religare security prashant
TRANSCRIPT
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A
PROJECT REPORT
On
Religare.in
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A RANBAXY Group Company
Submitted for the partial fulfillment towards the award of the
degree in
MASTER OF BUSINESS ADMINISTRATION
Submitted to:- Submitted by :-Madurai Kamraj University Prashant Kumar
Faculty MBA Department Roll No.-A8C7510072
MBA IInd Year
MADURAI KAMRAJ UNIVERSITY
Madurai
PREFACE
To compete and outscore the growing competition from the various online trading
providers, Religare needs to find potential clients and also new investors to avail its
range of financial services. The company in sync with its mission objective of
providing complete financial services to its clients by upholding the relationship of
trust and confidence.
The Broad objective of the project is to equip the trainees with all the knowledge,
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skills, qualities & confidence necessary to face any circumstances that might arise
during the course of the business while providing service to the clients.
The objective of the project was to understand peoples perception towards
technology savvy products & services, equities trading & their readiness for doing
stock trading through net. The project also helps in understanding the trend of the
particular sector (banking sector) in different market condition.
All these live experiences & learning helped me to learn to cope up with different
types of people and their diversified need satisfaction level.
ACKNOWLEDGEMENT
It has been a great pleasure and wonderful learning experience to work as a Trainee
in RELIGARE SECURITIES LTD. which is Indias well known and starkly
established Financial Services Company. I as a trainee got to learn a lot as I had an
opportunity to work with people who are extremely talented, co-operative& masters
of their own field..
I would like to express my sincere gratitude & thanks to Ms. Indu Mathur,
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Associate HR Manager Mr. NISHANT GHOSH , Branch Manager, Religare
Securities Ltd, ASHOK Vihar New Delhi for giving an opportunity to elongate my
knowledge and providing me a pragmatic experience.
The project would not have seen the light of the day without the unparalleled
support & able guidance of Mr. VINEET SOLANKI, Relationship Manager
Religare Securities Ltd. ASHOK Vihar, New Delhi who has been my project
guide. I would like to convey my sincere thanks to Mr. Vineet Solanki who has
been a source of inspiration & a great teacher. It would not be fair if I dont thanks
Mr. Amit Dhami, Mr.Nesar Ahmad & Mr.Ajit (all Relationship Managers,
Religare)for their valuable guidance, useful inputs, love & support throughout the
training period.
Last but not the least I would like to thanks each and every member of the Religare
Securities for their full support which made this experience a pleasurable one.
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Contents
S. No. Topic
1. Executive Summary
2. Objectives
3. Company Profile
4. Religare Products
5. Investment
6. Securities
7. Regulator
8. Participants
9. Primary Market
10. Secondary Market11. Stock Exchange
12. Stock Trading
13. Market Research Analysis
14. SWOT Analysis
15. Online Trading Account16. Conclusion
17. Limitations
18. References
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Executive Summary
This project aimed at understanding the core business & basic operations of
Religare Securities Ltd. Promoting the business of the company through
acquisition of new clients & by explaining the products & services of the company
was one of the primary objectives. In the process I learnt a no. of effective marketing
techniques, enhanced my convincing power. Further I also carried out a
comprehensive analysis of the major competitors of Religare securities in the
financial services market & the threats posed by them.
The project also provides information about the products and services provided by
Religare to their customers. This also includes the requirements and ways to acquire
new clients and the problems faced to handle the clients.
The information about theaccount opening charges, products, brokerage,
research report, minimum margin requirement, exposure, etc. are shown in
competitor analysis.
Also I have compared the mutual funds on different parameters such as risk and
returns, facilities, volume of investing money, good promotional schemes,
redemption, and investing time
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Objectives
To take an overview of the Indian Stock Market and encapsulate the
various investment avenues available.
To analyze the Indian Stock Market. How it works. What are the
options available in the Capital Market to invest?
To understand online trading & analyze how it is different from
other trading of stock market? Also to gauge the pros & cons of
online trading.
To compare equity and online trading on different parameters such
as risk and returns, facilities, volume of investing money, good
promotional schemes, redemption, and investing time.
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19 Nehru Place , New Delhi
110019
Telephone- 011- 30815100 /66552200
Website: www.religare.in
mailto:%E2%80%[email protected]:%E2%80%[email protected]://www.religare.in/http://www.religare.in/http://www.religare.in/mailto:%E2%80%[email protected] -
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INTRODUCTION
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GROUP PROFILE010009000003350200000200a80100000000a801000026060f004
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Indias largest pharmaceutical Company
-Manufactures & markets
Generics
Branded generic pharmaceuticalsActive pharmaceutical ingredients.
Amongst the top ten generic companies worldwide.
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-Started by the promoters ofRanbaxy
-Vision: To become an integrated Caring partner for
HEALTH through Fortis Healthcare Limited &WEALTH through Fortis Securities Limited.
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-A leading solutions provider in
Screening
Diagnosis
Monitoring of every illness and disease in thecommunity.
-Aim to provide world class services
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Religare is driven by ethical and dynamic process for wealth creation. Based on
this, the company started its endeavor in the financial market.
Religare Enterprises Limited (A Ranbaxy Promoter Group Company) through
Religare Securities Limited, Religare Finevest Limited, Religare Commodities
Limited and Religare Insurance Advisory Services Limited provides integrated
financial solutions to its corporate, retail and wealth management clients. Today, we
provide various financial services which include Investment Banking, Corporate
Finance, Portfolio Management Services, Equity & Commodity Broking, Insurance
and Mutual Funds. Plus, theres a lot more to come your way.
Religare is proud of being a truly professional financial service provider managed by
a highly skilled team, who have proven track record in their respective domains.
Religare operations are managed by more than 1500 highly skilled professionals
who subscribe to Religare philosophy and are spread across its country wide
branches.
Today, it have a growing network of 1550 branches and more than 300 business
partners spread across 460 cities in India and a fully operational international office
at London.
Unlike a traditional broking firm, Religare group works on the philosophy of
partnering for wealth creation. We not only execute trades for our clients but also
provide them critical and timely investment advice. The growing list of financial
institutions with which Religare is empanelled as an approved broker is a reflection
of the high level service standard maintained by the company.
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Religare Securities Ltd. (RSL)
I feel immensely privileged in introducing Religare Securities Limited, a
company managed and controlled by Ranbaxy promoters and presently among the
leading brokerage house of India.
The primary focus of RSL is to cater to services in Capital Market Operations to
Institutional Investors. The Company is a member of the National Stock Exchange
(NSE) and OTCEI. The growing list of financial institutions with whom RSL isempanelled, as approved Broker is a reflection of the high levels of services
maintained by the Company. As on date the Company is empanelled with Alliance
Capital AMC, UTI, IDBI, IFCI, SBI, BOI-MF, Punjab National Bank, PNB-MF,
Oriental Insurance, GIC, UTI-Offshore, ICICI Can bank MF, Punjab & Sind Bank,
Pioneer ITI, SUN F&C, IDBI Principal, Prudential ICICI, ING Baring and J M
Mutual Fund.
Religare in recent past has been constantly innovating in terms of the product
and services, which it offers, and in this respect it has started a premium NRI,
FIs, HNIs and Corporate Servicing group. This group specifically caters to the
growing investment needs of these premium client categories by taking all
their portfolio investment decisions depending upon their risk / returnparameter.
Religare has a very credible team in its Research & Analysis division, which
not only caters to the need of our Institutional clientele but also gives their
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valuable input to Investment Dealers.
Religare is also giving in house depository services to its clientele and it is
among one the leading depository services provide among country. Presently
it manages more than Rs. 3000 Crores worth of shares under its electronic
custody.
Religare among capital market investment fraternity is the most vibrant place
in terms of information and performance and every day it is consolidating its
efforts to provide more customized services to its clients.
It is in the process of developing relationship with like minded corporate and
individual who can value Religare philosophy of financial care and in this respect I
request for a personal meeting with you on convenient date.
The primary focus of RSL is to cater to services in Capital Market Operations to
Institutional Investors. The Company is a member of the National Stock Exchange
(NSE) and OTCEI. The growing list of financial institutions with which RSL is
empanelled, as approved Broker is a reflection of the high levels of services
maintained by the Company.
As on date the Company is empanelled with UTI, IDBI, IFCI, SBI, BOI-MF, Punjab
National Bank, PNB-MF, Oriental Insurance, GIC, UTI-Offshore, ICICI Can bankMF, Punjab & Sind Bank, Pioneer ITI, SUN F&C, IDBI Principal, Prudential ICICI,
ING Baring and J M Mutual Fund.
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Background of Religare Securities Ltd
Religare Securities Limited, a Ranbaxy Promoter Group Company, was
founded by late Dr. Parvinder Singh (CMD Ranbaxy Laboratories
Limited), with the vision of providing integrated financial care driven by
the relationship of trust & confidence. To realize its vision the Religaregroup provides various financial services which include broking (stocks
& commodities), depository participant services, portfolio management
services, advisory on mutual fund investments and many more. Working
on the philosophy of being Financial Care Partner, Religare unlike
other traditional broking firms not only executes the trades for the clients
but also provides them critical and timely investment advice. The growing
list of financial institutions with which Religare is empanelled as an
approved broker is a reflection of the high levels of service standard
maintained by the company. Religare is a truly professional financial
service provider managed by a team of highly skilled professionals who
have proven track record in their respective domains. Religare has the
widest reach through its Regional, Zonal and Branch Offices spread
across the length & breadth of the country.
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Now a days Religare is driven by ethical and dynamic process for wealth
creation. Based on this, the company started its endeavor in the financial market.
- An ISO 9001 : 2000 company
- Member of National Stock Exchange (NSE) since November 1994, first
deposit based
- Member of BSE.
- Depository Participant with
- National Securities Depository Limited (NSDL) since July 2000 -
- Central Depository Services (India) Limited (CDS) since February 2003
- SEBI Approved Portfolio Manager
- Working on the Philosophy of being Financial Care Partner
- Among the leading service provider in Capital Market
In a span of less than five years of its retail operations, FSL recorded a healthy
growth rate both in business volumes and profitability.
Religare is among the very few stock market intermediaries to having very
sound based capital and healthy net worth..
Religare aims to have its footprint all across the country by the end of year so
that it may add value to the investing community in the country.
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Religare Enterprises Limited (A Ranbaxy Promoter Group Company) through
Religare Securities Limited, Religare Finevest Limited, Religare Commodities
Limited and Religare Insurance Advisory Services Limited provides integrated
financial solutions to its corporate, retail and wealth management clients. Today, it
provide various financial services which include Investment Banking, Corporate
Finance, Portfolio Management Services, Equity & Commodity Broking, Insurance
and Mutual Funds. Plus, theres a lot more to come your way.
Presence
Religare is present in more than 1550 branches all over India and the target is to
cross 1800 branches very soon. Its branches are fully equipped with high bandwidth
internet lines and high end computers i.e. the latest IT tools. There are efficient
branch managers and dealers to give you tips of highest quality and accuracy with
support from our analysts. Its branches would make you feel like doing business in
Dalal Street however, in a more sophisticated manner. You get to work with more
traders and learn more and also trade more.
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Infrastructure
OfficesThe company has offices located at prime locations in Mumbai, New Delhi,
Kolkatta and Chennai. The offices are centrally located to cater to the requirements
of institutional and corporate clients and retails clients, and for ease of operations
due to proximity to stock exchanges and banks. Today, it have a growing network of
1550 branches and more than 400 business partners spread across 460 cities in India
and a fully operational international office at London.
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Management
Religare is led by individuals who are professionals and leaders in every sense of
the word.
Board of Directors
Malvinder Mohan Singh( Chairman / Chairperson)
Sunil Godwani (MD and CEO)
Shivinder Mohan Singh ( Non Executive Director )
Padam Bahel ( Independent Director )
Harpal Singh ( Non Executive Director)
Deepak Ramchand Sabnani ( Independent Director)
J W Balani ( Independent Director )
R K Shetty ( Alternative Director )
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G P S Bhalla ( Alternative Director )
Sunita Naidu ( Independent Director )
Mission and Vision
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Mission-
To be India's first Multinational providing complete financial services solution
across the globe.
Vision-
Providing integrated financial care driven by the relationship of trust and
confidence.
Business & Operations
RELIGARE facilitates trading in Secondary Market in Equity Trading & Derivative
(Future & Options) Trading through its Corporate Membership of the premier
exchanges of the country namely National Stock Exchange (NSE), The Stock
Exchange, Mumbai (BSE) and Over the Counter Exchange of India (OTCEI).
Religare On-Line Terminals are installed in all the major cities of Northern India
and its trading clients are categorized as Retail Sub-Brokers and Corporate, NRI's,
Bankers & FI's. They provide very competitive brokerage rates and full transparency
in operations.
Business:
Over a period of time Religare has recorded a healthy growth rate both in business
volumes and profitability as it is one the major players in this line of business. The
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business thrust has been mainly in the development of business from Financial
Institutions, Mutual Funds and Corporate.
Operations:
The operations of the company are broadly organized along the following functions.
Research & Analysis:
This group is focused on doing daily stock picks and periodical scrip \ segment
specific research. It provides the best of analysis in the industry and is valued by
both our Institutional and Retail clientele.
Marketing:
This group is focused on tracking potential business opportunities and converting
them into business relationships. Evaluating the needs of the clients and tailoring
products to meet their specific requirements helps the company to build lasting
relationships.
A summary of our competitive advantage
(Religare Securities Ltd).
1. Participant on the countrys premier exchange: Religare is a member of the
countrys premier stock exchange The National Stock Exchange of India
(NSE).
2. Clearing membership on Capital & Derivatives segments: It has clearing
memberships on both the Capital Market and Derivatives segment of the
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exchange. We are also authorized to trade the retail debt market.
3. Depository Participants with NSDL & CDSL: We are depository participants
with the countrys premier depository service - National Securities Depository
Limited (NSDL), as well as with the only other depository with a countrywide
reach - Central Depository Services Limited.
4. Leading private sector bank as partner: Our banking partners are HDFC and
ICICI Bank The foremost private sector banks in the country, that have the
most technologically advanced infrastructure in the country, with Internet
banking allowing access to information 24 X 7.
5. Bloomberg Information Services: The worlds two best information services
are Bloomberg LPandReuters. These are prohibitively expensive for all but
mutual funds and financial institutions to own terminals of, and subscribe to. We
however have two connections to the Bloomberg Information Service, the
premier service; both in Delhi and Mumbai, and these provide us information
ahead of the general public, and at par with the financial institutions. We have
access to breaking news from across the globe, and across asset classes, and
superior research and analysis capabilities.
6. Prime Office Locations: We have prime office locations in the nations political
capital and the business capital Delhi and Mumbai, in the heart of the city.
7. Research Capabilities: We have a dedicated team of analysts in our Bombay
office They provide fundamental analysis of stocks and markets, which are
fundamentally strong, and provide above market returns to investors, but over a
slightly longer time frame Typically 6 months and above.
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8. Technical Analysis: A daily technical newsletter is published by our in-house
technical analyst, who is a recognized leading practitioner of the science. He has
a success rate of over 73%. He tracks the progress of the calls on a real-time
basis, and advises of any change in the profit points or stop loss levels.
9. All Services under one roof: India has moved to a T+2 settlement system, where
all trades and settled on a rolling basis. However this gives the clients no time to
arrange deliveries to their broker, through a separate depository participant.
Religare, being a trading-clearing member, as well as a depository participant,
allows seamless transfer of securities under the same roof, with minimum delay,
and constant monitoring.
Religare deals with
(Products)
EQUTIES..
MUTUAL FUND
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DERIVATIVES (F & O)
COMODITIES
P M S
WELTH MANAGEMENT
Equity (Shares):
We can say that a Share or Stock is a document issued by a company, which
entitles its holder to be one of the owners of the company. A share is issued by a
company or can be purchased from the stock market.
Mutual Fund:
A mutual fund is a type ofInvestment Company that gathers assets from investors
and collectively invests those assets in stocks, bonds, or money market
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instruments. Individuals and institutions invest in a mutual fund by purchasing
shares issued by the fund. It is through these sales of shares that a mutual fund raises
the cash used to invest in its portfolio of stocks, bonds, and other securities.
Through the collective investments of the mutual fund, each investor shares in the
returns from the funds portfolio while benefiting from professional investment
management, diversification, liquidity, and other benefits and services.
Derivative (F&O)-
Derivatives (Futures & Options) are ideal instruments to protect your portfolio
against risk. You can trade with index movements, hedge and leverage your
portfolio by limiting risk but keeping your upside unlimited
CommodityThe process of economic liberalization in India began in 1991.As part of this process, several capital market reforms were carried out by the capital
market regulator Securities and Exchange Board of India. One such measure was to
allow trading in equities-based derivatives on stock exchanges in 2000. This step
proved to be a shot in the arm of the capital market and volumes soared within three
years. The success of the capital market reforms motivated the government and the
Forward Market Commission (the commodities market regulator) to kick off similar
reforms in the commodities market. Thus almost all the commodities were allowed
to be traded in the futures market from April 2003. To make trading in commodity
futures more transparent and successful, multi-commodity exchanges at national
level were also conceived and these next generation exchanges were allowed to start
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futures trading in commodities on-line. Commodities exchanges have seen a surge in
commodity futures volumes in the last few months. This rise in volumes has been
led by bullion (gold and silver) trading. Today a whole lot of commodities are
available for trading in futures and the list is getting bigger by the day. No wonder
then that the commodity futures market is being viewed as a significant business
segment by many businessmen, investors, institutions, brokers, banks etc.
FEATURES OF RELIGARE
Religare.in is the most comprehensive website, which allows you to invest in
shares, mutual funds, derivatives (Future and Option) and other financial
products.
1. TRADING IN SHARES
Religare offers you various options while trading in shares
CASH TRADING
This is a delivery based trading system, which is generally done with the intention of
taking delivery of shares
MARGIN TRADING (Delivery)
You can also do an delivery settlement trading up to 2 times the fund available
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wherein you take long buy / short sell position in stocks with the intention of
squaring off the position within the same day settlement cycle.
MARGIN TRADING (Intra day)
Trough margin you can do an intra settlement trading up to 4 to 10 times your
available funds, wherein you take long buy/ short sell position in stock with the
intention of squaring off the position within the same day settlement cycle Margin
PLUS will give much higher leverage in your account against your limits.
BTSTBuy Today Sell Tomorrow (BTST) is a facility that allows you to sell shares even on
1st and 2nd day after the buy date, without waiting you have the receipt of shares into
your Demat account.
CALL TRADE
CALL Trade allows you to call on a local number &trade on the telephone through
our Customer Service Executive.
TRADING ON BSE/NSE:
Through Religare the share can be traded on NSE as well asBSE.
2. TRADE IN DERIVATIVES
FUTURE
Through Religare you can now trade in index and stock futures on the NSE. In
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future trading, you take buy/sell index contracts having a longer contract period of
up to 3 months.
Trading in Future is simple during course of contract life; the price moves in favor,
you make profit.
Presently only selected stocks, which meet the criteria on liquidity and volume, have
been enabled for future trading.
OPTION
An option is a contract, which gives the buyer the right to buy or sell shares at a
specific price, on or before a specific date. For this, the buyer has to pay to the seller
some money, which is called premium. There is no obligation on the buyer to
complete the transaction if the price is not favorable to him. To take the buy/ sell
position on index options you have to place certain %age of order value as margin.
With options trading, you can leverage on your trading limit by taking buy/sell
positions much more than what you could have taken in cash segment.
The Buyer of a call option has the right but not obligation to purchase the underlying
Asset at the specific strike price by paying a premium where as the seller of the Callhas the obligation of selling the Underlying Asset at the specific strike price.
By paying lesser amount of premium, you can create position under OPTIONS and
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take advantage of more trading opportunities.
3. INVESTING IN MUTUAL FUND
Religare brings you the same convenience while investing in Mutual Funds as hassle
free and less paperwork investing.
You can now invest in any mutual fund like standard charter MF, Prudential ICICI
MF, Alliance MF, Franklin Templeton MF, Sunderam MF, Birla sun life; HDFC
MF, Principal MF, etc are the mutual funds available for investment. You can invest
in mutual funds without the hassles of identity proof. You need on signature on the
mutual fund .You also get on information of performance of your investment
through online current NAV.
PURCHASE
You may invest / purchase prudential ICICI MF, JM MF, ALLIANCE MF,
FRANKLINE TEMPLETON MF, SUNDARAM MF, BIRLA SUN LIFE MF,
HDFC MF and STANDARD CHARTERED MF without hassles of identity proof.
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REDEMPTION
When ever you required your money, you get it easily. For that purpose you put on
signature on the redemption form. You get youre your money by on line or by
physical process (cheque).
Systematic investment plan (SIP)
SIP allows you to invest a certain sum of money over a period of time periodically.
Just fill in the investment amount, the period of investment and the frequency of
investing and submit Religare do the rest of your investment automatically for you.
Systematic withdrawal program
This allows you to withdraw certain Sum of money over a period of time
periodically.
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Investment Basics
InvestmentThe money you earn is partly spent and the rest saved for meeting future expenses.
Instead of keeping the savings idle you may like to use savings in order to get return
on it in the future. This is called Investment.
Why should one invest?One needs to invest to:
earn return on your idle resources
generate a specified sum of money for a specific goal in life
make a provision for an uncertain future
One of the important reasons why one needs to invest wisely is to meet the cost of
Inflation. Inflation is the rate at which the cost of living increases.
The cost of living is simply what it costs to buy the goods and services you need to
live. Inflation causes money to lose value because it will not buy the same amount of
a good or a service in the future as it does now or did in the past. For example, if
there was a 6% inflation rate for the next 20 years, a Rs.100 purchase today would
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cost Rs. 321 in 20 years. This is why it is important to consider inflation as a factor
in any long-term investment strategy. Remember to look at an investment's 'real' rate
of return, which is the return after inflation. The aim of investments should be to
provide a return above the inflation rate to ensure that the investment does not
decrease in value. For example, if the annual inflation rate is 6%, then the
investment will need to earn more than 6% to ensure it increases in value.
VARIOUS OPTIONS AVAILABLE FOR INVESTMENT
One may invest in
Physical assetslike real estate, gold/jewellery, commodities etc. or
Financial assetssuch as fixed deposits with banks, small saving
instruments with post offices, insurance/ provident/ pension fund etc. or
securities market related instruments like shares, bonds, debentures etc.
Various Short-term financial options available for
investment.
Broadly speaking, savings bank account, money market/liquid funds and fixed
deposits with banks may be considered as short-term financial investment options:
Savings Bank Accountis often the first banking product people use, whichoffers low interest (4%-5% p.a.), making them only marginally better than fixed
deposits.
Fixed Deposits with Banksare also referred to as term deposits and minimum
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investment period for bank FDs is 30 days. Fixed Deposits with banks are for
investors with low risk appetite, and may be considered for 6-12 months investment
period as normally interest on less than 6 months bank FDs is likely to be lower than
money market fund returns.
Various Long-term financial options available for investment.
Post Office Savings: Post Office Monthly Income Scheme is a low risk saving
instrument, which can be availed through any post office. It provides an interest rate
of 8% per annum, which is paid monthly. Minimum amount, which can be invested,
is Rs. 1,000/- and additional investment in multiples of 1,000/-. Maximum amount is
Rs. 3, 00,000/- (if Single) or Rs. 6,00,000/- (if held Jointly) during a year. It has a
maturity period of 6 years. A bonus of 10% is paid at the time of maturity.
Premature withdrawal is permitted if deposit is more than one year old. A deduction
of 5% is levied from the principal amount if withdrawn prematurely; the 10% bonus
is also denied.
Public Provident Fund: A long term savings instrument with a maturity of 15
years and interest payable at 8% per annum compounded annually. A PPF account
can be opened through a nationalized bank at anytime during the year and is open all
through the year for depositing money. Tax benefits can be availed for the amount
invested and interest accrued is tax-free. A withdrawal is permissible every year
from the seventh financial year of the date of opening of the account and the amount
of withdrawal will be limited to 50% of the balance at credit at the end of the 4th
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year immediately preceding the year in which the amount is withdrawn or at the end
of the preceding year whichever is lower the amount of loan if any.
Company Fixed Deposits:These are short-term (six months) to medium-term
(three to five years) borrowings by companies at a fixed rate of interest which is
payable monthly, quarterly, semi-annually or annually. They can also be cumulative
fixed deposits where the entire principal along with the interest is paid at the end of
the loan period. The rate of interest varies between 6-9% per annum for company
FDs. The interest received is after deduction of taxes
.
Bonds:It is a fixed income (debt) instrument issued for a period of more than one
year with the purpose of raising capital. The central or state government,
corporations and similar institutions sell bonds. A bond is generally a promise to
repay the principal along with a fixed rate of interest on a specified date, called the
Maturity Date.
Mutual Funds:These are funds operated by an investment company which raises
money from the public and invests in a group of assets (shares, debentures etc.), in
accordance with a stated set of objectives. It is a substitute for those who are unable
to invest directly in equities or debt because of resource, time or knowledge
constraints. Benefits include professional money management, buying in small
amounts and diversification. Mutual fund units are issued and redeemed by the
Fund Management Companybased on the fund's net asset value (NAV), which is
determined at the end of each trading session. NAV is calculated as the value of all
the shares held by the fund, minus expenses, divided by the number of units issued.
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Mutual Funds are usually long term investment vehicle though there some categories
of mutual funds, such as money market mutual funds which are short term
instruments.
STOCK EXCHANGE
The Securities Contract (Regulation) Act, 1956 [SCRA] defines Stock Exchange
as any body of individuals, whether incorporated or not, constituted for the purpose
of assisting, regulating or controlling the business of buying, selling or dealing in
securities. Stock exchange could be a regional stock exchange whose area of
operation/jurisdiction is specified at the time of its recognition or national
exchanges, which are permitted to have nationwide trading since inception. NSE
was incorporated as a national stock exchange.
Equity/ShareTotal equity capital of a company is divided into equal units of small denominations,
each called a share. For example, in a company the total equity capital of Rs
2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is
called a Share. Thus, the company then is said to have 20,00,000 equity shares of Rs
10 each. The holders of such shares are members of the company and have voting
rights.
Equity Market
In finance a share is a unit of account forvarious financial instruments including
stocks, mutual funds, limited partnerships, and REIT's. In British English, the usage
of the word share alone to refer solely to stocks is so common that it almost replaces
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the word stock itself.
In simple Words, a share or stock is a document issued by a company, which
entitles its holder to be one of the owners of the company. A share is issued by a
company or can be purchased from the stock market.
By owning a share you can earn a portion and selling shares you get capital gain.
So, your return is the dividend plus the capital gain. However, you also run a risk of
making a capital loss if you have sold the share at a price below your buying price
Trade in shares
Every transaction in the stock exchange is carried out through licensed memberscalled brokers.
To trade in shares, you have to approach a broker However, since most stock
exchange brokers deal in very high volumes, they generally do not entertain small
investors. These brokers have a network of sub-brokers who provide them with
orders.
The general investors should identify a sub-broker for regular trading in shares
and place his order for purchase and sale through the sub-broker. The sub/broker
will transmit the order to his broker who will then execute it.
In equity market SEBI is actively participating without them equity market
cant control so it necessary to know about SEBI.
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Index
An Index shows how a specified portfolio of share prices is moving in order to give
an indication of market trends. It is a basket of securities and the average price
movement of the basket of securities indicates the index movement, whether
upwards or downwards.
Depository
A depository is like a bank wherein the deposits are securities (viz. shares,
debentures, bonds, government securities, units etc.) in electronic form.
Dematerialization
Dematerialization is the process by which physical certificates of an investor are
converted to an equivalent number of securities in electronic form and credited to
the investors account with his Depository Participant(DP).
SECURITIES
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Securities:The definition of Securities as per the Securities Contracts Regulation Act
(SCRA), 1956, includes instruments such as shares, bonds, scrips, stocks or other
marketable securities of similar nature in or of any incorporate company or body
corporate, government securities, derivatives of securities, units of collective
investment scheme, interest and rights in securities, security receipt or any other
instruments so declared by the Central Government.
Function of Securities Market:Securities Markets is a place where buyers and sellers of securities can enter into
transactions to purchase and sell shares, bonds, debentures etc. Further, it performs
an important role of enabling corporate, entrepreneurs to raise resources for their
companies and business ventures through public issues. Transfer of resources from
those having idle resources (investors) to others who have a need for them
(corporate) is most efficiently achieved through the securities market. Stated
formally, securities markets provide channels for reallocation of savings to
investments and entrepreneurship. Savings are linked to investments by a variety of
intermediaries, through a range of financial products, called Securities.
REGULATOR
Why does Securities Market need Regulators?The absence of conditions of perfect competition in the securities market makes the
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role of the Regulator extremely important. The regulator ensures that the market
participants behave in a desired manner so that securities market continues to be a
major source of finance for corporate and government and the interest of investors
are protected.
Who regulates the Securities Market?The responsibility for regulating the securities market is shared by Department of
Economic Affairs (DEA), Department of Company Affairs (DCA), Reserve Bank of
India (RBI) and Securities and Exchange Board of India (SEBI)
.
SECURITY AND EXCHANGE BOARD OF INDIA (SEBI)
The Securities and Exchange Board of India (SEBI) is the regulatory authority in
India established under Section 3 of SEBI Act, 1992. SEBI Act, 1992 provides for
establishment ofSEBI with statutory powers for
Protecting the interests of investors in securities
Promoting the development of the securities market and
Registering and regulating the working of stock brokers, subbrokers etc.
Promoting and regulating self-regulatory organizations
Prohibiting fraudulent and unfair trade practices
SEBI has power for: Regulating the business in stock exchange and other securities market;
Registering and regulating the working of stock brokers sub- brokers, share
transfer agents, bankers to an issue, trustees of trust deeds, registers to an
issue, merchant bankers, underwriters, portfolio manager, investment advisers
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and such other intermediaries who may be associated with securities markets
in any manners;
Registering and regulating the working of depositaries, participants,
custodians of securities, foreign institutional investors, credit rating agencies
and such other intermediaries as SEBI may by notification, specify in this
behalf;
Registering and regulating the working of venture capital funds and collective
investment schemes including mutual funds;
Promoting and regulating self-regulatory organizations;
Prohibiting fraudulent and unfair trade practices related to securities markets;
Promoting investors education and training of intermediaries securities
markets;
Prohibiting insider trading in securities;
Regulating substantial acquisition of shares and take-over of companies;
Calling for information from, undertaking inspection, conducting inquiries
and audits of the stock exchanges, mutual and other persons associated with
the securities market;
Conducting research for the above purpose.
Calling from or furnishing to any such agencies, as may be specified by SEBI,
such information as may be considered necessary by it for the efficient
discharge of its functions.
PARTICIPANTS
Participants in the Securities Market:
The securities market essentially has three categories of participants, namely, the
issuers of securities, investors in securities and the intermediaries, such as merchant
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bankers, brokers etc. While the corporate and government raise resources from the
securities market to meet their obligations, it is households that invest their savings
in the securities market.
Is it necessary to transact through an intermediary?
It is advisable to conduct transactions through an intermediary. For example you
need to transact through a trading member of a stock exchange if you intend to buy
or sell any security on stock exchanges. You need to maintain an account with a
depository if you intend to hold securities in demat form.
You need to deposit money with a banker to an issue if you are subscribing to public
issues. You get guidance if you are transacting through an intermediary. Chose a
SEBI registered intermediary, as he is accountable for its activities. The list of
registered intermediaries is available with exchanges, industry associations etc.
DEPOSITORY PARTICIPATION
A depository is an organization form to provide electronic depository facilities
for securities trade. Securities are then held in the electronic form through the
medium of participants (DPs). The national Securities Depository Limited
(NSDL) is the first Depository in India. The function of NSDL is regulated by
the SEBI.
The depository is not just another custodian. The depository can legally
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transfer beneficial ownership. The main objective of depository is to reduce
settlement risk by minimizing paperwork involved in trading, settling and
transferring securities.
To utilize the services offered by a depository, you must open an account with
the depository through a DP. The DPs are the link between the shareholders,
the company and NSDL.
Depending upon the DP. There may or may not be an opening account fees
towards transaction and custody.
Banks, financial institutions, custodians and stockbrokers can becomeDPs
subject to their meeting certain requirements prescribed by NSDL and SEBI.
NSDL publishes the list of DPs registered with them, from time to time.
The DP will provide you with a passbook or statement of account periodically
inform you on your holdings.
You can even have a zero balance in your account.
If you loose your statement of account inform the DP and obtain a duplicate.
If holdings in the statement are incorrect, approach the DP for clarification.
If you receive an incorrect dividend amount, contact the company or registrar.
Main depository participants
1. NSDL
2. CSDL
1. NATIONAL SECURITIES DEPOSITORY LTD (NSDL)
In order to solve the problems associated with trading securities, NSE joinedhand with the Industrial Development Bank of India (IDBI) and the Unit Trust of
India (UTI) to promote dematerizalition of securities.
NSDL, commenced operations in November 1996 and has since established a
national infrastructure of international standard to handle trading and settlement
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in dematerialized form and thus completely eliminated the risk to investors
associated with fake paper.
a. CENTRAL DEPOSITOEY SERVICESLTD (CSDL)
The Kolkata Stock Exchange Association Limited, Bank Of India HDFC Bank
Limited CDSL is another Depository after NSDL. Its promoter are Bombay Stock
Exchange,, Standard chartered Bank, State Bank of India Bank Of Baroda Union
Bank Of India, Bank Of Maharastra Centurion Bank etc.
As on 30 June 2001 CDSL has signed agreement with 3297 companies. Of these
3528 are available for Demat services. CDSL has 160 DPs offering Depository
services in 78 cities across 147 locations in the country.
Segments of Securities Market
The securities market has two interdependent segments: the primary (new issues)
market and the secondary market. The primary market provides the channel for sale
of new securities while the secondary market deals in securities previously issued.
1. PRIMARY MARKET
2. SECONDARY MARKET
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1. PRIMARY MARKET
Role of the Primary Market
The primary market provides the channel for sale of new securities. Primary market
provides opportunity to issuers of securities; Government as well as corporate, to
raise resources to meet their requirements of investment and/or discharge some
obligation.
They may issue the securities at face value, or at a discount/premium and these
securities may take a variety of forms such as equity, debt etc. They may issue the
securities in domestic market and/or international market.
Face Value of a share/debenture
The nominal or stated amount (in Rs.) assigned to a security by the issuer. For
shares, it is the original cost of the stock shown on the certificate; for bonds, it is the
amount paid to the holder at maturity. Also known as par value or simply par. For an
equity share, the face value is usually a very small amount (Rs. 5, Rs. 10) and does
not have much bearing on the price of the share, which may quote higher in the
market, at Rs. 100 or Rs. 1000 or any other price. For a debt security, face value is
the amount repaid to the investor when the bond matures (usually, Government
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securities and corporate bonds have a face value of Rs. 100). The price at which the
security trades depends on the fluctuations in the interest rates in the economy.
Premium and Discount in a Security Market
Securities are generally issued in denominations of 5, 10 or 100. This is known as
the Face Value or Par Value of the security as discussed earlier. When a security is
sold above its face value, it is said to be issued at a Premium and if it is sold at less
than its face value, then it is said to be issued at a Discount.
ISSUE OF SHARES
Why do companies need to issue shares to the public?
Most companies are usually started privately by their promoter(s). However, the
promoters capital and the borrowings from banks and financial institutions may not
be sufficient for setting up or running the business over a long term. So companies
invite the public to contribute towards the equity and issue shares to individual
investors. The way to invite share capital from the public is through a Public
Issue. Simply stated, a public issue is an offer to the public to subscribe to the share
capital of a company. Once this is done, the company allots shares to the applicants
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as per the prescribed rules and regulations laid down by SEBI.
Different kinds of issues
Primarily, issues can be classified as a Public, Rights or Preferential issues (also
known as private placements). While public and rights issues involve a detailed
procedure, private placements or preferential issues are relatively simpler. The
classification of issues is illustrated below:
Initial Public Offering (IPO) is when an unlisted company makes either
a fresh issue of securities or an offer for sale of its existing securities or both
for the first time to the public. This paves way for listing and trading of the
issuers securities.
A follow on public offering (Further Issue)is when an already listed
company makes either a fresh issue of securities to the public or an offer for
sale to the public, through an offer document.
Rights Issueis when a listed company which proposes to issue fresh
securities to its existing shareholders as on a record date. The rights are
normally offered in a particular ratio to the number of securities held prior to
the issue. This route is best suited for companies who would like to raise
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capital without diluting stake of its existing shareholders.
A Preferential issueis an issue of shares or of convertible securities by
listed companies to a select group of persons under Section 81 of the
Companies Act, 1956 which is neither a rights issue nor a public issue. This is
a faster way for a company to raise equity capital. The issuer company has to
comply with the Companies Act and the requirements contained in the
Chapter pertaining to preferential allotment in SEBI guidelines which inter-
alia include pricing, disclosures in notice etc.
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Issue price
The price at which a company's shares are offered initially in the primary market is
called as the Issue price. When they begin to be traded, the market price may be
above or below the issue price.
Market Capitalization
The market value of a quoted company, which is calculated by multiplying its
current share price (market price) by the number of shares in issue, is called as
market capitalization. E.g. Company A has 120 million shares in issue. The current
market price is Rs. 100. The market capitalization of company A is Rs. 12000
million.
Initial Public Offer (IPO)
An Initial Public Offer (IPO) is the selling of securities to the public in the primary
market. It is when an unlisted company makes either a fresh issue of securities or an
offer for sale of its existing securities or both for the first time to the public. This
paves way for listing and trading of the issuers securities. The sale of securities can
be either through book building or through normal public issue.
Who decides the price of an issue?
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Indian primary market ushered in an era of free pricing in 1992. Following this, the
guidelines have provided that the issuer in consultation with Merchant Banker shall
decide the price. There is no price formula stipulated by SEBI. SEBI does not play
any role in price fixation. The company and merchant banker are however required
to give full disclosures of the parameters which they had considered while deciding
the issue price. There are two types of issues, one where company and Lead
Merchant Banker fix a price (called fixed price) and other, where the company and
the Lead Manager (LM) stipulate a floor price or a price band and leave it to market
forces to determine the final price (price discovery through book building process).
How does one know if shares are allotted in an IPO/offer for
sale? What is the timeframe for getting refund if shares not
allotted?As per SEBI guidelines, the Basis of Allotment should be completed with 15 days
from the issue close date. As soon as the basis of allotment is completed, within 2
working days the details of credit to demat account / allotment advice and dispatch
of refund order needs to be completed. So an investor should know in about 15 days
time from the closure of issue, whether shares are allotted to him or not.
Does NSE provide any facility for IPO?Yes. NSEs electronic trading network spans across the country providing access to
investors in remote areas. NSE decided to offer this infrastructure for conducting
online IPOs through the Book Building process. NSE operates a fully automated
screen based bidding system called NEAT IPO that enables trading members to
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enter bids directly from their offices through a sophisticated telecommunication
network. Book Building through the NSE system offers several advantages:
The NSE system offers a nation wide bidding facility in securities
It provide a fair, efficient & transparent method for collecting bids using the
latest electronic trading systems
Costs involved in the issue are far less than those in a normal IPO
The system reduces the time taken for completion of the issue process
The IPO market timings are from 10.00 a.m. to 3.00 p.m. On the last day of the IPO,
the session timings can be further extended on specific request by the Book Running
Lead Manager.
What is Lock-in?
Lock-in indicates a freeze on the sale of shares for a certain period of time.
SEBI guidelines have stipulated lock-in requirements on shares of promoters mainly
to ensure that the promoters or main persons, who are controlling the company, shall
continue to hold some minimum percentage in the company after the public issue.
SEBIs Role in an Issue
Any company making a public issue or a listed company making a rights issue of
value of more than Rs 50 lakes is required to file a draft offer document with SEBI
for its observations. The company can proceed further on the issue only after getting
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observations from SEBI. The validity period of SEBIs observation letter is three
months only i.e. the company has to open its issue within three months period.
SECONDARY MARKET
Secondary market refers to a market where securities are traded after being initially
offered to the public in the primary market and/or listed on the Stock Exchange.
Majority of the trading is done in the secondary market.
Secondary market comprises of equity markets and the debt markets.
Role of the Secondary Market
For the general investor, the secondary market provides an efficient platform for
trading of his securities. For the management of the company,
Secondary equity markets serve as a monitoring and control conduitby facilitating
value-enhancing control activities, enabling implementation of incentive-based
management contracts, and aggregating information (via price discovery) that guides
management decisions.
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Difference between the Primary Market and the Secondary
Market
In the primary market, securities are offered to public for subscription for thepurpose of raising capital or fund. Secondary market is an equity trading venue in
which already existing/pre-issued securities are traded among investors. Secondary
market could be either auction or dealer market. While stock exchange is the part of
an auction market, Over-the-Counter (OTC) is
a part of the dealer market.
STOCK EXCHANGE
Role of a Stock Exchange in buying and selling shares
The stock exchanges in India, under the overall supervision of the regulatory
authority, the Securities and Exchange Board of India (SEBI), provide a trading
platform, where buyers and sellers can meet to transact in securities. The trading
platform provided by NSE is an electronic one and there is no need for buyers and
sellers to meet at a physical location to trade. They can trade through the
computerized trading screens available with the NSE trading members or the
internet based trading facility provided by the trading members of NSE.
Stock exchanges in India
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Currently, two stock exchanges in India, the National Stock Exchange (NSE) and
Bombay Stock Exchange (BSE)
1.NATIONAL STOCK EXCHANGE (NSE)
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The
National
Stock
Exchange
of India
Ltd.
(NSE), set up in the year 1993, is today the largest stock exchange in India and a
preferred exchange for trading in equity, debt and derivatives instruments by
investors. NSE has set up a sophisticated electronic trading, clearing and settlement
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platform and its infrastructure serves as a role model for the securities industry. The
standards set by NSE in terms of market practices; products and technology have
become industry benchmarks and are being replicated by many other market
participants. It provides a 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 the on-line system has helped
in integrating retail investors across the nation. The exchange has a
network in more than 350 cities and its trading members are connected to the central
servers of the exchange in Mumbai through a sophisticated telecommunication
network comprising of over 2500 VSATs. NSE has around 850 trading members
and provides trading in over 1000 equity shares and 2500 debt securities. Besides
this, NSE provides trading in various derivatives products such as index futures,
index options, stock futures, stock options and interest rate futures.
At NSE, it has always been our endeavor to continuously upgrade the skills and
proficiency of the Indian investor. Since, financially literate investors are the
backbone of the securities market, knowledge and awareness about the securities
market is of the foremost concern to us, starting with the most basic of information
being made available as the first step.
This booklet has therefore been prepared for those of you who are keen to acquire
some basic but key information about the stock markets as an initial step towards
becoming a more informed investor. We hope this booklet will act as a means of
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satisfying some of your initial queries on the stock markets.
2.BOMBAY STOCK EXCHANGE (BSE)
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich
heritage. Popularly known as "BSE", it was established as "The Native Share &
Stock Brokers Association" in 1875. It is the first stock exchange in the country to
obtain permanent recognition in 1956 from the Government of India under the
Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent
role in the development of the Indian capital market is widely recognized and its
index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the
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Exchange is now a demutualised and corporatised entity incorporated under the
provisions of the Companies Act, 1956, pursuant to the BSE(Corporatisation and
Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of
India (SEBI).
The BSE Sensex orBombay Stock Exchange Sensitive Index is a value-weighted
index composed of 30 stocks with the base April 1979 = 100. It consists of the 30
largest and most actively traded stocks, representative of various sectors, on the
Bombay Stock Exchange. These companies account for around one-fifth of the
market capitalization of the BSE.
The base value of the Sensex is 100 on April 1, 1979 and the base year of BSE-
SENSEX is 1978-79.
At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and
modify its composition to make sure it reflects current market conditions.
The abbreviated form "Sensex" was coined by Deepak Mohoni around 1990 while
writing market analysis columns for some of the business newspapers and
magazines. It gained popularity over the next year or two.
The stock market has grown by over ten times from June 1990 to today. Using
information from April 1979 onwards, the long-run rate of return on the BSE Sensex
can be estimated to be 0.52% per week (continuously compounded) with a standard
deviation of 3.67%. This translates to 27% per annum, which translates to roughly
18% per annum after compensating for inflation.
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STOCK TRADING
Screen Based Trading
The trading on stock exchanges in India used to take place through open outcry
without use of information technology for immediate matching or recording of
trades. This was time consuming and inefficient. This imposed limits on trading
volumes and efficiency. In order to provide efficiency, liquidity and transparency,
NSE introduced a nationwide, on-line, fully automated screen based trading system
(SBTS) where a member can punch into the computer the quantities of a security
and the price at which he would like to transact, and the transaction is executed as
soon as a matching sale or buy order from a counter party is found.
NEAT
NSE is the first exchange in the world to use satellite communication technology for
trading. Its trading system, called National Exchange for Automated Trading
(NEAT), is a state of-the-art client server based application. At the server end all
trading information is stored in an in memory database to achieve minimum
response time and maximum system availability for users. It has uptime record of
99.7%. For all trades entered into NEAT system, there is uniform response time of
less than one second.
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Place orders with the broker
You may go to the brokers office or place an order on the phone/internet or as
defined in the Model Agreement, which every client needs to enter into with his or
her broker.
How does an investor get access to internet based trading
facility?
There are many brokers of the NSE who provide internet based trading facility to
their clients. Internet based trading enables an investor to buy/sell securities through
internet which can be accessed from a computer at the investors residence or
anywhere else where the client can access the internet. Investors need to get in touch
with an NSE broker providing this service to avail of internet based trading facility.
Contract Note
Contract Note is a confirmation of trades done on a particular day on behalf of the
client by a trading member. It imposes a legally enforceable relationship between the
client and the trading member with respect to purchase/sale and settlement of trades.
It also helps to settle disputes/claims between the investor and the trading member.
It is a prerequisite for filing a complaint or arbitration proceeding against the trading
member in case of a dispute. A valid contract note should be in the prescribed form,
contain the details of trades, stamped with requisite value and duly signed by the
authorized signatory. Contract notes are kept in duplicate, the trading member and
the client should keep one copy each.
After verifying the details contained therein, the client keeps one copy and returns
the second copy to the trading member duly acknowledged by him.
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Contract note issued by the stock broker
A broker has to issue a contract note to clients for all transactions in the form
specified by the stock exchange. The contract note inter-alia should have following:
Name, address and SEBI Registration number of the Member broker.
Name of partner/proprietor/Authorized Signatory.
Dealing Office Address/Tel. No./Fax no., Code number of the member given
by the Exchange.
Contract number, date of issue of contract note, settlement number and time
period for settlement.
Constituent (Client) name/Code Number.
Order number and order time corresponding to the trades.
Trade number and Trade time.
Quantity and kind of Security bought/sold by the client.
Brokerage and Purchase/Sale rate.
Service tax rates, Securities Transaction Tax and any other charges levied by
the broker.
Appropriate stamps have to be affixed on the contract note or it is mentioned
that the consolidated stamp duty is paid.
Signature of the Stock broker/Authorized Signatory.
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Why should one trade on a recognized stock exchange only
for buying/selling shares?
An investor does not get any protection if he trades outside a stock exchange.Trading at the exchange offers investors the best prices prevailing at the time in the
market, lack of any counter-party risk which is assumed by the clearing corporation,
access to investor grievance and redressed mechanism of stock exchanges,
protection up to a prescribed limit, from the Investor Protection Fund etc.
How to know if the broker or sub broker is registered?
One can confirm it by verifying the registration certificate issued by SEBI. A
broker's registration number begins with the letters INB and that of a sub broker
with the letters INS.
Precautions must one take before investing in the stock
markets
Here are some useful pointers to bear in mind before you invest in the markets:
Make sure your broker is registered with SEBI and the exchanges and do not
deal with unregistered intermediaries.
Ensure that you receive contract notes for all your transactions from your
broker within one working day of execution of the trades.
All investments carry risk of some kind. Investors should always know the
risk that they are taking and invest in a manner that matches their risk
tolerance.
Do not be misled by market rumours, luring advertisement or hot tips of the
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day.
Take informed decisions by studying the fundamentals of the company. Find
out the business the company is into, its future prospects, quality of
management, past track record etc Sources of knowing about a company are
through annual reports, economic magazines, databases available with
vendors or your financial advisor.
If youre financial advisor or broker advises you to invest in a company you
have never heard of, be cautious. Spend some time checking out about the
company before investing.
Do not be attracted by announcements of fantastic results/news reports, abouta company. Do your own research before investing in any stock.
Do not be attracted to stocks based on what an internet website promotes,
unless you have done adequate study of the company.
Investing in very low priced stocks or what are known as penny stocks does
not guarantee high returns.
Be cautious about stocks which show a sudden spurt in price or trading
activity.
Any advice or tip that claims that there are huge returns expected, especially
for acting quickly, may be risky and may to lead to losing some, most, or all
of your money.
Market Research Analysis
Preference of investment
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75%
16%
7% 2%
Only shares --75 %
Mutual Funds --16%
Bonds --7%
Derivatives --2%
Interpretation: This shows that although the mutual fund market is on rise yet,
the most favored investment continues to be in the Share Market. So, with a more
transparent system, investment in the Stock Market can definitely be increased.
Awareness of online share trading
91%
9%
Yes -- 91%
No -- 9%
Interpretation: With the increase in cyber education, the awareness towards
online share trading has increased by leaps and bounds. This awareness is expected
to increase further with the increase in internet education.
Awareness of Religare.in as a Brand
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63%
37%
Yes -- 63%
No -- 37%
Interpretation: This pie-chartshows that Religare has reasonable amount of
Brand awareness in terms of a premier Retail Stock Broking Company. This brand
image should be further levered by the company to increase its market share over its
competitors.
Awareness of Religare Facilities
20%
80%
Yes -- 20%
No -- 80%
Interpretation: although there is sufficiently high brand equity among the target
audience yet, it is to be noted that the customers are not aware of the facilities
provided by the company meaning thereby, that the company should concentrate
more towards promotional tools and increase its focus on product awareness rather
than brand awareness.
DEMAT Account Market
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20%
15%
25%
18%
Religare-20%
Sharekhan-15%
ICICI Direct-25%
India Bulls-22%Others-28%
Interpretation: This shows that even with sufficiently high Brand Equity,
Religare ranks only 3rd amongst the Demat Account providers. This is probably
because of two main reasons.
1. Lack of promotion and unfocussed approach towards Product awareness.
2. Non transparent marketing policies of the company.
Hence, the company should crystallize its products and should indulge in aggressive
marketing and promotion.
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Satisfaction Level among Customers with Current Broker
92%
8%
Yes -- 92%
No -- 8%
Interpretation: This pie-chart accentuates the fact that Strategic Marketing,
today, has gone beyond only meeting sales targets and generating profit volumes. It
shows that all the competitors are striving hard not only to woo the customer but
also to make them Brand loyal by generating customer satisfaction.
Frequency of Trading
9%
25%
55%
11%
Daily-9%
Weekly-27%
Monthly-53%
Yearly-11%
Interpretation: In spite of the huge returns that the share market promises, we
see that there is still a dearth of active trade and investors. This is because of non
transparent structure of the Indian share market and the skepticism of the target
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audience that is generated by the volatility of the stock market. It requires efficient
bureaucratic intervention on the part of the Government.
Percentage of Earning Invested In Share Trading
75%
16%
7% 2%
Upto 10%--71%
Upto 25%--19%
Upto 50%--7%
Above 50%--3%
Interpretation: This shows that people invest only up to 10% of their earnings in
the stock market, again reiterating the volatile and non-transparent structure of the
Indian stock market. Hence, effective and efficient steps should be undertaken to
woo the customers to investment more in the lucrative stock market.
Rating of Share Trading Companies
15%
20%
30%
5%
10%
Religare-15%
Sharekhan-20%
ICICI Direct-30%
India Bulls-25%
Others-10%
Interpretation: The survey indicated that people ranked Religare at the 3rdposition as an online stock broking company. Even after relatively low brokerages
and better services being provided in competitors, Religare is not at top spot because
of ineffective marketing and promotion strategies. Hence, the company should
indulge in to aggressive marketing and promotional methods and should approach
this problem in a more structured format.
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SWOT ANALYSIS
A SWOT analysis focuses on the internal
and external environments, examining
strengths and weaknesses in the internal environment and opportunities and
threats in the external environment.
STRENGTHS
Services
As products of Religare is a extremely innovative product with very less cost.
Services like online trading facility, institutional and domestic broking, customized
research reports with almost 80% efficiency etc give Religare an edge over its
competitors. Religare provides other support services that make retail investors more
confident and assured with their trading. SMS alerts (allowing traders and investors
to make the most of the available opportu