekhan

(Customer buying preference.)

SUBMITTED BY:

SARVAIYA NIKHIL J.

SUBMITTED TO:

GIDC RAJJU SHROFF ROFEL INSTITUTE OF MANAGEMENT STUDIES,

VAP I

GUIDED BY:

ANITHA THOMAS

ABOUT INDUSTRY

HISTORY OF THE STOCK BROKING INDUSTRY

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business.

In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as "The Stock Exchange"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.

Thus in the same way, gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges.

DEVELOPMENT

An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers Association at Bombay in 1875, the precursor of the present-day Bombay Stock Exchange. This was followed by the formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently.

In order to check such aberrations and promote a more orderly development of the stock market, the central government introduced a legislation called the Securities Contracts (Regulation) Act, 1956. Under this legislation, it is mandatory on the part of a stock exchanges to seek government recognition. As of January 2002 there were 23 stock exchanges recognized by the central Government. They are located at Ahemdabad, Bangalore, Baroda, Bhubaneshwar, Calcutta, Chenni,(the Madras stock Exchanges ), Cochin, Coimbatore, Delhi, Guwahati, Hyderbad, Indore, Jaipur, Kanpur, Ludhiana, Mangalore, Mumbai(the National Stock Exchange or NSE), Mumbai (The Stock Exchange), popularly called the Bombay Stock Exchange, Mumbai (OTC Exchange of India), Mumbai (The Inter-connected Stock Exchange of India), Patna, Pune, and Rajkot. Of course, the principle bourses are the National Stock Exchange and The Bombay Stock Exchange, accounting for the bulk of the business done on the Indian stock market.

While the recognized stock exchanges have been accorded a privileged position, they are subject to governmental supervision and control. The rules of a recognized stock exchanges relating to the managerial powers of the governing body, admission, suspension, expulsion, and re-admission of its members, appointment of authorized representatives and clerks, so on and so forth have to be approved by the government. These rules can be amended, varied or rescinded only with the prior approval of the government. The Securities Contracts (Regulation) Act vests the government with the power to make enquiries into the affairs of a recognized stock exchange and its business, withdraw the recognition the task of regulating the stock exchange to the Securities Exchanges Board of India.

BSE (BOMBAY STOCK EXCHANGE)

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education program and making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.

NSE(NATIONAL STOCK EXCHANGE)NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It started operations in June 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments.

NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nation-wide, screen-based, automated trading system, with a high degree of transparency and equal access to investors irrespective of geographical location. The high level of information dissemination through on-line system has helped in integrating retail investors on a nation-wide basis. The standards set by the exchange in terms of market practices, Products , technology and service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service.

NCDEX (NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE)

NCDEX started working on 15th December 2003. This exchange provides facilities to their trading and clearing member at different 130 centers for contract.

In commodity market the main participants are speculators, hedgers and arbitrageurs.

Promoters of NCDEX are

National Stock Exchange (NSE)

ICICI bank

Life Insurance Corporation (LIC)

National Bank for Agricultural and Rural Development (NABARD)

IFFICO

Punjab National Bank (PNB)

CRISIL

WHY NCDEX?

NCDEX is nationalized screen based system which is providing transparent, private and easy services.

NCDEX is one of the traditional media which gives online information

NCDEX is one of the Indian commodity exchange, constructed on the basis of the current national institutes the exchange has been established with the coloration of leading institutes like NABARD, LIC, NSI etc.

In India NCDEX has maximum settlement guarantee fund.

NCDEX has appointed two exports for checking quality at the time of delivery

FACILITIES PROVIDED BY NCDEX

NCDEX has developed facility for checking of commodity and also provides a wear house facility

By collaborating with industrial partners, industrial companies, news agencies, banks and developers of kiosk network NCDEX is able to provide current rates and contracts rate.

To prepare guidelines related to special products of securitization NCDEX works with bank.

To avail farmers from risk of fluctuation in prices NCDEX provides special services for agricultural.

NCDEX is working with tax officer to make clear different types of sales and service taxes.

NCDEX is providing attractive products like weather derivatives

MCX(MULTI COMMODITY EXCHANGE)MULTI COMMODITY EXCHANGE of India limited is a new order exchange with a mandate for setting up a nationwide, online multi-commodity market place, offering unlimited growth opportunities to commodities market participants. As a true neutral market, MCX has taken several initiatives for users in a new generation commodities futures market in the process, become the countrys premier exchange.

MCX, an independent and a de-mutualized exchange since inception, is all set up to introduce a state of the art, online digital exchange for commodities futures trading in the country and has accordingly initiated several steps to translate this vision into reality.Market Watch:

The market watch window is used to view the market details for a particular or group of contracts and for a particular instrument type. This window displays the following details: Symbol, Expiry, price quotation unit, buy qty, buy price, sell price, sell qty, last traded price, D.P.R, volume (in 000s), value (in lack), % change, average trade price, high, low, open, close & open interest.

SROCK MARKET BASIC

What are corporations?

Companies are started by individuals or may be a small circle of people. They pool their money or obtain loans, raising funds to launch the business.

A choice is made to organize the business as a sole proprietorship where one

Person or a married couple owns everything, or as a partnership with others who may wish to invest money. Later they may choose to "incorporate". As a

Corporation, the owners are not personally responsible or liable for any debts of the company if the company doesn't succeed. Corporations issue official-looking sheets of paper that represent ownership of the company. These are called stock certificates, and each certificate represents a set number of shares. The total number of shares will vary from one company to another, as each makes its own choice about how many pieces of ownership to divide the corporation into. One corporation may have only 2,500 shares, while another, such as IBM or the Ford Motor Company, may issue over a billion

shares. Companies sell stock (pieces of ownership) to raise money and provide funding for the expansion and growth of the business. The business founders give up part of their ownership in exchange for this needed cash. The expectation is that even though the owners have surrendered a portion of the company to the

public, their remaining share of stock will become increasingly valuable as the business grows. Corporations are not allowed to sell shares of stock on the open stock market without the approval of the Securities and Exchange Commission (SEC). This transition from a privately held corporation to a publicly traded one is called going public, and this first sale of stock to the public is called an initial public offering, or IPO.

Why do people invest in the stock market?When you buy stock in a corporation, you own part of that company. This gives you a vote at annual shareholder meetings, and a right to a share of future profits.When a company pays out profits to the shareholder, the money received is called a "Dividend"."kj* I I ** I *-f % I V* * IThe corporation's board of directors choose when to declare a dividend and how much to pay. Most older and larger companies pay a regular dividend, most newer and smaller companies do not.The average investor buys stock hoping that the stock's price will rise, so the shares can be sold at a profit. This will happen if more investors want to buy stock in a company than wish to sell. The potential of a small dividend check is of little concern.What is usually responsible for increased interest in a company's stock is the prospect of the company's sales and profits going up.A company who is a leader in a hot industry will usually see its share price rise dramatically.Investors take the risk of the price falling because they hope to make more money in the market than they can with safe investments such as bank CD's or government bonds.

What is a stock market index?In the stock market world, you need a way to compare the movement of the market, up and down, from day to day, and from year to year. An index is just a benchmark or yardstick expressed as a number that makes it possible to do this comparison. For e.g. S&P CNX Nifty is the index of NSE and SENSEX is the index of BSE.

Market CapAs you become familiar with stock and mutual fund investing, you will encounter the term "Cap", as in Small-Cap, Mid-Cap, and Large-Cap. Cap is short for capitalization.As a stock market term, the capitalization of a company is calculated by multiplying the total number of shares by the current price per share. If a company has 500 million shares trading at $20 a share, its market cap is $10 billion (500,000,000 x $20). This is the total value of the company's stock, the value that the world of stock market investors has placed on the company (at least for today, investors are quick to change their minds).Much of this perceived value is due to the expectations of a company's future prospects.Market cap is not dictated by how "big" a company is.Today, we define a large-cap company as one whose stock is valued at over $10 billion (some still say over $5 billion), a mid-cap from $1 to $10 billion, a small-cap from $250 million to $1 billion, and a company whose stock value is under $250 million as a micro-cap. Depending on whom you listen to or how old your reference book is, these definitions will vary.A related point - don't think a company is big just because it has a high stock price, or that it is small just because its stock price is low.

For example, Disney trading at $23 is not smaller than Barnes & Noble trading at $33, since Disney has 2,048,690,000 shares outstanding (called the "float") and B&N has just 68,585,000 shares. That's a $4.7 billion market cap for Disney versus only $226 million for Barnes & Noble.The price per share, like the market cap, has nothing to do with how big a company is.The Securities Market consists of two segments, viz. Primary market and Secondary market. Primary market is the place where issuers create and issue equity, debt or hybrid instruments for subscription by the public; the Secondary market enables the holders of securities to trade them.Secondary market essentially comprises of stock exchanges, which provide platform for purchase and sale of securities by investors. In India, apart from the Regional StockExchanges established in different centers, there are exchanges like the National StockExchange (NSE) and the Over the Counter Exchange of India (OTCEI), who provide nation wide trading facilities with terminals all over the country. The trading platform of stock exchanges is accessible only through brokers and trading of securities is confined only to stock exchanges.Thus, the securities market has two independent, inseparable segments, the new issues (primary) market and the stock (secondary) market. The primary market provides channel for sale of new securities while the secondary market deals in securities previously issued. The issuer of securities sells the securities to the primary market to raise funds for investment and/or to discharge some obligations. The secondary market enables them who hold securities to adjust their holdings in response to change in their assessment of risk and return. They also sell securities for cash to meet their liquidity needs.

The corporate securities market dates back to the 18 century when the securities of the East India Company were traded in Mumbai and Kolkata. The brokers used to gather under a banyan tree in Mumbai and under a neem tree in Kolkata for the purpose. However, the real beginning came in the 1850s with the introduction of the joint stock companies with limited liability. The 1860s witnessed beverish dealings in securities and securities speculation. This brought brokers to Bombay together in July 1875 to boom the first organized stock exchange in the country, viz. The Stock Exchange, Mumbai, Ahemadabad Stock Exchange in 1894 and 22 others followed with 20 century.The Stock Exchanges are the exclusive centers for trading in equities and the trading platform of an exchange is accessible only to brokers. The regulatory framework heavily favors the recognized stock exchanges by almost banning trading activity outside the stock exchanges. The securities are divided into two parts viz. Corporate securities and Government SecuritiesCorporate Securities:

The no of stock exchanges increased from 11 in 1990 to 23 now. All the exchanges are fully computerized and offer 100% on-line trading. 9644 companies were available for trading on stock exchanges at the end of March 2002. The trading platform of the stock exchanges was accessible to 9687 members from over 400 cities on the same date.The sectoral distribution of turnover has undergone significant change over last fewYears. The share of manufacturing companies in turnover of top '50' companies, which was nearly 80% in 1995-96, declined sharply to about 6% in 201-02. During the same period the share of IT companies in turnover increased sharply from nil in 1995-96 to 67% in 2001-02.Government Securities:

The aggregate turnover in central and state government dated securities, including treasury bills, through SGL transactions increased 31 times between 1994-95 and 2001-02. During 2001-02 it reached a level of Rs. 1,573,893 core, higher than combined trading volumes in equity segments of all the exchanges in the country, reflecting deepening of the market. The share of outright transactions in government securities increased from 23.2% in 1995-96 to 77% in 2001-02. The share of repo transactions declined correspondingly from 76.8% in 1995-96 to 23% in 2001-02. The Share of dated securities in turnover of government securities increased from 69% in 1996-97 to 94% in 2001-02. The T-bills accounted for remaining SGL turnover.Derivatives Market:

Derivatives trading commenced in India in June 2000. The total exchange traded derivatives witnessed a volume of Rs. 442,343 crore during 2002-03 as against Rs. 4018 crore during the preceding year. While NSE accounted for about 99.5% of total turnover, BSE accounted for about 0.5% in 2002-03. The market witnessed higher volumes from June 2001 with introduction of index options, and still higher volumes with introduction of stock options in July 2001. There was a spurt in volumes in November 2001 when stock futures were introduced. It is believed that India is the largest market in the world for stock futures.The stock market or secondary market ensures free marketability, negotiability and price discharge. For these reasons the stock market is referred to as the nerve center of the capital market, reflecting the economic trend as well as the hopes, aspirations and apprehensions of the investors. Stock Market is also called the barometer of the economy.The broad structure of the secondary market as on March 31, 2000 is presented below:Stock Exchanges24Exchanges with Screen Based Trading system24Exchanges having Trade/Settlement Guarantee Fund16Exchanges with Internet Trading1

Registered Members (brokers)9192Registered Foreign Brokers38Registered Corporate Members3136Registered Sub-Brokers5675Registered FIIS506Listed Companies9871Market CapitalizationRs. 1192630 croreTurnover during 1999-2000Rs. 2067031 crore

Supply and DemandA stock's price movement up and down until the end of the trading day, is strictly a result of supply and demand. The SUPPLY is the number of shares offered for sale at anyone one moment. The DEMAND is the number of shares investors wish to buy at exactly that same time. What a share of a company is worth on anyone day or at any one minute, is determined by all investors voting with their money. If investors want a stock and are willing to pay more, the price will go up. If investors are selling a stock and there aren't enough buyers, the price will go down. Period.

How does one buy stocks?Buying stocks is not as simple as walking into a stockbroker's office and buying shares like you would a pair of shoes from a store. You are required to open an account with the brokerage, like opening an account at a bank.Some brokers will allow you to open an account with very little money. The firm will then hold this money in an interest earning cash account, awaiting your orders to buy or sell stock, or other securities such as bonds or mutual funds. When you buy or sell, you pay a commission, which is deducted, from your account. When a stock is purchased, the ownership of the shares may be listed in one of two ways. "Listed" means how the corporation tracks the ownership of their stock.If you choose to have the stock listed in your name, you will receive the actual stock certificates. Most investors choose to have the ownership listed in the broker's name, called "held in street name", with the broker keeping track of whose trading account the stock actually belongs to. The benefits are reduced paperwork, consolidated portfolio statements, no concerns about storing and processing the paper certificates, and the ability to instantly sell and transfer the shares. Either way, any dividends are credited to your account. Stocks held in street name are insured up to $500,000 by the federal government against fraud or financial failure of the brokerage company.

Why do people sell their stock?The reasons people sell their stock are more complex. A person may just need the money. He or she may have watched the price go up, and have a hunch this is a good time to lock in their profit and sell some or all their shares.Bad news concerning a company or its industry, or a disappointing earnings report is sure to prompt heavy selling.An investor may see better opportunities in another company, and so sell his stocks that aren't moving up. But usually, investors sell because they've watched the price fall, and just want to get out before they lose even more.

Secondary Market IntermediariesStock brokers, sub-brokers, portfolio managers, custodians, share transfer agents constitute the important intermediaries in the Secondary Market.A stock broker plays a very important role in the secondary market helping both the seller and the buyer of the securities to enter into a transaction. The buyer and seller may be either a broker or a client. The transaction entered cannot be annulled except in the case of fraud, willful misrepresentation or upon prima-facie evidence of a material mistake in the transaction, in the judgment of the existing authorities. If a member of the stock exchange (broker) has orders to buy and to sell the same kind of securities, he may complete the transaction between his clients concerned.When executing an order the stock may on behalf of his client buy or sell securities from his own account i.e. as principal or act as an agent. For each transaction he has to issue necessary contract note indicating whether he as principal or as an agent for another has entered into the transaction. While buying pr selling securities as a principal, the stock broker has to obtain the consent of his client and the prices charged should be fair and justified by the conditions of the market.A sub-broker is one who works along with the main broker and is not directly registered with the stock exchange as a member. He acts on behalf of the stockbroker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stockbrokers.No stockbrokers or sub-brokers shall buy, sell or deal in securities unless he holds a certificate of registration granted by SEBI under the Regulations made by SEBI ion relation to them.The Central Government has notified SEBI (Stock Brokers & Sub-Brokers) Rules, 1992 in exercise of the powers conferred by section 29 of SEBI Act, 1992. These rules came into effect on 20th August, 1992.

Ten Golden rules for InvestingWarren Buffet has suggested ten golden rules for investing which proves to be immense use to the investors who want a better investment in stock markets, ShareKhan follows these rules which are as described below:1. Never invest in a business you cannot understand.2. Risk can be reduced by concentrating on a few holdings.3. Stop trying to predict the direction of the stock market, the economy, interestrates, or elections.4. Buy companies with strong histories of profitability and with a dominantbusiness franchisee.5. Be fearful when others are greedy and greedy when others are fearful.6. Unless you can watch your stock holding decline by 50% without becomingpanic-stricken, you should not be in the stock market.7. Do not take yearly results too seriously. Instead, focus on four or five yearaverages.8. Focus on return on equity, not earnings per share (EPS).9.Calculate "owner earnings" to get a true reflection of value. Look for companieswith high profit margins.10.Always invest for the long term. Does the business have favorable long-termprospects?HISTORY OF ONLINE TRADING:Online stock trading is very old concept for big institutions who tradethru private networks owned by Reuter's "Instinet" and a system called"Posit" since 1969. But it becomes internet based for lay men only in late 90s.

Funny, that actually idea was first time used by a company making Beercalled "WIT beer" to help its shareholders trade its shares. Thats how "WITCapital" was born which is considered pioneer of this concept. It was mademainstream and household name by an offshoot of Charles Schwab & Co called eSchwab which is used by millions of people in USA. Lots of NRI's playin US stock market even when they come to India for holidays, via websiteof eSchwabe.

There are other serious players like E*trade, DATEK online etc. All thiscompanies ask you to start account with US $5000 and you can buy and sellstock using these funds. They also issue you a check book which you can useto make payments from this account. Or use their ATM card to withdraw cash from your stock trading account.

Today practically every big name brokerage firm offers online stock tradingas it reduces their costs. Earlier they had army of brokers on phone withclients executing trade, which is done by computers accepting orders fromclients directly. This firm now offers human access to high net worth accounts, and to rest at charge per trade.E- Broking - A small beginning:

You have some money to dabble with. Trading shares on BSE/NSE has always been your dream. When will you ever find the time? And besides, the hassle of finding a broker is not easy. Realizing there is untapped market of investors who want to be able to execute their own trades when it suits them, brokers have taken their trading rooms to the Internet. Known as online brokers, they allow you to buy and sell shares via Internet. There are 2 types of online trading service:

1. Discount brokers and

2. Full service online broker.

Discount online brokers allow you to trade via Internet at reduced rates. Some provide quality research, other dont. Full service online brokerage is linked to existing brokerages. These brokers allow their clients to place online orders with the option of talking/ chatting to brokers if advice is needed. Brokerage rates here are higher. 5Paisa.com, ICICIDirect.com, IndiaBulls.com, Sharekhan.com, Geojit securities.com, HDFCsec.com, Tatatdw.com, Kotakstreet.com are some of the online broking sites in India. With Net trading in securities and rapid consolidation between multiple stock exchanges, the international securities marketplace is fast becoming a "global village" through the creation of a universal virtual equity market.

Compared to the Western countries, online trading is still in its infancy in India. With trading turnover at around Rs. 10 crores per day from online trading compared to a combined gross turnover of around Rs. 9000-10,000 crores handled by the BSE and NSE together, online trading has a long way to go.

INTERNET TRADING IN INDIA:

In the past, investors had no option but to contact their broker to get real time access to market data. The Net brings data to the investor on line and net broking enables him to trade on a click. Now information has become easily accessible to both retail as well as big investors.

The development of broking in India can be categorized in 3 phases:

1. Stock brokers offering on their sites features such as live portfolio manager, live quotes, market research and news to attract more investors.

2. Brokers offering on line broking and relationship management by providing and offering analysis and information to investors during broking and non-broking hours based on their profile and needs, that is, customized services.

3. Brokers (now e-brokers) will offer value management or services such as initial public offerings on line, asset allocation, portfolio management, financial planning, tax planning, insurance services and enable the investors to take better and well-considered decisions.

In the US, 82 per cent of the deals are done on line. The European on line broking market is expected to be of $8 billions and is likely to raise five fold by 2002. In India, presently Internet trading can take place through the order routing system, which will route client orders to exchanges trading systems for execution of trades on stock exchanges (NSE and BSE). This will also require interface with banks to facilitate instant cash debit or credit and the depository system for debit or credit of securities.

Objectives of Internet trading:

Increase transparency in the markets.

Enhance market quality through improved liquidity, by increasing quote continuity and market depth.

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

Provide management information system (MIS).

Introduce flexibility in system, to handle growing volumes easily and to support nationwide expansion of market activity.

Besides, through Internet trading three fundamental objectives of securities regulation can be easily achieved, these are: Investor protection, creation of a fair and efficient market and, reduction of the systematic risks.

Procedure for Internet trading:

Step-1: Those investors interested in doing the trading over internet system, that is, NEAT-ISX, should approach the brokers and register with the Stock Broker.

Step-2: After registration, the broker will provide to them a login name, password and a personal identification number (PIN).

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

First by entering the symbol and series of stock and other parameters such as quantity and price of the scrip on the place order window.

Second, fill in the symbol, series and the default quantity.

Step-4: It is the process of review. Thus, the investor has to review the order placed by clicking the review option. He may also re-set to clear the values.

Step-5: After the review has been satisfactory; the order has to be sent by clicking on the send option.

Step-6: The investor will receive an ``Order Confirmation'' message along with the order number and the value of the order.

Step-7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a time lag of about ten seconds is there in executing the trade.

Step-8: It is regarding charging payment, for which there are different modes. Some brokers will take some advance payment from the investors and will fix their trading limits. When the trade is executed, the broker will ask the investor for transfer of funds by the investor to his account.

The above figure shows how the internet trading procedure.

Company Overview

SHAREKHAN PVT LTD.

Stock broking company

Rajkot.

Address

Registered Office

SHAREKHAN PVT LTD.

102/103, Hem Arcade,

Opp, Vivekanand Statue,

Dist. Rajkot 360 001.

Gujarat {India}

Phone No. : (0281) /2482483 /4/5/6

Fax : 0281-2466086

Corporate Office

SHAREKHAN PVT LTD.A 206, PHOENIH HOUSE,

PHOENIH MILL COPUND,

SENAPATI, BAPTA MARG,

LOWER PAREL,

MUMBAI 400013Phone:- 1800 - 22 7500 , 3970 75 00

Web site:- www.sharekhan.com

Sharekhan GroupSSKI Securities Pvt. Ltd. (NSE case & F& O )

Sharekhan Ltd. (BSE case)

Sharekhan commodities Pvt. Ltd. ( MCX & NCDEX )

Communication PartnerBlue Lotus Communications Consultancy

SHAREKHAN GROUP

Promoter

: Shripal Morakhiya

Shreyas Morakhiya

Chief Executive Officer

: Tarun p. Shah

Director of Operation

: Shankar Vailaya

Director of Product & Technology

: Jaideep Arora

Manager of Franchisee Business

: Gaurav Bhojak

SSKI Corporate Structure

ABOUT SHAREKHAN COMPANY

INTRODUCTION

Sharekhan is stock broking company. Share Khan comes under retail arm of SSKI (Shripal Sevantilal Kantilal Ishwarlal ) investors Services Pvt. Ltd. offers World-class facilities for buying and selling Shares on BSE and NSE, Demate Services(DP)Derivatives(F&O). SSKI group also comprises of Institutional broking and Corporate Finance. Sharekhan does not claim expertise in too many things.

Sharekhan's expertise lies in stocks and that's what he talks about with authority. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse, it is something that is spoken with years of focused learning and experience in the stock markets. And these beliefs are reflected in everything Sharekhan does for you!

Those of you who feel comfortable dealing with a human being and would rather visit a brick-and-mortar outlet than talk to a PC, you'd be glad to know that Sharekhan offers you the facility to visit (or talk to) any of our share shops across the country. In fact Sharekhan runs India's largest chain of share shops with over hundred outlets in more than 80 cities! What's a share shop? How do you locate a share shop in your city?

Sharekhan is 80 years old company which is started online in the year 2000 & it is the first company who started online in 1984 they ventured into institutional broking& corporate finance. They having 14 branches, 400 franchises also having 588 shops in 213 cities. In Rajkot branch daily dealing Rs.16 crore & 400 crore daily dealing all over India. Almost 4000 employees and 100000 trading customers.

ABOUT SHAREKHAN

SSKI named its online division as SHARE KHAN and it is into retail Broking

The business of the company overhauled 4 years ago on February 8, 2000.

It acts as a discount brokerage house to a full service investment solutions provider

It has a 150 member strong team.

It has specialized research product for the small investors and day traders

Largest chain of share shops, 588 share shop in 213 city.

It has $25m/trades every day.

Leading player today with 20% market share

Over 8000 online clients

The site was also launched on February 8, 2000 and named it as www.sharekhan.com

The Speed Trade account of share khan is the next generation technology product launched on April 17, 2002

SpeedTradePlus was launched on October 28, 2002 for trading in Derivatives

It offers its customers with the trade execution facilities on the NSE, for cash as well as derivatives, depository services

Ensures convenience in trading experience:

Share Khans trading services are designed to offer an easy, hassle free trading experience, whether trading is done daily or occasionally. The customer will be entitled to a host of value added services, in the investment process depending on his investing style and frequency. And offers a suite of products and services, providing the customer with a multi-channel access to the stock markets.

It gives advice based on extensive research to its customers and provides them with relevant and updated information to help him make informed about his investment decisions.

Share khan offers its customers the convenience of a broker-DP.

It helps the customer meet his pay-in obligations on time thereby reducing the possibility of auctions. The company believes in flexibility and therefore allows accepting late instructions without any extra charge. And execute the instruction immediately on receiving it and thereafter the customer can view his updated account statement on Internet.

Sharekhan Depository Services offers demat services to individual and corporate investors. It has a team of professionals and the latest technological expertise dedicated exclusively to there demat department. A customer can avail of Demat \ Remat; Repurchase, Pledge, Transmission facilities at any of the Share khan branches and business partners outlets.VISION

To empower the investor with quality advice and superior service to help him take better investment decisions. We believe that our growth depends on client satisfaction.

MISSION

To provide the best customer service and product innovation tuned to diverse needs of clientele

Continuous up-gradation with changing technology, while maintaining human values.

Respond to progressive globalization and achieving international standard.

Efficiency and effectiveness built on ethical practices.

CORE VALUE

Customer satisfaction through

Providing quality service effectively and efficiently

Smile, it enhances your face value is a service quality stressed on periodic customer service Audits

Maximization of stakeholder value

Success through Teamwork, integrity and People

SWOT ANALYSISDuring this training at Sharekhan, we had come to know the Strengths -Weaknesses -Opportunities -- Threats for the company and it is very useful for a company to analyze them. Therefore, the SWOT analysis is presented here and the suggestions for maintaining strengths and removing weaknesses are explained.Strengths:

80 years of research and broking experience

Fastest Browser based Trading

2,00,000 + customer

Largest ground network in broking with 588+ retail outlets spanning 213 cities\

Dedicated, Intelligent and Loyal staff.

On-line Trading products.

Lowest brokerage and other charges than. Competitors.

The best investment advice correct up to 70-90 % through dedicated

Wide product range to enable the clients to choose the best alternative.

One of the best DPs in India.

A positive image in the existing clients.Weaknesses:

Less awareness in the market.

Time consuming process for account opening, resolving the problems of theCustomers, etc. a Service quality is not maintained accordingly how they are promoted.Opportunities:

Large primary market to sit as a book runner for the other companies just like Kotak securities ltd. that runs the books of share holdings for many companies

Slope of stock market towards delivery based transactions.

Large potential market for delivery and intra-day transactions.

Open interest of the people to enter in stock market for investing.

Attract the customers who are dissatisfied with other brokers & DPs. a An indirect opportunity generated by the market from its bullishness.Threats:

Decreasing rates of brokerage in the market. a Increasing competition against other brokers & DPs.

Poor marketing activities for making the company known among the customers. a A threat of loosing clients for any kind of weakness of the company. a Indirect threat from instable stock market, i.e., low/no profit of Sharekhan's clients would lead them to go for other broker/DP.MARKET COVERAGE

SHAREKHANS STOCK CLUSTER

Every investors needs and goals are different. To meet these needs, Sharekhan provides a comprehensive set of research reports, so that one can take the right investment decisions regardless of their investing preferences! The Research and Development at Sharekhan is done at its Head office Mumbai.

The R&D department Head Mr. Hemang Jani forwards all the details regarding all stocks and scripts to all the branches through Internet. At the end of each trading day there is a Teleconference, through which the R&D department Head MR. Hemang Jani talks with each Branch heads and discusses about each days closing position and shows their predictions about next days opening position. The quarries regarding stock positions and other relevant matter of the branch heads of each branch is being solved through teleconference.

The various publications of Sharekhan viz. Derivatives Digest, Sharekhans Valueline, Eagle eye, High Noon, Investors Eye, Commodities Buzz, Commodities Beat, Commodity Traders corner, Sharekhan Xclusive, etc. are being prepared by the research team of Sharekhan made up of highly experienced people from diverse field. These all publication provides:

In-depth analysis of the markets

Analysis Before, During (live market updates) and after market timings

Special sector tracking reports sent regularlyStock ideas

Stock Ideas is aimed at Sharekhan's trading clients. It presents our best stock picks in today's market. We categorize these companies into six clusters to help you identify the stocks that fit your time horizons and return objectives the best. Each cluster represents a certain. Profilein terms of business fundamentals as well as the kind of returns you can expect of it over a certain time horizon.

Stock Clusters

Sharekhan categories all the scripts that are under coverage into 6 clusters. Each cluster represents a certain profile in terms of business fundamentals as well as the kind of returns you can expect over a certain time horizon. This help in identifying the stocks that fit your time horizons and return objectives best. The six clusters are: Evergreen, Apple Green, Emerging Star, Ugly Duckling, Vulture's Pick and Cannonball.

Evergreen

These stocks are steady compounders, churning out steady growth rates year on year. They are typically significant players in their markets, with sound strategies that will help them achieve and sustain market dominance in the long run. They have strong brands, management credentials and a consistent track record of achieving super normal shareholder returns. We expect stocks in this category to compound at between 18-20% per annum for the next five to ten years. Also called ownership stocks, Evergreen stocks are the brightest jewels in any portfolio.

Apple Green

These are stocks that have the potential to be steady compounders and are attempting to move upwards, to turn Evergreen. They rank a shade below the Evergreen companies, only because their potential in the five to ten years' time is still not very clear, although they might grow at rates faster than that of the Evergreen stocks in the next year or two. They could grow at 25-30% per annum over the next two to three years.

Emerging Star

These are typically young companies, often in niche businesses, that have the potential to grow and dominate their niches. Even better, they might turn out to be real giants, if their niches explode into full-blown markets in their own rights. These stocks are potential ten-baggers but you need to be patient.

Ugly Duckling

These are companies that are trading below their fair value or at values, which are at a significant discount to that of their peer group, due to a combination of circumstances. But things are now starting to happen in these companies or in their markets that are likely to cause a re-evaluation of their prospects. These stocks could double in two to three years' time.

Vulture's Pick

These are companies with valuable assets or brands that have been trashed to ridiculously low prices. Buy a Vulture's Pick and wait for a predator who finds its assets undervalued to come along. This could be a long wait but the returns could be startlingly high.

Cannonball

Season's favorites! Typically they are fast gainers in a rising market, which could give returns of 20-40% within three months. These are based on a combination of sound market information, technical charts and available fundamentals for investors, which are having an appetite for high risk and high reward.

Publications of Sharekhan

Sharekhans Valueline

Derivatives Digest

Eagle Eye

High Noon

Investors Eye

Commodities Buzz

Commodities Beat

Commodity Traders Corner

Sharekhan Xclusive

PRODUCTS OF THE SHAREKHAN COMPANY

Other Services:1. Dial-n-Trade2. Depository Services3. Commodity Trading4. Derivative Trading5. Mutual fund6. Portfolio Management Services7. Online IPO8. Research Based Information Provided OFFLINE

Offline A/c is the A/c for the investors who are not familiar with the use of computer. The A/C opening charges Rs.500(One time)

For 1st Year Demat A/C is Free,On 2nd Year AMC charge is applicable.

ONLINE

A/C Opening Charges Rs.750 (onetime Charge).

For 1st Year Demat A/C is Free, On 2nd Year AMC charge is applicable.

Type with 7 banks through which one can transfer or withdraw his fund online. Which are as follows

1. HDFC Bank

2. IDBI Bank

3. UTI Bank

4. OBC Bank

5. CITY Bank

6. Indusind Bank

7. Union Bank of India

Any one who have A/C either of above banks they can use this facility. Otherwise one has to make fund transfer or withdraw by cheque. This account enables you to buy and sell shares through our website. You get features like

Streaming quotes (using the applet based system).

Multiple watch lists.

Integrated Banking, demat and digital contracts.

Instant credit and transfer.

Real-time portfolio tracking with price alert and, of course, the assurance of secure transactions.Features of Classic Account

That enables you to invest effortlessly

Online trading account for investing in Equities and Derivatives via sharekhan.com

Integration of: Online trading + Bank + Demat account

Instant cash transfer facility against purchase & sale of shares

Make IPO booking

You get Instant order and trade confirmations by e-mail

Streaming Quotes

Personalized Market Scan with your own customized stock ticker!

Single screen interface for cash and derivatives

Your very own Portfolio Tracker!

A/C Opening Charges Rs.1000/-(onetime Charge).

Monthly charges Rs.500/-(But if Client give Brokerage of Rs.1500/-in a Quarter, then Rs.1500/-that was charged of a Quarter will be Reimbursed).

For 1st Year Demat A/C is Free, On 2nd Year AMC charge is applicable.

Type with 7 banks through which one can transfer or withdraw his fund online. Which are as follows

HDFC Bank

IDBI Bank

UTI Bank

OBC Bank

CITY Bank

Indusind Bank

Union Bank of India

Any one who have A/C either of above banks they can use this facility. Otherwise one has to make fund transfer or withdraw by cheque.

Features of Speed Trade

Instant order Execution & Confirmation

Single screen trading terminal

Real-time streaming quotes, tic-by-tic charts

Market summary (most traded scrip, highest value and lots of other relevant statistics)

Hot keys similar to a brokers terminal

Alerts and reminders

Back-up facility to place trades on Direct Phone lines

Single screen interface for cash and derivatives

Charges of Different companies for online A/C

ParametersOpening FeeBrokerageInterface

Trading A/CDemate A/cDeliverySquare OffBank Associated

Sharekhan750NIL0.500.10HDFC,UTI,OBC, IDBI, City Bank

ICICI Direct750NIL0.750.18ICICI Bank

IndiaBulls7502500.400.10

5 Paisa250NIL0.200.05ICICI Bank ,UTI,OBC,HDFC, City Bank

Kotak Street5000.590.06Kotak Bank, City Bank

HDFC Securities700NIL0.500.15HDFC & Other Bank

OTHER SERVICES

1.DIAL-N-TRADE

Free with your Sharekhan Classic Account, the Dial-n-Trade service enables you to place orders for buying and selling shares through your telephone.

All you have to do is dial any one of our two dedicated numbers (1-800-22-7050 or 30307600), enter your TPIN number (which is provided at the time of opening your account) and on authentication you'll be directed to a tele broker who will buy and sell shares for you.

Features of Dial-n-Trade

That enables you to trade effortlessly

TWO dedicated numbers for placing your orders with your cell phone or landline. Toll free number: 1-800-22-7050. For people with difficulty in accessing the toll-free number, we also have a Reliance number 30307600, which is charged at Rs. 1.50 per minute for STD calls.

Automatic funds transfer with phone banking (for Citibank and HDFC bank customers)

Simple and Secure Interactive Voice Response based system for authentication

No waiting time. Enter your PIN to be transferred to our telebrokers

You also get the trusted, professional advice of our telebrokers

After hours order placement facility between 8.00 am and 9.30 am (timings to be extended soon)

Reliable service, wherever you are

2.PORTFOLIO MANAGEMENT SYSTEMSharekhan follow a multi-disciplined approach incorporating quantitative analysis, fundamental analysis and technical analysis. This multi-pronged approach enables us to provide risk-controlled returns for you.

Right from choosing the combination of stocks most suitable for you based on your risk appetite to monitoring their movements and discussing them with you at special events.

3.MUTUAL FUND

Everybody talks about mutual funds, but what exactly are they? Are they like shares in a company, or are they like bonds and fixed deposits? Will I lose all my money in funds or will I become an overnight millionaire? Big questions that get answered in just five minutes.A mutual fund is a pool of money that is invested according to a common investment objective by an asset management company (AMC). The AMC offers to invest the money of hundreds of investors according to a certain objective - to keep money liquid or give a regular income or grow the money long term. Investors buy a scheme if it fits in with their investment goals, like getting a regular income now or letting the money accumulate over the long term. Investors pay a small fraction of their total funds to the AMC each year as investment management fees.

4.SHAREKHAN DP SERVICEDematerialization and trading in the demat mode is the safer and faster alternative to the physical existence of securities. Demat as a parallel solution offers freedom from delays, thefts, forgeries, settlement risks and paper work. This system works through depository participants (DPs) who offer demat services and hold the securities in the electronic form for the investor Sharekhan Depository services offers dematerialization services to individual and corporate investors. We have a team of professionals and the latest technological expertise dedicated exclusively to our demat department, apart from a national network of franchisee, making our services quick, convenient and efficient. At Sharekhan, our commitment is to provide a complete demat solution which is simple, safe and secure.

5.Research based adviceEvery investors needs and goals are different. To meet these needs, Sharekhan provides a comprehensive set of research reports, so that one can take the right investment decisions regardless of their investing preferences! The Research and Development at Sharekhan is done at its Head office Mumbai.

The R&D department Head Mr. Hemang Jani forwards all the details regarding all stocks and scripts to all the branches through Internet. At the end of each trading day there is a Teleconference, through which the R&D department Head MR. Hemang Jani talks with each Branch heads and discusses about each days closing position and shows their predictions about next days opening position. The quarries regarding stock positions and other relevant matter of the branch heads of each branch is being solved through teleconference.

The various publications of Sharekhan viz. Derivatives Digest, Sharekhans Valueline, Eagle eye, High Noon, Investors Eye, Commodities Buzz, Commodities Beat, Commodity Traders corner, Sharekhan Xclusive, etc. are being prepared by the research team of Sharekhan made up of highly experienced people from diverse field. These all publication provides:

In-depth analysis of the markets

Analysis Before, During (live market updates) and After market timings

Special sector tracking reports sent regularly

6.Online IPOOnline IPO (Initial Public Offering) is a new service started by Sharekhan for providing the application form of any companys issues of shares just like the TCS issue can be subscribed by filling an online form to reduce the paper work and the fund transfer facility is also provided to the clients for transferring the funds online. It is given on its web-site for helping the clients who are not able to collect the forms manually and the speed of filling and reducing the risk of misplacing of forms, not reaching in time, etc.

7.COMMODITYOrganized futures market evolved in India by the setting up of "Bombay Cotton Trade Association Ltd." in 1875.In 1893, following widespread discontentamongst leading cotton mill owners and merchantsover the functioning of the Bombay Cotton Trade Association, a separate association by the name "Bombay Cotton Exchange Ltd." was constituted. Futures trading in oilseeds was organized inIndia for the first time with the setting up of Gujarati Vyapari Mandali in 1900, which carried on futures trading in groundnut , castor seed and cotton. Before the Second World War broke out in 1939 severalfutures markets in oilseeds werefunctioning in Gujarat and Punjab.

There were booming activities in this market and at one time as many as 110 exchanges were conducting forward trade in various commodities in the country. The securities market was a poor cousin of this market as there were not many papers to be traded at that time.

The era of widespread shortages in many essential commodities resulting in inflationary pressures and the tilt towards socialist policy, in which the role of market forces for resource allocation got diminished, saw the decline of this market since the mid-1960s. This coupled with the regulatory constraints in 1960s, resulted in virtual dismantling of the commodities future markets. It is only in the last decade that commodity future exchanges have been actively encouraged. However, the markets have been thin with poor liquidity and have not grown to any significant level.

A three-pronged approach has been adopted to revive and revitalize the market. Firstly, on policy front many legal and administrative hurdles in the functioning of the market have been removed. Forward trading was permitted in cotton and jute goods in 1998, followed by some oilseeds and their derivatives, such as groundnut, mustard seed, sesame, cottonseed etc. in 1999. A statement in the first ever National Agriculture Policy, issued in July, 2000 by the government that futures trading will be encouraged in increasing number of agricultural commodities was indicative of welcome change in the government policy towards forward trading.

Secondly, strengthening of infrastructure and institutional capabilities of the regulator and the existing exchanges received priority. Thirdly, as the existing exchanges are slow to adopt reforms due to legacy or lack of resources, new promoters with resources and professional approach were being attracted with a clear mandate to set up demutualized, technology driven exchanges with nationwide reach and adopting best international practices.

The year 2003 marked the real turning point in the policy framework for commodity market when the government issued notifications for withdrawing all prohibitions and opening up forward trading in all the commodities. This period also witnessed other reforms, such as, amendments to the Essential Commodities Act, Securities (Contract) Rules, which have reduced bottlenecks in the development and growth of commodity markets. Of the country's total GDP, commodities related (and dependent) industries constitute about roughly 50-60 %, which itself cannot be ignored.

Most of the existing Indian commodity exchanges are single commodity platforms; are regional in nature, run mainly by entities which trade on them resulting in substantial conflict of interests, opaque in their functioning and have not used technology to scale up their operations and reach to bring down their costs. But with the strong emergence of: National Multi-commodity Exchange Ltd., Ahmedabad (NMCE), Multi Commodity Exchange Ltd., Mumbai (MCX), National Commodities and Derivatives Exchange, Mumbai (NCDEX), and National Board of Trade, Indore (NBOT), all these shortcomings will be addressed rapidly. These exchanges are expected to be role model to other exchanges and are likely to compete for trade not only among themselves but also with the existing exchanges.

The current mindset of the people in India is that the Commodity exchanges are speculative (due to non delivery) and are not meant for actual users. One major reason being that the awareness is lacking amongst actual users. In India, Interest rate risks, exchange rate risks are actively managed, but the same does not hold true for the commodity risks. Some additional impediments are centered around the safety, transparency and taxation issues.

8.DERIVATIVE The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked by a very high degree of volatility. Through the use of derivative products, it is possible to partially or fully transfer price risks by locking-in asset prices. As instruments of risk management, these generally do not influence the fluctuations in the underlying asset prices. However, by locking-in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse investors.Organization chart

Head office

Branch head

Assistant manager

Back office

Marketing Officer

Account department DP

MARKETING DEPARTMENTThe main aim of marketing activities at Sharekhan is that the customer should get enough guidance to join the company and how he can get the best service than any other stockbroker. There is an officer for handling the marketing activities followed by two executives and it is not limited to them but the other people are also having some responsibilities to increase the no. of clients and retain them by providing them the services needed by them.There are many services those are designed such that the specific target segments of the customers are covered and the products are positioned in the minds of customers as the best one in India. The services are as given below:Sharekhan is India's leading national network of stock-broking outlets. It is having the largest retail distribution chain in India. Sharekhan is not only a share-broking firm, but it avails of various services and other financial products to its clients.

1. Offline Trading facility2. Online BSE and NSE executions (through BOLT, i.e. BSE Online Trading andNEAT, i.e. National Exchange Automated Trading)3. Free access to investment advice from Sharekhan's Research team.4. Depository services: Demat and Remat transactions (Sharekhan is registered withNSDL, i.e. National Securities Depository Ltd., as a Depository Participant)5. Derivatives trading, i.e. Futures and Options (through NEAT F&O)6. Internet based online trading.7. Other investment products: Mutual Funds, RBI Bonds, Insurance, etc.

Online BSE and NSE TradingSharekhan is a registered Stock Broker with the Bombay Stock Exchange and National Stock Exchange to trade on behalf of clients. The screen-based trading is done on BOLT-BSE Online Trading and NEAT- National Exchange Automated Trading, terminals. There are two types of transactions executed on these terminals viz. intra-day and delivery based transactions. Intraday transactions are those, in which the squaring up of deal is done on the same day, while in delivery based transaction the squaring up is not done on the same day, but the stock is to be traded on the basis of rolling settlement i.e. T+2. The Brokerage of Intraday transaction is 0.10% single side, while brokerage on delivery based transactions is 0.50% on both side, i.e. while purchasing as well as selling.

Free Access to Investment Advice through R&DThe Research and Development at Sharekhan is done at its Head office Mumbai. From there it forwards the relevant data and tips on particular shares and scripts at the relevant time. The R&D department Head Mr. Hemang Jani forwards all the details regarding all stocks and scripts to all the branches through Internet. At the end of each trading day there is a Teleconference, through which the R&D department Head MR. Hemang Jani talks with each Branch heads and discusses about each day's closing position and shows their predictions about next day's opening position. The quarries regarding stock positions and other relevant matter of the branch heads of each branch is being solved through teleconference. The various publications of Sharekhan viz. Derivatives Digest, Sharekhan's Valueline, Eagle eye, High Noon, Investor's Eye, Commodities Buzz, Commodities Beat, Commodity Trader's corner, Sharekhan Xclusive, etc. are being prepared by the research team of Sharekhan made up of highly experienced people from diverse field.

Depository Participation

Sharekhan is a registered Depository Participant (DP) with National Securities Depository Ltd. (NSDL). The participants are required to enter into an agreement with beneficial owners. It is required that separate accounts shall be opened by every participant in the name of each of the beneficial owner and the securities of each beneficial owner shall be segregated and shall not be mixed up with the securities of other beneficial owners or with the participant's own securities. The participants are obliged to reconcile the records with every depository on a daily basis. Participants are required to maintain the following records for a period of five years.

Records of all the transactions entered into with a depository and with a beneficialowner;

Details of security dematerialized, rematerialized on behalf of beneficial ownerswith whom it has entered into an agreement;

Records of instructions received from beneficial owners and statements ofaccount provided to beneficial owners; and

Record of approval, notice, entry and cancellation of pledge or hypothecation as the case may be.

Derivatives TradingSharekhan is a Trading Member registered with the Stock Exchange, according to the norms and Guidelines given by the SEBI. Two types of users access the NEAT F&O trading system. The Trading Members and the Clearing Members. The Trading Members (TM) has access to functions such as, order matching, order and trade management. The Clearing Member (CM) uses the trader workstation for the purpose of monitoring the trading member(s) for whom he clears the trades. Additionally, he can enter and set limits to position, which a trading member can take. Sharekhan provides the service of derivatives trading on NEAT F&O to its clients.

Commodities TradingSharekhan is providing the facility to trade with the commodities through MCX (Multi-Commodity Exchange) and NCDEX (National Commodities & Derivatives Exchange). The commodities market in India is an emerging market, which will become the largest market in the world within the next 5 years, as the trends in the commodities market shows its performance. The company also provides research reports on daily, weekly and monthly basis for the investors in the commodities. It is just like the futures and is having a fixed lot of goods with the margin for each commodity and the trading is based on the theory of futures and therefore, it is also called Vayda Market. In short Sharekhan also provides brokering in commodities and the brokerage charges are 0.10% on total trade value and if carry forwarded an additional 0.02% charge on total trade.

Online IPOOnline IPO (Initial Public Offering) is a new service started by Sharekhan for providing the application form of any company's issues of shares just like the TCS issue can be subscribed by filling an online form to reduce the paper work and the fund transfer facility is also provided to the clients for transferring the funds online. It is given on its web-site for helping the clients who are not able to collect the forms manually and the speed of filling and reducing the risk of misplacing of forms, not reaching in time, etc.

Internet Based Online TradingThe Online trading facilities provided by Sharekhan is basically divided into two types of accounts, viz. Classic Account and Speed trade and speedtradeplus1. Classic Account: This account allows the client to trade through the websiteand is suitable for the retail investor. The online trading through Sharekhanwebsite also comes with Dial-n-Trade service that enables you to buy and sellshares by calling our dedicated toll-free number.2. Speedtrade and Speedtrade Plus: SPEEDTRADE is a next-generationonline trading product that brings the power of the broker's terminal to theclient's PC. Through SPEEDTRADE PLUS the client is also allowed to trade onDerivatives.3.Streamer: Streamer account is just for the new learners of market and is a newservice offered by Sharekhan to give the view of the market online to thecustomers who don't have any experiences of the stock market and it is a softwareprovided to see the ups and downs of market with the screen on your PC. It costsRs.2000 per quarter and there will not be any facility for trading and just you cansee how trading is done on the market.The various benefits the client gets from the online trading are:

Freedom from Paperwork: Integrated trading, bank and Demataccount (auto pay-in and pay-out of securities) with digital contractsremoves all paperwork.

Instant Credit And Transfer: Instant transfer of funds from bankaccounts of client's choice to his/her Sharekhan trading account.

Trade Anywhere: Enjoy the ease of trading from any part of the worldin a completely secure environment.

Dial n Trade: Call Sharekhan on a toll free number to place ordersthrough sharekhan's telebrokers.

Timely Advice: Make informed decisions with expert advice, investmentcalls and live market commentary.

Real-Time Portfolio Tracking: Benefit from real-time information ofyour investment and current portfolio value.Comparison of Online Trading Products

Cos. / FeaturesProducts OfferedOnline BSE/NSEOnlineF&OOnline IPOOnlineMFOnlineCommodityA/c OpeningChargesDeposits

Share khanGround A/c, E-Broking, Commodity, DP, PMSYesYesYesNoNoClassic 750/-ST 1000/-10000

Kotakstreet.comGround A/c, Online A/c, Commodity, DPYesYesYesYesNo50050000

ICICI Direct.comOnline A/c, Mutual FundYesYesNoYesNo750-----

HDFCE-BrokingYesYesNoNoNo600-----

Motilal OswalGround A/c, Online A/c, Commodity, DP, PMSYesYesYesYesYesUpto 400-----

IndiabullsGround A/c, Online A/c, Commodity, DP,MFYesYesYesNoNo 250-----

5-Paisa.comE-Broking, InsuranceYesYesNoNoYes5005000

Angel BrokingGround A/c, E-BrokingYesNoYesNoNo50050000

IL&FSInsurance, MF, E-Broking, Ground A/cYesYesYesYesYes500------

Anagram Ground A/c, E-Broking, Mutual FundYesYesYesYesYes78010000

SEVEN PS OF SHAREKHAN

PRODUCT Product Variety

Share khan offers 3 types of online trading accounts for its customers specially designed according to their volume in share trading. Those 3 varieties are:

Classic- for retail investors

Speed Trade: for high net worth investors with large and active equity portfolio who need to monitor and action swiftly

Speed trade Plus- for high net worth investors dealing in derivative market. Quality

User Friendly, attractive & colorful Website.

Design

The website of Share khan namely www.sharekhan.com has been specially designed to facilitate its users to buy and sell shares in an instant at anytime and from anywhere they like. The site is user friendly allowing even a layman to easily operate without any hassles.

Features:

Share khans product comes with the following features:

Trade execution in a fraction of a second!

Single Screen Trading Terminal

Real time streaming quotes. Price watch on any number of scripts.

Hot keys similar to Brokers Terminal.

Customized Alerts based on Multiple Parameters.

Back up Facility to place trades on Direct Phone Lines.

Intra day charts, updated live, tick-by-tick.

Instant Order\ Trade Confirmation in the same window

Live margin, position, marked to market profit & loss report.

Competitive Brokerage.

Flexibility to customize screen layout and setting.

Facility to customize any number of portfolios & watch lists.

Facility to cancel all pending orders at one click.

Facility to square off all transactions at one click.

Top Gainers, Top Losers, and Most Active, updated live.

Index information; index chart, index stock information live.

Market depth, i.e. Best 5 bids and offers, updated live for all scripts

Online access to both accounts and DP.

Live updated Order and Trade Book.

Details of pending, executed and rejected orders.

Online access to Customer Service.

128 - bit super safe encryption.

Facility to place after market orders

Online fund transfer facility from leading Banks

Online intra-day technical calls.

Exhaustive database of over 2000 companies

Historical charts and technical analysis tools.

Last but not the least, ideas that help you to make money!!!

Brand Name

The company as a whole in its offline business has named itself as SSKI Securities Pvt. Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal Securities Pvt. Ltd. The company has preferred to name themselves under a Blanket Family Name.

But in its online division started since 1997, the company preferred to name itself as SHARE KHAN. The Brand Name SHARE KHAN itself suggests the business in which

the company is dealing so that the consumer could easily identify the product or service category.

ServicesShare khan offers its customers, depository services and trade execution facilities for equities, derivatives and commodities backed with investment advice tempered by decades of broking experience. The teams of its dedicated analysts are constantly at work to track performance and trends.

Dial-n-trade is also an exclusive service available to all Sharekhan customers for trading in shares via the telephone. On dialing the toll free number 1600-22-7050 and on entering the customers TPIN number, the customer will be directed to a telebroker who will buy or sell shares for him.

PRICE List Price

CLASSICSPEED TRADEOff Line

One time

Registration fee7501000300

Minimum brokerage Charges QuarterlyNil1000Nil

BrokerageShare khan in its online business charges brokerage as follows:

In equity Market:

On Trading: 0.1% On Delivery: 0.5%

In Derivative Market

On Trading: 0.12% (Total brokerage) On Delivery: 0.1%

Service Tax

-8% on Brokerage.

Turnover tax + Stamp duty

-0.015% (Rs. 15 on every turnover of Rs. 100000)

Custody ChargeRe. 1 per script held per month. DiscountsFor investors with High Net worth, there are slabs in brokerage rates. Payment PeriodThe transaction settlement date in the securities market is T+ 2 days i.e. the payment of the transaction taken place has to be made within two days of its occurrence.

Credit termsShare khan allows its customers to trade up to 4 times i.e. by keeping 1/4th margin with them.

PROMOTIONOnline share trading is totally a new concept in Indian Market. Generally investor doesnt like to come out from conventional way of share trading. Share khan has introduced this product in. The concept and Product are still new in the market. Therefore the company has undertaken extensive promotion campaign to create awareness about the product. Share khan adopts the following tools for promoting the product

Advertising

Company advertises its product through TV media on channels like CNBC, Print Media-in leading dailies and outdoors media. It advertises itself as an innovative Brand with a cartoon of tiger-called SHERU. Besides attractive and colorful brochures as well as posters are used giving full details about the product.

Mails are sent to people logging on to sites like moneycontrol.com and rediff.com.

Also, stalls are opened up now and then at places where prospective customers can be approached.

Sales PromotionThe Company offers Rs.500 instead of Rs.750 for corporate accounts (more than 20 accounts).Also, it provides online trading accounts for just Rs.300 for IIM students.

Sales ForceThe Company has an aggressive sales force, which is given incentives, based on their sales. The sales force is given intensive training continuously. SeminarThe Company also arranges seminar in corporate world for creating awareness about the product. Recently, it had organized for a seminar in ONGC, IIM. Direct MarketingCompany emphasizes more on direct marketing, as many people are still not aware of this new way of smart trading. For this, the company recruits and trains sales representatives so as to explain the product and solve customer queries related to the product. This is the most effective way to communicate the three-in-one concept which company offers.

TelemarketingThis is another promotional tool company is using to boost up its sales. For this, the company collects the database of the people belonging to different professional segments. Dematerialization chargesRe. 3 per certificate or Rs.15 per requests whichever is higher.

PLACE ChannelsShare khan uses various channel alternatives to reach to its customers through

Internet

Tele Marketing

Retail Share Shops

Franchisee Owners

Power Brokers

Sales Force CoverageAccess to the website from any part of the globe.

Locations Share khan has the largest chain of retail share shops in India. It has 588 share shops located in 213 cities. all over India like Pune, Thane, Chennai, Kolkata, Banglore, Luckhnow, Darjleeng, Kanpur, Baroda, Midnapore, Surat, Delhi, Gaziabad, Hydrabad, Allahbad, etc.

PEOPLE EmployeesDedicated, Intelligent and Loyal employeeEmployees are selected on the basis of their experience and qualification as applicable to the job.

Research TeamShare khan has a team of dedicated analysts who have years of working experience in the industries that they track, and a proven track record in using their knowledge of the investment science to deliver results.

Customers,

The heart of sharekhan are really treated loyally like the kings. The customer care, which comprises of highly trained executives operating from 9:30 to 8:00 p.m.

PHYSICAL EVIDENCE Office Environment: The ambience within the office is what can make the customer feel comfortable in trading. The cordial and friendly atmosphere at office is like a full time motivation for the employees.

Interiors and Infrastructure:

In every sharekhan branch well furnished and fully Airconditioner .

The office is well furnished and has 24 computer terminals on which tick-by-tick price movements of the securities are displayed.

PROCESS

In this service organization, the ways in which the customers receive delivery of the service constitutes the process. Here, the process involves adding value or utility so that the customers get full satisfaction for the money spent by them.

Here the process begins from the step when customer wants to open e-invest account and ends when his account is actually activated.

All Indian residents and NRI are eligible to avail this service.

Customers can open a sharekhan e-invest account by filling a single application form. This form includes 9 agreements like

1. Main form with customer details2. Agreement between sharekhan and client in respect of the ONLINE-INVESTMENT SUPPORT service offered.3. Agreement between the Depository Participant and the client for providing the transaction statement through Internet.4. Irrevocable power of attorney5. Agreement between the DP and the person seeking to open an account with the DP.6. Maintenance of clients account on a running account bases by SSKI.7. Agreemen4 giving the right of lien on the credit balance of client in NSE trading.8. Agreement giving the right of lien on the credit balance of client in BSE trading.9. Risk disclosure document (cash segment)Industry Analysis using Porters 5 forces Model

1.SUPPLIERS

NSE & BSE are playgrounds where common an investor trade through stock broking houses, for which they have to take permission from NSE/BSE.

NSE & BSE are under the purview of SEBI, thats why stock broking houses like

SSKI, have low bargaining power. But here there is one advantage that NSE/BSE

have i.e. they cannot go for forward integration.

MCX & NCDEX are stock exchanges which trade in commodities and

derivatives. Here again stock broking houses have to follow rules and regulation

of the same.

Web maintainers are companies which maintain web sites & technical aspects of

the same. Here stock broking houses like SSKI can have more bargaining power

due to stiff competition among web maintaining companies.

Web maintainers are companies who make and maintain softwares for stock

broking houses. If say for example stock broking houses switches over to other

web maintainers then that company cannot understand the mechanisms of

softwares. So it is quite high switching cost.

2BUYERS

There are various types of investors who trade through stock broking houses like SSKI, which includes investors like small investors, medium net worth investors, business partners, institutional investors and mutual fund companies.

Here the bargaining power of stock broking houses depends on how big the investor is.

So here we can say that bargaining power of stock broking houses is high in case of small investors & HUF.

While its moderate in HNI/MNIs and business partners.

While its less in case of mutual fund companies and institutional investors.

There is competitive buzz in stock broking industry, competitors are offering low brokerage and best services with added feature. So switching cost is pretty much less. So the buyer can easily switch over to competitors product.

3Entry Barriers

Huge capital:- Capital is necessary not only for fixed facilities but also for customers credit and absorbing start up losses. To start a stock broking house, one needs huge capital for technology up gradation and skilled manpower.

Technology:- Technology for stock broking houses is life saving device. Stock broking requires huge capital to make their products user friendly, which in turn requires capital to employ skilled manpower. Thus, technology could be one of the entry barrier.

Regulatory Constraints:- Obtaining a license is a tedious job for a stock broking house. It should comply with the regulation of the governing bodies like SEBI, NSDL, etc. For a stock broking houses to plunge into the stock broking industry, it needs to have some kind of financial background and expertise. Thus, regulators constraints could be an entry barrier.

Experience curve:- The core competency in this industry is the services which are provided to the end-users and the research based activities which includes TIPS, fundamental as well as technical script analysis. Also the most important thing which helps already established firms is-TRUST which people would be having on firms like SSKI , Motilal Oswal, etc. this is very difficult for new companies to imitate. Network:- the Reach to the customer is the key factor in the industry. The network of the companies like Motilal Oswal, Sharekhan, ICICI is very efficient and spreaded all over India. It will take time for a new entrant to establish such a huge network (e.g. Marwadi), which say that, Network can come up as most difficult entry barrier to overcome. Expected Retaliation:- whenever a new player comes in the industry, the old companies have an option to reduce the prices of their product. This kind of practice is called expected Retaliation which is also possible in this industry in terms of less brokerage rates and reduced account opening charges. E.g. before the entry of so many mew companies, Sharekhan was having two types of accounts viz. speed trade speed trade plus, which were costing 1000 & 1500 account opening charges respectively. But due to competition, they have come up with only one account i.e. speed trade plus with the account charges of Rs.1000.

4COMPETITORS

The company is facing the competition from local as well as national level players. The local players provide facility for off-line trading while the national players like ICICIdirect.com and Kotakstreet.com, HDFC Security provide online trading services.

There are also other big names like Indiabulls, Motilal Oswal, 5paisa and Marwadi encircles the company form both the sides by providing online and off-line trading with competitive services.

5POTENTIAL ENTRANT

Few entrants, which may take away the share of current players.

The potential entrant in Rajkot city like Invest mart, Jeojit and Cipher which are coming in near future.

Nationalized banks are also thinking to enter in this field by tieing up with broking houses. Eg Bank Of Baroda.

6SUBSTITUTES

Here substitutes are such instruments which can be used instead of investing in shares.

The instruments like Bank FD, insurance, mutual funds are the substitutes.

If the use of this instruments increase this may be disadvantage for the stock broking houses. The companies and banks which are having these instruments can plunge into this industry.

Banks are planning to jump while others may come.COMPETITIVE ANALYSIS

Follower:

The followers are just blindly follow the other player which are leader and challenges.

The players like 5 Pisa, Motilal Oswal, HDFC Securities, and Kotakstreet are the followers.

LEADER:

ICICIdirect.com is a leader in the online account which is having 1,24,000 account in the country.

While in offline account Sharekhan is leading with 64,000 offline accounts.

NICHER:

ICICIdirect.com and Kotakstreet.com are the two stock broking houses which are focusing only on online investors.

CHALLENGER:

Sharekhan, Kotakstreet and Indiabulls come under this head.

Sharekhan challenges competitors by providing quality services and research based advice.

Indiabulls is also challenging with low brokerage rates and class one services.

FINANCE DEPARTMENTLike Blood is the most important in our body, in business Finance is the blood of any business. Finance is needed for all the activities like production or services as well as their distribution. The finance department directly influences all the functions of the other departments. Also finance has to give equal importance to all departments. Finance is that administrative area or set of administrative function in an organization, which relate with the arrangements of cash & credit so that they organization may have the means to carry out its objective as satisfactorily as possible. Sharekhan has special accounts department for separate calculation of pay-in and payout of funds according to the client's Profit/Loss. Finance management is done at Sharekhan is done by managing the stocks in the Demat accounts and funds in the margin & trading accounts

Finance is the lifeblood of an organization to continue its activities and the finance management at Sharekhan can be divided into two major parts viz. DP (depository participation) and Accounts management, which are shown in the figure given above.

DP is treated as a separate department at Sharekhan and is covered in the back office management in the organization structure. In simple words, DP means providing the facility to the clients for managing the stock bought/sold by them. DP covers two major terminologies viz. settlements and the auctions which is a part of managing Demat account. Settlements as defined by SEBI (Securities Exchange Board of India) are T+2, currently and it means that the Demat account of the clients are prone to be sufficient for selling a script with no debit at all, i.e., the account must have the soldAmount of stock to fulfill the settlement after 2 days from trade-day. The settlements for Day-Traders is not needed because they buy/sell stocks in that particular day, only the delivery trades are needed to be settled because if you sell 1000 shares of, say SAIL then your account must have the stock before you sell it or it must be there in your Demat before the next day's trading begins (market opens). Generally, the timings are 9:30 and 3:00 as a deadline for the client and he must provide the stock for giving a delivery to the buyer. The chart shows the total transaction between two clients.

The chart shows the process that the request for selling and buying passes through the DPs of the respective clients and finally the exchanges like SKSE (Saurashtra Kutch Stock Exchange) becomes the controlling intermediary for the delivery of stocks and this process is done in two days. Nowadays, as banks are becoming fast for E-Fund Transfer (EFT) and Phone-banking is getting more popularity, SEBI is thinking to make the financial market of India to have a maximum speed of transactions just like the other nations in the world and proposing for T+l settlement scheme but the system is not enough competent for that thing. But soon or later we will have such a settlement system in India, as said by Mr. J. N. Bajpai, chairman of SEBI.The client, if not capable of providing the delivery of say, 1000 shares of SAIL then the Auctions are initiated by the exchanges and the client has to pay for the price prevailing in the market with 4-5% penalty. The penalty can go on maximum to 20% more than the market price of the sold stock. Generally, it is known as a buying auction and a same kind of auction is for selling the stock for which the buyer was proved unable to pay the price is carried out by exchange, known as the selling auction. And a debit or credit note is provi