A

Summer Training Report

On
“ANALYSIS OF EQUITY MARKET”

TO BE SUBMITTED TO DR. APJ ABDUL KALAM

TECHNICAL UNIVERSITY, LUCKNOW
IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Session-2019 – 2021

Submitted By: Submitted To. Under the Guidance of:

ABHISHEK TIWARI Mr.R.K. TOMAR RANJIT KUMAR
Roll no:-1902160700004 (HOD MBA) ASS. MANAGER
MBA-III Sem (SHAREKHAN)

IIMT COLLEGE OF ENGINEERING

GREATER NOIDA

1
 STUDENT DECLARATION
My self Abhishek Tiwari Student of MBA – III Sem here by declared that
the research report entitled “Analysis of Equity Market” is completed
and submitted under the guidance of Mr. RANJIT KUMAR, ASSISTANT
MANAGER (SHARE KHAN) is my original work. The imperial finding in
this report is based on the data collected by me. I have not submitted
this project report to Dr. APJ Abdul Kalam Technical University,
Lucknow or any other University for the purpose of compliance of any
requirement of any examination or degree.

Signature
AbhishekTiwari
RollNo:-1902160700004
MBA 3rd Semester

2
 ACKNOWLEDGEMENT
I express my sincerest gratitude and thanks to Mr. RANJIT KUMAR
(Assistant Manager), for whose kindness I had the precious opportunity
of attaining research project at Sharekhan. Under his brilliant untiring
guidance I could complete the Project being undertaken on the
“Analysis on Equity Market” successfully in time. His meticulous
attention and invaluable suggestions have helped me in simplifying the
problem involved in the work. I would also like to thank the
overwhelming support of all the people who gave me an opportunity to
learn and gain knowledge about the various aspects of the industry. I
would like to thanks to Mr. R.K. Tomar for their constant enthusiastic
encouragement and valuable suggestions without which this project
would not been successfully completed.

3
Executive Summary
This project is all about the stock market and their features. It presents
the stock market indices, trading technology and term of trade in stock
market.

In this research project showing the various indices and stock exchange
work in stock market. The project is being done about the whole
procedure essential to open an online trading account couple with
demat account.

The project will help in exploring the area where there is the feasibility
of acquiring more new investors.

It would also help in knowing the various perception of client that how
much they satisfied with the services of sharekhan and their brokerage.

The Indian scenario has been evaluated considering the facts like,
players in the market, advantages, draw-backs, connectivity hazards.
Still, in due course of time, Indian online share trading will be able to
find it‘s hold; there is no doubt about that.

Beside this we all got the chance to trap the derivative market in Indian
share market, through which we got to know how the margins are
booked in real terms in the share market. We also got the chance to get
familiar with. how the d/p account of a customer‘s maintained by
company in which we got the knowledge of calculation of brokerages,
maintenance charges of that d/p account as well as the working of
NSDL,CDSL,NSCCL etc.

The report is divided into various sections….

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1. Company Profile:

This part describes the company profile. This part recognizes the
achievements and rewards the company has achieved, it also gives
little insights into what company offers to the Corporate and the
Consumers. This section also describes the kind of technology used.

2. About Online trading account:

Since the project leads to opening of online trading account, this

section gives the details of what all services Sharekhan offers to the
consumer. This section gives the detail of how different services
provided by the others online trading account and how is Sharekhan
superior from them.

3. Procedures and requirement for opening an Trading cum demat

account:

This section gives the detail of the different conditions that have to
be met for opening an trading cum demat account. The section
contains the documents, which is required to open an account.

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CONTENTS
Chapter 1 – Introduction of Stock Market

Meaning of Stock Market

Stock Basics

Different types of Stock

Bombay Stock Exchange (BSE)

National Stock Exchange (NSE)

Trading

Technology’s on trading

Objective of the study

Chapter 2 – Company Profile/Research Methodology

Company Details

About Online Trading

Documents required for opening an account

Computer Hardware & Software Requirement

Research Design

Sampling Design

Data Collection

Chapter 3 – Data Analysis & Findings

Chapter 4 – Conclusions

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Limitation

Recommendations

Appendix

Questionnaire

Bibliography

7
 Chapter 1
Meaning of Stock Market

The stock market is where you can buy, sell, and trade stocks any
business day. It's also called a stock exchange and works like an
auction where investors buy and sell shares of stocks. Stocks allow
you to own a share of a public corporation.

Once listed on the stock exchanges, the stocks issued by

companies can be traded in the secondary market to make profits or
cut losses. This buying and selling of stocks listed on
the exchanges are done by stockbrokers /brokerage firms, that act
as the middleman between investors and the stock exchange. Once
listed on the stock exchanges, the stocks issued by companies can be
traded in the secondary market to make profits or cut losses. This
buying and selling of stocks listed on the exchanges are done by
stockbrokers /brokerage firms, that act as the middleman between
investors and the stock exchange.

Stock Basics

Stocks are a part, if not the cornerstone, of nearly any investment

portfolio. When you start on your road to financial freedom, you need
to have a solid understanding of stocks and how they trade on the stock
market.

Over the last few decades, the average person's interest in the stock
market has grown exponentially. What was once a toy of the rich has
now turned into the vehicle of choice for growing wealth. This demand

8
coupled with advances in trading technology has opened up the
markets so that nowadays nearly anybody can own stocks.

The key to protecting yourself in the stock market is to understand

where you are putting your money. It is for this reason that we've
created this tutorial: to provide the foundation you need to make
investment decisions yourself. We'll start by explaining what a stock is
and the different types of stock, and then we'll talk about how they are
traded, what causes prices to change, howyou buy stocks, and much
more.

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 What are stocks?

Plain and simple, stock is a share in the ownership of a company. Stock

represents a claim on the company's assets and earnings. As you
acquire more stock, your ownership stake in the company becomes
greater. Whether you say shares, equity, or stock, it all means the same
things.

Being an Owner:-

Holding a company's stock means that you are one of the many
owners (shareholders) of a company, and, as such, you have a claim to
everything the company owns. Yes, this means that technically you own
a tiny sliver of every piece of furniture, every trademark, and every
contract of the company. As an owner, you are entitled to your share of
the company's earnings as well as any voting rights attached to the
stock.

A stock is represented by a stock certificate. This is a fancy piece of

paper that is proof of your ownership. In today's computer age, you
won't actually get to see this document because your brokerage keeps
these records electronically, which is also known as holding shares "in
street name." This is done to make the shares easier to trade. In the
past when a person wanted to sell his or her shares, that person
physically took the certificates down to the brokerage. Now, trading
with a click of the mouse or a phone call makes life easier for
everybody.

It isn't too big a deal that the shareholders are not the ones managing
the company. After all, the idea is that you don't want to have to work
to make money, right? The importance of being a shareholder is that

10
you are entitled to a portion of the company‘s profits and have a claim
on assets. Profits are sometimes paid out in the form of dividends. The
more shares you own, the larger the portion of the profits you get. The
importance of stock ownership is your claim on assets and earnings.
Without this, the stock wouldn't be worth the paper it's printed on.
Debt vs Equity: -

Why does a company issue stock? Why would the founders share the
profits with thousands of people when they could keep profits to
themselves? The reason is that at some point every company needs to
raise money. To do this, companies can either borrow it from
somebody or raise it by selling part of the company, which is known as
issuing stock. A company can borrow by taking a loan from a bank or by
issuing bonds. Both methods fit under the umbrella of "debt financing."
On the other hand, issuing stock is called "equity financing." Issuing
stock is advantageous for the company because it does not require the
company to pay back the money or make interest payments along the
way. All that the shareholders get in return for their money is the hope
that the shares will someday be worth 13 more. The first sale of a stock,
which is issued by the private company itself, is called the initial public
offering (IPO).

It is important that you understand the distinction between a

company financing through debt and financing through equity. When
you buy a debt investment such as a bond, you are guaranteed the
return of your money (the principal) along with promised interest
payments. This isn't the case with an equity investment. By becoming
an owner, you assume the risk of the company not being successful.
Just as a small business owner isn't guaranteed a return, neither is a
shareholder. As an owner your claim on assets is lesser than that of
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creditors. This means that if a company goes bankrupt and liquidates,
you, as a shareholder, don't get any money until the banks and
bondholders have been paid out; we call this absolute priority.
Shareholders earn a lot if a company is successful, but they also stand
to lose their entire investment if the company isn't successful.

Risk:-

It must be emphasized that there are no guarantees when it comes

to individual stocks. Some companies pay out dividends, but many
others do not. And there is no obligation to pay out dividends even for
those firms that have traditionally given them. Without dividends an
investor 14 can make money on a stock only through its appreciation in
the open market. On the downside, any stock may go bankrupt, in
which case your investment is worth nothing.

Although risk might sound all -negative, there is also a bright side.
Taking-on greater risk demands a greater return on your investment.
This is the reason why stocks have historically outperformed other
investments such as bonds or savings accounts. Over the long term, an
investment in stocks has historically had an average return of around
10%-12%. A great proof of the power of owning equities is General
Electric.

Different Types of Stock: -

There are two main types of stocks:

Common stock and

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Preferred stock.

Common Stock

Common stock is, well, common; the majority of stock issued is in this
form. Common shares represent ownership in a company and a claim
(dividends) on a portion of profits. Investors get one vote per share to
elect the board members, who oversee the major decisions made by
management.

Over the long term, common stock, by means of capital growth, yields
higher returns than almost every other investment. This higher return
comes at a cost since common stocks entail the most risk. If a company
goes bankrupt and liquidates, the common shareholders will not
receive money until the creditors, bondholders, and preferred
shareholders are paid.

Preferred Stock

Preferred stock represents some degree of ownership in a company

but usually doesn't come with the same voting rights. (This may vary
depending on the company.) With preferred shares investors are
usually guaranteed a fixed dividend forever. This is different than
common stock, 16 which has variable dividends that are never
guaranteed. Another advantage is that in the event of liquidation
preferred shareholders are paid off before the common shareholder
(but still after debt holders). Preferred stock may also be callable,
meaning that the company has the option to purchase the shares from
shareholders at anytime for any reason (usually for a premium).

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Causes Prices to Change: -

Stock prices change every day by market forces. By this we mean that
share prices change because of supply and demand. If more people
want to buy a stock (demand) than sell it (supply), then the price moves
up. Conversely, if more people wanted to sell a stock than buy it, there
would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to
comprehend is what makes people like a particular stock and dislike
another stock. This comes down to figuring out what news is positive
for a company and what news is negative. There are many answers to
this problem and just about any investor you ask has their own ideas
and strategies. That being said, the principal theory is that the price
movement of a stock indicates what investors feel a company is worth.
Don't equate a company's value with the stock price. The value of a
company is its market capitalization, which is the stock price multiplied
by the number of shares outstanding.

The most important factor that affects the value of a company is its
earnings. Earnings are the profit a company makes, and in the long run
no company can survive without them. . Public 17 companies are
required to report their earnings four times a year (once each quarter).
If a company's results surprise (are better than expected), the price
jumps up. If a company's results disappoint (are worse than expected),
then the price will fall.

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 So, why do stock prices change? The best answer is that nobody really
knows for sure. Some believe that it isn't possible to predict how stocks
will change in price while others think that by drawing charts and
looking at past price movements, you can determine when to buy and
sell. The only thing we do know as a certainty is that stocks are volatile
and can change in price extremely rapidly.

The important things to grasp about this subject are the following:

1. At the most fundamental level, supply and demand in the market

determine stock price.

2. Price times the number of shares outstanding (market capitalization)

is the value of a company. Comparing just the share price of two
companies is meaningless.

3. Theoretically earnings are what affect investors' valuation of a

company, but there are other indicators that investors use to predict
stock price. Remember, it is investors' sentiments, attitudes, and
expectations that ultimately affect stock prices.

4. There are many theories that try to explain the way stock prices
move the way they do. Unfortunately, there is no one theory that can
explain everything.

COMPANY PROFILE

Sharekhan is India's leading retail financial services company with over

250 share shops across 115 cities in India. While our size and strong
balance sheet allow us to provide you with varied products and services
at very attractive prices, our over 750 Client Relationship Managers are
dedicated to serving your unique needs.

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Sharekhan is lead by a highly regarded management team that has
invested crores of rupees into a world class Infrastructure that provides
our clients with real-time service & 24/7 access to all information and
products. Our flagship Sharekhan Professional Network offers real-time
prices, detailed data and news, intelligent analytics, and electronic
trading capabilities, right at your finger-tips. This powerful technology
complemented by our knowledgeable and customer focused
Relationship Managers. It‘s creating a world of Smart Investor.

Sharekhan offers a full range of financial services and products ranging

from Equities to Derivatives enhance your wealth and hence, achieve
your financial goals.

Sharekhan' Client Relationship Managers are available to you to help

with your financial planning and investment needs. To provide the
highest possible quality of service, India bulls provides full access to all
our products and services through multi-channels.

Services provided by the SHAREKHAN:--

1. Equities & Derivatives : Comprehensive services for

Independent investors, active traders & Non-Resident

Indians.

2. Sharekhan equity analysis : Premium research on 401+ companies

Updated daily

3. Depository Services : Value added services for seamless

Delivery.

16
Equities and Derivatives
Our Retail Equity Business caters to the needs of individual Indian and
Non-Resident Indian (NRI) investors. Sharekhan offers broker assisted
trade execution, automated online investing and access to all IPO's.
Through various types of brokerage accounts, India bulls offers the
purchase and sale of securities which includes Equity, Derivatives and
Commodities Instruments listed on National Stock Exchange of India Ltd
(NSEIL), The Stock Exchange, Mumbai (BSE) and NCDEX.

Choose the service options that fit your best.

 Sharekhan Classic account - Comprehensive services including

research and investing

guidance for independent investors.

 Sharekhan Fast trade - Sharekhan is dedicated to empower Active

Traders through

personal service and advanced trading technology.

 Sharekhan Speed trade plus - With an extensive range of investment

products, you will

discover an unwavering commitment to helping you invest in India.

Online trading account

Sharekhan provide two types of trading account:

1. Classic account (For beginners and medium investor)

2. Speed Trade (For heavy investor)

Classic Account:--
17
The CLASSIC ACCOUNT is a Sharekhan online trading account, through
which you can buy

and sell shares through our website www.sharekhan.com in an instant.

Along with enabling access for you to trade online, the CLASSIC
ACCOUNT also gives you our

Dial-n-Trade service. With this service, all you have to do is dial 1-600-
22-7050 to buy and sell

shares using your phone.

9 Features of the CLASSIC ACCOUNT that enables you to invest

effortlessly.

1. Online trading account for investing in Equities and Derivatives via

sharekhan.com

2. Integration of: Online trading + Bank + Demat account

3. Instant cash transfer facility against purchase & sale of shares

4. Reasonable transaction charges

5. Instant order and trade confirmation by e-mail

6. Streaming quotes

7. Personalized market watch

8. Single screen interface for cash, derivatives and more

9. Provision to enter price trigger and view the same online in market
watch

SPEED TRADE ACCOUNT

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SPEEDTRADE is an internet-based software application, that enables
you to buy and sell

shares in an instant.

It‘s ideal for active traders and jobbers who transact frequently during
day's trading session to

capitalize on intra-day price movements.

Speed Trade provides all the features of Classic, with the added
functionality of trading in

derivatives from the same single-screen software interface.

7 Features of Speed trade that enable you to trade effortlessly

1. Instant order Execution & Confirmation

2. Single screen trading terminal

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

4. Market summary (most traded scrip, highest value)

5. Hot keys similar to a brokers terminal

6. Alerts and reminders

7. Back-up facility to place trades on Direct Phone lines

Our Dial-n-Trade service gives you the convenience of buying and

selling shares over the

phone by calling our dedicated phone lines at 1-600-22-7050.

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DIAL-N -TRADE now comes as a part of the Sharekhan Classic Account,
an exclusive service

for trading shares from your telephone.

Just dial 1-600-22-7050*, enter your TPIN number, and you will be
directed to a tiebreaker who

will buy or sell shares for you.

Documents required to opening of demat account:

All investors have to submit their proof of identity and proof of address
along

with the prescribed account opening form.

1. Proof of identity: You can submit a copy of Passport, Voters ID card,

Driving license or PAN card with photograph.

2. Proof of address: You can submit a copy of Passport, Voters ID card,

Driving license, PAN card with photograph, Ration card or Bank

Passbook as proof of address. You must remember to take original

Documents to the DP for verification.

3. Passport-size photograph:

The above are mandatory requirements as per Securities and Exchange

Board of India.

Pricing for Retail Customers

Classic/ Applet

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 Account opening: Rs 0 (life time charges)

 Demat :1st yr NIL

 From 2nd yr : Rs 400+18% gst per year as AMC

 Initial Margin : NIL

 Min Margin Retainable :NIL

 Brokerage :

Intraday Trading- 0.10%each side +all Taxes

Delivery- 0.50%each side +all Taxes

Exposure: 4 to 6.6 times (on margin money)

Speed Trade

•Account Opening : Rs 1000 (Refundable against brokerage in Month +

1)

•Demat 1st Yr : Inclusive in Account Opening

•Initial Margin : NIL

•Min Margin Retainable: NIL

•Brokerage :

Trading 0.10% each side + All Taxes

Delivery 0.50% each side + All Taxes

(Negotiable based on volume)

27

21
Account Access Charges

1. Account access free for lifetime, adjustable quarterly against

brokerage of Rs 3000/- for

quarterly.

2. No access charges for gold customers ( Above 1 lac brokerage).

YOUR FRIENDLY NEIGHBOURHOOD STOCK BROKER:-

Share khan, India‘s leading stockbroker is the retail arm of SSKI, an
organization with over eighty eight years of stock market experience
with more than 180 share shops in over 90 cities, and a presence on
internet through www.sharekhan.com , India‘s premier online trading
destination, it reach out to customers like no one else.

Share khan offers your trade execution facilities on the BSE and the
NSE, for cash as well as derivatives, depository services and most
importantly, investment advice tempered by 88 years of research and
broking experience. To ensure that your trading experience with share
khan is fast, secure and hassle free, we offer a suite of products and
services, providing you with multi-channel access to the stock markets.

BROKING PERSONALIZED:-
If you prefer the assurance and reliability of trading through a broker,
you can use our network of 30 branches and 157 business partner
outlets in over 80 cities to trade in equities as well as derivatives. We
will help you with the investment process, give you advice based on
extensive research and provide you with relevant and updated
information to help you make informed investment decisions.

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TRADE ANYWHERE:-
[email protected]

However, if you prefer the convenience of trading from wherever you

are, you can get yourself a Classic trading account and enjoy the
freedom that comes with it. You can now place orders even after the
trading hours, and the orders are queued up to be executed as soon as
the market opens. Sharekhan.com, the winner of several prestigious
awards, has been the most preferred destination for online trading ever
since its launch.

MISSION: To educate and empower the individual investor to make

better investment decisions through quality advice and superior
service.

VISION: To be the best retail brokering Brand in the retail business of

stock market.

STRATEGY:

The main strategies used in our training were as follow :-

DATA CALLING

In data calling we were provided data of mobile numbers and our job
was to generate appointments. After that we were required to convert
that appointment into closure. Apart from given data we also brought
latest business directory. We called to different business people and
tried to generate appointments.

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COLD CALLING

Cold calling means to go at different corporate houses and to meet

different

People and to get their visiting card by it we get lead and our
immediate task

Was to call them & to fix appointment

HIERARCHY IN SHAREKHAN:

Sales Side Dealing Side

Trainees Junior Dealer

Super Trainees Dealer

Sales Executives Relationship manager

Senior sales executives Senior Relationship manager

Business development

executive

Equity advisor

Assistant sales manager, Assistant Branch Manager

Deputy manager, Branch Manager

Territory manager, Cluster Head

Area sales manager/ Cluster manager,Directors ,Regional sales

manager,CEO,Regional Head,Vice president,Directors,CEO

24
OFFERING OF THE COMPANY
 Sharekhan provides 2 in 1 account.

De-mat a/c

Trading a/c [for cash calculation]

Dematerialization account:-

Dematerialization is the process of converting physical shares (share

certificates) into an electronic form. Shares once converted into
dematerialized form are held in a De-mat account Sharekhan is a
depository participant. This means that we can keep the shares in
dematerialized form in Sharekhan. But for this one has to purchases the
Demat account in Sharekhan. .

Sharekhan provides no opening charge.

Sharekhan provide de-mat account free of charge for first year, Rs.400/
year from the next year +Service Tax (year continued from the day of
opening).

Trading Account:

It is an electronic account which enables customers to trade in share

through internet without help to broker.

NSE/BSE/F&O/Commodity terminal live screen:- Provides online

fluctuations rate on computer screen

Online Daily Tips:-

Sharekhan is providing tips through mails in 4 sessions

25
Pre market

Noon session

Post market

Late evening

Sharekhan is providing tips through SMS.

Sharekhan is providing tips through email.

3) IPO/MF Online :-

Sharekhan provide IPO and MF facility for the customer.

FOR OPENING AN ACCOUNT:

 2 passport size photograph

 Identity proof (PAN card is compulsory)

 Residence proof

 Cheque ( Min Rs.10,000 margin balance)

Proofs of Identity

Customer can submit a photo copy of any one of the following

Voter ID

Passport

PAN Card

Driving License

Photo I card issued by Employer registered under MAPIN

26
Copy of Ration card

Address Proof

Customer can submit a photo copy of any one of the following

Voter ID Card

Driving License

Passport

Ration Card

Telephone Bill

Electricity Bill

Leave-License

Bank Passbook

Latest Bank Statement

PRODUCTS & SERVICES

Sharekhan ltd. Provide different Product as follows

 Share online& offline

 Derivatives

 Mutual fund online

 Commodities online

 IPO online

27
 Portfolio Management Services

 Insurance

 Fixed deposits

 Advisory products

 Currency trading

 Ignite

28
SHARE ONLINE:

Sharekhan provide online facilities.

BENEFIT

Freedom from paperwork:-Integrated trading, bank and de-mat

account with digital contracts removers all paperwork.

Instant credit and transfer:-instant transfer of funds from bank account

of the choice to Sharekhan trading account.

Trade anywhere:-enjoy the ease of trading from any part of the world
in a completely secure environment.

Dial n Trade:-call toll free number (1-800-22-7050) to place orders

through telebrokers.

Timey advice:-make informed decisions with expert advice, investment

calls and live market commentary.

Real-time portfolio tracking:-benefit from real-time information for

investment and current portfolio value.

After-hour orders:-place order after market hours, which get executed

as soon as the markets opens.

TRADE TIGER:

Trade tiger is a next-generation online trading product that brings the

power of broker‘s terminal to customer pc. It is session to capitalize on
intra-day price movement. Trade tiger is an internet

–based application available on a CD, which provides everything a

trader needs on one screen.

29
Key Features:-

A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX,
NCDEX, Mutual Funds, IPOs

Multiple Market Watch available on Single Screen

Multiple Charts with Tick by Tick Intraday and End of Day Charting
powered with various Studies

Graph Studies include Average, Band- Bollinger, Know Sure Thing,

MACD, RSI, etc

Apply studies such as Vertical, Horizontal, Trend, Retracement & Free

lines

User can save his own defined screen as well as graph template, that
is, saving the layout for future use

User-defined alert settings on an input Stock Price trigger

Tools available to gauge market such as Tick Query, Ticker, Market

Summary, Action Watch, Option Premium Calculator, Span Calculator

Shortcut key for FAST access to order placements & reports

Online fund transfer activated with 11 Banks

SHARE OFFLINE:

As the internet has taken over the physical trade, the same is the
situation in trading in shares. Even the internet has not spared trading
in shares and still the conventional system of offline trading continues
in today‘s world.

Merits of offline trading

30
 Low brokerage

 Less margin

 Flexibility in credit period

 Customized advice

Demerits of offline trading

 Problems in getting in touch with the broker

 Limited clientele

 Problem of attention from the broker due to load

 Reliance on the broker‘s information

 Customer has to believe what the broker says

 Broker Might not give the best price

 Reconciliation of account and cash settlements

 Paperwork

 Geographical Restriction

DERIVATIES:

Derivatives are financial contracts whose value/price is depends on the

behavior of price of one or more basic underling assets. These contracts
are legally binding agreement, made on the trading screen of stock
exchange, buy or sell an asset in future. The assets can be share, index,
interest rate, bond, rupee- dollar exchange rate, sugar, crude oil,
soybean, cotton, coffee etc.

31
EQUITY FUTURE AND OPTION:

Future:-

An agreement between two parties to buy or sell an asset at a certain

time in the Future at a certain price. Stock futures on certain specified
securities and internet rate futures are available for trading at NSE
(NATIONAL STOCK EXCHANGE).All the futures contracts are settled in
cash.

Options:-

An Options is a contract which gives the right, but not but or sell the
underlying at a stated price, which a buyer of an option pays the
premium and Options are of two types – calls and put.

Calls give the buyer the right but not the obligation to buy a given
quantity of the underlying asset, at a given price on or before a given
future date. Calls also known as bulls.

Puts give the buyer the right, but not obligation to sell a given quantity
of the underlying asset at a given price on or before a given date. Puts
also known as bears.

COMMODITIES ONLINE:

Commodities are agreements to buy and sell virtually anything except,

for some reason, onions. The primary commodities that are traded are
oil, gold and agricultural products. Commodity derivatives comprise of
raw materials and products that can be traded on special commodity
exchanges across the country. Commodities expands customer

32
investing horizon from investing in a metal company to trading in the
metal itself. Trading in commodity derivative provides unique market
opportunities for a wider section of participants like: investor, hedgers,
arbitragers, traders, manufactures planters, exporters and importers.
While trading commodities through an exchange, there are no
transportation charges, no insurance costs, no storage charges and
complete security when customer trade though an exchange. Customer
can trade in commodities at nominal costs and carry the investment in
paper from as customer want. The fundamentals for commodities are
quite simple: price is a function of demand and supply.

Sharekhan provides commodity facility. Sharekhan trades on two major

commodity exchanges in India.

MCX

NCDEX

MCX: MCX (MULTI COMMODITY EXCHANGE OF INDIA LTD) is a state-of-

the-art electronic commodity futures exchange.MCX is an independent
commodity exchange based in India. It was established in 2003 and is
based in Mumbai. The turnover of the exchange for the period Apr-Dec
2008 was INR 32 Trillion.MCX offers futures trading in Agricultural
Commodities, Bullion, Ferrous & Non-ferrous metals, Pulses, Oils &
Oilseeds, Energy, Plantations, Spices and other soft commodities. MCX
has also setup in joint venture the NationalSpot Exchangea purely
agricultural commodity exchange and National Bulk Handling
Corporation(NBHC) which provides bulk storage and handling of
agricultural products.

33
NCDEX: National Commodity & Derivatives Exchange Limited (NCDEX) is
a professionally managed online multi commodity exchange promoted
by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India
(LIC), National Bank for Agriculture and Rural Development (NABARD)
and National Stock Exchange of India Limited (NSE). Punjab National
Bank (PNB), CRISIL Limited (formerly the Credit Rating Information
Services of India Limited), Indian Farmers Fertilizers Cooperative
Limited (IFFCO) and Canara Bank by subscribing to the equity shares
have joined the initial promoters as shareholders of the Exchange.

NCDEX is the only commodity exchange in the country promoted by

national level institutions. This unique parentage enables it to offer a
bouquet of benefits, which are currently in short supply in the
commodity markets. The institutional promoters of NCDEX are
prominent players in their respective fields and bring with them
institutional building experience, trust, nationwide reach, technology
and risk management skills. NCDEX is a public limited company
incorporated on April 23, 2003 under the Companies Act, 1956. It
obtained its Certificate for Commencement of Business on May 9, 2003.
It has commenced its operations on December 15, 2003. NCDEX is a
nation-level, technology driven de-mutualized on-line commodity
exchange with an independent Board of Directors and professionals not
having any vested interest in commodity markets. It is committed to
provide a world-class commodity exchange platform for market
participants to trade in a wide spectrum of commodity derivatives
driven by best global practices, professionalism and transparency.

NCDEX is regulated by Forward Market Commission in respect of

futures trading in commodities. Besides, NCDEX is subjected to various
laws of the land like the Companies Act, Stamp Act, Contracts Act,
34
Forward Commission (Regulation) Act and various other legislations,
which impinge on its working. NCDEX is located in Mumbai and offers
facilities to its members in more than 390 centers throughout India.
The reach will gradually be expanded to more centers.

NCDEX currently facilitates trading of thirty six commodities - Cashew,

Castor Seed, Chana, Chilli, Coffee, Cotton, Cotton Seed Oilcake, Crude
Palm Oil, Expeller Mustard Oil, Gold, Guar gum, Guar Seeds, Gur, Jeera,
Jute sacking bags, Mild Steel Ingot, Mulberry Green Cocoons, Pepper,
Rapeseed - Mustard Seed ,Raw Jute, RBD Palmolein, Refined Soy Oil,
Rice, Rubber, Sesame Seeds, Silk, Silver, Soy Bean, Sugar, Tur, Turmeric,
Urad (Black Matpe), Wheat, Yellow Peas, Yellow Red Maize & Yellow
Soybean Meal. At subsequent phases trading in more commodities
would be facilitated.

MUTUAL FUNDS:

Mutual Fund is an investment company that pools money from

shareholders and invests in a variety of securities, such as stocks,
bonds and money market instruments. Most open- end mutual
funds stand ready to buy back (redeem) its shares at their current net
asset value, which depends on the total market value of the fund's
investment portfolio at the time of redemption. Most open-end mutual
funds continuously offer new shares to investors.

Security exchange board of India is the regulatory body for all mutual
funds. All mutual funds must get registered with the SEBI.

Benefits of investing in mutual funds:

Small investment

35
Professional fund management

Spreading risk

Transparency

Choice

Regulation

OVERVIEW OF INDIAN SECURITIES MARKET

STOCK EXCHANGE

A stock exchange is a corporation or mutual organization which

provides the facilities for stock brokers to trade company stocks and
other financial instruments in the secondary market. Stock exchanges
also provide facilities for the issue and redemption of securities, as well
as other financial instruments and capital events including the payment
of income and dividends.

The securities usually traded on a stock exchange include the shares

issued by companies, unit trusts and other pooled investment products
as well as corporate bonds and government bonds.

Usually there is a central location at least for recordkeeping, but trade

is less and less linked to such a physical place, as modern markets are
electronic networks, which gives them advantages of speed and cost of
transactions.

36
Trade on an exchange is by members only; a stock broker is said to
"have a seat" on the exchange.

A stock exchange is often the most important component of a stock

market. There is usually no compulsion to issue stock via the stock
exchange itself, nor must stock be subsequently traded on the
exchange. Such trading is said to be "off exchange".

The initial offering of stock to investors is by definition the primary

market and subsequent trading is the secondary market.

Increasingly all stock exchanges are part of the global securities market.

Supply and demand in stock markets is driven by various factors which,

as in all free markets, affect the price of stocks (see stock valuation).In
franc phonic European countries stock exchanges are called bourses.

History of the Stock Exchange

In 12th Century France the courratier de change was concerned with

managing and regulating the debts of agricultural communities on
behalf of the banks. Because these men also traded with debts, they
could be called the first brokers.

In the late 13th Century Bruges commodity traders gathered inside the
house of a man called Van der Bourse, and in 1309 they
institutionalized this until now informal meeting and became the
"Bruges Bourse". The Idea quickly spread around Flanders and
neighboring counties and "Bourses" soon opened in Ghent and
Amsterdam.

37
In the middle of the 13th Century Venice Bankers began to trade with
government securities. In 1351 the Venetian Government outlawed
spreading rumors intended to lower the price of

government funds. Pisa, Verona, Genoa and Florence also began

trading with government securities during the 14th century. This was
only possible because these were independent city states not ruled by a
duke but a council of influential citizens.

The Dutch later started joint stock companies, which let shareholders
invest in business ventures and get a share of their profits - or losses. In
1602, the Dutch

East India Company issued the first shares on the Amsterdam Stock
Exchange. It was the first company to issue stocks and bonds.

Listing requirements

Companies have to meet the requirements of the exchange in order to

have their stocks and shares listed and traded there. To be listed on the
NYSE (New York Stock Exchange), for example, a company must have
issued at least a million shares of stock worth $100 million and must
have earned more than $10 million over the last three years.

Stock market index

A stock market index is a listing of stocks, and a statistic reflecting the

composite value of its components. It is used as a tool to represent the
characteristics of its component stocks, all of which bear some
commonality such as trading on the same stock market exchange,
belonging to the same industry, or having similar market capitalizations.

38
Many indices compiled by news or financial services firms are used to
benchmark the performance of portfolios such as mutual funds.

Types of indices

Stock market indices may be classed in many ways. A broad-base index

represents the performance of a whole stock market— and by proxy,
reflects investor sentiment on the state of the economy. The most
regularly quoted market indices are broad-base indices including the
largest listed companies on a nation's largest stock exchange, such as
the American Dow Jones Industrial Average and S&P 500 Index, the
British FTSE 100, and the Japanese Nikkei 225.

The concept may be extended well beyond an exchange. The Dow

Jones Wilshire 5000 Total Stock Market Index, as its name implies,
represents the stocks of nearly every publicly traded company in the
United States, including all stocks traded on the New York Stock
Exchange and most traded on the NASDAQ and American Stock
Exchange. The Europe, Australia, and Far East Index (EAFE), published
by Morgan Stanley Capital International, is a listing of large companies
in developed economies in the Eastern Hemisphere.More specialized
indices exist tracking the performance of specific sectors of the market.
The Morgan Stanley Biotech Index, for example, consists of 36
American firms in the biotechnology industry. Other indices may track
companies of a certain size, a certain type of management, or even
more specialized criteria— one index published by Linux Weekly News

39
tracks stocks of companies that sell products and services based L'
lll\'on the Linux operating environment.

Weighting

An index may also be classified according to the method used to

determine its price. In a price weighted index such as the Dow Jones
Industrial Average, the price of each component stock is the only
consideration when determining the value of the index. Thus, price
movement of even a single security will heavily influence the value of
the index even though the dollar shift is less significant in a relatively
highly valued issue, and moreover ignoring the relative size of the
company as a whole. In contrast, a market-value weighted or
capitalization-weighted index such as the Hang Sang Index factors in
the size of the company. Thus, a relatively small shift in the price of a
large company will heavily

Influence the value of the index. In a market-share weighted index,

price is weighted relative to the number of shares, rather than their
total value.

Traditionally, capitalization- or share-weighted indices all had a full

weighting i.e. all outstanding shares were included. Recently, many of
them have changed to a float-adjusted weighting which helps indexing.

Indices and passive investment management

There has been an accelerating trend in recent decades to create

passively managed mutual funds that are based on market indices,
known as index funds. Advocates claim that index funds routinely beat
a large majority of actively managed mutual funds; one study claimed
that over time, the average actively managed fund has returned 1.8%
40
less than the S&P 500 index. Since index funds attempt to replicate the
holdings of an index, they obviate the need for— and thus many costs
of— the research entailed in active management, and have a lower
"churn" rate (the turnover of securities which lose favor and are sold,
with the attendant cost of commissions and capital gains taxes).

Indices are also a common basis for a related type of investment, the
exchange-traded fund or ETF. Unlike an index fund, which is priced
daily, an ETF is priced continuously, is optionable, and can be sold short.

Ethical stock market indices

A notable specialised index type is those for ethical investing indices

that include only those companies satisfying ecological or social criteria,
e.g. those of The Calvert Group, Domini, and the Dow Jones Sustainable
Index.

Another important trend is strict mechanical criteria for inclusion and

exclusion to prevent market manipulation, e.g. as in Canada when
Nortel was permitted to rise to over 50% of the TSE 300 index value.
Ethical indices have a particular interest in mechanical criteria, seeking
to avoid accusations of ideological bias in selection, and have pioneered
techniques for inclusion and exclusion of stocks based on complex
criteria. Another means of mechanical selection is mark-to-future
methods that exploit scenario produced by multiple analysts weighted
according to probability, to determine which stocks have become too
risky to hold in the index of concern.

Critics of such initiatives argue that many firms satisfy mechanical

"ethical criteria", e.g. regarding board composition or hiring practices,
but fail to perform ethically with respect toshareholders, e.g. Enron.

41
Indeed, the seeming "seal of approval" of an ethical index may put
investors more at ease, enabling scams. One response to these
criticisms is that trust in the corporate management, index criteria,
fund or index manager, and securities regulator, can never be replaced
by mechanical means, so "market transparency" and "disclosure" are
the only long- term-effective paths to fair markets.

Bombay Stock Exchange

The Bombay Stock Exchange (BSE) is located in Dalal Street, Mumbai.

Established in 1875, BSE is the oldest stock exchange in Asia. There are
around 3,500 companies in the country which are listed and have a
significant trading volume. As of January 2005, the market
capitalization of the BSE is about Rs. 12 trillion. The BSE `Sensex' is a
widely used market index for the BSE. As of 2005, it is among the 5
biggest stock exchanges in the world in terms of number of
transactions.

Of the 22 stock exchanges in the country, Mumbai's (earlier known as

Bombay), Bombay Stock Exchange is the largest, with over 6,000 stocks
listed. The BSE accounts for over two thirds of the total trading volume
in the country. Established in 1875, the exchange is also the oldest in
Asia. Among the twenty-two Stock Exchanges recognised by the
Government of India under theSecurities Contracts (Regulation) Act,
1956, it was the first one to be recognised and it is the only one that
had the privilege of getting permanent recognition ab-initio.
42
Approximately 70,000 deals are executed on a daily basis, giving it one
of the highest per hour rates of trading in the world. There are around
3,500 companies in the country which are listed and have a serious
trading volume. The market capitalization of the BSE is Rs.5 trillion. The
BSE `Sensex' is a widely used market index for the BSE.

The main aims and objectives of the BSE is to provide a market place for
the purchase and sale of security evidencing the ownership of business
property or of a public or business debt. It aims to promote, develop
and maintain a well regulated market for dealing in securities and to
safeguard the interest of members and the investing public having
dealings on the Exchange.

It helps industrial development of the country through efficient

resource mobilization to establish and promote honourable and just
practices in securities transactions.

History

An informal group of stockbrokers had been trading under a banyan

tree opposite the Town Hall of Bombay from mid-1850s. This banyan
tree still stands in Horniman Circle Park, Mumbai. This informal group
of stockbrokers organized themselves as ―The Native Share
and Stockbrokers Association‖ which, in 1875, was formally organized
as the Bombay Stock Exchange (BSE). BSE is the oldest stock exchange
in Asia, the second being the Tokyo Stock Exchange, established in
1878.Premchand Roychand was a leading stockbroker of that time, and
he assisted in setting out traditions, conventions, and procedures for
the trading of stocks at Bombay Stock Exchange and they are still being
followed.

43
Dalal Street

James M. Maclean inaugurated the Brokers‘ Hall in January 1899. After

the First World War, BSE was shifted to an old building, near the
Bombay Town Hall and in 1928, the plot on which the BSE building now
stands, on Dalal Street, was acquired, and a building was constructed in
1930.

The Bombay Stock Exchange followed the familiar outcry system for
stock trading, which was replaced, in the year 1995, with screen-based
eTrading. BSE is presently housed in a 28-storied Jeejeebhoy Towers,
where the older structure once stood: the present building derives its
name from Sir Phiroze Jamshedjee Jeejeebhoy, the chairman of the
Bombay Stock Exchange from 1966, until his death in 1980.

BSE Sensex

The BSE Sensex is a value-weighted index composed of 30 companies

with the base April 1979= 100. It has grown by more than four times
from January 1990 till date. The set of companies in the index is
essentially fixed. These companies

account for around one-fifth of the market capitalization of the BSE. We

can use information from April 1979 onwards in estimating the long-run
rate of return on the BSE Sensex and that comes to 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.

44
New Developments

In November, 1996, as a move to reduce the counter party risk, the

Exchange set up a trade guarantee scheme i.e. all trades carried out on
the BOLT are guaranteed by the Clearing House of the Exchange.

A depository has been set up as a joint venture by the Bank of India and
the Exchange. However, it will be a subsidiary of the Bank of India. The
Exchange introduced trading in fixed income securities under a
separate group to give impetus to trading in debentures and other
corporate debt instruments to Increase Trading in government dated
securities.

BSE - other Indices

Apart from BSE Sensex, which is the most popular stock index in India,
BSE uses other stock Indices as well:

BSE 100

BSE 500

BSEPSU

BSEMIDCAP

BSESMLCAP

BSEBANKEX

45
The stock market has grown by more than four times from January
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.

The Bulls: -

A bull market is when everything in the economy is great, people are

finding jobs, GDP is growing, and stocks are rising. Picking stocks during
a bull market is easier because everything is going up. Bull markets
cannot last forever though, and sometimes they can lead to dangerous
situations if stocks become overvalued.

The Bears: -

A bear market is when the economy is bad, recession is looming, and

stock prices are falling. Bear markets make it tough for investors to pick
profitable stocks. One solution to this is to make money when stocks
are falling using a technique called short selling. Another strategy is to
wait on the sidelines until you feel that the bear market is nearing its
end, only starting to buy in anticipation of a bull market.

National Stock Exchange of India

46
The National Stock Exchange of India (NSE) is one of the largest and
most advanced stock markets in India. The NSE is the world's third
largest stock exchange in terms of transactions. It is located in Mumbai,
the financial capital of India.

The National Stock Exchange (NSE), located in Bombay, is India's first

debt market. It was set up in 1993 to encourage stock exchange reform
through system modernization andcompetition. It opened for trading in
mid-1994. It was recently accorded recognition as a stock exchange by
the Department of Company Affairs. The instruments traded are,
treasury bills, government security and bonds issued by public sector
companies.

The number of members trading on the exchange has been on a steady

increase, helping integrate the national market and providing a modern
system with a complete audit trail of all transactions.

Origins

It was promoted by leading Financial Institutions at the behest of the

Government of India and was incorporated in November 1992 as a tax-
paying company. In April 1993, it got the recognition as a Stock
Exchange. NSE commenced operations in the Wholesale Debt Market
(WDM) segment in June 1994. The Capital Market (Equities) segment
commenced operations in November 1994 and operations in
Derivatives segment commenced in June 2000.

Innovations

47
NSE has remained in the forefront of modernization of India's capital
and financial markets, and its pioneering efforts include:

Co-promoting and setting up of National Securities Depository Limited,

first depository in India

NSE pioneered commencement of Internet Trading in February 2000,

which led to the wide popularization of the NSE in the broker
community.

Markets

Currently, NSE has the following major segments of the capital market:

Equity

Futures and Options

Retail Debt Market

Wholesale Debt Market

Membership

1026 trading members on the Capital Market segment, of which around

86% account for corporate, and the remaining individuals and firms.

113 trading members on the Wholesale Debt Market segment, all of

which account for corporate. (Out of these 113 trading members, 106
are members of the Capital Market segment also and are included in
the 1026 members indicated above).

Geographic Distribution

Over 2600 trading terminals

48
Over 1500 VSAT‘s across the country with a 24 hour Network
monitoring system in over 160 cities as of December 31st, 1997.

Number of Companies

On the Capital Market segment, 600 securities are listed and 762
securities are permitted to trade as of December 31st, 1997.

On the Wholesale Debt Market segment, 470 securities are listed and
369 securities are permitted to trade as of December 31st, 1997. Of the
470 securities listed, 267 are Government Securities, T-Bills and the
balance account for other securities.

Capital Market Operations

NSE is working to increase the capacity of the trading system from the
present 4, 00,000 trades per day to more than 10, 00,000 trades per
day.

The average daily numbers of trades have gone up from over 893
trades in November-94 to over 1, 48,783 trades in November 97. On
August 7, ‘97 the number of trades reached a record high of 2, 36,411
which makes NSE one of the largest stock exchanges in the world.

Average daily traded value has increased from Rs.7 crores in

November-94 to more than Rs. 1480 crores in December-97 with a high
of Rs.3,080.61 crores recorded on 26th June- 97.

Number of shares traded has increased from 76.10 lakhs in November-

94 to 11,148.21 lakhs in December-97.

49
Net traded value has increased from Rs.125 crores in November -94 to
Rs. 32,549 crores in December-97.

Delivered value (settlement wise) has increased from Rs.60 crores in

November -94 to Rs.5, 008 crores in December -97.

Number of shares traded (depository segment) has increased from 200

shares in December -96 to 1, 19,102 shares in December-97. Net traded
value (depository segment) has increased from Rs.0.43 lakhs in
December -96 to Rs.185.44 lakhs in December-97.

Market share of cities other than five metros (Mumbai, Delhi, Calcutta,
Chennai & Ahmadabad) which was about 16% in first quarter of 1996
grew to as high as 24% during the last quarter of 1997.

The ratio of contribution to turnover from Non Stock Exchange centers

to Stock Exchange centers has risen from 0.36% in first quarter (Jan to
Mar) of 1996 to over 10% in fourth quarter of 1997.

The market capitalization of companies has increased from Rs. 292637

crores in November'94 to Rs. 4571663 crores in February'98.

Clearing & Settlement

Completed 170 settlements successfully without any delay or

postponement as on February 28, 1998.

Value of shares handled by the Clearing house per week has increased
from Rs. 30 crores in November-94 to over Rs.1042 crores per week in
December-97. The highest value of shares handled during the period
was more than Rs. 2251.40 crores.

50
Inter-Region Clearing: NSCCL has Regional Clearing Centers at Delhi,
Calcutta, Chennai and a Central Clearing Centre at Mumbai. Members
have the option of delivering/receiving the securities at a clearing
centre chosen by them.

Wholesale Debt Market Operations

The WDM segment commenced operations on June 30, 1994 with 224
securities carrying an outstanding debt value of Rs. 1,35,000 crores
(US$ 34 billion). This has now increased to 839 securities with a market
capitalization of Rs. 3, 50,565 crores (US$ 88 billion). More than half of
the securities available for trading are listed and the balance are
permitted to trade. Currently, the Exchange has 78 registered
participants on the WDM segment which includes 24 Public sector
banks, 18 Foreign banks, 15 Private sector banks, 6 Primary dealers, 5
Financial institutions, the others being corporate bodies, mutual funds
and foreign debt fund.

Average daily value in the WDM segment increased from Rs. 2.4 crores
in June-94 to Rs.

298.17 crores in December -97 with a high of Rs. 1831.27 crores

recorded on 12-Aug-97.

Net traded value in the WDM segment increased from Rs. 1096.25
crores in July -94 to Rs. 7,752.52 crores in December-97 with a high of
Rs. 15,545.40 crores recorded in July '97.

There has been a consistent increase in NSE‘s share of the total volume
of activity in the market (gilt securities) over the period. Government
securities along with Treasury bills together account for over 80% of the
total market activity.
51
The share of the Exchange of the total market activity in Government
Securities and T- Bills has increased from a mere 22% in 1996 to 53% in
1997.

Indices

NSE also set up as index services firm known as India Index Services &
Products Limited (IISL) and has launched several stock indices,
including:

S&P CNX Nifty

CNX Nifty Junior.

CNX IT

S&P CNX 500

CNX MIDCAP 200

Certifications

NSE also conducts online examination and awards certification, under

its programmers of NSE's Certification in Financial Markets (NCFM)
Currently; certifications are available in 9 modules, covering different
sectors of financial and capital markets:

Branches of the NSE are located throughout India.

S&P CNX Nifty

The S&P CNX Nifty is the leading index for large companies on the
National Stock Exchange of India. It consists of 50 companies
representing 24 sectors of the economy, and representing
approximately 77% of the traded value of all stocks on the National

52
Stock Exchange of India. The S&P CNX Nifty is owned and operated by
India Index Services and Products Ltd. It is quoted using the symbol
NSEI.

It is calculated as a weighted average, so changes in the share price of

larger companies have more effect. The base is defined as 1000 at the
price level of November 3, 1995, at which time the total capitalization
was 2.06 trillion rupees. In January 2005 its level was approximately
2000

History of the Stock Exchange

In 12th Century France the courratier de change were concerned with

managing and regulating the debts of agricultural communities on
behalf of the banks. Because these men also traded with debts, they
could be called the first brokers.

In the late 13th Century Bruges commodity traders gathered inside the
house of a man called Van der Bourse, and in 1309 they
institutionalized this until now informal meeting and became the
"Bruges Bourse". The Idea quickly spread around Flanders and
neighboring counties and "Bourses" soon opened in Ghent and
Amsterdam.

In the middle of the 13th Century Venice Bankers began to trade with
government securities. In 1351 the Venetian Government outlawed
spreading rumors intended to lower the price of government funds.

53
Pisa, Verona, Genoa and Florence also began trading with government
securities during the 14th century. This was only possible because these
were independent city states not ruled by a duke but a council of
influential citizens.

The Dutch later started joint stock companies, which let shareholders
invest in business ventures and get a share of their profits - or losses. In
1602, the Dutch East India Company issued the first shares on the
Amsterdam Stock Exchange. It was the first company to issue stocks
and bonds

Stock Market

The market in which shares are issued and traded either through
exchanges or over-the-counter

markets. Also known as the equity market, it is one of the most vital
areas of a market economy as it provides companies with access to
capital and investors with a slice of ownership in the company and the
potential of gains based on the company's future performance.

This market can be split into two main sections: the primary and
secondary market. The primary market is where new issues are first
offered, with any subsequent trading going on in the secondary market.

Primary market (IPOs‟)

In financial markets, an initial public offering (IPO) is the first sale of a

company's common shares to public investors. The company will
usually issue only primary shares, but may also sell secondary shares.
Typically, a company will hire an investment banker to underwrite the

54
offering and a corporate lawyer to assist in the drafting of the
prospectus.

The sale of stock is regulated by authorities of financial supervision and

where relevant by a stock exchange. It is usually a requirement that
disclosure of the financial situation and prospects of a company be
made to prospective investors.

The Federal Securities and Exchange Commission (SEC) regulates the

securities markets of the United States and, by extension, the legal
procedures governing IPOs. The law governing IPOs in the United States
includes primarily the Securities Act of 1933, the regulations issued by
the SEC, and the various state "Blue Sky Laws".

Secondary market

The secondary market (also called "aftermarket") is the financial

market for trading of securities that have already been issued in its
initial private or public offering. Stock exchanges are examples of
secondary markets. Alternatively, secondary market can refer to the
market for any kind of used goods.

Secondary markets have a long history, beginning perhaps with a

flourishing trade in commercial bills of exchange in 12th and 13th
century France. It was the French King Philip the Fair who created the
profession of broker, or "couratier de change," in order to regularize
this market.

55
Amsterdam's Bourse, which began operations in 1611, was the first
true stock exchange, and this reflected the importance of Holland in
world trade at that time.

Function

In the secondary market, securities are sold by and transferred from

one speculator to another. It is therefore important that the secondary
market be highly liquid and transparent. The eligibility of stocks and
bonds for trading in the secondary market is regulated through
financial supervisory authorities and the rules of the market place in
question, which could be a stock exchange

Means of financing

Financing a company through the sale of stock in a company is known

as equity financing. Alternatively debt financing (for example issuing
bonds) can be done to avoid giving up shares of ownership of the
company.

Trading

Shares of stock are usually traded on a stock exchange, where people

and organizations may buy and sell shares in a wide range of
companies. A given company will usually only trade its shares in one
market, and it is said to be quoted, or listed, on that stock exchange.

However, some large, multinational corporations are listed on more

than one exchange. They are referred to as inter-listed shares.

Buying

56
There are various methods of buying and financing stocks. The most
common means is through a stock broker. Whether they are a full
service or discount broker, they are all doing one thing – arranging the
transfer of stock from a seller to a buyer. Most of the trades are
actually done through brokers listed with a stock exchange such as the
New York Stock Exchange. There are many different stock brokers to
choose from such as full service brokers or discount brokers. The full
service brokers usually charge more per trade, but give investment
advice or more personal service; the discount brokers offer little or no
investment advice but charge less for trades. Another type of broker
would be a bank or credit union that may have a deal set up with either
a full service or discount broker.

There are other ways of buying stock besides through a broker. One
way is directly from the company itself. If at least one share is owned,
most companies will allow the purchase of shares directly from the
company through their investor's relations departments. However, the
initial share of stock in the company will have to be obtained through a
regular stock broker. Another way to buy stock in companies is through
Direct Public Offerings which are usually sold by the company itself. A
direct public offering is an initial public offering a company in which the
stock is purchased directly from the company, usually without the aid
of brokers.

When it comes to financing a purchase of stocks there are two ways:

purchasing stock with money that is currently in the buyers ownership
or by buying stock on margin. Buying stock on margin means buying
stock with money borrowed against the stocks in the same account.
These stocks, or collateral, guarantee that the buyer can repay the loan;
otherwise, the stockbroker has the right to sell the stocks (collateral) to
57
repay the borrowed money. He can sell if the share price drops below
the margin requirement, at least 50 percent of the value of the stocks
in the account. Buying on margin works the same way as borrowing
money to buy a car or a house using the car or house as collateral.
Moreover, borrowing is not free; the broker usually charges you 8-10
percent interest.

58
Selling

Selling stock in a company goes through many of the same procedures

as buying stock. Generally, the investor wants to buy low and sell high,
if not in that order; however, this is not how it always ends up.
Sometimes, the investor will cut their losses and claim a loss.

As with buying a stock, there is a transaction fee for the broker's efforts
in arranging the transfer of stock from a seller to a buyer. This fee can
be high or low depending on if it is a full service or discount broker.

After the transaction has been made, the seller is then entitled to all of
the money. An important part of selling is keeping track of the earnings.
It is important to remember that upon selling the stock, in jurisdictions
that have them, capital gains taxes will have to be paid on the
additional proceeds, if any, that are in excess of the cost basis.

Technology‟s on Trading

Stock trading has evolved tremendously. Since the very first Initial
Public Offering (IPO) in the 13th century, owning shares of a company
has been a very attractive incentive. Even though the origins of stock
trading go back to the 13th century, the market as we know it today did
not catch on strongly until the late 1800s.

Co-production between technology and society has led the push for
effective and efficient ways of trading. Technology has allowed the
stock market to grow tremendously, and all the while society has
encouraged the growth. Within seconds of an order for a stock, the
transaction can now take place. Most of the recent advancements with
the trading have been due to the Internet. The Internet has allowed
online trading. In contrast to the past where only those who could
59
afford the expensive stock brokers, anyone who wishes to be active in
the stock market can now do so at a very low cost per transaction.
Trading can even be done through Computer-Mediated Communication
(CMC) use of mobile devices such as hand computers and cellular
phones. These advances in technology have made day trading possible.

The stock market has grown so that some argue that it represents a
country's economy. This growth has been enjoyed largely to the
credibility and reputation that the stock market has earned

CHEPTER-2

Objective /Research Methodology

OBJECTIVES

The project “Empirical study of Indian stock market” aims at fulfilling

the following objectives: -

To understand what are Stocks? What are different types of stock

available in the market and how they are traded?

To Understanding Stock market in India.

To understand different kind of interest rates and the hedging concept.

To know what are Interest rate futures and swaps? How they are
priced? And how hedging is done using them?

Ensure the development of underwriting and market making

capabilities for Government Securities.

Improve secondary market trading system, which would contribute to

price discovery, enhance liquidity and turnover and encourage

60
voluntary holding of Government securities amongst a wider investor
base.

RESEARCH METHODOLOGY

Research Methodology is a systematic way which consists of series of

actions or steps necessary to effectively carry out research and the
desired sequencing of these steps. The marketing research is a process
of involves a number of inter-related activities which overlap and do
rigidly follow a particular sequence. It consists of the following steps :

Formulating the objective of the study

Designing the methods of data collection

Selecting the sample plan

Collecting the data

Processing and analyzing the data

Reporting the findings

RESEARCH DESIGN

Research Design specifies the methods and procedures for conducting a

particular study. A Research Design is the arrangement of conditions for
collection and analysis of the data in a manner that aims to combine
relevance to the research purpose with economy in procedure.
Research Design is broadly classified into three types as :

Exploratory Research Design

Descriptive Research Design

Hypothesis testing Research Design

61
On the basis of the objective of study, the studies which are concerned
with describing the character tics of a particular individual, or of a
group of individual under study comes under Descriptive Research
Design.

Descriptive Research Design:

In this research design the objective of study is clearly defined and has
accurate method of measurement with a clear cut definition of
population which is to be studied.

SAMPLING DESIGN

A Sample Design is a definite plan for obtaining a sample from a given

Population. It refers to the technique or the procedure adopted in
selecting items for the sample. The main constituents of the sampling
design are as below: -

Sampling Unit

Sample Size

Sampling Procedure

SAMPLING UNIT:

A sampling framework i.e. developed for the target population will be

sampled i.e. who is to be surveyed.

Respondent of Share Khan

SAMPLE SIZE:

62
It is the substantial portion of the target population that are sampled to
achieve reliable results.

Clients of Sharekhan50

SAMPLING PROCEDURE:-

The procedure to choose the respondents to obtain a representative

sample, a probability sampling technique is applied for the target –
market.

NON-PROBABILITY SAMPLING:-

It is a purposive sampling which deliberately chooses the particular

units of the universe for constituting a sample on the basis that the
small mass that they so select out of a huge one will be typical or
representative of the whole. Non-Probability sampling technique is
used in the study because the random selection of the universe i.e all
clients can‘t be available randomly.

63
DATA COLLECTION

PRIMARY DATA:-

The primary data are those data which are collected afresh and for the
first time and happen to be original in character. The primary data to be
collected for the study are:-

By Interviewing the Respondents of Sharekhan.

By Structured Questionnaire

By Tele calling.

SECONDARY DATA:-

Secondary data are those data which have already been collected by
someone else and which already had been passed through the statically
process. The secondary data to be collected for the study are:-

Publication of the company

Periodical of the company

By Companies Websites

64
RESEARCH INSTRUMENT

STRUCTURED QUESTIONNAIRE:-

A Questionnaire consists of a number of questions printed or typed In a

definite order on a form or set of forms. It is the set of questions
presented to the respondents for their answers. When the questions
have only two alternatives or of multiple choice, then it is known as
closed-end questionnaire, which is hence used the given study.

65
 Chapter-3

DATA ANALYSIS & FINDINGS

SAGE GROUP OF RESPONDENTS OF ONLINE TRADING

18-30 15

30-45 20

45-60 15

Analysis: From the above tabulation and charts it has been analyzed
that maximum online traders are from the age group 30-45.In

66
Sharekhan the maximum number of online traders are in the age
groups 45-60

AWARENESS ABOUT ONLINE TRADING

AwarenessSharekhan

Fully 30

Almost 15

Not Exactly

Analysis: From the above tabulation it has been analyzed that

maximum no. of traders that are aware about the online trading.
Majority of traders of Sharekhan are aware about Online Trading.

67
CUSTOMER PERCEPTION REGARDING BROKING HOUSE
Percepti Sharek
on han
Exellent 35
Good 10
Poor 05

From the above data and tabulation it has been analyzed that 70%
Sharekhan Respondents are having excellent perception regarding it,
which indicates good customer relations in Sharekhan.

PREFERENCE FOR ONLINE VS OFFLINE TRADING

ONLINE 40

OFFLINE 10

68
Analysis:

From the above data and tabulation it has been analyzed that
maximum no. of respondents of all the broker houses prefer on-line
trading rather than off-line.

SATISFACTION FROM MARKET REPORTS PROVIDED

VERY MUCH SATISFIED 35

SATISFIED 10

LESS SATISFIED

69
 h

Analysis:

From the above data and tabulation it has been analyzed that
maximum satisfaction level from market reports is from respondents of
sharekhan with 70% very much satisfaction level .

SATISFACTION FROM BROKERAGE

VERY MUCH SATISFIED 35

SATISFIED 10

SOME WHAT SATISFIED 05

70
 g

Analysis:

From the above data and tabulation it has been analyzed that the
maximum no. of respondents very much satisfied from brokerage is
from sharekhan.

SATISFACTION LEVEL WITH RELATIONSHIP MANAGER

VERY MUCH SATISFIED 30

SATISFIED 10

SOME WHAT SATISFIED 10

71
Analysis:

From the above data and tabulation it has been analyzed that
maximum level of satisfaction with relationship managers is from
sharekhan.

SATISFACTION FROM SERVER SPEED

VERY MUCH SATISFIED 35

SATISFIED 10

LESS SATISFIED 05

72
Analysis: From the above data and tabulation it is clear that most of the
clients of sharekhan are satisfied with the server speed, but it has to
further strengthen its server speed to increase the customer
satisfaction level to be competent in the market.

SATISFACTION FROM SERVER AVAILIBILITY

VERY MUCH SATISFIED 35

SATISFIED 10

LESS SATISFIED 05

73
Analysis : The data and chart depicts that most of the customers of
Sharekhan are satisfied with the availability of server. The chart
indicates that it has to further improve the capability of the server and
bandwidth so that the target level of 90% could be achieved.

74
 CHEPTER-4

CONCLUSION
Conclusion

There are currently close to 50 online brokerages in India. However,

due to limited volumes, no online brokerage is currently making money
and a shakeout is imminent in the near future. The going is expected to
get tougher with the advent of capital account convertibility. Players
such as PWC have already entered the Indian market, while others such
as Schwab are expected shortly. On an average, Rs 40 crore per day (Rs
1,000 crore per month) is likely to be the threshold breakeven for
online brokerages. There is scope for multiple players as the entire
segment is in a growth stage.

While there are many factors that need to be understood to justify this
assertion, one simple fact is worthy of note. The average age of the
Indian Internet user as cited by a recent IDC survey is 27 years. The
average age of the head (and financial decision taker) of the Indian
equity-investor household, as revealed by the SEBI-NCAER study of
Indian investors in 2000 is 45 years. The older, experienced equity

75
investor is not online today and the fact that older, mature investors
are not ‗tech-positive‘ and hence unlikely to move to online trading is a
major barrier to the growth of e-broking in India.

Besides, only scripts that have been compulsorily dematerialized can be

traded on the Net here. These number nearly 600 (about 1,500 and
6,000 scripts are traded on the national stock Exchange (NSE) and the
Bombay Stock Exchange (BSE), respectively).

Brand building, assurances of security, developing multiple delivery

channels with anytime telephonic grievance redressed options is some
directions which may be of use for the immediate future. Online trading
firms can also market themselves aggressively to students who are
entering the professional arena, ensuring that their entry into equity
happens online. One of the major issues governing trading is the
prevailing uncertainty in the market.

Hence, notwithstanding the current sentiment in the market, potential

for online trading is still immense in India. With a more transparent
system, increased awareness, and a sustained bullish market we would
surely be heading to become the largest online stock trading country by
the turn of the next decade.

76
LIMITATIONS

There are a few constraints in achieving the targets assigned by the

company officials –

General public is not aware of the company because of no promotional

activities undertaken by the company.

People are reluctant in entering into share market as they think it‘s a
gamble to invest in shares.

Sometimes the database is not provided then it becomes difficult to

contact to people as our work is mostly through telephonic
conversation.

In last days of the previous it became more difficult to accomplish the

target because of the news of IPO scam in the share market.

Delhi being new to me there are very few persons whom I know so it is
very difficult get references from people staying here.

RECOMMENDATIONS

For rectifying above constraints I found some suggestions. These are :

Company should provide awareness to the public about the company

by various form of advertising like print media and as well as electronic
media.
77
Company should aware the general public that now a days, the
investors who invest their money in share market earn very good profit.

Company should provide the database of the customers to their

executives to do contact with them easily.

Company should provide the knowledge to general public that Stock

Exchange Board of India (SEBI) controlled all the activities of the share
market.

78
APPENDIX

QUESTIONNAIRE

Do you invest presently in Shares?

Yes [ ] no [ ]

In which following category you invest?

Mutual Funds [ ]

Bonds [ ]

Derivatives [ ]

Shares [ ]

79
3. With which broking house you are trading presently? (i)Sharekhan
[ ]

India bulls [ ]

ICICI [ ]

Any other

4. Your mode of Trading?

online [ ]

Offline [ ]

5. Awareness about online trading?

Fully [ ]

Almost [ ]

80
Not exactly [ ]

6. What is your perception regarding your broker?

Excellent [ ]

Good[ ]

Poor [ ]

7. Whether you like to trade online or offline?

Online [ ]

Offline [ ]

8. How much satisfied you are with the research reports provided to
you?

Very much satisfied [ ]

81
Satisfied [ ]

Less satisfied [ ]

9. ARE YOU SATISFIED WITH BROKERAGE?

Very much satisfied [ ]

Satisfied [ ]

Less satisfied [ ]

10. Are you satisfied with the Relationship Manager?

Very much satisfied [ ]

Satisfied [ ]

Somewhat satisfied [ ]

82
11. Are you satisfied with server speed?

Very much satisfied [ ]

Satisfied [ ]

Less satisfied [ ]

12. Are you satisfied with server availability?

Very much satisfied [ ]

Satisfied [ ]

Less satisfied [ ]

NAME

AGE

83
OCCUPATION QUALIFICATION
PHONE NO.

Bibliography

Books-

Kothari, C.R., Research methodology, New Delhi, Viswas Publication,

2004.

Pandian punithavathy. Security Analysis and Portfolio Management,

vikas publishing house pvt ltd.

Securities (Basic) Module of NCFM.

Website- www.sharekhan.com www.sebi.com www.bseindia.com

www.nseindia.com www.wikipedia.org

84